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Avangrid, Inc. (AGR)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 delivered a clean beat: adjusted EPS $0.49 vs consensus ~$0.27 (+$0.22) and revenue $1.923B vs consensus ~$1.72B (+$0.203B), driven by execution of multi‑year rate plans in NY and ME and stronger renewables pricing and resources .
  • GAAP EPS rose to $0.44 (from $0.22 YoY), operating income improved to $201M (from $126M), while net income margin expanded to ~8.8% YoY; QoQ seasonality pulled revenue down from Q1’s $2.417B .
  • Networks earned $152M in Q2 (rate plans), Renewables $70M (pricing/resource strength, offset by higher depreciation); H1 capex reached $1.9B, debt up $1.8B to fund investments .
  • Key catalysts: full Federal approval for New England Wind construction and agreement to sell the Kitty Hawk North offshore lease (~$160M), which supports capital recycling and portfolio focus .

What Went Well and What Went Wrong

  • What Went Well

    • Execution of NY/ME rate plans driving Networks earnings: “Results… primarily impacted by the execution of existing rate plans in New York and Maine” (Q2 Networks $152M, $0.39 EPS) .
    • Renewables performance and pricing: “strong balancing resource performance and increased pricing” (Q2 Renewables $70M, $0.18 EPS) .
    • Strategic progress: full Federal approval for New England Wind; PPA momentum (578 MW YTD and a 300 MW existing wind PPA); H1 capex $1.9B invested in growth .
    • CEO tone: “Our first half financial results remained in-line with our plan” (Pedro Azagra) .

  • What Went Wrong

    • Opex and interest cost headwinds: Operations & maintenance rose to $819M (from $634M), and net interest expense increased to $122M (from $99M) YoY, diluting flow‑through of revenue gains .
    • Depreciation burden: D&A up to $310M (from $285M) reflecting higher asset base and repowering, pressuring Renewables GAAP results .
    • Balance sheet leverage: debt increased $1.8B in H1 to fund investment; requires continued rate base growth and cash generation to protect FFO/credit metrics .

Financial Results

MetricQ2 2023Q1 2024Q2 2024
Operating Revenues ($USD Billions)$1.587 $2.417 $1.923
GAAP EPS ($USD)$0.22 $0.91 $0.44
Adjusted EPS ($USD)$0.21 $0.88 $0.49
Operating Income ($USD Millions)$126 $407 $201
Operating Margin % (Operating Income/Revenue)7.9% (126/1,587) 16.8% (407/2,417) 10.5% (201/1,923)
Net Income Margin % (Net Income Attrib./Revenue)5.4% (85/1,587) 14.5% (351/2,417) 8.8% (169/1,923)

Segment earnings (GAAP):

Segment Earnings ($USD Millions)Q2 2023Q1 2024Q2 2024
Networks$76 $268 $152
Renewables$69 $95 $70
Corporate & Other-$60 -$11 -$54
Total (Net Income Attrib.)$85 $351 $169

KPIs:

KPIValue
H1 2024 Capex ($USD Billions)$1.9
H1 2024 Debt Increase ($USD Billions)$1.8
Onshore PPAs Executed YTD (MW)578; plus a 300 MW existing wind PPA
Weighted‑Avg Diluted Shares (Q2) (Millions)387.4
NECEC AFUDC Assumption (Disclosure from prior call)8.5%

Consensus vs Actual (note: S&P Global consensus unavailable via tool; using third‑party proxies):

MetricConsensusActualBeat/Miss
Adjusted EPS ($USD)~$0.27 $0.49 +$0.22
Revenue ($USD Billions)~$1.72 $1.923 +$0.203

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPS ($USD)FY 2024$2.17–$2.32 (affirmed in Q1) No change signaled in Q2 materials; prior range remains the reference Maintained
Dividend per Share ($USD)Annual$1.76 (maintained policy; subject to Board) No change indicated in Q2 materials Maintained
NECEC Capex (2024)FY 2024“Over $600M” spend expected (Q4 call) Ongoing execution; project progress continued Maintained focus

Earnings Call Themes & Trends

(Transcript for Q2 2024 not publicly available via our sources; themes reflect prepared remarks and prior Q&A.)

