Revises 2016 Earnings Outlook, Maintains 8-10%
Long-term Earnings CAGR and Announces Execution of Renewables’ Safe
Harbor Strategy for up to 2,000 MWs
Today AVANGRID, Inc. (NYSE: AGR) reports its financial results
for the third quarter of 2016, including consolidated net income of
$109 million, or $0.35 per share, for the third quarter of 2016,
compared to $54 million, or $0.22 per share, for the same period in
2015. For the first nine months of 2016, consolidated net income
was $423 million, or $1.36 per share, compared to $171 million, or
$0.68 per share, for the first nine months of 2015. AVANGRID’s
reported results for the third quarter and first nine months of
2015 do not reflect the combination with UIL Holdings Corporation
(“UIL”).
Adjusted to reflect the combination of AVANGRID with UIL and
exclude certain merger-related costs in 2015, non-GAAP consolidated
adjusted net income was $109 million, or $0.35 per share, for the
third quarter of 2016, compared to $76 million, or $0.25 per share,
for the same period in 2015. Adjusted to reflect the combination of
AVANGRID with UIL and exclude the gain from the sale of equity
investments, the impairment of an investment recorded in 2016, and
certain merger-related costs recorded in 2015, the non-GAAP
consolidated adjusted net income was $404 million, or $1.30 per
share, for the first nine months of 2016, compared to $279 million,
or $0.90 per share, for the first nine months of 2015. For
additional information, see “Use of Non-GAAP Financial Measures”
and “Reconciliation of Non-GAAP Financial Measures” below.
Net income for the third quarter and first nine months of 2016
and 2015 on a U.S. GAAP basis are set forth below:
Net Income (Loss) - $M Three Months ended
September 30, Nine Months ended September 30,
$M 2016 2015 '16 vs '15
2016 2015 '16 vs '15
Networks $ 75 $ 67 $ 8 $ 319 $ 185 $ 134 Renewables 37 62 (24 ) 121
156 (35 ) Other (3 ) (75 ) 72
(17 ) (170 ) 153
Net Income $
109 $ 54 $ 56
$ 423 $ 171
$ 252 Earnings (Loss) Per Share
Three Months ended September 30, Nine Months ended
September 30, 2016 2015 '16 vs '15
2016 2015 16 vs '15 Networks $ 0.24 $
0.27 $ (0.02 ) $ 1.03 $ 0.73 $ 0.30 Renewables 0.12 0.25 (0.13 )
0.39 0.62 (0.23 ) Other (0.01 ) (0.30 ) 0.29
(0.05 ) (0.67 ) 0.62
Earnings
Per Share $ 0.35 $ 0.22
$ 0.13 $ 1.36
$ 0.68 $ 0.69
Weighted-avg # of Shares (M): 309.5 252.2 309.5 252.2 Amounts may
not add due to rounding
“Our financial performance in 2016 to date has been
significantly better than last year,” said James P. Torgerson,
chief executive officer of AVANGRID. “This reflects solid earnings
in the underlying Networks and Renewables businesses, in part due
to the results of our rate settlement in New York, and from higher
wind production and the extension of the useful life of certain
wind assets”
“Although results year to date were better than last year, we
had set our expectations assuming normal wind and weather and the
timely extension of leases for our wind farms. Those assumptions
have not fully occurred and in conjunction with certain rate base
adjustments, we are revising our 2016 earnings outlook
accordingly,” added Torgerson. “We remain focused on our long-term
plan to grow our earnings and are maintaining our 8-10% earnings
CAGR (2014-2020). As we look to the remainder of this year and
beyond, we will continue to execute on our capital expenditure
plan, integration initiatives and the identification and
implementation of best practices.”
“In addition, we have authorized the purchase in 2016 of
equipment for up to 2,000 MWs of additional new wind generation and
more than 350 MWs to repower certain existing wind turbines under
Safe Harbor provisions to secure the full value of the production
tax credits (PTCs). Also, we are contracting additional power
purchase agreements as we continue to manage our merchant
exposure,” added Torgerson.
