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The call emphasized a clear operational turnaround and balance-sheet strengthening: solid year-over-year adjusted earnings growth (≈17%), adjusted EPS up ~13%, meaningful debt paydown (~$1.6B), large interest expense savings (~$81M Y/Y), improved earned ROE (5.5% → 6.8%), constructive multi-jurisdictional rate-case settlements, and a sizeable regulated capex plan to drive organic rate base growth. Key negatives include a higher-than-expected effective tax rate for 2027 (mid–high 20s) that trims near-term EPS (~$0.03), loss of Atlantica dividend income (~$76M), a $7.3M project write-off, share dilution from prior settlements, and remaining timing/implementation risk on certain rate cases and California wildfire/regulatory exposure. Overall, the positive operational, regulatory, and balance-sheet developments materially outweigh the headwinds, while management retains transparency on remaining execution and tax items.
Algonquin reaffirmed 2026 adjusted net EPS guidance of $0.35–$0.37 and revised 2027 adjusted net EPS to $0.38–$0.42 (the change largely reflecting an expected 2027 effective tax rate in the mid‑ to high‑20s% versus prior low‑ to mid‑20s, costing roughly $0.03/share), while outlining a $3.2 billion regulated utility capex plan for 2026–2028 ($800M in 2026, $1.1B in 2027 and $1.3B in 2028) that management expects to fund ~65%–70% internally; year‑end rate base is targeted to grow from ~$8.2B (2025) to ~$8.5B (2026), ~$9.0B (2027) and ~$9.7B (2028), a ~6% CAGR, total debt sits near $6.5B after using ~ $1.6B of sale proceeds to pay down debt, the 2026 APUC financing plan is ~ $1.6B (including ~$1.45B upstream from LUCO) with ~$1.15B of LUCO bond issuance expected to refinance a June 2026 maturity, management expects no equity issuance through 2027, plans to maintain investment‑grade ratings and targets an annualized dividend of $0.26/share (subject to Board approval), and reiterated confidence in executing the drivers behind the guidance despite some tax‑timing and gas operational normalization risks.
Full-year GAAP net earnings of $208 million (vs. $54.8 million in 2024) and full-year adjusted net earnings of $258.8 million, up ~17% from $221.6 million in 2024. Full-year adjusted net EPS was $0.34, up from $0.30 in 2024 (≈13% growth) and exceeded the top end of guidance by $0.02.
Fourth-quarter GAAP net earnings of $29.4 million compared to a net loss of $110.2 million in Q4 2024. Fourth-quarter adjusted net EPS was $0.06, flat year-over-year, reflecting stability after prior-year weakness.
Operating expense as a percentage of gross revenue improved from approximately 38% in 2024 to roughly 36% in 2025 (≈2 percentage point improvement), reflecting realized operating expense savings and 'bending the cost curve.'
Earned return on equity improved from 5.5% in 2024 to approximately 6.8% in 2025 (≈+1.3 percentage points), demonstrating progress toward closing the gap with authorized returns.
Used about $1.6 billion of net proceeds from sale of the renewables business (ex-hydro) to retire debt; total debt approximately $6.5 billion. Full-year interest expense declined by $81.1 million (with a $17.9 million reduction in Q4) due to debt paydowns. Liquidity reported at over $1.4 billion and investment-grade ratings with stable outlooks from S&P and Fitch.
Multiple positive regulatory outcomes: Missouri Empire Electric settlement approved authorizing $97 million in revenue (plus potential $13 million contingent); CalPeco proposed decision for $48.6 million revenue increase (allowed ROE 9.75%); New England Natural Gas settlement $45.3 million (allowed ROE 9.3%, stay-out to Oct 31, 2029); Litchfield Park Water & Sewer proposed settlement $15.3 million (allowed ROE 9.75%). These settlements advance recovery and rate base growth.
Year-end 2025 rate base ~ $8.2 billion (up from $7.9 billion in 2024). Expected rate base: ~$8.5B (2026), ~$9.0B (2027), ~$9.7B (2028) — ~6% CAGR 2025–2028. Regulated utility capex plan of ~$3.2 billion for 2026–2028 (≈$800M in 2026, $1.1B in 2027, $1.3B in 2028), with ~65%–70% expected to be internally funded.
2026 adjusted net EPS reaffirmed at $0.35–$0.37; 2027 adjusted net EPS range updated to $0.38–$0.42 (reflecting tax-rate assumptions). Company expects no equity issuance through 2027 and plans to proactively refinance near-term maturities (June 2026 notes).
Hello, and welcome to the Algonquin Power & Utilities Corp. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I will now turn the conference over to Mr. Brian Chin, Vice President of Investor Relations. Please go ahead.\
Thank you, operator, and good morning, everyone. Thank you for joining us for our fourth quarter and full year 2025 earnings conference call. Joining me on the call today will be Rod West, Chief Executive Officer; and Rob Stefani, Chief Financial Officer, who will share prepared remarks. Other members of the management team are also available to answer your questions during the Q&A portion of the call today. To accompany today's earnings call, we have a supplemental webcast presentation available on our website, algonquinpower.com. Our financial statements and management discussion and analysis are also available on the website as well as on SEDAR+ and EDGAR. We would like to remind you that our discussion during the call will include certain forward-looking information and non-GAAP measures. Actual results could differ materially from any forecast or projection contained in such forward-looking information.
Additionally, all net earnings information to be discussed today is for continuing operations and is attributable to the common shareholders of Algonquin. Certain material factors and assumptions were applied in making the forecasts and projections reflected in forward-looking information. Please note and review the related disclaimers located on Slide 2 of our earnings call presentation at the Investor Relations section of our websi...