12:17 PM EDT, 08/09/2024 (MT Newswires) -- Algonquin Power & Utilities ( AQNB ) (AQN.TO, AQN) on Friday said it is cutting its dividend for the third quarter by 40% as it reported a mixed second quarter result with better than expected earnings but weaker revenues.

The company also agreed to sell its renewable energy business to LS Power for up to US$2.5 billion. It said the transaction will unlock its value as a pure-play regulated utility, adding proceeds are expected to recapitalize its balance sheet and position it for future growth.

Algonquin declared a third-quarter dividend of US$0.0650 per share, compared to US$0.1085 in the second quarter. The amount is payable Oct. 15 to shareholders of record on Sept.30.

In the second quarter, Algonquin reported an adjusted profit, excluding most one-time items, of US$65.2 million, or US$0.09 per share, up from US$56.2 million, or US$0.08, a year earlier and beating a forecast $0.08 at Capital IQ.

Revenue fell 4.7% to US$598.6 million from US$627.9 million and adjusted EBITDA rose 12% to US$311.0 million. Revenue missed a Capital IQ forecast of $635.95 million.

Outside of the earnings, AQN has agreed to sell its renewable energy business to LS Power, a development, investment and operating company focused on the North American power and energy infrastructure sector. Consideration comprises US$2.28 billion of cash at closing and up to US$220 million of cash pursuant to an earn out agreement relating to certain wind assets.

AQN said the sale is subject to the satisfaction of customary closing conditions, including the approval of the U.S. Federal Energy Regulatory Commission and approval under applicable competition laws. The company expects the transaction to close in the fourth quarter of 2024 or the first quarter of 2025 and to receive estimated cash proceeds of approximately $1.6 billion (excluding the Earn Out) after repaying construction financing, and net of taxes, transaction fees and other closing adjustments.

"We are pleased to announce this important transaction with LS Power, which is the result of a highly competitive strategic sale process," Algonquin chief executive Chris Huskilson said. "This major milestone, coupled with our previously announced agreement to support the sale of our Atlantica shares, delivers on our plan to transform AQN into a pure play regulated utility, optimize our regulated business activities, strengthen our balance sheet, and enhance our quality of earnings."

Algonquin's shares were last seen down $0.95 to $7.54 on the Toronto Stock Exchange.

Price: 7.52, Change: -0.97, Percent Change: -11.43