Avista Corp. (
NYSE: AVA) today announced financial
results for the first quarter of 2024. Net income and earnings per
diluted share for the first quarter of 2024 compared to the first
quarter of 2023 are presented in the table below (dollars in
thousands, except per-share data):
|
|
2024 |
|
|
2023 |
|
Net Income (Loss) by
Business Segment: |
|
|
|
|
|
|
Avista Utilities |
|
$ |
67,508 |
|
|
$ |
51,627 |
|
AEL&P |
|
|
3,911 |
|
|
|
4,042 |
|
Other |
|
|
76 |
|
|
|
(824 |
) |
Total net income |
|
$ |
71,495 |
|
|
$ |
54,845 |
|
Earnings (Loss) per
Diluted Share by Business Segment: |
|
|
|
|
|
|
Avista Utilities |
|
$ |
0.86 |
|
|
$ |
0.69 |
|
AEL&P |
|
|
0.05 |
|
|
|
0.05 |
|
Other |
|
|
— |
|
|
|
(0.01 |
) |
Total earnings per diluted share |
|
$ |
0.91 |
|
|
$ |
0.73 |
|
“I'm pleased with our solid start this year. Our earnings for
the first quarter are right in line with our expectations,
including the negative impact of the Energy Recovery Mechanism
(ERM). We are well positioned to meet our earnings targets for the
year. Our rate plan filing with the Washington commission in
January of this year seeks to alter the way in which power supply
costs are shared in Washington, which, if approved, would reduce
the volatility we continue to experience under the ERM," said
Avista CEO Dennis Vermillion.
"Our first quarter operations were impacted by the extreme cold
which took hold throughout the Pacific Northwest in mid-January,
highlighting the growing need for additional capacity in the
region. We’re taking the increase in demand into account as we
continue our integrated resource planning, and it may accelerate
our needs for generation to ensure that we have adequate resources
to serve our customers reliably into the future.
"Alaska Electric Light and Power Company's first quarter results
met our expectations, and we continue to be pleased with its
operating and financial performance," Vermillion added.
Non-GAAP Financial Measures
The tables below include electric and natural gas utility
margin, two financial measures that are considered “non-GAAP
financial measures.” The most directly comparable measure
calculated and presented in accordance with GAAP is utility
operating revenues.
The presentation of electric and natural gas utility margin is
intended to enhance the understanding of operating performance, as
it provides useful information to investors in their analysis of
how changes in loads (due to weather, economic or other
conditions), rates, supply costs and other factors impact our
results of operations. These measures are not intended to replace
utility operating revenues as determined in accordance with GAAP as
an indicator of operating performance.
The following table reconciles Avista Utilities' operating
revenues to utility margin (pre-tax and after-tax) for the three
months ended Mar. 31 (dollars in thousands):
|
|
OperatingRevenues |
|
|
ResourceCosts |
|
|
UtilityMargin(Pre-Tax) |
|
|
IncomeTaxes (a) |
|
|
UtilityMargin(Net of Tax) |
|
For the three months ended Mar. 31, 2024: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric |
|
$ |
366,894 |
|
|
$ |
166,354 |
|
|
$ |
200,540 |
|
|
$ |
42,113 |
|
|
$ |
158,427 |
|
Natural
Gas |
|
|
233,907 |
|
|
|
132,019 |
|
|
|
101,888 |
|
|
|
21,396 |
|
|
|
80,492 |
|
Less:
Intracompany |
|
|
(5,865 |
) |
|
|
(5,865 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
594,936 |
|
|
$ |
292,508 |
|
|
$ |
302,428 |
|
|
$ |
63,509 |
|
|
$ |
238,919 |
|
For the three months ended Mar. 31, 2023: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric |
|
$ |
257,297 |
|
|
$ |
84,744 |
|
|
$ |
172,553 |
|
|
$ |
36,236 |
|
|
$ |
136,317 |
|
Natural
Gas |
|
|
210,390 |
|
|
|
114,938 |
|
|
|
95,452 |
|
|
|
20,045 |
|
|
|
75,407 |
|
Less:
Intracompany |
|
|
(7,545 |
) |
|
|
(7,545 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
460,142 |
|
|
$ |
192,137 |
|
|
$ |
268,005 |
|
|
$ |
56,281 |
|
|
$ |
211,724 |
|
(a) |
Income taxes
for 2024 and 2023 were calculated using Avista Corp.'s federal
statutory tax rate of 21 percent. |
Analysis of 2024 Consolidated Earnings
The table below presents the change in net income and diluted
earnings per share for the first quarter of 2024 as compared to the
first quarter of 2023, as well as the various factors, shown on an
after-tax basis, that caused such change (dollars in thousands,
except per-share data):
