Algonquin Power & Utilities Corp. · TSX:AQN
Algonquin Power & Utilities — Investor Day (December 2020)
75 slides from Algonquin Power & Utilities's investor day presentation, Dec 14, 2020
Slide 1: Algonquin by the Numbers
Algonquin by the Numbers o£ * ? » "we ae “oe ~ “ % . = a ve e *® * oc of e * . s e % « -s. 4° ie? = “ % . oe x ® * . ° os All dollar amounts presented in U.S. $ unless otherwise noted. ~$9B Market Cap! ~40% 2019 Total Shareholder Return? BBB Credit Rating 1988 Company Founded ~3 GW Renewables in Ope
Slide 2: 2020 Investor Day
2020 Investor Day December 14, 2020
Slide 3: Forward-Looking Statements
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 the provinces of Canada and the respective polic
Slide 4: Strategic Overview
2020 Investor Da y Strategic Overview Algonquin _ Liberty:
Slide 5: Arun Banskota
Arun Banskota President and Chief Executive Officer Algonquin continues to play a leading role in the transition to a low-carbon economy. Algonquin | Liberty: :
Slide 6: Speakers & Agenda
2020 Investor Day Speakers & Agenda ea asn/ Arun Banskota Arthur Kacprzak Jeff Norman Johnny Johnston George Trisic President & Chief Financial Officer Chief Development Officer Chief Operating Officer Chief Governance Officer Chief Executive Officer Arun Banskota Jeff Norman Strategic Overview... L
Slide 7: Industry Backdrop and Opportunity Set
Industry Backdrop and Opportunity Set * Decarbonization: Well-aligned portfolio — Projected retirements of coal and nuclear facilities — Proactive climate policy * Regulated business continues to benefit from renewable investments into rate base — Early pioneer in “Greening the Fleet” initiatives —
Slide 8: Algonquin: Investment Theses
Algonquin: Investment Theses Outstanding Returns Exceptional Growth Resilient Business with Strong Balance Sheet Leaders in ESG Algonquin Strong Total Shareholder Returns (“TSR")': - 2019 TSR of ~40%; 5-year TSR of ~141%; 10-year TSR of ~619% Historical dividend per share Compound Annual Growth Rate
Slide 9: Strong Track Record of Shareholder Returns
Strong Track Record of Shareholder Returns 1-Year 5-Year Cumulative 10-Year Cumulative Algonquin 14.1% 148.1% 567.3% S&P/TSX Composite S&P/TSX Capped Utilities 14.2% 129.4% PHLX Utility 245.4% Source: FactSet Data as at November 30, 2020. Delivering on shareholder performance Algonquin Liberty: °
Slide 10: Financial Outlook
Financial Outlook ($) ©) oul $9.4. 8-10% 11.2% 5-year capital plan Expected 2021-2025 Adjusted Net Expected 5-year rate base from 2021 through 2025 Earnings! per share 5-year CAGR CAGR from 2020 through 2025 Robust investment pipeline should continue to deliver shareholder value Appendix for reconci
Slide 11: Growth: Regulated Services Group
Growth: Regulated Services Group + Organic investments — Improving safety and reliability of mission critical infrastructure * Organic tuck-in opportunities — Completing at attractive multiples + Greening the Fleet initiatives — Leveraging development expertise + Acquisitions — Continuing successful
Slide 12: Growth: Renewable Energy Group
Growth: Renewable Energy Group + Expand customer base — Helping C&l customers achieve emissions goals — Chevron, General Mills, Kimberly Clark, Facebook, Starbucks, and Amazon — Government * Partner with developers * Greenfield development — Pipeline of over 3,400 MW of greenfield opportunities * At
Slide 13: Future Growth Levers
Future Growth Levers + Energy Storage — Regulated - 12 MW of Battery Storage; 80 MW in development — Non-Regulated - 3 MW Solar and Storage in NY; 30MW of development opportunities * Renewable Natural Gas (RNG) — Kinderhook! - St. Lawrence Gas Investing in future growth initiatives focused on sustai
