Algonquin Power & Utilities Q4 Earnings Call Highlights

Algonquin Power & Utilities (NYSE:AQN) executives told investors the company made “substantial operational and regulatory progress” in 2025, strengthened its balance sheet, and exceeded the top end of its full-year earnings guidance, as management continues to reposition the business toward a “premium pure-play regulated utility.”

2025 results and operational progress

CEO Rod West described 2025 as a “turning point,” pointing to improvements in cost discipline, regulatory execution, and earned returns. The company reported full-year net earnings per share of $0.27 and adjusted net EPS of $0.34, which management said was $0.02 above the high end of its guidance range.

West said operating expense as a percentage of gross revenue improved to roughly 36% in 2025 from approximately 38% in 2024, while earned return on equity (ROE) increased to about 6.8% from 5.5% a year earlier. He also highlighted the use of proceeds from the renewables sale (excluding hydro assets) to retire about $1.6 billion of debt, which management said improved the company’s financial flexibility.

Financial drivers: rates, interest savings, and portfolio changes

New CFO Robert Stefani, who joined in early January, detailed a significant year-over-year improvement in reported profitability. Algonquin posted full-year GAAP net earnings of $208 million, compared with $54.8 million in 2024. Adjusted net earnings rose to $258.8 million from $221.6 million, a roughly 17% increase. In the fourth quarter, GAAP net earnings were $29.4 million versus a net loss of $110.2 million in the prior-year quarter.

For Q4, adjusted net EPS was $0.06, flat year over year. Stefani attributed higher adjusted net earnings primarily to $10.3 million from new utility rates implemented across multiple systems, including BELCO, Midstates Gas, Peach State Gas, Missouri Water, New York Water, and several Arizona water and sewer systems. He also cited a $17.9 million reduction in interest expense tied to debt paydowns funded by proceeds from both the renewable energy business divestiture and the company’s prior sale of its ownership stake in Atlantica.

Management also noted several offsetting items in the quarter, including the removal of $10.9 million in Atlantica dividend income and a $7.3 million write-off related to a discontinued CalPeco solar project. On the CalPeco write-off, West said the project was in Nevada and intended to supply power in the CalPeco system, but Algonquin decided not to proceed based on project economics and its assessment of the ability to earn a fair return. He added the company did not treat the write-off as a one-time adjustment, stating that, as a utility, projects may occasionally be abandoned and the company wanted to reflect it within operating results.

On a full-year basis, adjusted net EPS increased to $0.34 from $0.30 in 2024, which Stefani said reflected:

• $41.6 million of benefit from new utility rates implemented across several systems
• $13.9 million of favorable weather, predominantly at Empire Electric
• $11.9 million of depreciation deferrals
• $81.1 million lower interest expense from debt paydowns

Those benefits were partly offset by the targeted customer relief initiative at Empire, the CalPeco solar project discontinuation, and the removal of $76.3 million in dividend income related to the Atlantica stake sale, which Stefani called the single largest headwind of the year. He also noted a higher effective tax rate and common share dilution tied to the settlement of purchase contracts in 2024, when approximately 77 million common shares were issued.

Regulatory activity and rate case updates

Management emphasized a more proactive regulatory strategy, with West saying the company is seeing the benefits of earlier stakeholder engagement and “more pragmatic filings.” Algonquin highlighted several recent proceedings:

• Missouri (Empire Electric): The Missouri Public Service Commission approved a settlement in January authorizing a $97 million revenue increase after the company meets customer metric performance requirements for three consecutive months, plus a potential additional $13 million annually if further performance requirements are met starting in the second half of 2026.
• California (CalPeco Electric): The company received a proposed decision adopting a settlement agreement providing for a $48.6 million revenue increase retroactive to January 2025, with an allowed ROE of 9.75% and an equity ratio of 52.5%. A final decision is pending.
• Massachusetts (New England Natural Gas): A settlement calls for a $45.3 million revenue adjustment, including approximately $17.9 million of non-Gas System Enhancement Plan revenue, with two additional step-ups in rate base in subsequent years. The settlement includes an allowed ROE of 9.3%, an equity ratio of about 52.9%, and a rate case stay-out through Oct. 31, 2029. Management said it requested a commission order by the end of the month.
• Arizona (Litchfield Park Water & Sewer): A proposed settlement filed with Arizona Corporation Commission staff calls for a $15.3 million revenue adjustment and an allowed ROE of 9.75% with a 54% equity ratio. Hearings are scheduled for late March.
• Kansas (Empire Electric): A rate case filed in December seeks a $15.8 million base rate adjustment, representing a net requested increase of $12.5 million with a three-year phase-in.

On Missouri’s customer metrics tied to rate implementation, West said the requirements involve areas such as billing accuracy and timeliness and reflect end-to-end processes the company has been working to improve. He said the company believes it has satisfied the metrics and is validating performance with the commission, describing this as a condition precedent to implementing rates under the settlement.

Management also addressed the California backdrop, including wildfire risk at CalPeco. West said the company is working to secure approval of wildfire mitigation plans and called the environment “complex,” adding that Algonquin is engaged with stakeholders from the state level to Washington, D.C., while focusing on reducing operational and financial risk and managing associated costs.

Capital plan, balance sheet, and updated guidance

Algonquin updated its three-year regulated utility capital expenditure outlook to approximately $3.2 billion from 2026 through 2028, including about $800 million in 2026, $1.1 billion in 2027, and $1.3 billion in 2028. Stefani said the company expects internal funding—including cash flow and existing cash—to cover roughly 65% to 70% of capital needs. He added that 2025 capital expenditures totaled about $604 million, down from about $757 million in 2024, primarily because investment in an integrated customer solution platform was largely completed in 2024.

Year-end 2025 rate base was approximately $8.2 billion, up from $7.9 billion at year-end 2024. Management projected rate base of about $8.5 billion in 2026, $9.0 billion in 2027, and about $9.7 billion by year-end 2028, which it said equates to a nearly 6% compound annual growth rate from 2025 through 2028.

On financing and leverage, Stefani said total debt stood at about $6.5 billion and that the company maintained investment-grade credit ratings with stable outlooks from S&P and Fitch, while Moody’s rated operating subsidiary Liberty Utilities at Baa2 with a stable outlook. He said Algonquin expects no equity issuance through 2027, plans to refinance unsecured notes due June 2026, and expects to pay an annualized dividend of $0.26 per share, subject to board approval.

Looking ahead, Algonquin reaffirmed 2026 adjusted net EPS guidance of $0.35 to $0.37. However, the company revised its 2027 adjusted net EPS outlook to $0.38 to $0.42, reflecting an updated assumption that the 2027 effective tax rate will be in the mid-to-high 20% range rather than the previously anticipated low-to-mid 20% range. Stefani said the tax-rate change reduced EPS by just over $0.03, and that the company is evaluating tax optimization strategies but expects most benefits, if pursued, to come after 2027. West also said the company continues to analyze strategic questions, including re-domiciling, but said there were no announcements to make.

About Algonquin Power & Utilities (NYSE:AQN)

Algonquin Power & Utilities Corp (NYSE: AQN) is a diversified generation, transmission and distribution utility company headquartered in Oakville, Ontario. Established in 1988, the firm operates through two primary business segments: Regulated Utilities and Renewable Energy. Its Regulated Utilities segment comprises electric, natural gas and water distribution networks serving residential, commercial and industrial customers across North America, while its Renewable Energy portfolio includes hydroelectric, solar, wind and thermal generation facilities.

The company’s renewable energy assets span multiple jurisdictions in Canada and the United States, reflecting its strategy to expand clean power capacity in regions with supportive regulatory frameworks.