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Avista Corp (AVA) Q1 2024 Earnings Call Transcript Highlights: Strong Performance and Strategic ...

GuruFocus Research
·4 min read

  • Earnings Per Share (EPS): Q1 2024 EPS was $0.91 per diluted share, up from $0.73 in Q1 2023.

  • Capital Expenditures: $117 million at Avista Utilities in Q1 2024; total planned for 2024 is $500 million.

  • Utility Margin: Increased due to positive impact from general rate cases.

  • Liquidity: $198 million available under committed line of credit as of March 31, 2024.

  • Debt Issuance: Remarketed $83.7 million of tax-exempt bonds at 3.875% in April 2024.

  • Common Stock Issuance: Approximately $70 million planned for 2024 to fund capital spending.

  • Earnings Guidance for 2024: Consolidated EPS expected to be between $2.36 and $2.56.

  • Impact of ERM: Negative $0.07 per diluted share expected for 2024.

  • Return on Equity: Expected at 8.1% for Avista Utilities in 2024.

Release Date: May 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Avista Corp reported an increase in consolidated earnings for Q1 2024 to $0.91 per diluted share, up from $0.73 in Q1 2023.

  • The company has been recognized by Ethisphere as one of the world's most ethical companies for the fifth consecutive year.

  • Avista Corp is undertaking a significant modernization project at the Post Falls dam, with an estimated investment of $225 million over five years, enhancing energy efficiency and reliability.

  • The company's utility margin increased due to positive impacts from general rate cases, contributing to higher earnings in Q1 2024 compared to Q1 2023.

  • Avista Corp confirmed its earnings guidance for 2024, projecting a consolidated range of $2.36 to $2.56 per diluted share, indicating stable financial expectations.

Negative Points

  • The Energy Recovery Mechanism (ERM) in Washington had a negative impact on Avista Corp's first-quarter results, resulting in a $6 million pre-tax expense.

  • Hydro conditions, which were anticipated to be below normal, have further deteriorated, negatively impacting the company's projections for 2024.

  • Avista Corp faces regulatory challenges, including the need to adjust customer rates and the impact of ongoing general rate cases in multiple states.

  • The company expects unrecovered structural costs and regulatory timing lag to reduce the return on equity by 70 basis points in 2024.

  • Extreme cold weather in the Pacific Northwest during Q1 significantly increased demand, highlighting challenges in resource adequacy and the need for accelerated generation capacity.

Q & A Highlights

Q: Can you provide an overview of Avista's financial results for the first quarter of 2024? A: (Dennis Vermillion - CEO) Our consolidated earnings for the first quarter of 2024 were $0.91 per diluted share compared to $0.73 for the first quarter of 2023. Our earnings are in line with our expectations, and we are well positioned to meet our full-year earnings targets.

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Q: What major projects did Avista undertake in the first quarter of 2024? A: (Dennis Vermillion - CEO) We began the modernization of our Post Falls dam, with an estimated spend of $225 million over five years. This project aims to replace aging equipment with more modern, energy-efficient designs and has received a $5 million grant from the US Department of Energy.

Q: How did the extreme weather in January impact Avista's operations? A: (Heather Rosentrater - President, COO) The extreme cold in January led to higher than expected demand, impacting our first-quarter operations. This has prompted us to adjust our resource planning to ensure adequate capacity and reliability in the face of increasing electrification and the transition to clean energy.

Q: What steps is Avista taking in terms of wildfire risk mitigation? A: (Heather Rosentrater - President, COO) We are actively enhancing our wildfire mitigation efforts, planning to spend about $55 million in 2024. Our initiatives include vegetation management, upgrading our transmission system to steel, and implementing grid hardening measures like fire-resistant pole wraps and undergrounding.

Q: Could you discuss the financial performance and expectations for Avista Utilities and other segments? A: (Kevin Christie - CFO) Avista Utilities saw an increase in earnings in Q1 2024, driven by positive impacts from general rate cases. We expect Avista Utilities to contribute $2.23 to $2.39 per diluted share for the full year. Our other businesses are projected to contribute $0.04 to $0.06 per diluted share.

Q: What are Avista's capital expenditure plans and funding strategies for 2024? A: (Kevin Christie - CFO) We plan to invest $500 million in capital expenditures at Avista Utilities and an additional $32 million across other segments. To support this, we expect to issue approximately $70 million of common stock throughout the year and utilize improved cash flows from operations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.