Algonquin Power & Utilities Corp. Announces 2020 Fourth Quarter and Full Year Financial Results - 04.03.21 - News

OAKVILLE, ON, March 4, 2021

"We are pleased to report solid fourth quarter and full year 2020 results, which, despite the year's challenges due to the COVID-19 pandemic, reflect year-over-year growth in all of our key financial metrics and several exciting new growth initiatives," said Arun Banskota, President and Chief Executive Officer of AQN. "We remain confident that our robust $9.4 billion capital expenditure plan from 2021 through 2025 will continue to drive further growth in earnings and cash flows."

Fourth Quarter and Full Year Financial Highlights

Annual revenues of $1,677.1 million, an increase of 3%;
Annual Adjusted EBITDA¹ of $869.5 million, an increase of 4%;
Annual Adjusted Net Earnings¹ of $365.8 million, an increase of 14%;
Annual Adjusted Net Earnings¹ per share of $0.64, an increase of 2%;
Fourth quarter revenues of $492.4 million, an increase of 12%;
Fourth quarter Adjusted EBITDA¹ of $253.1 million, an increase of 10%;
Fourth quarter Adjusted Net Earnings¹ of $127.0 million, an increase of 23%; and,
Fourth quarter Adjusted Net Earnings¹ per share of $0.21, an increase of 5%, in each case on a year-over-year basis.

Key Financial Information

All amounts in U.S. $ millions except per share
information

Three months ended December
31

Twelve months ended
December 31

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2020

2019

Change

2020

2019

Change

Revenue

$

492.4

440.0

12%

1,677.1

1,626.4

3%

Net earnings attributable to shareholders

504.2

172.1

193%

782.5

530.9

47%

Per share

0.84

0.34

147%

1.38

1.05

31%

Cash provided by operating activities

174.0

167.5

4%

505.2

611.3

(17)%

Adjusted Net Earnings¹

127.0

103.6

23%

365.8

321.3

14%

Per share

0.21

0.20

5%

0.64

0.63

2%

Adjusted EBITDA¹

253.1

230.4

10%

869.5

838.6

4%

Adjusted Funds from Operations¹

179.3

144.1

24%

600.2

566.2

6%

Dividends per share

0.1551

0.1410

10%

0.6063

0.5512

10%

1.	Please refer to "Non-GAAP Financial Measures" at the end of this document for further details

2020 Growth Highlights

Surpasses Milestone of Over One Million Customer Connections - During the fourth quarter of 2020, the Company announced the completion of two new regulated utility acquisitions. Empresa de Servicios Sanitarios de Los Lagos S.A. ("ESSAL") is a vertically integrated, regional water and wastewater provider with approximately 239,000 customer connections in Southern Chile, of which AQN initially acquired approximately 94% of outstanding shares, and currently indirectly owns approximately 64% of the outstanding shares. Also during the fourth quarter, the Company successfully completed its acquisition of Ascendant Group Limited, which, through its major subsidiary, Bermuda Electric Light Company Limited (BELCO), is the sole electric utility in Bermuda, providing regulated electrical generation, transmission and distribution services to approximately 36,000 customer connections. With the completion of these two acquisitions, AQN's Regulated Services Group has expanded and diversified its geographical footprint into new high quality jurisdictions, and now serves more than one million customer connections.
C&I Customers Strategy Proving Out - Over the course of 2020, the Company announced several partnerships with C&I customers to green their fleets and help them achieve their corporate targets for cleaner energy, including a framework agreement with Chevron for the potential development of over 500 MW of renewable energy facilities. AQN has successfully partnered with other developers on early-stage projects, leveraging its expertise in financing, development and construction to advance these projects to commercial operation. Facilities either announced or that reached full or partial commercial operations in 2020 with C&I energy buyers include Maverick Creek Wind, Altavista Solar¹ and Carvers Creek Solar.
Largest Construction Program in Company History - AQN had approximately 1,600 MW of renewable energy projects under construction in 2020 between the Renewable Energy Group and Regulated Services Group. This was the largest construction program in the Company's history and the new projects are expected to approximately double AQN's renewables portfolio. Of this 1,600 MW, Great Bay Solar, Sugar Creek Wind and North Fork Ridge Wind achieved full commercial operations ("COD") in 2020. Maverick Creek Wind, Altavista Solar¹, Neosho Ridge Wind and Kings Point Wind are on track to achieve COD in the first half of 2021.
Acquisition of Majority Interest in Coastal Wind Portfolio - On November 20, 2020, the Renewable Energy Group entered into an agreement to acquire a 51% interest in a portfolio of four wind facilities (the "Texas Coastal Wind Facilities"). The Texas Coastal Wind Facilities, located in the coastal region of south Texas, are expected to have an aggregate capacity of 861 MW. Three wind facilities (Stella, Cranell and East Raymond), representing 621 MW of the total portfolio, have already achieved COD, with the fourth wind facility (West Raymond) expected to achieve COD in March 2021. The acquisitions of the three completed wind facilities have closed, with the acquisition of the West Raymond Wind Facility expected to close after achieving COD.

