CALGARY,
AB, July 28, 2022 /CNW/ - Canadian
Utilities Limited (TSX: CU) (TSX: CU.X)
Canadian Utilities Limited (Canadian Utilities or the Company)
today announced second quarter 2022 adjusted earnings of
$136 million ($0.51 per share), $21
million ($0.08 per share)
higher compared to $115 million
($0.43 per share) in the second
quarter of 2021.
Second quarter earnings attributable to equity owners of the
Company reported in accordance with International Financial
Reporting Standards (IFRS earnings) were $151 million ($0.50
per Class A and Class B share), $146
million ($0.54 per Class A and
Class B share) higher compared to $5
million ($(0.04) per Class A
and Class B share) in the second quarter of 2021.
IFRS earnings include timing adjustments related to
rate-regulated activities, dividends on equity preferred shares of
the Company, unrealized gains or losses on mark-to-market forward
and swap commodity contracts, one-time gains and losses,
impairments, and items that are not in the normal course of
business or a result of day-to-day operations. These items are not
included in adjusted earnings.
RECENT DEVELOPMENTS IN THE SECOND QUARTER OF 2022
- Invested $294 million in capital
projects of which 83 per cent was invested in regulated utilities
and 17 per cent mainly in Energy Infrastructure.
- Announced an agreement with Canadian Pacific (CP) to provide
engineering, procurement and construction services for two hydrogen
production and refueling facilities in Calgary and Edmonton. The construction of these facilities
will advance CP's innovative Hydrogen Locomotive Program, which has
its sights set on building its first line-haul hydrogen-powered
freight locomotive.
- Released ATCO's 2021 Sustainability Report which highlights our
progress and key achievements in energy transition, climate change
and environmental stewardship, operational reliability and
resilience, community and Indigenous relations, diversity, equity
and inclusion, and safety.
- On July 14, 2022, Canadian
Utilities declared a third quarter dividend of 44.42 cents per share or $1.78 per Class A non-voting and Class B common
share on an annualized basis.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED
EARNINGS
A financial summary and reconciliation of adjusted earnings to
earnings attributable to equity owners of the Company is provided
below:
|
Three Months
Ended
June
30
|
Six Months
Ended
June
30
|
|
($ millions except
share data)
|
2022
|
2021
|
2022
|
2021
|
|
|
|
|
|
|
Adjusted
Earnings
|
136
|
115
|
355
|
306
|
|
Impairments and other
costs (1)
|
—
|
(65)
|
—
|
(65)
|
|
Unrealized losses on
mark-to-market forward and swap
commodity contracts (2)
|
(19)
|
(13)
|
(31)
|
(12)
|
|
Rate-regulated
activities (3)
|
20
|
(29)
|
56
|
(81)
|
|
IT Common Matters
decision (4)
|
(3)
|
(3)
|
(7)
|
(7)
|
|
Transition of managed
IT services (5)
|
—
|
(16)
|
—
|
(27)
|
|
Dividends on equity
preferred shares of
Canadian Utilities
Limited
|
17
|
16
|
35
|
33
|
|
AUC enforcement
proceeding (6)
|
—
|
—
|
(27)
|
—
|
|
Workplace COVID-19
vaccination standard (7)
|
—
|
—
|
(8)
|
—
|
|
Gain on sale
(8)
|
—
|
—
|
5
|
—
|
|
Other
|
—
|
—
|
—
|
(1)
|
|
|
|
|
|
|
Earnings attributable
to equity owners of the Company
|
151
|
5
|
378
|
146
|
|
Weighted average shares
outstanding (millions of shares)
|
269.1
|
269.7
|
269.0
|
270.8
|
|
(1)
|
In 2021, Canadian
Utilities recorded impairments and other costs not in the normal
course of business of $65 million (after-tax). The Company incurred
$54 million of these costs in Mexico, related mainly to its
Veracruz hydro facility within its Energy Infrastructure segment.
