AQN

• Strategic Update: U.S. Re-domiciliation

  • Algonquin currently has over 80% of operations located in the U.S. and less than 5% in Canada. Re-domiciling to Delaware (U.S.) will align the corporate structure with the company's asset base and future growth plans.
  • The move is expected to eliminate cross-border tax inefficiencies (referred to as "tax friction"), strengthen the company's long-term financial profile, broaden access to capital, and create a path for inclusion in U.S. equity indices and funds.
  • Senior leadership will be based at a new headquarters in Chicago, while a significant employee presence will be maintained in Oakville, Ontario. No changes to utility operations, customer service, or regulatory compliance are planned.
  • Management expects to seek shareholder approval in H1 2027, with completion following all required regulatory and shareholder approvals.

• Regulatory Progress & Rate Case Updates

  • Concluded key rate proceedings: The Missouri Public Service Commission approved implementation of the Empire Electric Missouri settlement for $97 million in annualized revenue adjustments, effective August 3, 2026; the Kansas Corporation Commission approved an $8.8 million revenue adjustment for Empire Electric Kansas; California Public Utilities Commission issued a final order for California Water Utilities authorizing a combined $2.7 million revenue reduction plus a $3.1 million retroactive true-up to July 2025.
  • A constructive proposed decision in the California WEMA wildfire cost proceeding authorized $58.1 million in wildfire cost recovery, equal to 75% of the company's requested amount.
  • New rate case filings completed during Q2: New York Water ($38.1 million requested adjustment, 10% ROE, 48% equity ratio); Empire Electric Arkansas ($8.4 million requested adjustment, 10% ROE, 53.4% capital structure); Energy North Gas ($35.8 million requested adjustment, 10.25% ROE, 52% capital structure); and two Arizona water utilities.
  • Filed a FERC case to convert electric transmission projects from a historic to projected test year (including CWIP inclusion), which could set foundational regulatory treatment for the company's SPP transmission line project over coming years.
  • A final decision is pending on the Arizona Litchfield Park water and sewer rate case; remaining planned 2026 filings include Granite State Electric (New Hampshire), Empire Electric Oklahoma, and a Missouri large load tariff.

• Operational & Capital Project Updates

  • Received a $5 million expense reimbursement approval from the U.S. Department of Energy for a California AMI grant that was reinstated earlier in 2026.
  • Secured a Certificate of Convenience and Necessity (CCN) from the Missouri Public Service Commission for the company's 250 MW gas-fired ERAS generation project, the first project to qualify for Construction Work in Progress (CWIP) regulatory recovery under Missouri Senate Bill 4.
  • The company's balance sheet remains strong: Algonquin holds BBB credit ratings from S&P and Fitch; Liberty Utilities holds BAA2 from Moody's and BBB from S&P and Fitch. In Q2, Liberty raised $1.15 billion via private placement senior notes to repay maturing debt at the parent level. No equity issuance is planned through 2027.

• Algonquin Power & Utilities maintains its full-year 2026 and 2027 adjusted net earnings per share forecast, with no upward or downward revision to prior guidance.
• Management reaffirms that it expects to remain on track to meet its existing adjusted net EPS targets for both years.
• Management expects that after re-domiciliation is completed (expected in 2027), recurring annual tax savings will add 2 to 3 cents to run-rate adjusted EPS, with partial phased benefits in 2027 depending on approval timing.
• The company expects to maintain its FFO-to-debt ratio above the S&P downgrade threshold of 11% through 2027, supported by revenue from recently approved rate cases.
• Management expects to extend long-term earnings guidance (in line with peer group practice) alongside the release of full-year 2026 results on the Q4 2026 earnings call.

Algonquin Power & Utilities does not break out separate product segment financial results with absolute revenue and contribution percentages in this call. Overall consolidated results for Q2 2026 are: GAAP net earnings of $4.9 million, compared to $14.8 million in Q2 2025; adjusted net earnings of $29.2 million, compared to $33.6 million in Q2 2025. Year-to-date (first half 2026) consolidated results: GAAP net earnings of $88 million, compared to $107.6 million in the first half of 2025; adjusted net earnings of $128.8 million, compared to $142.6 million in the prior year period. Second quarter 2026 adjusted net earnings per share was flat year-over-year at 0.14 cents per share; year-to-date adjusted net EPS was 17 cents per share, compared to 19 cents per share in the first half of 2025. Adjusted for $25.7 million in non-recurring favorable items that occurred in 2025, year-to-date adjusted net EPS was 1 cent higher year-over-year.

