OAKVILLE, ON, Feb. 19, 2021 /PRNewswire/ - This news release
constitutes a "designated news release" for the purposes of the
Company's prospectus supplement dated May
15, 2020 to its short form base shelf prospectus dated
April 3, 2020.
Algonquin Power & Utilities Corp. ("AQN" or the "Company")
(TSX: AQN) (NYSE: AQN) is updating investors on the ongoing
operating impacts of the extreme winter storm conditions that have
been experienced in Texas and
parts of central U.S.
"First and foremost, our thoughts are with the many people whose
lives have been disrupted by the extreme weather events," said
Arun Banskota, President and CEO of
Algonquin. "Since the events began, our teams have worked
tirelessly under very challenging conditions to keep our customers
and communities safe, and to maintain our system reliability and
resiliency. I would like to thank our employees for their
unwavering commitment and teamwork, and we look forward to resuming
normal operations as soon as possible."
Despite the extreme weather conditions, within the Regulated
Services Group, the Company's electric, gas and water networks have
performed strongly. Other than the need for short term load
shedding of a small minority of customers in line with the other
utilities within the Southwest Power Pool (SPP), the Regulated
Services Group has seen strong reliability of its networks during a
sustained period of increased consumption, including new winter
peaks for the electricity and gas systems located in the central
U.S.
The recent extreme winter weather has caused ice and freezing
conditions, which have restricted electricity production at certain
of the Renewable Energy Group's Texas-based wind facilities. The
Company's revenue portfolio at these facilities is comprised of a
mixture of financial hedges/swaps, long term unit-contingent power
purchase agreements, and market energy settlements. The financial
hedges/swaps impose an obligation to deliver energy and, as a
result of the production impacts caused by the recent weather
events, the relevant facilities may be required to settle at
elevated pricing in order to meet obligations. The Company's number
one priority is to safely return the turbines back online as soon
as weather conditions permit.
The Company continues to assess the aggregate net impact of
these unusual weather conditions on its business, operations,
results and financial performance. Based on available information,
the unfavourable financial impact of these weather
events on 2021 adjusted earnings before interest, taxes,
depreciation and amortization ("Adjusted EBITDA") is currently
estimated to be between $45 million
and $55 million (see "Non-GAAP
Financial Measures and Use of Non-GAAP Financial Measures" below)
which represents approximately 5% to 6% of 2019 Adjusted EBITDA.
The Company has asserted force majeure and is assessing other
potential mitigating options. The Company anticipates
providing a further update in connection with the release of its
financial results for the year ended December 31, 2020, which is scheduled to occur on
March 4, 2021.
About Algonquin Power & Utilities Corp.
Algonquin Power & Utilities Corp., parent company of
Liberty, is a diversified international generation, transmission,
and distribution utility with approximately $12 billion of total assets. Through its two
business groups, the Regulated Services Group and the Renewable
Energy Group, AQN is committed to providing safe, secure, reliable,
cost-effective, and sustainable energy and water solutions through
its portfolio of electric generation, transmission, and
distribution utility investments to over one million customer
connections, largely in the United
States and Canada. AQN is a global leader in renewable
energy through its portfolio of long-term contracted wind, solar,
and hydroelectric generating facilities owning, operating, and with
interests in over 2.5 GW of installed capacity.
AQN is committed to delivering growth and the pursuit of
operational excellence in a sustainable manner through an expanding
global pipeline of renewable energy and electric transmission
development projects, organic growth within its rate-regulated
generation, distribution, and transmission businesses, and the
pursuit of accretive acquisitions.
AQN's common shares, Series A preferred shares, and Series D
preferred shares are listed on the Toronto Stock Exchange under the
symbols AQN, AQN.PR.A, and AQN.PR.D, respectively. AQN's common
shares, Series 2018-A subordinated notes and Series 2019-A
subordinated notes are listed on the New York Stock Exchange under
the symbols AQN, AQNA and AQNB, respectively.
Visit AQN at www.algonquinpowerandutilities.com and
follow us on Twitter @AQN_Utilities.
All amounts are shown in United
States dollars ("U.S. $" or "$"), unless otherwise
noted.