The charge reflected an adverse arbitration decision, changes in
market regulations, ongoing political uncertainty, and a
challenging operating environment, resulting in an impairment of
the carrying value of the assets. Other costs recorded were
individually immaterial.
|
|
|
|
(2)
|
The Company's retail
electricity and natural gas business in Alberta enters into
fixed-price swap commodity contracts to manage exposure to
electricity and natural gas prices and volumes. These contracts are
measured at fair value. Unrealized gains and losses due to changes
in the fair value of the fixed-price swap commodity contracts are
recognized in the earnings of the Corporate & Other segment.
Realized gains or losses are recognized in adjusted earnings when
the commodity contracts are settled.
|
|
|
|
(3)
|
The Company records
significant timing adjustments as a result of the differences
between rate-regulated accounting and International Financial
Reporting Standards with respect to additional revenues billed in
the current year, revenues to be billed in future years, regulatory
decisions received, and settlement of regulatory decisions and
other items.
|
|
|
|
(4)
|
Consistent with the
treatment of the gain on sale in 2014 from the IT services business
by the Company, financial impacts associated with the IT Common
Matters decision are excluded from adjusted
earnings.
|
|
|
|
(5)
|
In the fourth
quarter of 2020 and first quarter of 2021, the Company signed
Master Services Agreements (MSA) with IBM Canada Ltd. (subsequently
novated to Kyndryl Canada Ltd.) and IBM Australia Limited,
respectively, to provide managed IT services. These services were
previously provided by Wipro under a ten-year MSA expiring in
December 2024. The transition of the managed IT services from Wipro
to IBM commenced on February 1, 2021 and is
complete.
|
|
|
|
(6)
|
In the fourth
quarter of 2021 and first quarter of 2022, the Company recognized a
$31 million penalty, $11 million of project costs and other costs
of $2 million ($14 million in Q4 2021 and $27 million in Q1 2022
(after-tax)) related to the AUC enforcement proceeding. The
settlement was filed with the AUC on April 14, 2022 and on June 29,
2022, the AUC issued its decision approving the settlement between
the AUC Enforcement branch and ATCO Electric in its
entirety.
|
|
|
|
(7)
|
In the six months
ended June 30, 2022, the Company incurred $8 million (after-tax) in
severance and related costs associated with its Workplace COVID-19
vaccination standard.
|
|
|
|
(8)
|
On March 31, 2022,
the Company sold 36 per cent of its ownership interest in a
subsidiary, Northland Utilities Enterprises Ltd., for $8 million,
net of cash disposed. The transaction resulted in a gain on sale of
$5 million (after-tax). With this transaction, ATCO Electric
Ltd. and Denendeh Investments Incorporated (DII) each have a 50 per
cent ownership interest.
|
|
|
This news release should be read in concert with the full
disclosure documents. Canadian Utilities' unaudited consolidated
financial statements and management's discussion and analysis for
the quarter ended June 30, 2022 will be available on the
Canadian Utilities website (www.canadianutilities.com), via SEDAR
(www.sedar.com) or can be requested from the Company.
TELECONFERENCE AND WEBCAST
Canadian Utilities will hold a live teleconference and webcast
at 9:00 am Mountain Time
(11:00 am Eastern Time) on
Thursday, July 28, 2022 at
1-800-319-4610. No pass code is required.
Brian Shkrobot, Executive Vice
President & Chief Financial Officer, will discuss second
quarter 2022 financial results and recent developments. Opening
remarks will be followed by a question and answer period with
investment analysts. Participants are asked to please dial-in 10
minutes prior to the start and request to join the Canadian
Utilities teleconference.
Management invites interested parties to listen via live webcast
at:
https://www.canadianutilities.com/en-ca/investors/events-presentations.html
A replay of the teleconference will be available approximately
two hours after the conclusion of the call until August 28, 2022. Please call 1-800-319-6413 and
enter pass code 9097. An archive of the webcast will be available
on July 28, 2022 and a transcript of
the call will be posted on
https://www.canadianutilities.com/en-ca/investors/events-presentations.html within
a few business days.
With approximately 4,800 employees and assets of $21 billion, Canadian Utilities Limited is an
ATCO company. Canadian Utilities is a diversified global energy
infrastructure corporation delivering essential services and
innovative business solutions in Utilities (electricity and natural
gas transmission and distribution, and international operations);
Energy Infrastructure (energy storage, energy generation,
industrial water solutions, and clean fuels); and Retail Energy
(electricity and natural gas retail sales, and whole-home
solutions). More information can be found at
www.canadianutilities.com.