|
|
NetIncome (a) |
|
|
Earningsper Share |
|
2023 consolidated earnings |
|
$ |
54,845 |
|
|
$ |
0.73 |
|
Changes
in net income and diluted earnings per share: |
|
|
|
|
|
|
Avista Utilities |
|
|
|
|
|
|
Electric utility margin (b) |
|
|
22,110 |
|
|
|
0.28 |
|
Natural gas utility margin (c) |
|
|
5,085 |
|
|
|
0.07 |
|
Other operating expenses (d) |
|
|
(4,682 |
) |
|
|
(0.06 |
) |
Depreciation and amortization (e) |
|
|
(2,070 |
) |
|
|
(0.03 |
) |
Interest expense |
|
|
(1,548 |
) |
|
|
(0.02 |
) |
Other |
|
|
562 |
|
|
|
0.01 |
|
Income tax at effective rate (f) |
|
|
(3,576 |
) |
|
|
(0.04 |
) |
Dilution on earnings |
|
n/a |
|
|
|
(0.04 |
) |
Total Avista Utilities |
|
|
15,881 |
|
|
|
0.17 |
|
AEL&P earnings |
|
|
(131 |
) |
|
|
— |
|
Other businesses earnings |
|
|
900 |
|
|
|
0.01 |
|
2024 consolidated earnings |
|
$ |
71,495 |
|
|
$ |
0.91 |
|
(a) |
The tax impact
of each line item was calculated using Avista Corp.'s federal
statutory tax rate of 21 percent. |
(b) |
Electric utility margin increased due to the effects of our
general rate cases. In 2024, we had a $6.0 million pre-tax expense
under the ERM, compared to a $7.6 million pre-tax expense in 2023.
The expense under the ERM in the first quarter of 2024 was
primarily due to below normal hydroelectric generation and the
impacts of high purchased power costs during a cold weather event
in mid-January. |
(c) |
Natural gas utility margin increased and was impacted primarily
by the effects of our general rate cases. |
(d) |
Other operating expenses increased year-to-date primarily due
to increased amortizations of previously deferred costs now
included in customer rates (resulting in no impact to net income),
as well as increased benefit costs. |
(e) |
Depreciation and amortization increased primarily due to
additions to utility plant. |
(f) |
Our effective tax rate in the first quarter of 2024 was
positive 3.1 percent compared to negative 13.7 percent in the prior
year. We expect the tax customer credits in 2024 to be
approximately half of the amounts recognized in 2023, due to a
tranche of these credits being returned to customers as of the
fourth quarter of 2023. |
Liquidity and Capital Resources
Liquidity
In April 2024, we closed the remarketing of $83.7 million of
long-term debt. The proceeds from the remarketing of these bonds
were used to pay borrowings under our committed line of credit. We
do not expect to issue additional long-term debt in 2024.
In 2024, we expect to issue approximately $70 million of common
stock, which will occur throughout the remainder of the year.
As of Mar. 31, 2024, we had $198.3 million of available
liquidity under the Avista Corp. committed line of credit, and
$36.0 million of available liquidity under our letter of credit
facility. AEL&P had $25.0 million available under their line of
credit as of Mar. 31, 2024.
Capital Expenditures and Other Investments
Avista Utilities' capital expenditures were $117.2 million and
AEL&P's capital expenditures were $1.5 million in the first
quarter of 2024.
We expect capital expenditures to total $500 million at Avista
Utilities and $21 million at AEL&P for 2024.
In addition, we expect to invest $11 million in 2024 at our
other businesses related to non-regulated investment opportunities
and economic development projects in our service territory.
2024 Earnings Guidance and Outlook
Avista Corp. is confirming its 2024 earnings guidance with a
consolidated range of $2.36 to $2.56 per diluted share.
We expect Avista Utilities to contribute within a range of $2.23
to $2.39 per diluted share in 2024. During the first quarter, there
were unfavorable changes in forward prices resulting in less
benefit from system optimization compared to that modeled at the
start of the year, in addition to further deterioration in
hydroelectric generation due to lower precipitation and snowpack
conditions. As a result, the impact of the ERM on earnings is
expected to be negative $0.07 per diluted share for the full year,
within the 90 percent customer/10 percent Company sharing band.
By the end of the second quarter, we expect to finalize an
agreement with a prospective large electric customer in our service
territory currently served in the wholesale markets. The expected
increase in utility margin would help to offset the forecast impact
of the ERM on results in 2024.