Slide 14: Operational Excellence
Operational Excellence + Best-in-class benchmarking and best practices + Aspire to be top quartile for safety, reliability, and customer metrics * Resilient business model * Expected cost savings of $23 M to $28 Min 2020 + Customer First - upgrading customer benefits and efficiency Focused on delive
Slide 15: Sustainability
Sustainability * 2020 Sustainability Report * Task Force for Climate-related Financial Disclosure (TCFD) report * Leaders in CO, emissions intensity per dollar of revenue * Recognized as ESG Leader Committed to sustainability journey Algonquin |, Liberty: 15
Slide 16: Growth
2020 Investor Day — Growth { Algonquin oa . meme —|— =| — ma q | _ Liberty tes =
Slide 17: Jeff Norman
Jeff Norman Chief Development Officer Creating value through 5-year i ! $9.4 billion capital plan. Algonquin |. Liberty: ”
Slide 18: New $9.4B Growth Pipeline
New $9.4 B Growth Pipeline! $9.4B Neosho NYA Water $0.6 B $0.6 B $6.3B ececo==-y ¢ aS 5 . f i Organic Organic ESSAL \ Organic t $0.3 B ! $0.9B $1.0B $1.08 Organic Organic Reg ulated ‘ 7 $0.6 B $0.6B “Ss << 2020 2022 Indirect 2023 Indirect 2024 Indirect 2025 Indirect $0.18 $0.18 $0.1B $0.1B @O O O au
Slide 19: Growth: Non-Regulated
2020 Investor Day — Growth . Non-Regulated Algonquin “on . — aa | ry Be ma q | L | Liberty tes =
Slide 20: Recent Additions: Wind
Recent Additions: Wind = 2021 2022 2023 + Investment Summary — 81% ownership of a portfolio of south Texas wind projects — Coastal assets complement existing Texas portfolio — llyears weighted average offtake duration Texas Regional Generation Profile * Project Summary x -— Stella | 201 MW | Operati
Slide 21: Recent Additions: Solar
Recent Additions: Solar eer a) 2021 2022 2023 Data Center Locations * Carvers Creek | 150MW | Virginia | Expected 2023 COD — Expanding our C&l relationships with Amazon and Starbucks — Algonquin’s largest solar project to date — Further establishing a foothold in a strong data center market — Weight
Slide 22: Construction Program: Wind
Construction Program: Wind Foundations, Turbines Turbines Roads, etc. Delivered Erected Gey Sugar Creek 5 5 5 (202 Mw) 100% 100% 100% Nov. 2020 Maverick Creek 5 o ° 2021 (492 Mw) 99% 97% 91% (expected) Blue Hill 9 4 2021 100% 2 2021 3 2021 Q (175 MW) Q Q (expected) Largest wind construction program
Slide 23: Construction Program: Solar
Construction Program: Solar Site on Panels Preparation pilings) Installed Gels Gsuw) 100% 100% 100% Aug. 2020 Altavista! 3 5 5 Q2 2021 (80 MW) 85% 1% 50% (expected) Expected solar additions of 123 MW in one year, more than doubling existing capacity Algonquin i Liberty” 1. Power purchase agreement w
Slide 24: Prospective Greenfield Projects Development
Prospective Greenfield Projects Development Portfolio Canada OO ater stage @O Earlier Stage United States C Chevron Framework Agreement ») 500 MW + Colombia Colombia Colombia Spain Spain Spain AAGES/ 20MW 20MW IOMW 28MW SOMW 5OMW International @ @ @ @ @ @ 2022 2023 2024 2025, Prospective 3.4 GW deve
Slide 25: Capturing ITC/PTC Value
Capturing ITC/PTC Value Algonquin 2020 2021 2022 2023 2024 Safe Harbor: 200 MW Continuous Efforts Physical work: 100 MW Physical work: 135 MW Physical work: 1,430 MW 60% PTC i Safe Harbor: 300 MW 60% PTC Continuous Efforts Investment expected to secure ITC / PTC benefits for up to 2,165 MW & Liberty
Slide 26: Offtake Customers
Offtake Customers 2023 Wind & Solar Portfolio + Recent Offtake Additions . + U.S. General Services — 675 MW added Governments Administration — 13 years weighted average Leading financial + — Diverse and experienced customers institutions — Established partnership with Chevron * SaskPower * Manitoba
