Avista Corp. (AVA) Reports Q1 EPS of $1.76, Confirms 2019 Earnings Guidance

Avista Corp. (NYSE: AVA) reported Q1 EPS of $1.76, may not compare to the analyst estimate of $0.83.

2019 Earnings Guidance and Outlook

Avista Corp. is confirming its 2019 guidance for consolidated earnings to be in the range of $2.78 to $2.98 per diluted share, which includes $1.01 per diluted share for the termination fee received from Hydro One and the payment of remaining transaction costs.

We expect to experience regulatory lag during the period 2019 through 2021. On April 30, 2019 we filed general rates cases in Washington that are two-year rate plans. We also filed a general rate case in Oregon in March and we expect to file general rate cases in Idaho in the second quarter of 2019. We expect these cases to provide rate relief in early 2020 and begin reducing the regulatory lag that we have been experiencing. Going forward, we will continue to strive to reduce the regulatory timing lag and more closely align our earned returns with those authorized by 2022. To achieve this, we anticipate an annual earnings growth rate of 9 percent to 10 percent from 2020 to 2022 with a return to our normal 4 percent to 5 percent growth rate following 2022. The earnings growth rates are based on the mid-point of our 2019 earnings guidance as the starting point and exclude the $1.01 per diluted share related to the Hydro One transaction. These growth rates also assume timely and appropriate rate relief in our jurisdictions.

Our 2019 earnings guidance range encompasses unrecovered structural costs estimated to reduce the return on equity by approximately 90 basis points. In addition, our 2019 guidance range includes regulatory timing lag estimated to reduce the return on equity by approximately 105 basis points. This results in an expected return on equity for Avista Utilities of approximately 7.5 percent in 2019.

We expect Avista Utilities to contribute in the range of $2.72 to $2.86 per diluted share for 2019. This includes $1.01 per diluted share for the termination fee received from Hydro One and the payment of remaining transaction costs. The midpoint of our Avista Utilities' guidance range does not include any expense or benefit under the ERM. Our current expectation for the ERM is a benefit position within the 75 percent customer/25 percent Company sharing band, which is expected to add approximately $0.05 per diluted share. Our outlook for Avista Utilities assumes, among other variables, normal precipitation, temperatures and below normal hydroelectric generation for the remainder of the year.

For 2019, we expect AEL&P to contribute in the range of $0.09 to $0.13 per diluted share. Our outlook for AEL&P assumes, among other variables, normal precipitation and hydroelectric generation for the remainder of the year.

We expect the other businesses to be between a loss of $0.03 and a loss of $0.01 per diluted share, which includes costs associated with exploring strategic opportunities.

Our guidance generally includes only normal operating conditions and does not include unusual items such as settlement transactions or acquisitions/dispositions until the effects are known and certain.

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