Investor & Analyst Inquiries:
Colin Jackson
Senior Vice President, Finance, Treasury, Risk &
Sustainability
Colin.Jackson@atco.com
(403) 808 2636
Media Inquiries:
Kurt
Kadatz
Director, Corporate Communications
Kurt.Kadatz@atco.com
(587) 228 4571
Subscription Inquiries:
To receive Canadian Utilities
Limited news releases, please click here.
Non-GAAP and Other Financial Measures
This
news release includes references to "adjusted earnings" which is a
"total of segments measure" as that term is defined in National
Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure.
The most directly comparable measure that is reported in accordance
with International Financial Reporting Standards (IFRS) is
"earnings attributable to equity owners of the Company". For
additional information, see "Financial Summary and Reconciliation
of Adjusted Earnings" in this news release, and "Other Financial
and Non-GAAP Measures" and "Reconciliation of Adjusted Earnings to
Earnings Attributable to Equity Owners of the Company" in the
Company's Management's Discussion and Analysis for the six months
ended June 30, 2022, which is
available on www.sedar.com.
Forward-Looking Information
Certain
statements contained in this news release constitute
forward-looking information. Forward-looking information is often,
but not always, identified by the use of words such as
"anticipate", "plan", "estimate", "expect", "may", "will",
"intend", "should", "goals", "targets", "strategy", "future", and
similar expressions. In particular, forward-looking information in
this news release includes, but is not limited to, references to
plans and targets, including the engineering, procurement and
construction of hydrogen production and refueling facilities to
advance CP's hydrogen locomotive program.
Although the Company believes that the expectations reflected
in the forward-looking information are reasonable based on the
information available on the date such statements are made and
processes used to prepare the information, such statements are not
guarantees of future performance and no assurance can be given that
these expectations will prove to be correct. Forward-looking
information should not be unduly relied upon. By their nature,
these statements involve a variety of assumptions, known and
unknown risks and uncertainties, and other factors, which may cause
actual results, levels of activity, and achievements to differ
materially from those anticipated in such forward-looking
information. The forward-looking information reflects the Company's
beliefs and assumptions with respect to, among other things, the
development and performance of technology and technological
innovations; continuing collaboration with certain regulatory and
environmental groups; the performance of assets and equipment; the
ability to meet current project schedules, and other assumptions
inherent in management's expectations in respect of the
forward-looking information identified herein.
The Company's actual results could differ materially from
those anticipated in this forward-looking information as a result
of, among other things, risks inherent in the performance of
assets; capital efficiencies and cost savings; applicable laws and
government policies; regulatory decisions; competitive factors in
the industries in which the Company operates; prevailing economic
conditions (including as may be affected by the COVID-19 pandemic);
credit risk; interest rate fluctuations; the availability and cost
of labour, materials, services, and infrastructure; the development
and execution of projects; prices of electricity, natural gas,
natural gas liquids, and renewable energy; the development and
performance of technology and new energy efficient products,
services, and programs including but not limited to the use of
zero-emission and renewable fuels, carbon capture, and storage,
electrification of equipment powered by zero-emission energy
sources and utilization and availability of carbon offsets; the
occurrence of unexpected events such as fires, severe weather
conditions, explosions, blow-outs, equipment failures,
transportation incidents, and other accidents or similar events;
and other risk factors, many of which are beyond the control of the
Company. Due to the interdependencies and correlation of these
factors, the impact of any one material assumption or risk on a
forward-looking statement cannot be determined with certainty.
Readers are cautioned that the foregoing lists are not exhaustive.
For additional information about the principal risks that the
Company faces, see "Business Risks and Risk Management" in the
Company's Management's Discussion and Analysis for the year ended
December 31, 2021.
Any forward-looking information contained in this news
release represents the Company's expectations as of the date
hereof, and is subject to change after such date. The Company
disclaims any intention or obligation to update or revise any
forward-looking information whether as a result of new information,
future events or otherwise, except as required by applicable
securities legislation.
SOURCE Canadian Utilities Limited