Avista Corp (AVA) 2024 Q1 法說會逐字稿

Good day and thank you for standing by. Welcome to the Avista Corporation Q1 2024 earnings conference call. (Operator instructions) Please be advised that today's call is being recorded.

美好的一天，感謝您的支持。歡迎參加 Avista Corporation 2024 年第一季財報電話會議。（接線生說明）請注意，今天的通話正在錄音。

I would now like to hand the conference over to our first speaker for today, Stacey Wenz, Investor Relations Manager. Stacey, you may begin.

現在我想將會議交給今天的第一位發言人，投資者關係經理史黛西溫茲 (Stacey Wenz)。史黛西，你可以開始了。

Thank you. Good morning, everyone. Welcome to Avista's first-quarter 2024 earnings conference call. Our earnings and first-quarter Form 10-Q were released pre-market this morning. You can find both on our website.

謝謝。大家，早安。歡迎參加 Avista 2024 年第一季財報電話會議。我們的收益和第一季 10-Q 表格於今天上午盤前發布。您可以在我們的網站上找到兩者。

Joining me this morning are Avista's Corp.'s CEO, Dennis Vermillion; President and COO, Heather Rosentrater; Senior Vice President, CFO, Treasurer, and Regulatory Affairs Officer, Kevin Christie; and Vice President, Controller, and Principal Accounting Officer, Ryan Krasselt.

今天早上和我一起來的是 Avista 公司的執行長 Dennis Vermillion；總裁兼營運長希瑟‧羅森特拉特 (Heather Rosentrater)；資深副總裁、財務長、財務主管兼監管事務官 Kevin Christie；副總裁、財務總監兼首席會計官 Ryan Krasselt。

Today, we will make certain statements that are forward looking. These involve assumptions, risks, and uncertainties which are subject to change. Various factors could cause actual results to differ materially from the expectations we discuss in today's call. Please refer to our Form 10-K for 2023 and our Form 10-Q for the first quarter of 2024, which are available on our website, for a full discussion of these factors.

今天，我們將做出一些前瞻性的聲明。這些涉及可能發生變化的假設、風險和不確定性。各種因素可能導致實際結果與我們在今天的電話會議中討論的預期有重大差異。請參閱我們網站上提供的 2023 年 10-K 表格和 2024 年第一季 10-Q 表格，以全面討論這些因素。

First, I will recap the financial results presented in today's press release. 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.

首先，我將回顧今天新聞稿中公佈的財務表現。我們 2024 年第一季稀釋後每股綜合收益為 0.91 美元，而 2023 年第一季為 0.73 美元。

Now, I'll turn the call over to Dennis.

現在，我將把電話轉給丹尼斯。

Well, thanks, Stacey, and good morning, everyone. In March, Avista marked its 135th anniversary. In the midst of unprecedented change in our industry, I look back on our history and realized that our legacy of innovation is still alive and well. We've made our ways through seismic shift before, and we're prepared to meet today's challenges and those of the future.

好吧，謝謝史黛西，大家早安。3 月，Avista 迎來了成立 135 週年。在我們行業發生前所未有的變化的過程中，我回顧我們的歷史，並意識到我們的創新遺產仍然存在且完好無損。我們之前已經經歷了巨大的轉變，並且我們已準備好迎接今天和未來的挑戰。

I continue to be inspired by the innovation that makes it possible not only to persevere, but to prevail over the years. Who we are today is a testament to the thoughtful planning and careful building of our predecessors who formed the company that we've inherited.

我繼續受到創新的啟發，這些創新不僅使我能夠堅持下去，而且能夠多年來取得勝利。我們今天的成就證明了我們的前輩們深思熟慮的規劃和精心建設，他們組成了我們所繼承的公司。

The quality of our work is recognized on the outside as well. For the fifth year in a row, Avista has been recognized by Ethisphere as one of the world's most ethical companies. Avista is one of only eight honorees in the energy and utilities industry this year.

我們的工作品質也得到了外界的認可。Avista 連續第五年被 Ethisphere 評為全球最具道德的公司之一。阿維斯塔是今年能源和公用事業行業中僅有的八位獲獎者之一。

We're putting our innovative spirit in action with the modernization of our Post Falls dam. We started work on this project here in the first quarter, and we currently estimate we will spend $225 million over five years, replacing existing aging equipment with more modern and energy-efficient designs.

