Algonquin Power & Utilities Q3 Earnings Call Highlights

Key Points

• Adjusted Q3 earnings increased: Net earnings rose to $88.1 million from $69 million, and adjusted EPS climbed to $0.11 from $0.09, helped by favorable weather and new utility rates. GAAP earnings declined to $57.6 million from $71 million.
• Outlook reaffirmed: Algonquin maintained adjusted EPS guidance of $0.35–$0.37 for 2026 and $0.38–$0.42 for 2027, and said it does not expect to issue equity through 2027 to fund current plans.
• Portfolio and regulatory updates: The company sold its 64% stake in Chilean water utility Suralis for $126 million and remains on track for a U.S. redomicile in the first half of 2027, which it expects to add $0.02–$0.03 to annualized adjusted EPS. It also filed a proposed Missouri tariff for large-load customers.

Algonquin Power & Utilities NYSE: AQN reported higher adjusted earnings for the third quarter of 2026, supported by favorable weather and new utility rates, and reaffirmed its earnings outlook for this year and next.

The company also outlined progress on a proposed Missouri tariff for large-load customers, its sale of a Chilean water utility interest and its planned move of corporate domicile to the United States.

Adjusted net earnings rose to $88.1 million from $69 million a year earlier, while adjusted net earnings per share increased to $0.11 from $0.09, Chief Financial Officer Rob Stefani said. GAAP earnings attributable to common shareholders fell to $57.6 million from $71 million.

For the first nine months of 2026, adjusted net earnings were $216.9 million, up from $211.6 million a year earlier. GAAP earnings declined to $145.6 million from $178.6 million. The earnings figures discussed on the call were for continuing operations and attributable to common shareholders.

Weather and rates boost results

Stefani said favorable weather at Empire Electric contributed $20.4 million to the quarterly improvement, while new rates added about $11.4 million, primarily at CalPeco and Empire Electric. The rate benefit was offset in part by wildfire insurance costs and lower gas system enhancement program revenue at New England Gas.

Higher operating expenses for gas safety, labor and maintenance reduced the year-over-year improvement by $4.4 million. Results also faced a $7.1 million comparison from a favorable one-time EnergyNorth depreciation deferral recorded in the prior year, Stefani said.

Algonquin reaffirmed its adjusted net earnings guidance of $0.35 to $0.37 per share for 2026 and $0.38 to $0.42 for 2027. Stefani said the company continues to expect it will not need to issue equity through 2027 to fund its current plans.

The company reported $1.2 billion in liquidity and a BBB credit rating. Stefani said funds from operations as a percentage of debt was 12.2% over the last 12 months and that management continues to monitor its headroom to a potential downgrade.

Missouri tariff and regulatory proceedings

Chief Executive Officer Rod West said Empire Electric Missouri filed a proposed large-load tariff intended to help serve potential new customers while requiring them to pay their representative cost of service. He said commission approval of the tariff is the first public milestone before the company can transact with a potential customer.

West declined to disclose potential customer discussions or specify future generation investments. “All options are on the table,” he said when asked whether the company might pursue gas, renewables or other generation if demand rises significantly.

West said Algonquin engaged with Missouri stakeholders before making the filing and expects that work to make the process less contested. He also said the Federal Energy Regulatory Commission granted construction work in progress and abandonment incentives for a portfolio of Southwest Power Pool transmission projects assigned to Empire.

Separately, Algonquin is working toward a resolution concerning a potential $13.7 million in incremental annualized revenue in Missouri. West declined to give a timeline for the regulatory discussions but said the company had narrowed gaps in billing and other customer-service issues. Stefani said approximately half of the annual amount would be available for 2026 and that management expects more visibility in the coming months.

The company also reached a resolution in its Litchfield Park Water and Sewer rate case in Arizona that includes a provision for formula rates, West said. Since its previous earnings call, it filed new rate cases at Empire Electric Oklahoma and Granite State Electric.

Portfolio sale and U.S. redomicile

Algonquin sold its 64% interest in Suralis, a regulated water utility in Chile, as part of its effort to simplify its portfolio. Stefani said the transaction closed at the end of October and generated $126 million in proceeds. The company also removed Suralis debt from its books, making the transaction slightly positive for credit metrics on a forward-looking basis, he said.

Stefani said a favorable tax benefit made the sale largely neutral to 2026 earnings. Looking ahead, the company is considering capital recycling and debt reduction with the proceeds.

Algonquin remains on track to complete its planned U.S. redomicile in the first half of 2027, subject to regulatory and shareholder approvals and other conditions. Stefani said the move is expected to reduce cross-border tax friction and provide an annualized adjusted earnings benefit of $0.02 to $0.03 per share, with a partial benefit beginning in 2027.

On costs, Stefani said outsourcing and the rationalization of applications and technology spending offer opportunities for savings. He said the company continues to target operating and maintenance costs in the low- to mid-30s as a percentage of gross revenue, although some severance and consulting costs associated with improvement efforts appeared in the operating expense line.

About Algonquin Power & Utilities (NYSE:AQN)

Algonquin Power & Utilities Corp. is a Canadian utility company that owns and operates regulated electric, natural gas and water distribution businesses. Through its Liberty operating brands, the company provides essential utility services to residential, commercial and industrial customers in communities across the United States and Canada.

The company's regulated utility operations include electricity distribution and generation, natural gas distribution, and water and wastewater services.

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