Hydro One (H) Q4 2024 earnings summary

Executive summary

• Achieved strong safety results in 2024, with a recordable injury rate at 0.55 per 200,000 hours, below world-class benchmarks, and received industry safety awards for the third consecutive year.

• Customer satisfaction improved across all segments, with residential and small business scores at 88% and commercial/industrial at 85%.

• Major infrastructure projects advanced, including early energization of the Chatham to Lakeshore Transmission Line, selection for the Wawa to Porcupine project, and strategic acquisition of a 48% interest in the East-West Tie transmission line for CAD 257 million, expected to close in H1 2025.

• Recognized by Forbes as one of Canada's best employers for the 10th consecutive year.

• One of North America's largest electric utilities, operating Ontario's largest transmission and distribution network, with 99% of business fully rate-regulated and minimal commodity price exposure.

Financial highlights

• 2024 revenues: $8,484 million (+8.2% year-over-year); net income: $1,156 million (+6.5%); basic EPS: $1.93 (+6.6%).

• Q4 net income increased by 10.5% year-over-year; Q4 basic EPS was $0.33, up 10.5%.

• OM&A expenses decreased by 6% in Q4 and 3.4% for the year, reflecting ongoing productivity initiatives.

• Full-year capital investments reached $3,063 million, up 21% from 2023.

• Annualized FFO to net debt: 13.4%; net debt to capitalization: 58.4%.

Outlook and guidance

• EPS guidance for 2027 raised to $2.15–$2.37, representing a 6–8% annualized growth rate from 2022 normalized EPS.

• Dividend of $0.3142 per share declared, payable March 12, 2025; annualized dividend $1.2568/share.

• Dividend growth expected to average ~6% annually, with a 70–80% payout ratio.

• Rate base expected to grow from $23.6B in 2022 to $31.8B in 2027, with ~6% CAGR.

• No external equity issuance anticipated to fund planned capital investments.