Hydro One ((TSE:H)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Hydro One’s Latest Earnings Call Projects a Positive Outlook Amid Challenges
Hydro One’s recent earnings call painted a largely positive picture, highlighting strong safety performance, improved customer satisfaction, and successful capital investments. The company’s robust financial performance was also emphasized, though challenges such as tariff uncertainties, increased costs in interest and depreciation, and significant executive changes were noted.
Strong Safety Performance
Hydro One’s commitment to safety was underscored by achieving a recordable injury rate of 0.55 per 200,000 hours, well below the world-class benchmark of 1.0. This achievement earned the company Electricity Canada’s President’s Award of Excellence for Employee Safety in the Transmission segment for the third consecutive year, demonstrating their continued dedication to maintaining a safe working environment.
Customer Satisfaction Improvement
The company reported notable improvements in customer satisfaction, with residential and small business scores climbing to 88% and commercial and industrial scores at 85%. These figures reflect Hydro One’s successful efforts in enhancing customer experience and satisfaction.
Capital Investments and Project Completion
In 2024, Hydro One deployed over $3 billion in capital and brought approximately $2.5 billion of assets into service. Notably, the Chatham by Lakeshore Transmission project was completed a year ahead of schedule and $30 million under budget, showcasing effective project management and cost control.
Financial Performance
The company’s financial performance remained strong, with fourth-quarter basic earnings per share rising to $0.33 from $0.30 in 2023, and full-year earnings per share increasing to $1.93 from $1.81. Net income also saw a healthy 10.5% increase in Q4, reflecting Hydro One’s solid financial footing.
Productivity Savings
Hydro One achieved $150 million in productivity savings in 2024, with a strong focus on capital expenditure efficiencies. This continued a trend from previous years and demonstrated the company’s commitment to operational efficiency.
Dividend Declaration
The board declared a dividend of $0.3142 per share for shareholders of record on March 12, 2025, indicating confidence in the company’s ongoing financial stability and profitability.
Sustainable Financing
Hydro One issued $2.75 billion in medium-term notes under its sustainable financing framework in 2024, aligning with its commitment to support sustainable and environmentally friendly initiatives.
Tariff Uncertainty
Despite the positive developments, the company expressed concerns about the evolving tariff situation, particularly the ongoing trade tensions between Canada and the US, which could impact future operations.
Organizational Changes
The departure of Andrew Spencer, Executive Vice President of Capital Portfolio Delivery, was announced, necessitating a search for a suitable replacement to continue the company’s strategic initiatives effectively.
Interest and Depreciation Costs
Hydro One faced increased costs in depreciation and interest expenses, with a 7.5% rise in interest expense due to higher rates and additional long-term debt, highlighting the financial challenges in the current economic climate.
Forward-Looking Guidance
During the earnings call, Hydro One provided forward-looking guidance, upgrading its earnings per share projection for 2027 to a range of $2.15 to $2.37, which suggests a 6% to 8% annualized growth. This outlook is driven by increased rate base growth and strategic acquisitions, such as the 48% interest in the East West Tie transmission line, positioning the company for future success.
In conclusion, Hydro One’s earnings call was marked by a positive sentiment, with strong safety and financial performance, rising customer satisfaction, and strategic capital investments. However, challenges such as tariff uncertainties and increased costs were acknowledged. Overall, the company appears well-positioned to continue its growth trajectory.
