Algonquin Power Utilities - Renewable Gains

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Algonquin Power & Utilities Corp. (AQN) is a renewable energy and utility company with over $15 billion of assets in Canada, the United States, Chile, and Bermuda.

Its Liberty Utilities and Liberty Power units provide regulated electricity, water distribution and wastewater collection, and natural gas utility services to more than one million customer connections, primarily in North America.

Algonquin Power’s growing portfolio of clean, renewable wind, solar, hydro, and thermal power generation facilities represents more than three gigawatts of renewable generation capacity in operation and under construction.

The company’s mission is to deliver clean water and energy solutions to its customers, so its focus is squarely on sustainable, low-carbon, sustainable initiatives worldwide.

The company’s operations are split into two groups. Its Regulated Services Group includes its utilities in Canada and the U.S. operating under the Liberty name. Its Renewable Energy Group is responsible for its international portfolio of renewable energy production, and its U.S./Canada generating assets.

In fiscal 2019, roughly 60% of operating profits came from the Regulated Services Group. This business mix is interesting to us as growth investors as it provides opportunities for growth but also for the stable base of revenues and earnings provided as a regulated utility.

The company was incorporated in 1988 and is headquartered in Oakville, Canada. Its stock was recently added to the S&P Global Clean Energy Index.

Algonquin Power’s revenues have grown at an annualized 22.6% since 2011, with earnings per share somewhat higher (though less consistent) at 24.9% average per year. In the first quarter ended March 31, Algonquin Power reported revenues of $634.5 million, an increase of 36.5% over the prior year quarter. EPS were $0.02 compared to -$0.13 in Q1 2020, while adjusted EPS were $0.20, up 5.0%.

The company’s wind operations in Texas were affected by the February 2021 winter storm, and the disruption in its operations forced the company to purchase energy in the elevated commodities markets to satisfy its contracts. Management believes that the incremental costs will be substantially recovered.

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