Avangrid Networks
Avangrid Networks earned $75 million, or $0.24 per share, in the
third quarter of 2016, compared to $67 million, or $0.27 per share,
in the third quarter of 2015. For the first nine months of 2016,
Avangrid Networks earned $319 million, or $1.03 per share, compared
to $185 million, or $0.73 per share, for the first nine months of
2015. Earnings for the third quarter and first nine months of 2016
compared to 2015 benefitted primarily from improved revenues with
growing rate base, the settlement of the NY rate case and lower
uncollectibles expense.
The Avangrid Networks results for the third quarter and the
first nine months of 2015 do not reflect the combination with UIL,
and, as a result 2015 results are not directly comparable to 2016
results. Adjusted to reflect the combination of AVANGRID with UIL,
Avangrid Networks earned $85 million and $282 million in the third
quarter and the first nine months of 2015, respectively.
Avangrid Renewables
Avangrid Renewables earned $37 million, or $0.12 per share, in
the third quarter of 2016, compared to $62 million, or $0.25 per
share, in the third quarter of 2015. For the first nine months of
2016, Avangrid Renewables earned $121 million, or $0.39 per share,
compared to $156 million, or $0.62 per share, in the first nine
months of 2015. Earnings for the third quarter of 2016 compared to
2015 benefitted primarily from higher wind production and the
extension of useful life of certain wind assets and were reduced by
the impacts of lower mark-to-market and a higher effective tax
rate, which partially offsets at Other/Corporate. The results for
the third quarter 2015 were impacted by the settlement of
intercompany interest with Other/Corporate that had no effect on
consolidated results.
Earnings for the first nine months of 2016 compared to 2015 also
reflected the positive impacts of higher wind production and the
extension of useful life of certain wind assets. The results for
the first nine months of 2016 and 2015 were impacted by certain
transactions that had no effect on consolidated results. These
transactions included the settlement of intercompany interest,
mentioned above, and the settlement of an intercompany note with
Other/Corporate, both favorable in 2015, and the impact of a higher
effective tax rate in 2016.
Other
The results from AVANGRID’s gas storage & transportation
business and AVANGRID’s corporate costs are included in “Other”.
Other incurred a loss of $3 million, or $0.01 per share, for the
third quarter of 2016, compared to a loss of $75 million, or $0.30
per share, in the third quarter of 2015. Results for the third
quarter of 2015 include certain merger-related costs and the
settlement of intercompany interest mentioned above. Earnings for
the third quarter 2016 compared to 2015 benefitted from favorable
mark-to-market impacts and lower tax expense.
For the first nine months of 2016, Other incurred a loss of $17
million, or $0.05 per share, compared to a loss of $170 million, or
$0.67 per share, in the first nine months of 2015. Results for the
first nine months of 2015 include certain merger-related costs and
the intercompany transactions described above. Results for the
first nine months of 2016 benefitted from the gains from the sale
of Iroquois and other equity investments, lower tax expense,
favorable gas transportation contracts and improved storage
spreads.
The Other results for the third quarter and first nine months of
2015 do not reflect the combination with UIL, and, as a result 2015
results are not directly comparable to 2016 results. Adjusted to
reflect the combination of AVANGRID with UIL, Other incurred a loss
of $71 million and $159 million in the third quarter of 2015 and
the first nine months of 2015, respectively.
Outlook
AVANGRID is revising its earnings outlook for 2016 to
$1.95-$2.05 per share, compared to the previously reported estimate
of $2.10-$2.20 per share. The revised outlook includes the on-going
identification and implementation of best practices across all of
the business segments. Details of the earnings components are
summarized as follows and explained below.