We expect AEL&P to contribute in the range of $0.09 to $0.11
per diluted share in 2024.
We expect our other businesses to contribute in the range of
$0.04 to $0.06 per diluted share in 2024.
We continue to expect long term earnings growth of 4 to 6
percent off of a 2025 base year. This assumes constructive outcomes
in our general rate cases.
Our guidance does not include the effect of unusual or
non-recurring items until the effects are probable. Various factors
could cause actual results to differ materially from our
expectations, including our earnings guidance. Please refer to our
10-K for 2023, and the cautionary statements below, for a full
discussion of these factors.
NOTE: We will host a conference call with
financial analysts and investors on May 1, 2024, at 10:30 a.m. ET
to discuss this news release. This call can be accessed on Avista’s
website at investor.avistacorp.com. You must register for the call
via the link at Avista’s website (investor.avistacorp.com) to
access the call-in details for the webcast. A replay of the webcast
will be available for one year on the Avista Corp. web site at
investor.avistacorp.com.
Avista Corp. is an energy company involved in the production,
transmission and distribution of energy as well as other
energy-related businesses. Avista Utilities is our operating
division that provides electric service to 418,000 customers and
natural gas to 382,000 customers. Our service territory covers
30,000 square miles in eastern Washington, northern Idaho and parts
of southern and eastern Oregon, with a population of 1.7 million.
AERC is an Avista subsidiary that, through its subsidiary
AEL&P, provides retail electric service to 18,000 customers in
the city and borough of Juneau, Alaska. Our stock is traded under
the ticker symbol “AVA”. For more information about Avista, please
visit www.avistacorp.com.
Avista Corp. and the Avista Corp. logo are trademarks of Avista
Corporation.
This news release contains forward-looking statements, including
statements regarding our current expectations for future financial
performance and cash flows, capital expenditures, financing plans,
our current plans or objectives for future operations and other
factors, which may affect the company in the future. Such
statements are subject to a variety of risks, uncertainties and
other factors, most of which are beyond our control and many of
which could have significant impact on our operations, results of
operations, financial condition or cash flows and could cause
actual results to differ materially from those anticipated in such
statements.
The following are among the important factors that could cause
actual results to differ materially from the forward-looking
statements:
Utility Regulatory Risk
state and federal regulatory decisions or related judicial
decisions that affect our ability to recover costs and earn a
reasonable return including, but not limited to, disallowance or
delay in the recovery of capital investments, operating costs,
commodity costs, the ordering of refunds to customers and
discretion over allowed return on investment; the loss of
regulatory accounting treatment, which could require the write-off
of regulatory assets and the loss of regulatory deferral and
recovery mechanisms;
Operational Risk
weather conditions, which affect both energy demand and electric
generating capability, including the impact of precipitation and
temperature on hydroelectric resources, the impact of wind patterns
on wind-generated power, weather-sensitive customer demand, and
similar impacts on supply and demand in the wholesale energy
markets; wildfires ignited, or allegedly ignited, by our equipment
or facilities could cause significant loss of life and property or
result in liability for resulting fire suppression costs and/or
damages, thereby causing serious operational, reputational and
financial harm; severe weather or natural disasters, including, but
not limited to, avalanches, wind storms, wildfires, earthquakes,
extreme temperature events, snow and ice storms that could disrupt
energy generation, transmission and distribution, as well as the
availability and costs of fuel, materials, equipment, supplies and
support services; political unrest and/or conflicts between foreign
nation-states, which could disrupt the global, national and local
economy, result in increases in operating and capital costs, impact
energy commodity prices or our ability to access energy resources,
create disruption in supply chains, disrupt, weaken or create
volatility in capital markets, and increase cyber and physical
security risks. In addition, any of these factors could negatively
impact our liquidity and limit our access to capital, among other
implications; explosions, fires, accidents, mechanical breakdowns
or other incidents that could impair assets and may disrupt
operations of our generation facilities, transmission, and electric
and natural gas distribution systems or other operations and may
require us to purchase replacement power or incur costs to repair
our facilities; interruptions in the delivery of natural gas by our
suppliers, including physical problems with pipelines themselves,
can disrupt our service of natural gas to our customers and/or
impair our ability to operate gas-fired electric generating
facilities; explosions, fires, accidents or other incidents arising
from or allegedly arising from our operations that could cause
injuries to the public or property damage; blackouts or disruptions
of interconnected transmission systems (the regional power grid);
terrorist attacks, cyberattacks or other malicious acts that could
disrupt or cause damage to our utility assets or to the national or
regional economy in general, including effects of terrorism,
cyberattacks, ransomware, or vandalism that damage or disrupt
information technology systems; pandemics, which could disrupt our
business, as well as the global, national and local economy,