_______________________________
¹Power Purchase Agreement with Facebook.

2020 Operational Excellence Highlights

COVID-19 Response Demonstrates Continued Resiliency and Cost Containment Strategies - The Company has demonstrated ongoing resiliency throughout the COVID-19 pandemic. Delivery of essential services has remained uninterrupted, with the health, safety and well-being of employees, customers and communities in which the Company operates a top priority. The decreased customer demand impacted AQN's 2020 Adjusted Net EPS by $0.02. In response to COVID-19 as well as the unfavorable weather variance experienced in the first quarter of 2020, AQN implemented cost containment strategies that achieved approximately $24.0 million in savings for the year without impacting customer safety and reliability.
Integration of New Brunswick Gas and St. Lawrence Gas - 2020 marked the first full year of contribution from New Brunswick Gas and St. Lawrence Gas to the Company's utility portfolio, with both utilities being successfully integrated into AQN's operations over the course of 2020.

2020 Sustainability Highlights

Update on Enhanced ESG Reporting Goals - In the fourth quarter of 2020, the Company released its 2020 Sustainability Report with enhanced ESG disclosure to provide transparency and a higher level of detail around priority ESG issues for the Company's stakeholders. During the quarter, the Company also released its first ever climate assessment report in response to guidelines established by the Financial Stability Board's Task Force on Climate-Related Financial Disclosures.
Issuance of Green Senior Unsecured Notes - On September 23, 2020, the Regulated Services Group, through its affiliate Liberty Utilities Finance GP1, completed an inaugural offering into the U.S. 144A market with the issuance of $600 million of green senior unsecured notes bearing interest at 2.05% and having a maturity date of September 15, 2030. The net proceeds from the offering are being used to finance or refinance wind energy projects and other eligible green investments.
Closure of Asbury 200 MW Coal Plant - In March 2020, the Regulated Services Group decommissioned the Company's last owned and operated coal plant, which is expected to reduce annual CO2 emissions by 905,000 metric tons. To replace this generation capacity, the Company undertook the build out of 600 MW of three new wind generation assets in the U.S. Midwest, of which approximately 150 MW (North Fork Ridge) achieved COD in 2020, with approximately 450 MW (Neosho Ridge and Kings Point) anticipated to achieve COD in the first half of 2021.

Subsequent Event

Midwest Extreme Weather Event

In February 2021, the Company's operations were impacted by extreme winter storm conditions experienced in Texas and parts of the central U.S. (the "Midwest Extreme Weather Event").

Despite the extreme weather conditions, the Regulated Services Group's mid-west electric and gas operations performed well through the extreme conditions delivering new system peaks. In line with other Southwest Power Pool utilities, limited and short lived load shedding was required to meet broader system requirements. The Company incurred incremental commodity costs during a period of record pricing and elevated consumption. The incremental commodity costs incurred by the Company are expected to be substantially recovered from customers over a timeframe to be agreed with its regulators. However, the Company expects it will have sufficient liquidity to fund these costs in the interim.

