CALGARY,
AB, July 27, 2023 /CNW/ - Canadian
Utilities Limited (TSX: CU) (TSX: CU.X)
Canadian Utilities Limited (Canadian Utilities or the Company)
today announced second quarter 2023 adjusted earnings of
$100 million ($0.37 per share), $36
million ($0.14 per share)
lower compared to
$136 million ($0.51 per share) in the second quarter of
2022.
Second quarter earnings attributable to equity owners of
the Company reported in accordance with International Financial
Reporting Standards (IFRS earnings) were $105 million ($0.32
per Class A and Class B share), $46
million ($0.18 per Class A and
Class B share) lower compared to $151
million ($0.50 per Class A and
Class B share) in the second 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 the executive appointment of Wayne Stensby as Chief Operating Officer of ATCO
Energy Systems, the newly branded gas and electrical utility
services business, which also oversees our interests in LUMA
Energy.
- Announced the executive appointment of Bob Myles as Chief Operating Officer of ATCO
EnPower, the newly branded non-regulated energy business, including
renewables, clean fuels, and energy storage.
- Invested $332 million in capital
expenditures in the second quarter of 2023, of which 86 per cent
was invested in ATCO Energy Systems and 14 per cent mainly in ATCO
EnPower. (1)
- The Barlow solar project achieved full commercial operations.
Our other Calgary solar
development project, Deerfoot, is expected to commence energization
in the third quarter of 2023, with full commercial operations
expected in the fourth quarter of 2023.
- Since acquiring the renewable energy portfolio in January 2023, the 232-MW of operating Forty Mile
and Adelaide wind assets have
contributed revenues of $46 million
for the six months ended June 30,
2023. Uprating work continues for the Forty Mile wind assets
with expected completion in the fourth quarter of 2023. This
uprating is expected to increase Forty Mile Wind generation
capacity from 202-MW to 225-MW.
- Despite significant wildfire activity within Alberta in the first half of 2023, Canadian
Utilities' businesses have been successful in limiting customer
outages and avoiding any safety incidents related to these events.
Wildfire activity in the province of Alberta has slowed significantly from its peak
earlier in the second quarter and our teams continue to stay
focused on restoration efforts. We do not expect to see any
negative impact to earnings as a result of these events.
- Significant opportunities for growth continue to be expected in
connection with the energy transition, including existing and new
opportunities within both ATCO Energy Systems and ATCO EnPower. To
support this potential growth, Canadian Utilities intends to
explore various financing alternatives including the possibility of
creating ATCO EnPower as a separate entity.
- On July 12, 2023, Canadian
Utilities declared a third quarter dividend of 44.86 cents per share or $1.79 per Class A non-voting and Class B common
share on an annualized basis.
____________________________
|
(1)
|
ATCO Energy Systems and
ATCO EnPower are referred to as Regulated Utilities and Energy
Infrastructure, respectively, in the Company's Management's
Discussion and Analysis for the six months ended June 30,
2023.
|
FINANCIAL SUMMARY AND
RECONCILIATION OF ADJUSTED EARNINGS
A financial summary and reconciliation of adjusted earnings to
earnings attributable to equity owners of the Company is provided
below:
|
Three Months
Ended
June
30
|
Six Months
Ended
June
30
|
($ millions except
share data)
|
2023
|
2022
|
2023
|
2022
|
Adjusted
Earnings
|
100
|
136
|
317
|
355
|
Impairment
(1)
|
(8)
|
—
|
(8)
|
—
|
Unrealized gains
(losses) on mark-to-market forward and swap
commodity contracts
(2)
|
7
|
(19)
|
68
|
(31)
|
Rate-regulated
activities (3)
|
(8)
|
20
|
1
|
56
|
IT Common Matters
decision (4)
|
(5)
|
(3)
|
(10)
|
(7)
|
Transition of managed
IT services (5)
|
—
|
—
|
(9)
|
—
|
Dividends on equity
preferred shares of Canadian Utilities Limited
|
19
|
17
|
38
|
35
|
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
|
105
|
151
|
397
|
378
|
Weighted average shares
outstanding (millions of shares)
|
269.9
|
269.1
|
269.7
|
269.0
|
(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 six
months 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 June 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, July 27, 2023 at
1-800-319-4610. No pass code is required.
Brian Shkrobot, Executive Vice
President & Chief Financial Officer, will discuss second
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 August 27, 2023. Please call 1-800-319-6413 and
enter pass code 0268. An archive of the webcast will be available
on July 28, 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 six months
ended June 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 timing of energization and full
commercial operations for the Deerfoot solar project; expected
growth opportunities; potential financing alternatives, including
the possibility of creating ATCO EnPower as a separate entity; the
expected uprating of electricity generation capacity at Forty Mile
Wind; and the expectation that there will not be any negative
impact to earnings as a result of wildfire activity in Alberta during the first half of 2023.
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