Results Presentation 2018 Results February 20 / 2019 Avangrid, “utility of the future”
Legal Notice FORWARD LOOKING STATEMENTS Additional information will also be set forth in subsequent filings Certain statements in this presentation may relate to our future with the SEC. You should consider these factors carefully in business and financial performance and future events or evaluating for-ward looking statements. developments involving us and our subsidiaries that are not purely historical and may constitute “forward -looking statements” Should one or more of these risks or uncertainties materialize, or within the meaning of the Private Securities Litigation Reform Act should any of the underlying assumptions prove incorrect, actual of 1995. Forward-looking statements may be identified by the use results may vary in material respects from those expressed or of forward-looking terms such as “may,” “will,” “should,” “would,” implied by these forward-looking statements. You should not “could,” “can,” “expect(s,)” “believe(s),” “anticipate(s),” “intend(s),” place undue reliance on these forward-looking statements. We “plan(s),” “estimate(s),” “project(s),”“assume(s),” “guide(s),” do not undertake any obligation to update or revise any forward- “target(s),” “forecast(s),” “are (is) confident that” and “seek(s)” or looking statements to reflect events or circumstances after the the negative of such terms or other variations on such terms or date of this presentation whether as a result of new information, comparable terminology. Such forward looking statements future events or otherwise, except as may be required under include, but are not limited to, statements about our plans, applicable securities laws. objectives and intentions, outlooks or expectations for earnings, revenues, expenses or other future financial or business About AVANGRID performance, strategies or expectations, or the impact of legal or AVANGRID, Inc. (NYSE: AGR) is a leading, sustainable energy regulatory matters on our business, results of operations or company with approximately $32 billion in assets and operations financial condition. Such statements are based upon the current in 24 U.S. states. AVANGRID has two primary lines of business: reasonable beliefs, expectations and assumptions of our Avangrid Networks and Avangrid Renewables. Avangrid management and are subject to significant risks and Networks owns eight electric and natural gas utilities, serving 3.2 uncertainties that could cause actual outcomes and results to million customers in New York and New England. Avangrid differ materially. Important factors that could cause actual results Renewables owns and operates 7.2 gigawatts of electricity to differ materially from those indicated by such forward-looking capacity, primarily through wind power, with a presence in 22 statements include, without limitation, the risks and uncertainties states across the United States. AVANGRID supports the set forth under the section entitled “Risk Factors” and achievement of the Sustainable Development Goals approved by “Management’s Discussion and Analysis of Financial Condition the member states of the United Nations, and earned the and Results of Operations” in our Annual Report on Form 10-K Compliance Leader Verification, a third party verification of its for the year ended December 31, 2017 and our Quarterly Report ethics and compliance program, from the Ethisphere Institute. on form 10-Q for the nine months ended September 31, 2018, AVANGRID employs approximately 6,500 people. For more which are on file with the U.S. Securities and Exchange information, visit www.avangrid.com. Commission (SEC) and available on our investor relations website at www.Avangrid.com and on the SEC website at Investors@AVANGRID.com www.sec.gov. Avangrid, “utility of the future” 2
Legal Notice Use of Non-U.S. GAAP Financial Measures Government on December 22, 2017, impact of accelerated To supplement our consolidated financial statements presented in depreciation on the repowering of certain Renewables assets and accordance with U.S. GAAP, AVANGRID considers certain non- the impairment of equity method investments. GAAP financial measures that are not prepared in accordance with U.S. GAAP, including adjusted net income, adjusted EPS, adjusted We define adjusted EBITDA as net income attributable to gross margin and adjusted EBITDA. The non-GAAP financial AVANGRID, adding back income tax expense, depreciation, measures we use are specific to AVANGRID and the non-GAAP amortization, impairment of non-current assets and interest financial measures of other companies may not be calculated in the expense, net of capitalization, and then subtracting other income same manner. We use these non-GAAP financial measures, in and earnings from equity method investments. We also define addition to U.S. GAAP measures, to establish operating budgets and adjusted gross margin as adjusted EBITDA adding back operations operational goals to manage and monitor our business, evaluate our and maintenance and taxes other than income taxes and then operating and financial performance and to compare such subtracting transmission wheeling. The most directly comparable performance to prior periods and to the performance of our U.S. GAAP measure to adjusted EBITDA and adjusted gross margin competitors. We believe that presenting such non-GAAP financial is net income. We believe that presenting these non-GAAP financial measures is useful because such measures can be used to analyze measures is useful in understanding and evaluating actual and and compare profitability between companies and industries because projected financial performance and contribution of AVANGRID core it eliminates the impact of financing and certain non-cash charges as lines of business and to more fully compare and explain our well as allow for an evaluation of AVANGRID with a focus on the results. The most directly comparable U.S. GAAP measure to performance of its core operations. In addition, we present non- adjusted net income is net income. We also provide adjusted EPS, GAAP financial measures because we believe that they and other which is adjusted net income converted to an earnings per share similar measures are widely used by certain investors, securities amount. analysts and other interested parties as supplemental measures of performance. The use of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, We provide adjusted net income and adjusted earnings per share, AVANGRID’s U.S. GAAP financial information, and investors are which are adjusted to reflect the effect of mark-to-market changes in cautioned that the non-GAAP financial measures are limited in their the fair value of derivative instruments used by AVANGRID to usefulness, may be unique to AVANGRID, and should be economically hedge market price fluctuations in related underlying considered only as a supplement to AVANGRID’s U.S. GAAP physical transactions for the purchase and sale of electricity, financial measures. The non-GAAP financial measures may not be adjustments for the non-core Gas Storage business including certain comparable to other similarly titled measures of other companies losses related to its sale, restructuring charges primarily associated and have limitations as analytical tools. Non-GAAP financial with reorganizing to better align our people resources with business measures are not primary measurements of our performance under demands and priorities as part of the Forward 2020+ program, impact U.S. GAAP and should not be considered as alternatives to from measurement of deferred income tax balances as a result of the operating income, net income or any other performance measures Tax Act enacted by the U.S. federal determined in accordance with U.S. GAAP. Avangrid, “utility of the future” 3
James Torgerson James Torgerson 4Q & FY 2018 Highlights Avangrid, “utility of the future” 4
2018 Results Highlights 4Q ’18 Net Income $119M $0.38/share + 253% FY ’18 Net Income $595M $1.92/share + 56% 4Q ’18 Adjusted Net Income (1) $173M $0.56/share - 8% FY ’18 Adjusted Net Income (1) $684M $2.21/share 0% • Addressing wind forecasting methodology & impact of the number of unprecedented minor storms • Aggressively pursuing best practices and corporate efficiency initiatives Executing on the growth in our strategic plan • $1.7B of capital spending (2) in ’18 • ~594 MW of solar and onshore wind long term contracts executed in ’18 ~1 GW onshore wind under construction for COD in ’19, additional 263 MW with contracts for ’20 COD, & optimizing pipeline with sale of 80% of the Coyote Ridge 97 MW wind project • New rate plans for CNG & BGC effective January ’19, filed rate case for CMP , & expect to file rate cases for NYSEG & RGE by 2Q ’19 • New England clean energy projects on track (Vineyard Wind (3) , NECEC) • Completed the sale of the Gas Storage non-core businesses Dividends • Board declared quarterly dividend of $0.44/share on 2/13/19, payable on 4/1/19 (1) See Appendix for reconciliation of adjusted net income and adjusted EPS to net income and EPS. (2) Accrued capital spending. (3) AVANGRID’s 50/50 partnership with Copenhagen Infrastructure Partners (CIP). 5
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