Algonquin Power & Utilities Corp. · TSX:AQN
Algonquin Power & Utilities — Investor Presentation (January 2023)
19 slides from Algonquin Power & Utilities's investor presentation, Jan 12, 2023
Slide 1: Investor Update
January 12, 2023 Investor Update January 12, 2023
Slide 2: Forward-Looking Statements
AQN Algonquin | Liberty | 2023 Investor Update Forward-Looking Statements Certain written statements included herein and/or oral statements made in connection with the presentation contained herein constitute “forward-looking information” within the meaning of applicable securities laws in each of t
Slide 3: Taking Decisive Actions to Support Strategy and Long-Term Profitable Growth
AQN Algonquin | Liberty | 2023 Investor Update Taking Decisive Actions to Support Strategy and Long-Term Profitable Growth Build on strong foundation We are proactively making across regulated & changes to address market renewable businesses conditions: Arun Banskota President & CEO 1. Realigning ca
Slide 4: Regulated and Renewable Businesses Enabling the Energy Transition
AQN Algonquin | Liberty | 2023 Investor Update Regulated and Renewable Businesses Enabling the Energy Transition Well positioned to assist Unique synergies across Capabilities across the value Portfolio of high-quality our customers: regulated and renewables: chain: assets: • Local customer centric
Slide 5: Future Value Opportunity Despite Short-Term Challenges
AQN Algonquin | Liberty | 2023 Investor Update Future Value Opportunity Despite Short-Term Challenges Short-Term Challenges • Rising interest rates and inflation • Kentucky Power Acquisition delays • Uneven renewables contribution • Common share dilution in 2024 resulting from equity units issued in
Slide 6: Kentucky Power Acquisition
AQN Algonquin | Liberty | 2023 Investor Update Kentucky Power Acquisition Regulatory Update Expected Benefits of Kentucky Power Acquisition ▪ On December 15, 2022, FERC denied the FERC 203 application for the Kentucky Power Acquisition ▪ Increased regulated mix without prejudice ▪ Increased electric
Slide 7: Demonstrated Track-Record of Operational Excellence
AQN Algonquin | Liberty | 2023 Investor Update Demonstrated Track-Record of Operational Excellence Improved earned Return on Equity (“ROE”) relative to allowed ROE Operating Expenses as a % of Revenue Granite State Electric, NH Empire District Electric, MO 100% 100% 52% 50% 48% 50% 80% 0% 60% Pre-AQ
Slide 8: History of Delivering Growth
AQN Algonquin | Liberty | 2023 Investor Update History of Delivering Growth Historical Adjusted EBITDA Growth1,2,3 $mm $1,077 $804 $839 $870 $689 $359 2016 2017 2018 2019 2020 2021 Includes Empire acquisition Historical Rate Base Growth4 Historical Non-Regulated Installed Renewable Generation5 $bn G
Slide 9: Strengthening Financial Foundation to Fund Growth
AQN Algonquin | Liberty | 2023 Investor Update Strengthening Financial Foundation to Fund Growth Committed to a BBB Credit Rating Balanced Funding Plan • No new common equity financings expected in 2023 and 2024 1 • Intend to reduce reliance on capital markets excluding regulated sector debt issuanc
Slide 10: 2023 Balanced Funding Plan
AQN Algonquin | Liberty | 2023 Investor Update 2023 Balanced Funding Plan Capital Intensity Capital Investment Attributes and Growth Objectives • ~$1.0bn of capital expenditures expected in 20231 • The current capital spending plan represents a capital intensity reduction of ~15% relative to 20222 1
Slide 11: 2023 Balanced Funding Plan (cont'd)
AQN Algonquin | Liberty | 2023 Investor Update 2023 Balanced Funding Plan (cont’d) 2023E Sources & Uses Commentary ~$300mm Dividends ~$800mm Retained Cash • Balanced funding plan is consistent with a BBB credit rating ~$1bn Capex • Diversified access to sources of capital • No new common equity fina
Slide 12: Dividend Reset
AQN Algonquin | Liberty | 2023 Investor Update Dividend Reset 2023E Adjusted Payout Ratio1,2 Taking necessary steps today to reallocate 125% capital and drive further value creation 75% 78% 63% • Algonquin intends to lower the quarterly dividend to $0.1085 (equivalent to $0.4340/sh annually) 3 4 5 A
Slide 13: Focusing on Monetizing ~$1bn of Assets to Fund Growth
AQN Algonquin | Liberty | 2023 Investor Update Focusing on Monetizing ~$1bn of Assets to Fund Growth Targeted Asset Sales Commentary • Inaugural asset recycling transaction was done at attractive multiples Second asset recycling • Actively evaluating additional asset sales transaction ~$1.0bn Phase
Slide 14: Financial Outlook
AQN Algonquin | Liberty | 2023 Investor Update Financial Outlook $0.675 $0.55 - $0.61 $0.605 $0.58 ($0.07) ($0.03) 2022 Adj. Net Gain on 2022 Adj. Net Regulated Kentucky Power Interest Other 2023 Adj. Net EPS Guidance Asset Recycling EPS Guidance Earnings Before Acquisition2 EPS Guidance Midpoint1 M
Slide 15: Well Positioned to Support Strategy and Long-Term Profitable Growth
AQN Algonquin | Liberty | 2023 Investor Update Well Positioned to Support Strategy and Long-Term Profitable Growth Taking decisive financial and strategic Remain committed to our ESG action in response to challenges focused strategy and integrated business model Committed to the Kentucky Power Acqui
Slide 16: Appendix
Appendix Algonquin | Liberty | 2023 Investor Update
Slide 17: Algonquin is Undervalued vs. Peers
AQN Algonquin | Liberty | 2023 Investor Update Algonquin is Undervalued vs. Peers U.S. Utilities1 Canadian Utilities2 Algonquin 2023E Price to Adjusted Net Earnings Ratio3,4 27.4x 21.5x 21.3x 21.0x 20.9x 20.8x 20.6x 20.4x 19.6x 19.4x 19.3x 19.3x 19.2x 18.9x 18.7x 18.4x 18.2x 18.1x 17.4x 16.3x 16.2x
Slide 18: Kentucky Power Acquisition Expected to Be Financed Consistent with Algonquin's BBB Rating
AQN Algonquin | Liberty | 2023 Investor Update Kentucky Power Acquisition Expected to Be Financed Consistent with Algonquin’s BBB Rating Kentucky Power Acquisition Financing $bn ($0.8) ($0.4) Potential Credit Facility Refinancing ($0.2) Sources $2.8 ($0.6) • Long-term fixed rate debt $1.7 ($1.4–1.5)
Slide 19: Utility by Facility & Modality
AQN Algonquin | Liberty | 2023 Investor Update Utility by Facility & Modality Rate Base & ROE by Major Facility and Modality Facility 2021A Rate Base ($mm) 2022E Rate Base ($mm)1 Latest Authorized ROE Empire Electric $2,718 $2,839 9.3% California Electric & Water $554 $626 9.8% New York Water $0 $49
Algonquin Power & Utilities — Investor Presentation (January 2023) on 6ix