TopicPrevious Mentions (Q4’23 and Q1’24)Current Period (Q2’24)Trend
NY/ME multiyear rate plans & ROE attainmentSecured ~$9B investments; NY PSC approvals; ME multiyear plan; targeting ROEs Networks earnings driven by plan execution Positive; predictable growth
Offshore wind (Vineyard, New England Wind)Vineyard 1 construction and ITCs in focus; tax equity closed; seeking additional ITCs Full Federal approval for New England Wind construction; Kitty Hawk lease sale agreement Progress and portfolio optimization
Onshore renewables, PPAs & repowering728 MW new FIDs; 990 MW under construction; repower plan to enhance cash/earnings 578 MW PPAs executed YTD; 300 MW existing wind PPA signed Continued execution
NECEC transmissionConstruction progress; AFUDC 8.5%; change‑of‑law focus Continued progress; earnings under construction via AFUDC On track
Financing/liquidity & leverageGreen bonds/loans; no 2024 equity issuance; focus on FFO/debt H1 debt +$1.8B to fund growth Neutral; monitor leverage metrics

Management Commentary

  • “Our first half financial results remained in-line with our plan; execution on our multi-year rate plans in New York and Maine, received full Federal approval for… New England Wind… and we continue to execute onshore wind and solar PPAs.” — CEO Pedro Azagra .
  • “Affirming 2024 Earnings and Adjusted Earnings Outlook of $2.17–$2.32 per share.” — Q1 release .

Q&A Highlights

  • Q2 2024 earnings call transcript was not available through our sources; the company scheduled the call for July 23, 2024 (4:00pm ET) .
  • The most recent detailed Q&A (Q4 2023) emphasized: NECEC AFUDC at 8.5%, focus on achieving authorized ROEs, repowering benefits (cash and earnings), and disciplined financing without 2024 equity issuance .

Estimates Context

  • Results materially exceeded Street proxies (Adjusted EPS +$0.22, Revenue +$0.203B). S&P Global consensus estimates were unavailable via our tool; therefore, consensus benchmarks reflect third‑party sources (Zacks/MarketBeat) .
  • Estimate revisions likely increase for Renewables/Networks given rate plan execution and pricing/resource tailwinds; O&M, interest expense, and depreciation trajectories should be reflected in updated models .

Key Takeaways for Investors

  • Beat quality looks high: regulated rate plan execution and renewables pricing/resources drove broad‑based earnings strength; adjusted EPS $0.49 vs ~$0.27 consensus, revenue $1.923B vs ~$1.72B consensus .
  • Networks momentum should persist as NY/ME plans ramp, supporting earnings visibility and cash generation; watch ROE attainment and O&M optimization .
  • Renewables portfolio is balancing resource/pricing gains with higher depreciation from repowering; continued PPA execution (578 MW YTD + 300 MW existing) underpins revenue stability .
  • Strategic portfolio actions (Kitty Hawk lease sale) and New England Wind approvals de‑risk the offshore pipeline and provide capital recycling optionality .
  • Balance sheet leverage increased ($1.8B H1 debt); near‑term focus should be on FFO/debt trajectory, rate base growth, and interest expense management .
  • Trading lens: strength in regulated narrative plus offshore approvals and capital recycling are positive catalysts; monitor macro rates and regulatory developments for sustained multiple support .
  • FY24 adjusted EPS range ($2.17–$2.32) remains the reference; absent a Q2 change, delivery vs midpoint is the critical proof point into H2 .

Sources:

  • Q2 2024 8‑K and press release with detailed financials, segment earnings, and reconciliations .
  • Q1 2024 8‑K and press release for prior quarter trend and guidance .
  • Q4 2023 earnings call transcript for prior themes, ROE/O&M, NECEC AFUDC .
  • Consensus proxies and call logistics .