The Midwest Extreme Weather Event caused ice and freezing conditions, which restricted electricity production at certain of the Renewable Energy Group's Texas-based wind facilities. The Company operates two facilities in Texas: the Senate Wind Facility in north-east Texas and the Maverick Creek Wind Facility in central Texas. The Company also has a 51% interest in the Stella, Cranell and East Raymond Texas Coastal Wind Facilities.

The most significantly impacted facility was the Senate Wind Facility, which has a financial hedge in place that imposes an obligation to deliver energy. Due to icing, the facility was unable to produce the required energy to satisfy the quantities required to be delivered under the hedge, and was required to settle in the market at elevated pricing. The impacts to the Company's other Texas wind facilities were marginal. The Maverick Creek Wind Facility has two unit-contingent power purchase agreements and as a result was not negatively subjected to the elevated market pricing. The Texas Coastal Wind Facilities experienced marginal impacts of the weather in aggregate.

The Company continues to assess the aggregate net impact of these unusual weather conditions on its business, operations, results and financial performance, with the ultimate impact being affected by a number of factors, including any government, regulatory or system operator action, and the outcomes of applicable disputes or proceedings. Based on available information, the unfavorable financial impact of the Midwest Extreme Weather Event on the Company's 2021 consolidated operating income is currently estimated to be between $45 million and $55 million, prior to potential mitigating factors.

Outlook

Estimated 2021 Adjusted Net Earnings Per Share - The Company estimates that its Adjusted Net Earnings per share will be within a range of $0.71-$0.76 for the 2021 fiscal year (see "Non-GAAP Financial Measures"). This Adjusted Net Earnings per share estimate does not include the impacts on the Senate Wind Facility associated with the market disruption related to the Midwest Extreme Weather Event, which is estimated to negatively impact the Company's 2021 basic net earnings per share by approximately $0.06 before any potential recoveries. The Company views the financial impacts of the Midwest Extreme Weather Event on the Senate Wind Facility as unusual and not indicative of the on-going operating performance of such facility or the Company. These estimates are based on, and should be read in conjunction with, the assumptions set out under "Outlook – Estimated 2021 Adjusted Net Earnings Per Share" and "Forward-Looking Statements and Forward-Looking Information" in AQN's Management Discussion & Analysis for the three and twelve months ended December 31, 2020 (the "Annual MD&A"), which will be available on SEDAR and EDGAR. Please also refer to "Caution Regarding Forward-Looking Information" and "Non-GAAP Financial Measures" at the end of this document.
Identified $9.4 Billion Pipeline - At its annual Analyst and Investor Day on December 14, 2020, the Company provided an update on its $9.4 billion capital expenditure plan from 2021 through the end of 2025. Approximately 70% of the capital plan is expected to be invested by the Regulated Services Group and approximately 30% is expected to be invested by the Renewable Energy Group.

AQN will file its Annual Consolidated Financial Statements, Annual MD&A and Annual Information Form, each for the year ended December 31, 2020, with the applicable Canadian securities regulatory authorities. AQN will also file its Form 40-F for the year ended December 31, 2020 with the U.S. Securities and Exchange Commission. Copies of these documents and other supplemental information on AQN is made available on its web site at www.AlgonquinPowerandUtilities.com and in its corporate filings on SEDAR at www.sedar.com (for Canadian filings) and EDGAR at www.sec.gov (for U.S. filings). A hard copy of AQN's Annual Consolidated Financial Statements for the year ended December 31, 2020 can be obtained free of charge upon request to InvestorRelations@APUCorp.com.

Earnings Conference Call

AQN will hold an earnings conference call at 10:00 a.m. eastern time on Friday, March 5, 2021 hosted by President and Chief Executive Officer, Arun Banskota and Chief Financial Officer, Arthur Kacprzak.

Date:

Friday, March 5, 2021

Time:

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