August 12, 2016: Algonquin Power & Utilities Corp. (AQN) announced another solid quarter early in morning, before market opened. Algonquin reported what consensus anticipated being a solid Q2 2016. The adjusted EPS of $0.10 remained marginally ahead of $0.09 street estimate as its core utilities performed far better than expected, which was partially offset by weaker renewable generation. $99.2 million of adjusted EBITDA for the quarter remained close to 45% increase over the same quarter last year.
AQN continues to make progress in improving returns on its existing utilities, making headway the empire regulatory process and developing new renewable power projects, which is considerably constructive. Additionally, 75 MW Amherst Island Wind Project (of $273 million) has finally reached final investment decision. Progress continues to be made on the Great Bay Solar and Val Eo Wind projects with the facilities expected to enter service in 2017.
The $426m Odell Wind project lately entered service and AQN has declared its intention to increase its ownership up to 100% by exercising an option for the 50% held by its JV partner. It is expected that company will continue to be successful in securing renewable projects and that this will be an engine of growth for the company. During the conference call; management also informed that they remain open to the idea of monetizing few of their renewable assets and recycling the capital into their pipeline of projects, considering recent valuations in the market. Company has filed a non‐unanimous stipulation agreement between itself and the Staff of the Missouri Public Service Commission. There is likely any material concerns with the conditions in the agreement and see it as paving the way for Missouri regulatory approval. In Arkansas, a stipulation agreement has been filed with the regulator and a decision is expected in second half of 2016. In Kansas, a hearing on its application is scheduled for November 30. AQN expects the acquisition closing early by 2017. Street experts have increased target price by $1 to $14 and it remains one of our preferred utility names.
APUC is a $5 billion North American diversified generation, transmission and distribution utility. The distribution business group provides rate regulated water, electricity and natural gas utility services to over 560,000 customers in the United States. APUC delivers continuing growth through an expanding pipeline of renewable energy development projects, organic growth within its regulated distribution and transmission businesses, and the pursuit of accretive acquisitions.