Avista Corporation Reports Increase in Third Quarter Earnings, Lowers 2024 Guidance

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Avista Corporation Reports Increase in Third Quarter Earnings, Lowers 2024 Guidance

Avista Corporation (NYSE: AVA) reported a growth in earnings per share (EPS) for the third quarter of 2024 during its earnings conference call on October 17, 2024, highlighting its strategic initiatives. The company announced a consolidated earnings per share of $0.23 for this quarter, compared to $0.19 in the third quarter of the previous year. Year-to-date earnings rose to $1.44 from $1.14 last year.

Despite this improvement, Avista lowered its full-year earnings guidance for 2024 due to higher energy supply costs and other expenses. Key developments include significant investments in renewable energy and infrastructure and the completion of the Clearwater Wind Project.

Highlights:

  • The diluted earnings per share for the third quarter of 2024 increased from $0.19 in the third quarter of 2023 to $0.23.
  • Year-to-date earnings rose to $1.44 from $1.14 the previous year.
  • Avista has invested over $2 billion in its system over the past five years.
  • The company signed four power purchase agreements for 325 megawatts of renewable energy.
  • Avista aims to source over 70% of its peak production capacity from emissions-free sources by 2026.
  • The 2024 earnings guidance was lowered to $2.26 to $2.46 per diluted share.
  • Capital expenditures for 2024 are projected at $515 million, with a three-year plan totaling $1.7 billion.

Company Outlook: Avista expects a constructive rate decision from Washington in December and plans to initiate general rate cases in Oregon and Idaho in 2025. The North Plains Connector Transmission Project is ongoing, with definitive agreements expected within 6-9 months.

Negative Points: The 2024 earnings forecast was adjusted to account for higher energy supply costs and other expenses. It is expected that Avista Utilities will contribute close to the lower end of the earnings range. Anticipated losses in other business segments could result in a decline of $0.04 to $0.06 per share.

Positive Points: Successful wildfire mitigation efforts were implemented, including AI-supported fire detection cameras. The completion of the Clearwater Wind Project contributes to Avista's clean energy goals. The company continues to maintain strong liquidity with $212 million under committed credit facilities.

Concerns: Despite improvements in earnings, the company lowered its full-year guidance for 2024.

Q&A Highlights: The Climate Commitment Act in Washington will remain in effect, while the outcome of the energy choice initiative is still pending. Avista reported a successful wildfire season with minimal customer impact and plans to pursue related legal initiatives.

During the call, Avista also discussed its regulatory strategy, noting that a general rate case decision is expected by mid-December 2024. The company has reached $389 million in capital expenditures at Avista Utilities in the first three quarters of 2024 and plans to continue significant investments in the coming years. As of September 30, 2024, liquidity included significant credit facilities, with plans to issue $70 million in common stock within the year.

Participation in the North Plains Connector project and RFP plans for new generation beginning in early 2025 were also noted. Recent election initiatives in Washington were addressed, confirming the continued operation of the Climate Commitment Act with the outcome of the energy choice initiative still uncertain. Heather Rosentrater highlighted the successful management of the recent wildfire season, including a public safety power outage affecting 1,500 customers that was restored the same day. The company is focusing on adding weather stations in high-risk areas and will pursue legal initiatives related to wildfire intervention responsibilities in Washington and Idaho. The call concluded with a thank-you message from Stacey Wenz.

InvestingPro Insights: Avista Corporation's recent earnings report and strategic initiatives align with several key insights from InvestingPro. The company's focus on renewable energy investments and infrastructure improvements is reflected in its financial metrics and long-term outlook.

According to InvestingPro data, Avista's revenue growth for the twelve months as of the second quarter of 2024 was 10.69%. This indicates positive momentum in line with the reported investments and strategic initiatives. This growth is bolstered by a robust 20.4% EBITDA growth during the same period, showcasing improved operational efficiency.

One InvestingPro tip emphasizes that Avista has "increased its dividend for 21 consecutive years," making its current 5.1% dividend yield particularly notable. This consistent dividend growth underscores the company's commitment to shareholder returns, even amidst challenges like rising energy supply costs.

Another InvestingPro tip notes that Avista is "trading at a low P/E ratio relative to near-term earnings growth." The current P/E ratio of 15.04 may be attractive to investors, especially considering ongoing investments in renewable energy and infrastructure that could drive future growth.

It is important to note that InvestingPro offers additional tips and insights for Avista Corporation, providing investors with more context for analyzing the company's performance and outlook.