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02/19/2019

AVANGRID Reports Fourth Quarter and Full Year 2018 Earnings Results and Provides 2019 Earnings Outlook

AVANGRID Reports Fourth Quarter and Full Year 2018 Earnings Results and Provides 2019 Earnings Outlook

(Orange, CT – February 19, 2019) Today AVANGRID, Inc. (NYSE: AGR) reported consolidated U.S. GAAP net income of $119 million, or $0.38 per share, for the fourth quarter ended December 31, 2018, compared to a net loss of $77 million, or $0.25 per share, for the same period in 2017. For the full year ended December 31, 2018, consolidated net income was $595 million, or $1.92 per share, compared to $381 million, or $1.23 per share, for the full year in 2017.

 

Excluding the Gas Storage and Trading businesses and certain losses related to its sale, restructuring charges, Tax Act-related adjustments, mark-to-market adjustments, and other adjustments in Renewables, non-U.S. GAAP consolidated adjusted net income was $173 million, or $0.56 per share, for the quarter ended December 31, 2018, compared to $188 million, or $0.61 per share, for the same period in 2017. For the full year ended December 31, 2018, non-U.S. GAAP consolidated adjusted net income was $684 million, or $2.21 per share, compared to $682 million, or $2.20 per share in 2017.

 

“2018 was an excellent year for AVANGRID in terms of executing on our strategic plan, but challenging from an earnings perspective,” commented James P. Torgerson, chief executive officer of AVANGRID. “Minor storms and storm-related impacts, lower than expected wind resource and start-up and transmission interruptions at two of our new wind farms negatively affected our 2018 financial performance. We met these challenges head-on by managing our operating costs to partially mitigate earnings setbacks.”

 

“Our two New England clean energy strategic projects are advancing and remain on track,” added Torgerson. “Vineyard Wind, our 800 MW offshore wind farm in a joint-venture with Copenhagen Infrastructure Partners, and the NECEC transmission project are both making progress on key approvals and permits and we continue to expect to begin construction in late 2019.”

 

“For 2019, we are looking to achieve our growth objectives, deliver efficiencies in all areas of the company and address the issues that impacted our results in 2018, ensuring we remain on the path to achieving best-in-class service, safety, reliability and financial performance and rank among the elite companies in our industry.”

 

Net income and earnings per share for the fourth quarter and full year of 2018 and 2017 on a U.S. GAAP basis and a non-U.S. GAAP adjusted basis are set forth below:

 

 

For additional information, see “Use of Non-U.S. GAAP Financial Measures” and “Reconciliation of Non-U.S. GAAP Financial Measures” at the end of the release.

 

The following results for AVANGRID’s business segments are reported in U.S. GAAP.

Avangrid Networks

For the fourth quarter 2018, Avangrid Networks earned $103 million, or $0.33 per share, compared to $124 million, or $0.40 per share, for the same period in 2017. Earnings for the full year 2018 were $478 million, or $1.54 per share, compared to $496 million, or $1.60 per share, for the same period in 2017. Earnings for the fourth quarter and full year 2018 compared to 2017 benefited primarily from the implementation of the multi-year rate plans and lower restructuring charges, which were more than offset by non-deferrable storm-related costs (minor storms and related impacts), increased depreciation expenses, the absence of performance incentives which expired in 2017 and higher tax sharing adjustments (partially offset in Corporate).

Networks adjusted earnings for the fourth quarter 2018 were $110 million, or $0.35 per share, compared to $133 million, or $0.43 per share, for the same period in 2017.  Adjusted earnings for the full year 2018 were $486 million, or $1.57 per share, compared to $507 million, or $1.64 per share in 2017.

Avangrid Renewables

For the fourth quarter 2018, Avangrid Renewables earned $7 million, or $0.02 per share, compared to $218 million, or $0.70 per share, for the same period in 2017. Earnings for the full year 2018 were $148 million, or $0.48 per share, compared to $333 million, or $1.07 per share, for the same period in 2017. Earnings for the fourth quarter and full year 2017 compared to the same periods in 2018 reflect tax reform measurements of a $301 million benefit and $16 million expense, respectively. Earnings for the fourth quarter compared to the same period in 2017 benefited from increased wind generation from new capacity (although below expectations), and income from the sale of projects in development and the absence of an impairment of an equity method investment recorded in 2017, partially offset by expiring tax credits. Adjusted earnings for the fourth quarter 2018 were $37 million, or $0.12 per share, compared to $6 million or $0.02 per share, for the same period in 2017.

Earnings for the full year 2018 benefited from increased wind generation from new capacity (although below expectations), income from the settlement of a counterparty bankruptcy proceeding, recovery of bad debt and revenues from a disputed contract, the sale of transmission rights and income from the sale of projects in development. These benefits were partially offset by the impact of start-up issues at two new wind farms during the second quarter 2018. Adjusted earnings for the full year 2018 were $185 million, or $0.60 per share, compared to $120 million, or $0.39 per share in 2017.