Outlook -
Estimated EPS (1)
As of July 18, 2016 Revised Networks $
1.56 - $ 1.62 $ 1.52 - $ 1.58 Renewables $ 0.53 - $ 0.58 $ 0.51 - $
0.54 Other(2) $ 0.00 - $ 0.01 $(0.08) - $(0.07) 2016 AVANGRID $
2.10 - $ 2.20 $ 1.95 - $ 2.05 Amounts may not add due to
rounding; Estimates are not expected to be additive (1) Assumes
approx. 309.5 million shares outstanding (2) Includes Corporate and
Gas Storage & Transportation
Networks
The revised estimate for Networks is $1.52-$1.58 per share,
compared to the previously reported estimate of $1.56-$1.62 per
share. The revision is due to certain rate base adjustments.
Renewables
The revised estimate for Renewables is $0.51-$0.54 per share,
compared to the previously reported estimate of $0.53-$0.58 per
share. The revision is due to lower than expected wind production,
lower useful life adjustments related to the timing of lease
extensions, and an operational change which moved Renewables power
trading from the Gas Storage and Transportation business to
Renewables.
Other
The revised estimate for Other is $(0.08)-$(0.07) per share,
compared to the previously reported estimate of $0.00-$0.01 per
share. The revision is due to lower volatility and prices driven by
exceptionally warm weather and lower storage spreads and trading
margin in the Gas Storage and Transportation business, along with
the operational change mentioned above.
Webcast
AVANGRID will webcast an audio-only financial presentation in
conjunction with releasing third quarter 2016 earnings, on Tuesday,
October 25, 2016 beginning at 11:30 A.M. Eastern time. The webcast
will feature presentations from AVANGRID’s CEO, James P. Torgerson
and other members of the executive team, and can be accessed
through the investor relations section of AVANGRID’s website at
http://www.avangrid.com.
Avangrid, Inc. (NYSE: AGR) is a diversified energy and utility
company with more than $30 billion in assets and operations in 25
states. The company operates regulated utilities and electricity
generation through two primary lines of business. Avangrid Networks
includes eight electric and natural gas utilities, serving
approximately 3.1 million customers in New York and New England.
Avangrid Renewables operates 6.3 gigawatts of electricity capacity,
primarily through wind power, in states across the United States.
AVANGRID employs approximately 7,000 people. The company was formed
through a merger between Iberdrola USA, Inc. and UIL Holdings
Corporation in 2015. Iberdrola S.A. (Madrid: IBE), a worldwide
leader in the energy industry, owns 81.5% of AVANGRID. For more
information, visit www.avangrid.com.
Forward Looking Statements
Certain statements in this presentation may relate to our future
business and financial performance and future events or
developments involving us and our subsidiaries that are not purely
historical and may constitute “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements may be identified by the use of
forward-looking terms such as “may,” “will,” “should,” “can,”
“expects,” “believes,” “anticipates,” “intends,” “plans,”
“estimates,” “projects,” “assumes,” “guides,” “targets,”
“forecasts,” “is confident that” and “seeks” or the negative of
such terms or other variations on such terms or comparable
terminology. Such forward looking statements include, but are not
limited to, statements about our plans, objectives and intentions,
outlooks or expectations for earnings, revenues, expenses or other
future financial or business performance, strategies or
expectations, or the impact of legal or regulatory matters on our
business, results of operations or financial condition. Such
statements are based upon the current beliefs and expectations of
our management and are subject to significant risks and
uncertainties that could cause actual outcomes and results to
differ materially. Important factors that could cause actual
results to differ materially from those indicated by such
forward-looking statements include, without limitation, the risks
and uncertainties set forth under the section entitled “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in our Annual Report on Form
10-K for the year ended December 31, 2015, and our Quarterly Report
on Form 10-Q for the six months ended June 30,2016, which are on
file with the Securities and Exchange Commission (SEC) and
available on our investor relations website at www.avangrid.com and
on the SEC website at www.sec.gov. Additional information will also
be set forth in subsequent filings with the SEC. You should
consider these factors carefully in evaluating for-ward looking
statements. Should one or more of these risks or uncertainties
materialize, or should any of the underlying assumptions prove
incorrect, actual results may vary in material respects from those
expressed or implied by these forward-looking statements. You
should not place undue reliance on these forward-looking
statements. We do not undertake any obligation to update or revise
any forward-looking statements to reflect events or circumstances
after the date of this presentation whether as a result of new
information, future events or otherwise, except as may be required
under applicable securities laws.
