CALGARY,
AB, Oct. 26, 2023 /CNW/ - Canadian
Utilities Limited (TSX: CU) (TSX: CU.X)
Canadian Utilities Limited (Canadian Utilities or the Company)
today announced third quarter 2023 adjusted earnings of
$87 million ($0.32 per share), $33
million ($0.13 per share)
lower compared to
$120 million ($0.45 per share) in the third quarter of
2022.
Third quarter earnings attributable to equity owners of the
Company reported in accordance with International Financial
Reporting Standards (IFRS earnings) were $125 million ($0.39
per Class A and Class B share), $16
million ($0.06 per Class A and
Class B share) higher compared to $109
million ($0.33 per Class A and
Class B share) in the third quarter of 2022.
IFRS earnings include timing adjustments related to
rate-regulated activities, 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, as well as dividends on equity preferred shares of the
Company, are not included in adjusted earnings.
RECENT DEVELOPMENTS
- Announced a partnership agreement between the Chiniki and
Goodstoney First Nations for the Deerfoot and Barlow Solar power projects, the largest solar
installation in an urban centre in Western Canada. Under the terms of the
agreement, the Chiniki and Goodstoney First Nations have become the
majority owners with a 51 per cent ownership stake in the
facilities.
- Entered into a 12.5-year virtual power purchase agreement with
Lafarge, an industry leader in sustainable building solutions, in
September 2023. Under the terms of
the agreement, Lafarge's Exshaw
cement plant will notionally purchase 100 per cent of the
solar power generated from the 38.5-MW Empress solar project.
- Received the Alberta Utilities Commission (AUC) decisions with
respect to the parameters of the third generation of
performance-based regulation (PBR3) and the future Generic Cost of
Capital parameters, on October 4,
2023 and October 9, 2023,
respectively. We will begin to operate under these new frameworks
in 2024. The receipt of both of these critical regulatory decisions
in advance of the respective operating years reinforces the strides
we've seen in reducing regulatory lag.
- In October 2023, the South
Australian Government announced an Early Contractor Involvement
(ECI) agreement with ATCO Australia and our joint venture
partner BOC Linde for the South Australian Hydrogen Jobs Plan
project, a 250-MW Hydrogen production facility, a 200-MW Hydrogen-
fuelled electricity generation facility and a Hydrogen storage
facility. Activities under this agreement include developing a
contract offer price, and negotiation of engineering, procurement,
construction and O&M contracts for delivery and operations
of the project. The ECI phase of the project is due for completion
in the second quarter of 2024.
- Appointed John Ivulich to Chief Executive Officer & Country
Chair of ATCO Australia, our
regulated gas utility and non-regulated renewables, power, and
clean fuels businesses in Australia, effective October 1, 2023.
- Incurred $330 million in capital
expenditures in the third quarter of 2023, of which 88 per cent was
invested in ATCO Energy Systems and 12 per cent mainly in ATCO
EnPower.
Corporate
- On September 12, 2023, Canadian
Utilities declared a fourth quarter dividend of 44.86 cents per share or $1.79 per Class A non-voting and Class B common
share on an annualized basis.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED
EARNINGS
A financial summary and reconciliation of adjusted earnings to
earnings attributable to equity owners of the Company is provided
below:
|
Three Months
Ended
September
30
|
Nine Months
Ended
September
30
|
($ millions except
share data)
|
2023
|
2022
|
2023
|
2022
|
|
|
|
|
|
Adjusted
Earnings
|
87
|
120
|
404
|
475
|
Impairment
(1)
|
—
|
—
|
(8)
|
—
|
Unrealized gains
(losses) on mark-to-market forward and swap
commodity contracts
(2)
|
70
|
(17)
|
138
|
(48)
|
Rate-regulated
activities (3)
|
(47)
|
(10)
|
(46)
|
46
|
IT Common Matters
decision (4)
|
(5)
|
(4)
|
(15)
|
(11)
|
Transition of managed
IT services (5)
|
—
|
—
|
(9)
|
—
|
Dividends on equity
preferred shares of Canadian Utilities Limited
|
20
|
20
|
58
|
55
|
AUC enforcement
proceeding (6)
|
—
|
—
|
—
|
(27)
|
Workplace COVID-19
vaccination standard (7)
|
—
|
—
|
—
|
(8)
|
Gain on sale of
ownership interest in a subsidiary company
(8)
|
—
|
—
|
—
|
5
|
|
|
|
|
|
Earnings attributable
to equity owners of the Company
|
125
|
109
|
522
|
487
|
Weighted average shares
outstanding (millions of shares)
|
270.3
|
269.2
|
269.9
|
269.1
|
(1)
|
In the second quarter
of 2023, the Company recognized an impairment of $8 million
(after-tax) relating to certain electricity generation assets in
Electricity Transmission. These assets had been removed from
service and it was determined that they no longer had any remaining
value.
|
(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 first quarter of
2023, the Company recognized legal and other costs of $9 million
(after-tax) related to the Wipro Ltd. master services agreements
matter that was concluded on February 26, 2023.
|
(6)
|
On April 14, 2022, the
AUC Enforcement branch and ATCO Electric Transmission filed a
settlement with the AUC regarding a sole source contract for the
Jasper interconnection project. On June 29, 2022, the AUC issued
its decision approving the settlement in its entirety. In the first
quarter of 2022, the Company recognized costs of $27 million
(after-tax) related to the proceeding.
|
(7)
|
In the first quarter of
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 September 30, 2023 will be available on the
Canadian Utilities website (www.canadianutilities.com), via SEDAR+
(www.sedarplus.ca) 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, October 26, 2023 at
1-800-319-4610. No pass code is required.
Brian Shkrobot, Executive Vice
President & Chief Financial Officer, will discuss third quarter
2023 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 November 26, 2023. Please call 1-800-319-6413 and
enter pass code 0440. An archive of the webcast will be
available on October 27, 2023 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.
Canadian Utilities Limited and its subsidiary and affiliate
companies have approximately 8,000 employees and assets
of
$23 billion. Canadian Utilities, an
ATCO company, 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 & 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 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 nine months ended
September 30, 2023, which is
available on www.sedarplus.ca.
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:
the expected electricity generation capacity of the Empress solar
project and the purchase of power by Lafarge pursuant to a 12.5
year virtual power purchase agreement; the uprating of capacity for
the Forty Mile wind assets that is expected to be completed in the
first quarter of 2024; and the expected hydrogen production,
electricity generation and hydrogen storage capacity of the
facilities planned in connection with the South Australian Hydrogen
Jobs Plan project, the expected timing of the project and the
related contract.
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 business
partners, and 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,
regulations and government policies; regulatory decisions;
competitive factors in the industries in which the Company
operates; prevailing market and economic conditions; 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 termination or breach of
contracts by contract counterparties; 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,
2022.
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