Slide 27: Growth: Regulated
2020 Investor Day — Growth . Regulated Algonquin “on . — aa | ry Be ma q | L | Liberty tes =
Slide 28: Midwest Greening
Midwest Greening Foundations, Turbines Turbines Expected Roads, etc. Delivered Erected coD North Fork Ridge 5 5 5 (150 MW) 100% 100% 100% Q4 2020 Neosho Ridge 5 y 9 (300 MW) 100% 100% 69% Ql 2021 Kings Point y 9 9 (150 MW) 100% 100% 43% Ql 2021 Construction of $1.2 B in new rate based assets nearly
Slide 29: Greening The Fleet
Greening The Fleet + CalPeco Electric - C100 — Luning expansion project in planning stages — 60 MW solar project — 240 MWh storage + Bermuda Electric — B100 — Recently closed acquisition of Bermuda Electric — Customer value and potential future energy independence with renewables — Offshore wind in
Slide 30: Growth Highlights
Growth Highlights + Strong $9.4 B growth pipeline + Further potential upside through greenfield — North America greenfield — International greenfield — Chevron framework agreement * Further potential upside through regulated M&A Multiple levers to drive growth Algonquin | Liberty: ”
Slide 31: Operational Excellence
2020 Investor Day Operational Excellence bn Algonquin ___ Liberty’
Slide 32: Johnny Johnston
Johnny Johnston Chief Operating Officer Algonquin’s experienced and skilled team drives value through operational excellence. Algonquin | - Liberty: 2 =
Slide 33: COVID-19 Response
COVID-19 Response * Safety continues to be our top priority + Allessential services sustained for our customers + Load impacts have moderated from peak in April * 61% of regulated revenues decoupled + Expected $23-28 Min 2020 operating cost savings to mitigate impacts Resilient business model has we
Slide 34: Operational Excellence in Action
0.4 0.3 0.2 01 0.0 Operational Excellence in Action Safety - Lost Time Injury Rate Reliability - 5 Year SAIDI JD Power CSAT Scores (system Average Interruption Duration Index) 140 700 135 680 on 2 5 130 660 £& = lJ 125 | 640 [ = 20 | ; ” 620 | L 2017 2018 2019-2020 YTD 2017 2018 2019-2020 2017-2018
Slide 35: Customer Driven Organic Investment
Customer Driven Organic Investment * $2.9 B planned investment in safety and reliability — Electric, gas, and water infrastructure replacement + $0.9 B planned investment in quality, efficiency, and choice — Customer First — Grid modernization — Microgrids — Electric vehicles/Smart cities + $0.3 B p
Slide 36: • • •
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Slide 37: PISA (Plant In Service Accounting)
PISA (Plant In Service Accounting) + Legislative defined mechanism for Missouri electric only Regulated Services * Defer 85% of depreciation expense and return (All Regions) for new qualifying electric plant once in “plant in service” Utility industry * Expected benefits: IM verage — Smooths rate im
Slide 38: Rate Case Filings and Returns
Rate Case Filings and Returns * Solid track record of delivering allowed returns Rate Base Growth . . wee ae . 10.0 . + Plan to file rate cases in 10 jurisdictions in 2021 a N2% : : : ss — Missouri electric 8.0 4 — California electric and water 60 + Prudent customer centric investments expected 40 t
Slide 39: Portfolio Additions
Portfolio Additions New BrunswickGas _ St. Lawrence Gas New Brunswick New York Natural Gas Natural Gas 12,000 customer 17,000 customer connections connections Successful integration track record continues Algonquin |. Liberty: 20
Slide 40: Portfolio Additions
Portfolio Additions New Brunswick ESSAL Ascendant _ Great Bay Il Gas Chile Bermuda Maryland Water Electric Solar St. Lawrence 230,000 customer 36,000 customer 43 MW Gas connections connections Successful integration track record continues Algonquin |. Liberty: 40