• There is uncertainty around the timing and final outcome of the IRS private letter ruling on re-domiciliation tax methodology, which could impact the magnitude of one-time transaction costs and net benefits of the move.
• Final regulatory approvals for re-domiciliation are required across 7 U.S. states plus New Brunswick, and outcomes could affect the timing or economics of the transaction.
• One-time taxable exit taxes (including FERPTA foreign investment real property tax in the U.S. and Canadian capital gains tax) will be incurred for the re-domiciliation, though management expects recurring long-term savings will outweigh these one-time costs; the exact magnitude of these costs is still being confirmed with regulators and not yet publicly disclosed.
• Multiple pending rate case decisions across multiple jurisdictions carry uncertainty around final authorized revenue levels, returns on equity, and cost recovery, which could impact future earnings results.
• Higher financing costs from recent debt issuance act as a headwind to current earnings, offsetting some of the benefit from new approved rate increases.

Q: What are the expected tax implications and savings of the U.S. re-domiciliation, and have issues with prior New Hampshire rate filing data been resolved? / A: The company filed a private letter ruling with the IRS and expects a decision in H2 2026. Re-domiciliation will eliminate two recurring cross-border taxes: a 5% withholding tax on dividends sent to the Canadian parent (approximately $10 million per year in savings on $200 million in annual dividends) and the 10% U.S. BEAT tax on intercompany debt payments. This will lower the company's effective tax rate over time. Management confirmed that after significant system and process improvements, prior data issues in New Hampshire have been addressed, and the company is confident it can prove improved performance to regulators ahead of the upcoming rate filing. The team has already restored stakeholder confidence in Missouri after similar prior issues, building proof of concept for the New Hampshire filing.

Q: What is the magnitude of one-time exit taxes for the re-domiciliation, which U.S. states require regulatory approval, and what are key upcoming milestones? / A: One-time FERPTA tax is calculated based on historical holdings of greater than 5% non-U.S. shareholders over the prior 10 years. Management has completed initial calculations and confirmed methodology with the IRS via the private letter ruling process. While a range of one-time costs has been estimated, it is not being disclosed publicly at this time, but management confirms the transaction remains value accretive, as recurring long-term savings will outweigh one-time exit costs. Regulatory filings for approval will be submitted in 7 U.S. states (Arizona, California, Georgia, Iowa, Illinois, New York, Texas) and New Brunswick, with outcomes expected to align with the H1 2027 shareholder vote timeline. The IRS ruling is the key near-term milestone to watch in H2 2026.

Q: What is the current trajectory for the FFO-to-debt ratio relative to the 11% downgrade threshold, and what is the status of the Missouri large load tariff and data center customer pipeline? / A: The FFO-to-debt ratio declined to 11.9% in Q2 2026 from 12.9% in Q1 2026. New rate revenues from the recently approved Missouri and California rate cases will flow through starting in August 2026, so management expects to maintain FFO-to-debt above the 11% downgrade threshold through 2027. The large load tariff enabling new large customer connections like data centers will be filed imminently in the coming weeks. Management cannot disclose specific customer discussions or pipeline size at this time to protect stakeholder and customer confidentiality, but confirms Missouri's service territory is a high-interest location for data center development, and the tariff will enable future customer deals. The company has added internal resources to pursue economic development and large load opportunities in the region.

Q: What is the upside potential from U.S. index inclusion after re-domiciliation, when will full EPS benefits be realized, and when will management extend long-term guidance? / A: The expected 2 to 3 cents per year of EPS upside from tax savings will be phased in 2027 based on when approval is received, with the full run-rate benefit realized in 2028. Based on advisor analysis, U.S. index inclusion is expected to generate positive incremental fund flows into the company's stock, though management has not provided a specific quantitative EPS or valuation estimate at this time. Extending long-term guidance beyond 2027 will follow peer practice, and is scheduled to happen at the 2026 full-year earnings call in Q1 2027. Management continues to make progress toward the target of mid-30s O&M as a percentage of gross revenue.