Mr. Chris Huskilson reports

ALGONQUIN POWER & UTILITIES CORP. WILL PURSUE SALE OF RENEWABLE ENERGY GROUP FOLLOWING STRATEGIC REVIEW; ANNOUNCES 2023 SECOND QUARTER FINANCIAL RESULTS

Algonquin Power & Utilities Corp. will pursue a sale of the renewable energy group.

"Over the past few months, the AQN board of directors, in conjunction with our independent financial adviser, has conducted a thorough review of our businesses with the aim of enhancing value for our shareholders," said Chris Huskilson, interim chief executive officer of Algonquin. "We have two strong businesses -- a well-positioned regulated utility business with diversified assets and attractive jurisdictions and a solid, competitive renewables business with scale and strong assets. That said, we believe the value of our assets is not fully realized in our current structure. We therefore determined that focusing on our regulated business going forward and pursuing a sale of the renewables business is the best path forward for AQN."

Mr. Huskilson continued: "We are confident that the intended sale will unlock AQN's value as a pure play regulated utility by simplifying our structure and enabling us to focus on lower-risk regulated investment opportunities, with greater operational efficiency and capital discipline. We expect to use the proceeds of a renewables transaction to reduce our debt and fund share repurchases. In addition, our objectives for the transaction are to support our current dividend, reduce our cost of capital and maintain our investment-grade BBB credit rating. At the same time, we will seek to maximize the value of the renewables business and position it with a new owner that can facilitate its long-term success through the ongoing energy transition."

As announced on May 11, 2023, the company's board of directors initiated a strategic review of the renewable energy group with the aim of enhancing shareholder value. The strategic review was conducted by the strategic review committee of the board, comprising directors Chris Huskilson (chair), Amee Chande and Dan Goldberg.

J.P. Morgan will act as the company's financial adviser in connection with the sale of the renewable energy group. The company expects to exit the sale process as a competitively capitalized, pure play regulated utility with a stable and healthy growth outlook.

Second quarter financial highlights

The company has released financial results for the second quarter ended June 30, 2023. All amounts are shown in U.S. dollars, unless otherwise noted.

"While our second quarter 2023 results were negatively impacted by unfavourable weather, we remain focused on our growth outlook and long-term success," said Mr. Huskilson.

Highlights:

• Revenue of $627.9-million -- an increase of 1 per cent;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $277.7-million -- a decrease of 4 per cent;
• Adjusted net earnings of $56.2-million -- a decrease of 49 per cent;
• Adjusted net earnings per common share of eight cents -- a decrease of 50 per cent, in each case on a year-over-year basis.

Quarterly results:

• Solid regulated growth from new rate implementations: The regulated services group grew primarily due to the implementation of new rates at certain of the company's utilities. As previously disclosed, the company realized the benefit of an annual revenue increase of $27-million at its CalPeco Electric utility, which was authorized on April 27, 2023, effective June, 2023, and retroactive to January, 2022. The order's retroactive adjustment resulted in a one-time net earnings benefit of $11.2-million that was realized in the second quarter of 2023.
• New rates filed in New York and New Hampshire: In the second quarter of 2023, the regulated services group filed for new rates at its New York Water and Granite State Electric utilities. The New York Water application, filed on May 4, 2023, seeks an increase in revenues of $39.7-million based on a return on equity (ROE) of 10 per cent and an equity ratio of 50 per cent. The Granite State Electric utility, filed on May 5, 2023, seeks a permanent increase in revenues of $15.5-million and a temporary increase of $6.7-million based on an ROE of 10.35 per cent and an equity ratio of 55 per cent.
• Unfavourably impacted results due to weather: Over all across the company's business segments, unfavourable weather negatively impacted second quarter adjusted net earnings per common share by approximately three cents compared with the same period in 2022. More specifically, the renewable energy group's wind facilities generated 75.1 per cent of long-term average resource, a 22-per-cent decrease compared with the same period in 2022, accounting for approximately two cents of year-over-year adjusted net earnings per common share decline. For the regulated services group, unfavourable weather reduced customer demand and drove a headwind equating to approximately one cent of year-over-year adjusted net earnings per common share decline.
• Renewable operating performance reduced by HLBV (hypothetical liquidation at book value) rolloffs: The renewable energy group experienced a $14-million decrease in hypothetical liquidation at book value related to end of the production tax credit eligibility on certain projects commissioned in 2012, as previously experienced in the latter half of 2022 and first quarter of 2023, and the remainder related to weather-driven reduced wind production.
• Higher interest expenses reflect growth financing and macro environment: In the second quarter of 2023, interest expense increased by $25.1-million year over year, with approximately two-thirds of this increase attributable to higher short-term borrowing costs and approximately one-third attributable to financings to support growth initiatives. Higher interest expenses also drove a large portion of the year-over-year decline in adjusted funds from operations.

The interim MD&A (management discussion and analysis) and Algonquin's unaudited interim consolidated financial statements for the three and six months ended June 30, 2023, will be available on its website and in its corporate filings on SEDAR+ (for Canadian filings) and EDGAR (for U.S. filings).

Earnings conference call

Algonquin will hold an earnings conference call at 8:30 a.m. Eastern Time on Thursday, Aug. 10, 2023, hosted by interim chief executive officer Chris Huskilson and chief financial officer Darren Myers.

Date:  Thursday, Aug. 10, 2023

Time:  8:30 a.m. ET

Conference call

Toll-free dial-in number:  1-800-715-9871

Toll dial-in number:  1-646-307-1963

Conference ID:  2060573

Webcast:  on Algonquin's website

About Algonquin Power & Utilities Corp.

Algonquin Power & Utilities, parent company of Liberty, is a diversified international generation, transmission and distribution utility with over $17-billion of total assets. Algonquin is committed to providing safe, secure, reliable, cost-effective and sustainable energy and water solutions through its portfolio of generation, transmission and distribution utility investments to over one million customer connections, largely in the United States and Canada. In addition, Algonquin owns, operates and/or has net interests in over four gigawatts of installed renewable energy capacity. Algonquin's common shares, preferred shares, Series A, and preferred shares, Series D, are listed on the Toronto Stock Exchange under the symbols AQN, AQN.PR.A, and AQN.PR.D, respectively. Algonquin's common shares, Series 2018-A subordinated notes, Series 2019-A subordinated notes and equity units are listed on the New York Stock Exchange under the symbols AQN, AQNA, AQNB, and AQNU, respectively.

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