Slide 41: Portfolio Additions (Expected)
Portfolio Additions 021 (expectea) New Brunswick — Great Bay Il Sugar Creek New York Midwest TX Coastal MaverickCreek Altavista Community EBR Gas Illinois American Water Greening Texas Texas Virginia Solar Quebec ESSAL wind New York Missouri/Kansas wind Wind Solar New York Wind St. Lawrence 202 MW W
Slide 42: Operational Excellence Enables Sustainable Growth
Operational Excellence Enables Sustainable Growth + Experienced team has successful track record of: — Safe and reliable operations — Integration of regulated and renewable projects — Driving customer-focused improvements * Our local approach helps us understand customer needs and build strong relat
Slide 43: Sustainability
2020 Investor Day Sustainability Algonquin __ Liberty:
Slide 44: George Trisic
Algonquin | Liberty: George Trisic Chief Governance Officer Our vision of sustainability is centered on our three strategic pillars. 44
Slide 45: ESG Embedded in our Business Strategy
ESG Embedded in our Business Strategy Greening ourselves Greening our partners it I i \ [ vy Ne [ oe S$ [ \ Li | \ \ > 1500 MWs of generation 1,600 MW construction 675 MW contracted to new capacity in operation program in 2020 renewables customers Our decades of renewables expertise is a key competi
Slide 46: ESG Goals Aligned with Business Strategy
ESG Goals Aligned with Business Strategy Environment Social Governance Target 75% Renewable Generation Exceed 30% Women in Leadership Embed Sustainability into Compensation Model a ee ) 75% >30% Reduce GHG Emissions by IM Metric Tons Achieve Top Quartile Customer Service Build a Robust Compliance Fr
Slide 47: Decarbonizing our Business
Decarbonizing our Business Total Scope 1+2 Emissions Emissions Intensity Benchmarking (thousands Mt CO,e) CO,¢ / per $ Dollar of Revenue 4,000 0.00400 3,654 0.00334 0.00315 0.00322 3,500 31% 3204 3,195 Reduction 0.00300 (From 2017 baseline) 0.00210 3,000 0.00200 — 0.00176 0.00174 2,517 2,500 0.00100
Slide 48: Enhancing our ESG Disclosures
Enhancing our ESG Disclosures Sustainability Report Climate Change Assessment in alignment with TCFD guidelines 2020 2020 Sustaining energy and water for life Building for the Future Bo tiberty: Wj]Aicongun WilAiconqun Delivering increased transparency, improved disclosure, and data breadth in our E
Slide 49: Internationally Recognized ESG Performer
Internationally Recognized ESG Performer Strong alignment of business strategy with ESG Wepp MSCI & * Renewables expertise is a competitive advantage * Geographic/commodity diversity is an asset BEST 50 CORPORATE CITIZENS * Low carbon intensity relative to our peers * Positioned for growth in a low
Slide 50: Financial Overview
2020 Investor Day Financial Overview Algonquin ‘Liberty: ae eerewr a VT VY \Y WALLALY Mul
Slide 51: Arthur Kacprzak
Arthur Kacprzak Chief Financial Officer Algonquin’s highly visible capital plan is expected to drive financial performance. Algonquin | Liberty:
Slide 52: Financial Considerations
Financial Considerations Highly visible capital plan Funding plan expected to maintain resilient balance sheet reconciliation of Non-GAAP Financial Measures. 0 Anticipated long-term sustainable Adjusted Net Earnings! per share and dividend growth ° @ Algonq ulin (ft Lib erty . 1. Please see note on
Slide 53: Projected $9.4B Investment Program
Projected $9.4 B Investment Program * Highly visible plan to invest in rate base sected “| ’ + Expected to maintain conservative business mix $6.0 B of ~70% from regulated services $4.4B + Expanding renewables footprint though = — — — accretive green generation development 2021 2022 2023 2024 2025 ‘
Slide 54: Diversifying Sources of Capital