我們將創新精神付諸行動，對波斯特瀑布大壩進行現代化改造。我們於第一季開始進行此項目，目前預計五年內將花費 2.25 億美元，以更現代、更節能的設計取代現有的老化設備。

The project was also selected by the US Department of Energy to receive a $5 million grant associated with the improvements in efficiency that are planned with part of the -- that are planned with the scope of that work. We are delighted with the Department of Energy's support. It enables our $500 million capital budget to accomplish even more for our customers in 2024.

該項目還被美國能源部選中接受 500 萬美元的贈款，該贈款與計劃中的部分工作範圍內計劃的效率提高有關。我們對能源部的支持感到高興。它使我們 5 億美元的資本預算能夠在 2024 年為我們的客戶實現更多目標。

Turning to earnings. Our earnings for the first quarter are right in line with our expectations, and I believe we are well positioned to meet our full-year earnings targets. Kevin will have more of this later.

轉向收益。我們第一季的獲利完全符合我們的預期，我相信我們有能力實現全年獲利目標。凱文稍後會有更多這樣的內容。

As we expected, the ERM in Washington had a negative impact on our first-quarter results. Our general rate case in Washington seeks to modify the way the power supply costs are shared with our Washington customers. And if approved, these changes would reduce the volatility we experienced under the ERM. We will continue to work through the rate case process with the commission, as we always do, as we execute on our regulatory strategy.

正如我們預期的那樣，華盛頓的企業風險管理對我們第一季的業績產生了負面影響。我們在華盛頓的一般費率案例旨在改變與華盛頓客戶分攤電力供應成本的方式。如果獲得批准，這些變化將減少我們在企業風險管理下經歷的波動。在執行監管策略時，我們將一如既往地與委員會一起完成費率案件流程。

Executing on our regulatory strategy includes seeking to adjust customer rates to reflect the actual cost of providing service. In addition to the general rate case currently before the Washington Commission, we expect to file our next Oregon case in the latter half of 2024. We expect to file general rate cases in Idaho in the first quarter of 2025.

執行我們的監管策略包括尋求調整客戶費率以反映提供服務的實際成本。除了華盛頓委員會目前正在審理的一般費率案件外，我們預計將於 2024 年下半年提交下一個俄勒岡州案件。我們預計於 2025 年第一季在愛達荷州提交一般費率案件。

Now, I'll turn the call over to Heather for some updates about our operations.

現在，我將把電話轉給希瑟，以了解有關我們運營的一些最新情況。

Thank you, Dennis. I'm glad to be here with you this morning. 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. Demand over the period of extreme cold exceeded our expectations based on a similar cold snap in late 2022. We're taking the increase in demand into account as we continue our integrated resource planning.

謝謝你，丹尼斯。我很高興今天早上能和你們在一起。我們第一季的營運受到一月中旬整個太平洋西北地區的極寒天氣的影響，突顯該地區對額外產能的需求不斷增長。極寒期間的需求超出了我們基於 2022 年底類似寒流的預期。在繼續進行綜合資源規劃時，我們正在考慮需求的成長。

Throughout the region, conversations around resource adequacy are continuing as we contemplate the transition to clean energy and the impact of increasing electrification. Ensuring that we have adequate resources to serve our customers reliably into the future may accelerate our generation needs compared to what was identified in our 2023 integrated resource plan. We're still working through how the landscape of our generation needs may change, utilizing our biannual integrated resource planning process, and we will also continue to intentionally consider opportunities as they arise.

在整個地區，當我們思考向清潔能源的過渡以及日益電氣化的影響時，圍繞資源充足性的討論仍在繼續。與 2023 年綜合資源計畫中確定的情況相比，確保我們有足夠的資源在未來可靠地為客戶提供服務可能會加速我們的發電需求。我們仍在利用我們每半年一次的綜合資源規劃流程，研究發電需求的模​​式可能如何變化，我們也將繼續有意識地考慮出現的機會。

I also want to spend some time talking about our wildfire preparedness efforts. Our wildfire risk mitigation efforts are critical to our customers, our communities, and our shareholders. And we made great progress in 2023, executing our wildfire mitigation plan, work that will continue as we move through 2024 and beyond. We plan to spend upwards of $55 million, including capital and O&M, in 2024 on wildfire mitigation work.

我還想花一些時間談談我們的野火防備工作。我們的野火風險緩解工作對我們的客戶、我們的社區和我們的股東至關重要。我們在 2023 年取得了巨大進展，執行了野火緩解計劃，這項工作將在 2024 年及以後繼續進行。我們計劃在 2024 年花費超過 5,500 萬美元（包括資本和營運維護）用於野火緩解工作。

So let me share a few highlights of our progress. In 2023, our vegetation management teams set company-wide records for the number of risk trees they addressed on the distribution system. As of the end of last year, our transmission system was 40% steel. The progress in both programs is ahead of our planned targets for the work.