Use of Non-GAAP Financial Measures
To supplement our consolidated financial statements presented in
accordance with U.S. GAAP, AVANGRID considers certain non-GAAP
financial measures that are not prepared in accordance with U.S.
GAAP, including adjusted net income and adjusted EPS. The non-GAAP
financial measures we use are specific to AVANGRID and the non-GAAP
financial measures of other companies may not be calculated in the
same manner. We use these non-GAAP financial measures, in addition
to U.S. GAAP measures, to establish operating budgets and
operational goals to manage and monitor our business, evaluate our
operating and financial performance and to compare such performance
to prior periods and to the performance of our competitors. We
believe that presenting such non-GAAP financial measures is useful
because such measures can be used to analyze and compare
profitability between companies and industries because it
eliminates the impact of financing and certain non-cash charges. In
addition, we present non-GAAP financial measures because we believe
that they and other similar measures are widely used by certain
investors, securities analysts and other interested parties as
supplemental measures of performance.
We provide adjusted net income, which is adjusted to reflect the
full nine month proforma results of the merged UIL entities, the
costs of the combination of AVANGRID with UIL, and the impairment
of certain investments and excludes the sale of certain equity
investments. We believe adjusted net income is more useful in
understanding and evaluating actual and projected financial
performance and contribution of AVANGRID lines of business and to
more fully compare and explain our results. The most directly
comparable U.S. GAAP measure to adjusted net income is net income.
We also provide adjusted EPS, which is adjusted net income
converted to an earnings per share amount. We have also provided
adjusted net income and EPS after mark-to-market adjustments to
reflect the effect on adjusted net income of mark-to-market changes
in the fair value of derivative instruments used by AVANGRID to
economically hedge market price fluctuations in related underlying
physical transactions for the purchase and sale of electricity and
gas.
The use of non-GAAP financial measures is not intended to be
considered in isolation or as a substitute for, or superior to,
AVANGRID’s U.S. GAAP financial information, and investors are
cautioned that the non-GAAP financial measures are limited in their
usefulness, may be unique to AVANGRID, and should be considered
only as a supplement to AVANGRID’s U.S. GAAP financial measures.
The non-GAAP financial measures may not be comparable to other
similarly titled measures of other companies and have limitations
as analytical tools. Non-GAAP financial measures are not primary
measurements of our performance under U.S. GAAP and should not be
considered as alternatives to operating income, net income or any
other performance measures determined in accordance with U.S.
GAAP.
Avangrid, Inc. Condensed Consolidated Statements of
Income (In Millions except per share amounts)
(Unaudited)
Three Months ended Nine Months ended September
30, September 30, 2016 2015
2016 2015 Operating Revenues $
1,418 $ 1,048 $
4,527 $ 3,214
Operating Expenses Purchased power, natural gas and fuel
used 312 211 961 754 Operations and maintenance 553 421 1,662 1,235
Impairment of non-current assets - 3 - 10 Depreciation and
amortization 203 163 621 525 Taxes other than income taxes
133 89 395
260
Total Operating Expenses 1,201
887 3,639
2,784 Operating Income
217 161 888
430 Other Income and
(Expense) Other income and (expense) 3 16 72 38 Earnings
(losses) from equity method investments 2 (3 ) 4 (3 ) Interest
expense, net of capitalization (60 ) (64 )
(212 ) (191 )
Income (Loss) Before Income