Diversifying Sources of Capital U.S. Subordinated Notes U.S. 144A Offering 2018 2020 2012 - 2017 2019 Expected 2021 + Canadian Bought Deal ATM Program U.S. Mandatory Equity Units Preferred shares U.S. Marketed Equity Offering Tax Equity U.S. Hybrid Instalment Receipts DRIP U.S. and Canadian Senior U
Slide 55: Prudent Balance Sheet Management
Prudent Balance Sheet Management! $3 B of Committed Credit Facilities Hybrid Securities — 9% + Hybrid securities provide additional Equity — 55% pool of cost effective capital ~ Preferred shares issued in Canada - Subordinated notes issued in the U.S. * Strong equity franchise in North America ~ Dua
Slide 56: Management of Credit Metrics
Management of Credit Metrics + Rated BBB by S&P, Fitch, and DBRS Algonquin’s Long-term Adjusted . a A . FFO! / Debt Metrics * Commitment to maintaining BBB flat credit metrics 18% | — Optimizes cost of capital 7% | + Targeted headroom to downgrade threshold 16% provides flexibility for opportunistic
Slide 57: Projected 5-Year $9.4B Capital Program
Projected 5-Year $9.4 B Capital Program Expected Sources Expected Uses Tax Equity $148 \N $9.4B $9.4 B [ID egulcted services 2021 through 2025 2021 through 2025 - : > Virtually More likely certain than not Free Cash Flow $3.1B Diversified sources of capital creates financing flexibility Algonquin |
Slide 58: Algonquin's Tax Positioning
Algonquin’s Tax Positioning A. Algonquin’s international advantage creates a lower effective tax rate 2021! Post 20222 Anticipated Effective Tax Rate = 3-4% 13-16% B. Cash tax horizon allows for self-monetization of renewable energy tax credit incentives — Flexibility to redirect cash taxes into acc
Slide 59: 2021 Adjusted Net Earnings per Share Outlook
2021 Adjusted Net Earnings! per Share Outlook Adjusted Net Earnings! per Share Outlook Key Assumptions? + Pessimistic COVID-19 scenario + Closing of NYAW Q4 2021 + Conservative renewable resource estimate * Demonstrated business resiliency in 2020 + Full year benefit from 1,400 MW of renewables * Cl
Slide 60: Adjusted Net Earnings per Share 5-Year Outlook
Adjusted Net Earnings! per Share 5-Year Outlook + Incremental growth from greenfield pipeline not in base plan * Proven M&A platform — No further M&A growth in base plan + Self monetization of tax attributes could provide further accretion * Conservative funding plan — Further strengthening the bala
Slide 61: Algonquin's Dividend Outlook
Algonquin’s Dividend Outlook + Sustainable long-term payout ratio target of 120 _ 80% - 90% reflects Algonquin’s business mix 100 | tm | * 10% dividend increase supported under current 2021 plan 080 | o6o | Targeted + Continued dividend increases driven by ry oon Adjusted Net Earnings per share! gro
Slide 62: Key Takeaways and Q&A
Key Takeaways and Q&A Outstanding Returns Growth Exceptional Growth * Strong growth trajectory and capital program * Opportunities for growth through C&I greening efforts — Algonquin’s investment theses supported by three pillar foundation Algonquin | Liberty: e2
Slide 63: Appendix
2020 Investor Day — | Appendix Algonquin | Liberty”
Slide 64: Speaker Biographies
Speaker Biographies Arun Banskota Arun Banskota joined Algonquin as President in February 2020. Prior to joining Algonquin, Mr. Banskota had 30 years of progressively senior roles with a unique combination of experience in renewable energy development, construction, financing, and operations; P&L ma
Slide 65: Speaker Biographies
Speaker Biographies Jeff Norman | cHicF DEVELOPMENT OFFICER Mr. Norman is the Chief Development Officer of Algonquin. He was appointed to the Algonquin executive team in 2015. Mr. Norman cofounded the Algonquin Power Venture Fund in 2003 and served as President until it was acquired by Algonquin in