resulting in a decline in customer demand, deterioration in the
creditworthiness of our customers, increases in operating and
capital costs, workforce shortages, losses or disruptions in our
workforce due to vaccine mandates, delays in capital projects,
disruption in supply chains, and disruption, weakness and
volatility in capital markets. In addition, any of these factors
could negatively impact our liquidity and limit our access to
capital, among other implications; work-force issues, including
changes in collective bargaining unit agreements, strikes, work
stoppages, the loss of key executives, availability of workers in a
variety of skill areas, and our ability to recruit and retain
employees; changes in the availability and price of purchased
power, fuel and natural gas, as well as transmission capacity;
increasing costs of insurance, more restrictive coverage terms and
our ability to obtain insurance; delays or changes in construction
costs, and/or our ability to obtain required permits and materials
for present or prospective facilities; increasing health care costs
and cost of health insurance provided to our employees and
retirees; increasing operating costs, including effects of
inflationary pressures; third party construction of buildings,
billboard signs, towers or other structures within our rights of
way, or placement of fuel containers within close proximity to our
transformers or other equipment, including overbuilding atop
natural gas distribution lines; the loss of key suppliers for
materials or services or other disruptions to the supply chain;
adverse impacts to our Alaska electric utility (AEL&P) that
could result from an extended outage of its hydroelectric
generating resources or their inability to deliver energy, due to
their lack of interconnectivity to other electrical grids and the
availability or cost of replacement power (diesel); changing river
or reservoir regulation or operations at hydroelectric facilities
not owned by us, which could impact our hydroelectric facilities
downstream;
Climate Change Risk
increasing frequency and intensity of severe weather or natural
disasters resulting from climate change, that could disrupt energy
generation, transmission and distribution, as well as the
availability and costs of fuel, materials, equipment, supplies and
support services; change in the use, availability or abundancy of
water resources and/or rights needed for operation of our
hydroelectric facilities, including impacts resulting from climate
change; changes in the long-term climate and weather could
materially affect, among other things, customer demand, the volume
and timing of streamflows required for hydroelectric generation,
costs of generation, transmission and distribution. Increased or
new risks may arise from severe weather or natural disasters,
including wildfires as well as their increased occurrence and
intensity related to changes in climate;
Cybersecurity Risk
cyberattacks on the operating systems used in the operation of
our electric generation, transmission and distribution facilities
and our natural gas distribution facilities, and cyberattacks on
such systems of other energy companies with which we are
interconnected, which could damage or destroy facilities or systems
or disrupt operations for extended periods of time and result in
the incurrence of liabilities and costs; cyberattacks on the
administrative systems used in the administration of our business,
including customer billing and customer service, accounting,
communications, compliance and other administrative functions, and
cyberattacks on such systems of our vendors and other companies
with which we do business, resulting in the disruption of business
operations, the release of private information and the incurrence
of liabilities and costs;
Technology Risk
changes in costs that impede our ability to implement new
information technology systems or to operate and maintain current
production technology; changes in technologies, possibly making
some of the current technology we utilize obsolete or introducing
new cyber security risks and other new risks inherent in the use,
by either us or our counterparties, of new technologies in the
developmental stage including, without limitation, generative
artificial intelligence; changes in the use, perception, or
regulation of generative artificial intelligence technologies,
which could limit our ability to utilize such technology, create
risk of enhanced regulatory scrutiny, generate uncertainty around
intellectual property ownership, licensing or use, or which could
otherwise result in risk of damage to our business, reputation or
financial results; insufficient technology skills, which could lead
to the inability to develop, modify or maintain our information
systems;
Strategic Risk
growth or decline of our customer base due to new uses for our
services or decline in existing services, including, but not
limited to, the effect of the trend toward distributed generation
at customer sites; the potential effects of negative publicity
regarding our business practices, whether true or not, which could
hurt our reputation and result in litigation or a decline in our
common stock price; changes in our strategic business plans, which
could be affected by any or all of the foregoing, including the
entry into new businesses and/or the exit from existing businesses
and the extent of our business development efforts where potential
future business is uncertain; wholesale and retail competition
including alternative energy sources, growth in customer-owned
power resource technologies that displace utility-supplied energy
or may be sold back to the utility, and alternative energy
suppliers and delivery arrangements; non-regulated activities may
increase earnings volatility and result in investment losses; the
risk of municipalization or other forms of service territory
reduction;