因此，讓我分享一下我們進展的一些亮點。2023 年，我們的植被管理團隊在分配系統上處理的風險樹木數量創下了全公司記錄。截至去年底，我們的傳輸系統 40% 是鋼製的。這兩個項目的進展都超過了我們計劃的工作目標。

Our grid hardening work, which includes fiberglass crossarms, fire-resistant pole wraps, and undergrounding, among other tools, exceeded their targets in 2023 as well. And we are taking this momentum from our 2023 efforts into 2024.

我們的電網加固工作，包括玻璃纖維橫擔、耐火桿包、地下埋設等工具，也超越了 2023 年的目標。我們將把 2023 年的努力延續到 2024 年。

As we look ahead to the upcoming fire season in our service territory, we are prepared with our fire safety mode. Fire safety mode consists of additional safety measures that are in place whenever the National Weather Service and our own fire risk dashboard indicate elevated fire risk within our service territory.

當我們展望服務區域即將到來的火災季節時，我們已做好消防安全模式的準備。消防安全模式包括每當國家氣象局和我們自己的火災風險儀表板顯示我們服務區域內火災風險升高時就採取的額外安全措施。

In 2023, we implemented a fire safety mode four times, and we saw positive results from these elevated protection settings. In 2024, public safety power shut-offs are part of our toolkit as well. We have been working with key stakeholders over the past two years to prepare, and we are holding a press conference to communicate the details of our public safety power shut-off plan more broadly next week.

2023年，我們四次實施了消防安全模式，這些提升的防護設置為我們帶來了積極的成果。到 2024 年，公共安全斷電也將成為我們工具包的一部分。過去兩年來，我們一直在與主要利益相關者合作進行準備，下週我們將舉行新聞發布會，更廣泛地傳達公共安全斷電計劃的細節。

This year, we will continue partnering with EEI to focus on opportunities at the federal level to provide support for wildfire risk. At the same time, we are leading efforts in the region to develop legislative protections for utilities at our state level.

今年，我們將繼續與 EEI 合作，重點關注聯邦層級的機會，為野火風險提供支援。同時，我們正在該地區帶頭努力為州一級的公用事業制定立法保護措施。

Now, I'll turn the call over to Kevin for a discussion of financial results.

現在，我將把電話轉給凱文，討論財務表現。

Thanks, Heather, and good morning, everyone. We are off to a solid start in 2024. Earnings at Avista Utilities increased in the first quarter of 2024 compared to the first quarter of 2023. Our utility margin increased as a result of our general rate cases positively impacting our earnings.

謝謝希瑟，大家早安。2024 年我們將迎來一個好的開始。與 2023 年第一季相比，Avista Utilities 2024 年第一季的獲利有所成長。由於我們的一般費率案例對我們的收益產生了積極影響，我們的公用事業利潤率增加。

As Dennis mentioned, we experienced some headwinds in the first quarter, and the ERM resulted in a $6 million pre-tax expense in the first quarter of 2024. This compares to a pre-tax expense of $7.6 million in the first quarter of 2023. AEL&P's results in the first quarter were also right in line with our expectations.

正如丹尼斯所提到的，我們在第一季遇到了一些阻力，ERM 在 2024 年第一季產生了 600 萬美元的稅前費用。相較之下，2023 年第一季的稅前費用為 760 萬美元。AEL&P 第一季的業績也符合我們的預期。

We are committed to investing the necessary capital in our utility infrastructure. Our capital expenditures at Avista Utilities were $117 million in the first quarter of 2024. So that we can continue to support customer growth and maintain our system to provide safe, reliable energy to our customers, our planned capital expenditures are $500 million in 2024. We expect capital expenditures at AEL&P to be $21 million and investments at our other businesses to be $11 million in 2024.

我們致力於在我們的公用事業基礎設施上投資必要的資本。2024 年第一季度，我們 Avista Utilities 的資本支出為 1.17 億美元。為了能夠繼續支援客戶成長並維護我們的系統，為客戶提供安全、可靠的能源，我們計劃在 2024 年的資本支出為 5 億美元。我們預計 2024 年 AEL&P 的資本支出為 2,100 萬美元，其他業務的投資為 1,100 萬美元。

On the liquidity front, as of March 31, we had $198 million of available liquidity under our committed line of credit and $36 million available under our letter of credit facility. In April, we took advantage of a remarketing opportunity for $83.7 million of tax-exempt bonds. We were pleased to be able to remarket them at 3.875%, about 140 basis points lower than the taxable market. We don't expect further debt issuances during the year.