Slide 66: Key Selected Financial Information
Key Selected Financial Information All dollar amounts in US$ M except Nine months ended September 30 Twelve months ended December 31 per share information 2020 2019 2019 2018 Revenue $ 1184.7 $ 1186.4 $ 1,624.9 $ 1648.5 Adjusted EBITDA! 616.3 608.3 838.6 804.4 Cash provided by operating activities 3
Slide 67: Expected CapEx Forecast — Regulated Services Group
Expected CapEx Forecast — Regulated Services Group (all dollar amounts in US$ millions) 2021F 2022F 2023F 2024F 2025F Total Organic Utility Investment Mid States Electric 230.8 235.0 322.7 161.4 154.5 1,104.4 EnergyNorth 30.9 50.7 43.0 64.4 43.3 232.3 Calpeco 36.5 25.8 66.2 63.5 72 263.2 Granite Sta
Slide 68: Calculation of Regulated Services Group Rate Base
Calculation of Regulated Services Group Rate Base Major Components in Rate Base Calculation — Based on Q3 2020 Financial Statements Values in US$ millions References: Net Property Plant and Equipment 4,842.6 Pg. 75 of APUC Q3 2020 Financial Statements (note 18) Advances in Aid of Construction (62.3)
Slide 69: Reconciliation of Adjusted EBITDA to Net Earnings
Reconciliation of Adjusted EBITDA to Net Earnings The following table is derived from and should be read in conjunction with the consolidated statement of operations. This supplementary disclosure is intended to more fully explain disclosures related to Adjusted EBITDA and provides additional inform
Slide 70: Reconciliation of Adjusted EBITDA to Net Earnings
Reconciliation of Adjusted EBITDA to Net Earnings The following table is derived from and should be read in conjunction with the consolidated statement of operations. This supplementary disclosure is intended to more fully explain disclosures related to Adjusted EBITDA and provides additional inform
Slide 71: Reconciliation of Adjusted Net Earnings to Net Earnings
Reconciliation of Adjusted Net Earnings to Net Earnings The following table is derived from and should be read in conjunction with the consolidated statement of operations. This supplementary disclosure is intended to more fully explain disclosures related to Adjusted Net Earnings and provides addit
Slide 72: Reconciliation of Adjusted Net Earnings to Net Earnings
Reconciliation of Adjusted Net Earnings to Net Earnings The following table is derived from and should be read in conjunction with the consolidated statement of operations. This supplementary disclosure is intended to more fully explain disclosures related to Adjusted Net Earnings and provides addit
Slide 73: Reconciliation of Adjusted Funds from Operations to Cash Flows
Reconciliation of Adjusted Funds from Operations to Cash Flows from Operating Activities The following table is derived from and should be read in conjunction with the consolidated statement of operations and consolidated statement of cash flows. This supplementary disclosure is intended to more ful
Slide 74: Reconciliation of Adjusted Funds from Operations to Cash Flows
Reconciliation of Adjusted Funds from Operations to Cash Flows from Operating Activities The following table is derived from and should be read in conjunction with the consolidated statement of operations and consolidated statement of cash flows. This supplementary disclosure is intended to more ful
Slide 75: Corporate Information
Corporate Information Head Office Oakville, ON Common Share Symbol TSX/NYSE: AQN Subordinated Notes Symbols NYSE: AQNA, AQNB Preferred Share Symbols TSX: AQN.PR.A, AQN.PR.D. Shares Outstanding* 597,043,339 Share Price* $15.68 Market Capitalization $9.4B Dividend** $0.6204 per share annually * Shares
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