External Mandates Risk
changes in environmental laws, regulations, decisions and
policies, including, but not limited to, regulatory responses to
concerns regarding climate change, efforts to restore anadromous
fish in areas currently blocked by dams, more stringent
requirements related to air quality, water quality and waste
management, present and potential environmental remediation costs
and our compliance with these matters; the potential effects of
initiatives, legislation or administrative rulemaking at the
federal, state or local levels, including possible effects on our
generating resources, prohibitions or restrictions on new or
existing services, or restrictions on greenhouse gas emissions to
mitigate concerns over climate changes, including future
limitations on the usage and distribution of natural gas; political
pressures or regulatory practices that could constrain or place
additional cost burdens on our distribution systems through
accelerated adoption of distributed generation or electric-powered
transportation or on our energy supply sources, such as campaigns
to halt fossil fuel-fired power generation and opposition to other
thermal generation, wind turbines or hydroelectric facilities;
failure to identify changes in legislation, taxation and regulatory
issues that could be detrimental or beneficial to our overall
business; policy and/or legislative changes in various regulated
areas, including, but not limited to, environmental regulation,
healthcare regulations and import/export regulations;
Financial Risk
our ability to obtain financing through the issuance of debt
and/or equity securities and access to our funds held with
financial institutions, which could be affected by various factors
including our credit ratings, interest rates, other capital market
conditions and global economic conditions; changes in interest
rates that affect borrowing costs, variable interest rate borrowing
and the extent to which we recover interest costs through retail
rates collected from customers; volatility in energy commodity
markets that affect our ability to effectively hedge energy
commodity risks, including cash flow impacts and requirements for
collateral; volatility in the carbon emissions allowances market
that could result in increased compliance costs; changes in
actuarial assumptions, interest rates and the actual return on plan
assets for our pension and other postretirement benefit plans,
which could affect future funding obligations, pension and other
postretirement benefit expense and the related liabilities; the
outcome of legal proceedings and other contingencies; economic
conditions in our service areas, including the economy's effects on
customer demand for utility services; economic conditions
nationally may affect the valuation of our unregulated portfolio
companies; declining electricity demand related to customer energy
efficiency, conservation measures and/or increased distributed
generation and declining natural gas demand related to customer
energy efficiency, conservation measures and/or increased
electrification; industry and geographic concentrations which could
increase our exposure to credit risks due to counterparties,
suppliers and customers being similarly affected by changing
conditions; deterioration in the creditworthiness of our customers;
activist shareholders may result in additional costs and resources
required in response to activist actions;
Energy Commodity Risk
volatility and illiquidity in wholesale energy markets,
including exchanges, the availability of willing buyers and
sellers, changes in wholesale energy prices that could affect
operating income, cash requirements to purchase electricity and
natural gas, value received for wholesale sales, collateral
required of us by individual counterparties and/or exchanges in
wholesale energy transactions and credit risk from such
transactions, and the market value of derivative assets and
liabilities; default or nonperformance on the part of parties from
whom we purchase and/or sell capacity or energy; potential
environmental regulations or lawsuits affecting our ability to
utilize or resulting in the obsolescence of our power supply
resources; explosions, fires, accidents, pipeline ruptures or other
incidents that could limit energy supply to our facilities or our
surrounding territory, which could result in a shortage of
commodities in the market that could increase the cost of
replacement commodities from other sources;
Compliance Risk
changes in laws, regulations, decisions and policies at the
federal, state or local levels, which could materially impact both
our electric and gas operations and costs of operations; and the
ability to comply with the terms of the licenses and permits for
our hydroelectric or thermal generating facilities at
cost-effective levels.
For a further discussion of these factors and other important
factors, please refer to our Quarterly report on Form 10-Q for the
quarter ended Mar. 31, 2024. The forward-looking statements
contained in this news release speak only as of the date hereof. We
undertake no obligation to update any forward-looking statement or
statements to reflect events or circumstances that occur after the
date on which such statement is made or to reflect the occurrence
of unanticipated events. New risks, uncertainties and other factors
emerge from time to time, and it is not possible for management to
predict all of such factors, nor can it assess the impact of each
such factor on our business or the extent to which any such factor,
or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking
statement.
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Issued by: Avista Corporation
Contact:Media: Lena Funston (509) 495-8090
lena.funston@avistacorp.comInvestors: Stacey Wenz (509) 495-2046
stacey.wenz@avistacorp.comAvista 24/7 Media Access (509)
495-4174
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