Algonquin Power & Utilities Corp.

Algonquin Power Q3 EPS $0.16 vs. estimates of $0.13

Financial Highlights

-Revenue of $443.3 million, up 100% from Q3 2016.

-Adjusted FFO of $127 million, up 108% from Q3 2016.

-Adj. EBITDA of $197.5 million, up 116% from Q3 2016.

-Adjusted net earnings per share of $0.16, up 78% from Q3 2016.

-Dividends per share of $0.1480, up 7% from Q3 2016.

-Bought deal offering of 43 470 000 shares at $13.25 per share, to finance the acquisition of Abengoa’s 25% ownership stake in Atlantica.

Key Metrics

-Dividend growth 5-year average: 16.1%

-Revenue growth 5-year average: 31.70%

-EPS growth 5-year average: 17.08%
Highlights from the Conference Call

-Management highlighted their expansion through the Atlantica deal for global growth.

-Organic growth continues to be an important factor, a positive as management shouldn’t rely on acquisitions for growth.

-70% of Algonquin’s business is regulated and therefore unaffected by tax reform in the US.

-Of the remaining 30%, 2/3 of Algonquin’s business operates in the US and will see a slight benefit from tax reform.

Recommendation: Buy

-Algonquin Power operates in the stable utilities sector and provides exceptional growth considering they operate in a heavily regulated business environment.

-The Atlantica deal is instantly accretive which brings earnings, cash flow and diversification.

-The equity offering shouldn’t worry investors, as issuing more debt can be problematic as interest rates begin to rise.

-Global shifts towards renewable energy are powerful tailwinds that will benefit Algonquin both in the short and long-run.

-Investors can hold both Algonquin Power and Fortis, combining large and medium cap utilities in their portfolio providing dividend growth and stability.

Disclosure

I, Jared Flomen, do own shares in Algonquin Power & Utilities.

Please consult a financial advisor before making investment decisions. This report represents my views, not actionable advice.