Tax 162 110
752 274 Income tax
expense 53 56 329
103
Net Income (Loss) $
109 $ 54 $
423 $ 171
Earnings (Loss) per Common Share,
Basic: $ 0.35 $ 0.22
$ 1.36 $ 0.68
Earnings (Loss) per Common Share, Diluted: $
0.35 $ 0.22 $
1.36 $ 0.68
Weighted-average Number of Common Shares Outstanding: Basic
309,495,141 252,235,232 309,520,316 252,235,232 Diluted 309,999,846
252,235,232 310,013,987 252,235,232 Amounts may not add due
to rounding
Avangrid, Inc. Condensed
Consolidated Balance Sheets (Unaudited)
September 30, December 31, ($M)
2016 2015 ASSETS Current assets $ 2,153 $
2,474 Net property, plant & equipment in service 19,552 19,373
Total property, plant & equipment 21,124 20,711 Regulatory
assets 3,110 3,314 Goodwill 3,113 3,115 Other assets 1,109
1,129
Total Assets $
30,609 $ 30,743 LIABILITIES
AND EQUITY Current liabilities 2,153 2,035 Regulatory
liabilities 2,267 2,360 Other non-current liabilities 6,739 6,752
Non-current debt 4,399 4,530
Total
Liabilities 15,558 15,677
EQUITY Common stock 3 3 Additional paid-in-capital
13,652 13,653 Treasury stock (4 ) - Retained earnings 1,471 1,449
Accumulated other comprehensive loss (84 ) (52 )
Total Stockholders' Equity 15,038
15,053 Noncontrolling interests 13 13
Total
Equity 15,051 15,066
Total Liabilities & Equity $ 30,609
$ 30,743 Amounts may not add due to
rounding
Avangrid, Inc. Condensed
Consolidated Statement of Cash Flows (Unaudited)
Nine Months Ended September 30,
$M 2016 2015 Cash Flow from Operating
Activities: Net income $ 423
$ 171 Net Cash Provided by Operating
Activities 1,216 963
Cash Flow from Investing Activities: Capital expenditures
(1,036 ) (670 ) Contributions in aid of construction 55 25
Government grants — 9 Proceeds from sale of property, plant and
equipment 50 — Proceeds from sale of equity method and other
investment 57 3 Receipts from (payments to) affiliates 6 (8 ) Other
investments and equity method investments, net 3
28
Net Cash Used in Investing Activities
(865 ) (613 ) Cash
Flow from Financing Activities: Non-current note issuance — 350
Repayments of non-current debt (83 ) (68 ) Repayments of other
short-term debt, net (159 ) — Payments on tax equity financing
arrangements (75 ) (59 ) Repayments of capital leases (6 ) (5 )
Repurchase of common stock (4 ) — Issuance of common stock (2 ) —
Dividends paid (267 ) —
Net Cash (Used in)
Provided by Financing Activities (596 )
218 Cash & cash equivalents, net
(245 ) 568 Cash &
cash equivalents, beginning of period 427
482 Cash & cash equivalents, end of
period $ 182 $ 1,050
Amounts may not add due to rounding
Reconcilation of
Non-GAAP Financial Measures
Earnings for the third quarter and first
nine months of 2015 are adjusted below to reflect the combination
of AVANGRID with UIL:
Avangrid, Inc. Reconciliation of Non-GAAP Adjusted
Net Income (Loss) (Unaudited)
Three Months ended September 30,
Nine Months ended September 30, $M 2016
Adjusted 2015
Adjusted'16 vs '15
2016 Adjusted 2015
Adjusted'16 vs '15
Networks $ 75 $ 67 $ 8 $ 319 $ 185 $ 134 Renewables 37 62
(24 ) 121 156 (35 ) Other (3 ) (75 ) 72
(17 ) (170 ) 153
Net Income
$ 109 $ 54 $ 56 $
423 $ 171 $ 252 Adjustments: Net
income representing full nine months for UIL - 16 (16 ) - 89 (89 )
Merger Costs - 9 (9 ) - 32 (32 ) Sale of equity method and other
investment - - - (36 ) - (36 ) Impairment of investment - - - 3 - 3
Income tax impact of adjustments* - (3 )
3 14 (13 ) 27
Adjusted Net Income $ 109 $
76 $ 34 $ 404
$ 279 $ 125
Mark-to-market adjustment: Renewables (11 ) (15 ) 4 (15 ) (16 ) 1
Other (6 ) 3 (9 ) 13
36 (23 )
Adjusted Net Income After
Mark-to-market Adjustment
$ 93 $ 64 $
28 $ 403 $ 299
$ 104 * 2016: Income tax impact
of adjustments: $14M from sale of equity method investment, $1M
from sale of other investment and $(1)M on impairment of
investment. * 2015: Income tax impact of adjustments of $13M relate
to merger costs.
