Hydro One (H) Q3 2024 earnings summary

Executive summary

• Q3 2024 basic EPS was $0.62, up from $0.60 year-over-year, driven by higher OEB-approved rates, increased demand, and strong revenue growth in both transmission and distribution segments.

• Net income for Q3 2024 rose 3.9% to $371 million, with revenues up 13.3% to $2,192 million; capital investments increased 21.2% to $773 million, supporting grid reliability and growth.

• Major transmission projects, including Waasigan and Chatham to Lakeshore, are progressing ahead of schedule and under budget, with significant First Nations partnerships and regulatory/government approvals.

• Regulatory settlements and OEB approvals provide revenue and cost certainty through 2029, supporting stable and predictable cash flows.

• Recognized for responsible business practices, safety, and sustainability, including a 24% reduction in Scope 1 GHG emissions since 2018 and national awards.

Financial highlights

• Q3 2024 consolidated revenues rose 13.3% year-over-year to $2,192 million; net income increased 3.9% to $371 million; basic EPS was $0.62.

• Revenue net of purchased power increased 6% year-over-year; transmission up 5.7%, distribution up 16.7%.

• Operating, maintenance, and administration expenses were stable at $294 million, up 0.3% year-over-year.

• Depreciation and asset removal costs rose 6% to $263 million due to capital asset growth.

• Issued $1.2 billion in medium-term notes under the Sustainable Financing Framework.

Outlook and guidance

• Maintaining 5%-7% compound annual EPS growth guidance for 2023–2027, with 2027 EPS guidance at $2.26, based on normalized 2022 EPS of $1.61.

• 2023–2027 rate base CAGR expected at ~6%; average annual dividend growth targeted at ~6%.

• Capital investments projected at $3,152 million for 2024, with future investments of $3,119 million in 2025, $2,667 million in 2026, and $2,362 million in 2027.

• Effective tax rate expected to remain between 13%-16% for the remainder of the JRAP period.

• Dividend of $0.3142 per share declared, payable December 31, 2024.