在流動性方面，截至 3 月 31 日，我們承諾的信用額度下有 1.98 億美元的可用流動性，信用證設施下有 3,600 萬美元的可用流動性。4 月份，我們利用了 8,370 萬美元免稅債券的再行銷機會。我們很高興能夠以 3.875% 的利率重新銷售它們，比應稅市場低約 140 個基點。我們預計年內不會進一步發行債券。

We expect to issue approximately $70 million of common stock in 2024 which will occur throughout the remainder of the year to fund our capital spending. Improved cash from operations will also help fund our planned expenditures in 2024.

我們預計在 2024 年發行約 7,000 萬美元的普通股，這將在今年剩餘時間內發行，為我們的資本支出提供資金。營運現金的增加也將有助於為我們 2024 年的計畫支出提供資金。

We are confirming our earnings guidance for 2024 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.

我們確認 2024 年獲利指引，合併範圍為稀釋後每股 2.36 美元至 2.56 美元。我們預計 Avista Utilities 攤薄後每股出資範圍為 2.23 美元至 2.39 美元。

Several changes have occurred since we shared our initial guidance for the 2024 ERM with you in February. There were unfavorable changes in forward prices that resulted in expected reduced benefit from optimization when compared to our forecast at the beginning of the year.

自從我們在 2 月與您分享 2024 年 ERM 的初步指南以來，已經發生了一些變化。遠期價格出現不利變化，導致與我們年初的預測相比，優化帶來的預期收益減少。

In addition, hydro conditions, which we anticipated would be below normal, have further deteriorated. As a result, we expect the impact of the ERM on the full year for 2024 to be negative $0.07 per diluted share in the 90% customer, 10% company sharing band.

此外，我們預計水力狀況將低於正常水平，但現在已進一步惡化。因此，我們預計，在 90% 客戶、10% 公司共享範圍內，ERM 對 2024 年全年的影響將為稀釋後每股負 0.07 美元。

And I'm pleased to share that by the end of the second quarter, we expect to finalize an agreement with a prospective large electric customer already in our service territory that is currently being served in the wholesale markets. We expect the resulting increase in utility margin to help offset the forecast impact of the ERM on our results in 2024.

我很高興地告訴大家，到第二季末，我們預計將與已經在我們的服務區域（目前正在批發市場提供服務）的潛在大型電力客戶敲定協議。我們預計公用事業利潤率的增加將有助於抵消 ERM 對我們 2024 年業績的預測影響。

Our guidance for Avista Utilities in 2024 reflects unrecovered structural costs, which we estimate will reduce the return on equity by 70 basis points. We expect 60 basis points of regulatory timing lag in 2024. This results in an expected return on equity at Avista Utilities of 8.1% in 2024.

我們對 Avista Utilities 2024 年的指導反映了未收回的結構性成本，我們估計這將使股本回報率降低 70 個基點。我們預計 2024 年監管時間落後將達到 60 個基點。這導致 Avista Utilities 2024 年的預期股本回報率為 8.1%。

We also expect AEL&P to contribute in the range of $0.09 to $0.11 per diluted share, and we expect our other businesses to contribute in the range of $0.04 to $0.06 per diluted share in 2024. Assuming a constructive outcome in our 2024 general rate case filings, we expect our earnings to grow over the long term in the range of 4% to 6% from a 2025 base share.

我們也預計 2024 年 AEL&P 的稀釋每股貢獻將在 0.09 至 0.11 美元之間，我們預計其他業務的攤薄每股貢獻將在 0.04 至 0.06 美元之間。假設我們的 2024 年一般利率案件備案取得建設性結果，我們預期我們的長期獲利將在 2025 年基礎份額的基礎上成長 4% 至 6%。

Now, we'll be happy to take your questions.

現在，我們很樂意回答您的問題。

Thank you. (Operator Instructions) At this time, we are not showing any questions. Stacey, would you like to return to the call?

謝謝。（操作員說明） 目前，我們不會顯示任何問題。史黛西，你想繼續通話嗎？

Absolutely. Thank you all for joining us today and for your interest in Avista. We look forward to seeing many of you in a few weeks at AGA. Have a great day.

絕對地。感謝大家今天加入我們以及對 Avista 的興趣。我們期待幾週後在 AGA 見到你們中的許多人。祝你有美好的一天。

Thank you. This now ends the call. You may now hang up.

謝謝。現在通話結束。您現在可以掛斷電話了。