Non-GAAP Adjusted Net Income
(Loss) - $M Three Months ended September 30,
Nine Months ended September 30, Adjusted 2015
Adjusted 2015 Networks $ 85 $ 282 Renewables 62 156 Other
(71 ) (159 )
Adjusted Net Income
$ 76 $ 279 Mark-to-market
adjustment: Renewables (15 ) (16 ) Other 3 36
Adjusted Net Income After
Mark-to-market Adjustment
$ 64 $ 299
Avangrid, Inc. Reconciliation of Non-GAAP Adjusted
Earnings (Loss) Per Share (EPS) (Unaudited)
Three Months ended
September 30, Nine Months ended September 30,
2016 Adjusted 2015
Adjusted'16 vs '15
2016 Adjusted 2015
Adjusted'16 vs '15
Networks $ 0.24 $ 0.27 $ (0.02 ) $ 1.03 $ 0.73 $ 0.30
Renewables 0.12 0.25 (0.13 ) 0.39 0.62 (0.23 ) Other (0.01 )
(0.30 ) 0.29 (0.05 ) (0.67 )
0.62
Earnings Per Share* $ 0.35
$ 0.22 $ 0.13 $ 1.36
$ 0.68 $ 0.69 Adjustments: Reduction
for acquisition of UIL shares - (0.05 ) 0.05 - (0.13 ) 0.13
Net income representing full nine months
for UIL
- 0.06 (0.06 ) - 0.29 (0.29 ) Merger Costs - 0.03 (0.03 ) - 0.10
(0.10 ) Sale of equity method and other investment - - - (0.12 ) -
(0.12 ) Impairment of investment - - - 0.01 - 0.01 Income tax
impact of adjustments* - (0.01 ) 0.01
0.05 (0.04 ) 0.09
Adjusted Earnings Per Share $ 0.35
$ 0.25 $ 0.10 $
1.30 $ 0.90 $ 0.40
Mark-to-market adjustment: Renewables (0.03 ) (0.05 ) 0.02
(0.05 ) (0.05 ) 0.00 Other (0.02 ) 0.01
(0.03 ) 0.04 0.12 (0.07 )
Adjusted Earnings Per Share After
Mark-to-market Adjustment
$ 0.30 $ 0.21 $
0.09 $ 1.30 $ 0.97
$ 0.33 * Pre-merger '15 EPS -
based on 252.2 M shares Weighted-avg # of Shares (M): 309.5 309.1
309.5 309.5 Amounts may not add due to rounding * 2016: EPS
Income tax impact of adjustments: $0.05 from sale of equity method
investment * 2015: EPS Income tax impact of adjustments: $0.04 from
merger costs
Non-GAAP Adjusted Earnings
(Loss) Per Share Three Months ended September 30,
Nine Months ended September 30, Adjusted 2015
Adjusted 2015 Networks $ 0.27 $ 0.91 Renewables 0.20 0.50
Other (0.23 ) (0.51 )
Adjusted Earnings per
Share $ 0.25 $ 0.90
Mark-to-market adjustment: Renewables (0.05 ) (0.05 ) Other
0.01 0.12
Adjusted Earnings Per Share After
Mark-to-market Adjustment $ 0.21 $
0.97 Weighted-avg # of Shares (M): 309.1 309.5
Amounts may not add due to rounding
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161025005510/en/
AVANGRID, Inc.Analysts:Patricia Cosgel,
203-499-2624orMedia:Michael West Jr., 203-499-3858
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