Corporate

For the fourth quarter 2018, Corporate earned net income of $8 million, or $0.02 per share, compared to $53 million, or $0.17 per share, for the same period in 2017. For the full year 2018, Corporate incurred a net loss of $12 million, or $0.04 per share, compared to net income of $60 million, or $0.19 per share, in 2017. Earnings for the fourth quarter and full year 2018 compared to the same period in 2017 reflect tax sharing adjustments (mentioned above in Networks), additional finance expenses associated with new long-term debt issued in November 2017, the elimination of intercompany interest income from the Gas Storage and Trading Businesses in 2018 and the absence of a unitary tax benefit driven by the sale of the Gas Storage and Trading Businesses recorded in the fourth quarter 2017.

Adjusted earnings for the fourth quarter 2018 were $26 million, or $0.08 per share, compared to $49 million, or $0.16 per share, for the same period in 2017. For the full year 2018, adjusted earnings for were $13 million, or $0.04 per share, compared to $55 million, or $0.18 per share in 2017.

Gas Storage and Trading

The sales of the Gas Storage and Trading and businesses were completed on May 1 and March 1  2018, respectively. For the fourth quarter 2018, Gas Storage and Trading reported net income of $1 million, compared to a net loss of $472 million, or $1.53 per share, for the same period in 2017. For the full year 2018, Gas Storage and Trading incurred a net loss of $19 million, or $0.06 per share, compared to net loss of $508 million, or $1.64 per share, compared to the full year 2017.

Outlook

AVANGRID’s U.S. GAAP consolidated earnings outlook and adjusted non-U.S. GAAP consolidated earnings outlook for 2019 are projected to be $2.18-$2.33 per share and $2.25-$2.40 per share, respectively. AVANGRID believes the adjusted consolidated earnings outlook is useful in understanding and evaluating actual and projected financial performance of the company. Details of the earnings components of the outlook are summarized as follows, including reconciliations to the U.S. GAAP earnings outlook for 2019 to the adjusted non-U.S. GAAP consolidated earnings outlook.

Details of the earnings components are as follows:

  • Earning allowed returns at the utilities through best practices & cost management
  • Addresses cost recovery mechanisms for minor storms in rate requests, implementing operational improvements and investing in storm resiliency
  • FERC ROE decision approving current proposal
  • Revised wind forecast from 2011-2014 average to life-to-date average
  • Potential sale and/or partnership sale of projects
  • Conducting mid-period assessment of Forward 2020+ plan to achieve best in class objectives

 

Webcast

AVANGRID will webcast an audio-only financial presentation in conjunction with releasing fourth quarter and full year 2018 earnings tomorrow, Wednesday, February 20th beginning at 9:00 A.M. Eastern time. The webcast will feature a presentation from Avangrid’s CEO, James P. Torgerson and other members of the executive team, and can be accessed through the Investor Relations’ section of Avangrid’s website at www.avangrid.com.

In addition, AVANGRID will host a meeting for the investor community on Tuesday, February 26, 2019 in New York beginning at 9:00 A.M. Eastern time.  AVANGRID’s Executive team will present an update of AVANGRID’s Long-term Outlook followed by a question and answer session. The audio-webcast can also be accessed through the Investor Relations’ section of Avangrid’s website at www.avangrid.com

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About Avangrid

About Avangrid: Avangrid, Inc. (NYSE: AGR) aspires to be the leading sustainable energy company in the United States. Headquartered in Orange, CT with approximately $44 billion in assets and operations in 24 U.S. states, Avangrid has two primary lines of business: networks and renewables. Through its networks business, Avangrid owns and operates eight electric and natural gas utilities, serving more than 3.3 million customers in New York and New England. Through its renewables business, Avangrid owns and operates a portfolio of renewable energy generation facilities across the United States. Avangrid employs approximately 8,000 people and has been recognized by JUST Capital in 2021, 2022, 2023 and 2024 as one of the JUST 100 companies – a ranking of America’s best corporate citizens. In 2024, Avangrid ranked first among utilities and 12 overall. The company supports the U.N.’s Sustainable Development Goals and was named among the World’s Most Ethical Companies in 2024 for the sixth consecutive year by the Ethisphere Institute. Avangrid is a member of the group of companies controlled by Iberdrola, S.A. For more information, visit www.avangrid.com.

 

About Iberdrola: Iberdrola is one of the world's biggest energy companies and a leader in renewables, spearheading the energy transition to a low carbon economy. The group supplies energy to almost 100 million people in dozens of countries. With a focus on renewable energy, smart networks and smart solutions for customers, Iberdrola’s main markets include Europe (Spain, the United Kingdom, Portugal, France, Germany, Italy and Greece), the United States, Brazil, Mexico and Australia. The company is also present in growth markets such as Japan, Taiwan, Ireland, Sweden and Poland, among others.

With a workforce of nearly 40,000 and assets in excess of €141.7 billion, across the world, Iberdrola helps to support 400,000 jobs across its supply chain, with annual procurement of €12.2 billion. A benchmark in the fight against climate change, Iberdrola has invested more than €130 billion over the past two decades to help build a sustainable energy model, based on sound environmental, social and governance (ESG) principles.

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