Caution Regarding Forward-Looking Information
Certain statements included in this news release constitute
''forward-looking information'' within the meaning of applicable
securities laws in each of the provinces of Canada and the respective policies,
regulations and rules under such laws and ''forward-looking
statements'' within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995 (collectively, ''forward-looking
statements"). The words "will", "expects", "anticipates", "may" and
similar expressions are often intended to identify forward-looking
statements, although not all forward-looking statements contain
these identifying words. Specific forward-looking statements in
this news release include, but are not limited to, statements
regarding the estimated impact of the recent weather events on the
Company, its operations, its facilities and its financial results
(including Adjusted EBITDA), the Company's response to such weather
events, and the settlement of financial hedges/swaps at certain of
the Company's Texas wind
facilities. Since forward-looking statements relate to future
events and conditions, by their very nature they rely upon
assumptions and involve inherent risks and uncertainties. The
forward-looking statements herein are based on assumptions that
were applied in drawing a conclusion or making a forecast or
projection, including the assumptions set out under the heading
"Forward-Looking Statements and Forward-Looking Information" in
AQN's Management Discussion and Analysis for the three and nine
months ended September 30, 2020 (the
"Interim MD&A"), and the following additional assumptions: the
Company's affected wind facilities will return to normal operation
by February 21, 2021, based upon an
expectation that normalized regional weather conditions
(including wind, precipitation and air temperatures) will have
resumed; the wind turbines at such facilities will incur no, or
minimal, damage resulting from ice buildup or thawing; and recently
stabilized market energy prices will continue to be in-line with
normal market energy prices for this time of year in the applicable
regions. AQN cautions that although it is believed that the
assumptions are reasonable in the circumstances, actual results may
differ materially from the expectations set out in the
forward-looking statements. Material risk factors include those set
out in the Interim MD&A, AQN's Management Discussion and
Analysis for the three and twelve months ended December 31, 2019 (the "Annual MD&A"), and
AQN's Annual Information Form for the year ended December 31, 2019, each filed with securities
regulatory authorities in Canada
and the United States. Given these
risks, undue reliance should not be placed on these forward-looking
statements, which apply only as of their dates. Other than as
specifically required by law, AQN undertakes no obligation to
update any forward-looking statements to reflect new information,
subsequent or otherwise.
Non-GAAP Financial Measures and Use of Non-GAAP Financial
Measures
The term "Adjusted EBITDA" is not a recognized measure under
U.S. GAAP. There is no standardized measure of "Adjusted EBITDA"
and, consequently, AQN's method of calculating this measure may
differ from methods used by other companies and therefore may not
be comparable to similar measures presented by other companies. A
calculation and analysis of "Adjusted EBITDA", including a
reconciliation to net earnings, can be found in the Interim
MD&A and the Annual MD&A.
"Adjusted EBITDA" is a non-GAAP measure used by many investors
to compare companies on the basis of ability to generate cash from
operations. AQN uses these calculations to monitor the amount
of cash generated by AQN as compared to the amount of dividends
paid by AQN. AQN uses "Adjusted EBITDA" to assess the
operating performance of AQN without the effects of (as
applicable): depreciation and amortization expense, income tax
expense or recoveries, acquisition costs, litigation expenses,
interest expense, gain or loss on derivative financial instruments,
write down of intangibles and property, plant and equipment,
earnings attributable to non-controlling interests, non-service
pension and post-employment costs, cost related to tax equity
financing, costs related to management succession and executive
retirement, costs related to prior period adjustments due to the
effects of the U.S. Tax Cuts and Jobs Act, costs related to
condemnation proceedings, gain or loss on foreign exchange,
earnings or loss from discontinued operations, changes in value of
investments carried at fair value, and other typically
non-recurring items. AQN adjusts for these factors as they
may be non-cash, unusual in nature and are not factors used by
management for evaluating the operating performance of AQN.
AQN believes that presentation of this measure will enhance an
investor's understanding of AQN's operating performance.
"Adjusted EBITDA" is not intended to be representative of cash
provided by operating activities or results of operations
determined in accordance with U.S. GAAP, and can be impacted
positively or negatively by these items.
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SOURCE Algonquin Power & Utilities Corp.
