Hydro One's strong foundation and stable
financials enable company to respond to the challenges of COVID-19
while continuing to energize life for Ontarians
TORONTO, May 8, 2020 /PRNewswire/ - Hydro One Limited
(Hydro One or the Company) today announced its financial and
operating results for the first quarter ended March 31, 2020.
First Quarter Highlights
- First quarter earnings per share (EPS) was $0.38 and adjusted EPS was $0.38, compared to $0.29 and $0.52,
respectively, for the same period in 2019.
- Hydro One implemented several safety measures and operational
changes to ensure employee and customer safety during the COVID-19
pandemic.
- Hydro One took steps to assist customers affected by COVID-19
including: creating a Pandemic Relief Fund, extending its Winter
Relief program, suspending late fees for all customers, and
returning approximately $5 million in
security deposits to eligible business customers.
- A significant driver of the year-over-year decrease in adjusted
quarterly EPS was the retroactive 2018 rate increase recorded in
2019 following the Ontario Energy Board (OEB) decision on the
distribution rate application.
- The Company received a regulatory decision regarding its
2020-2022 transmission rate application from the OEB.
- The Company received the approval of the OEB to proceed with
the Orillia Power Distribution Corporation and Peterborough
Distribution Inc. acquisitions.
- Demonstrating its financial stability and flexibility, Hydro
One Inc. successfully issued $1.1
billion of long-term debt at competitive rates.
- Ongoing productivity savings of approximately $45 million represent a 29.9% increase
year-over-year compared to the first quarter of 2019.
- Improved reliability in the transmission segment with an
approximate 31% reduction in System Average Interruption Duration
Index (SAIDI) in comparison to the first quarter of 2019.
- Hydro One and Ontario Power Generation Inc. launched the Ivy
Charging Network, a new partnership that will create Ontario's largest and most connected electric
vehicle fast-charger network.
- Quarterly dividend declared at $0.2536 per share, payable June 30, 2020.
"Ontarians are counting on us now more than ever as we
collectively fight the COVID-19 pandemic. As an essential service,
we recognize the critical role we have in energizing life for
families, businesses and communities," said Mark Poweska, President and CEO, Hydro One.
"Building on our strong foundation, stable financials and focus on
operational excellence, we will continue to meet the needs of our
customers and communities now and into the future."
Selected
Consolidated Financial and Operating Highlights
|
|
|
|
Three months ended
March 31
|
(amounts throughout
in millions of Canadian dollars, except as otherwise
noted)
|
2020
|
2019
|
Revenues
|
$
1,850
|
$
1,759
|
Purchased
power
|
1,007
|
807
|
Revenues, net of
purchased power1
|
843
|
952
|
Net income (loss)
attributable to common shareholders
|
225
|
171
|
Costs related to
acquisition of Avista, after tax
|
—
|
140
|
Adjusted net income
attributable to common shareholders1
|
225
|
311
|
Basic EPS
|
$0.38
|
$0.29
|
Diluted EPS
|
$0.38
|
$0.29
|
Basic Adjusted
EPS1
|
$0.38
|
$0.52
|
Diluted Adjusted
EPS1
|
$0.38
|
$0.52
|
Net cash from operating
activities
|
548
|
118
|
Capital
investments
|
372
|
311
|
Assets placed
in-service
|
225
|
145
|
Transmission: Average
monthly Ontario 60-minute peak demand (MW)
|
19,247
|
20,763
|
Distribution: Electricity
distributed to Hydro One customers (GWh)
|
7,484
|
7,738
|
1 Non-GAAP Measures - Hydro
One uses financial measures that do not have a standardized meaning
under the United States generally accepted accounting principles
(US GAAP) and may not be comparable to similar measures presented
by other entities. Hydro One calculated the non-GAAP measures by
adjusting certain US GAAP measures for specific items that impact
comparability but which the Company does not consider part of
normal, ongoing operations. Refer to the Non-GAAP Measures section
of the Company's Management's Discussion and Analysis (MD&A)
for further discussion of these items.
|
Key Financial Highlights
2020 First Quarter Highlights
The Company reported net income attributable to common
shareholders of $225 million during
the quarter, compared to $171 million
in the same period of 2019. This resulted in EPS of $0.38 compared to EPS of $0.29 in the prior year, while adjusted EPS was
$0.38 for the quarter compared to
$0.52 in 2019.
Revenues, net of purchased power, for the first quarter were
lower than last year, primarily due to the 2018 catch-up revenues
recognized in the first quarter of 2019 following the OEB decision
on Hydro One's distribution rate application and lower transmission
revenues primarily due to lower average monthly Ontario 60-minute peak demand driven by less
favourable weather.
Lower operation, maintenance and administration (OM&A) costs
resulted primarily from the 2019 incurrence of the termination fee
related to the proposed acquisition of Avista Corporation (Merger),
as well as lower asset write-offs and lower corporate support
costs, which were partially offset by higher vegetation management
expenditures.
Financing charges were lower year over year as a result of
Merger-related financing charges incurred in the prior year,
partially offset by an increase in interest expense on long-term
debt as a result of increased debt levels largely driven by the
debt issuances completed in the second quarter of 2019 and first
quarter of 2020.
Income tax expense for the first quarter of 2020 was higher than
the prior year, primarily due to an income tax recovery in the
prior year associated with Merger-related costs and incremental tax
deductions associated with the deferred tax asset sharing
recognized in 2019. This was partially offset by lower income
before taxes, adjusted for costs related to the Merger, and higher
net tax deductions primarily related to accelerated tax
depreciation.
Hydro One continues to invest in the reliability and performance
of Ontario's electricity
transmission and distribution systems, address aging power system
infrastructure, facilitate connectivity to new load customers and
generation sources, and improve service to customers. The Company
made capital investments of $372
million during the first quarter of 2020, and placed
$225 million of new assets
in-service.
COVID-19
As a result of the spread of the novel strain of the coronavirus
disease, widely known as COVID-19, Hydro One invoked its business
continuity plan towards the end of the quarter and also elected to
scale back certain components of the Company's operating and
capital programs. During this period, the Company has been guided
by the following two priorities: to protect Hydro One's employees
and to maintain the safe and reliable supply of electricity to
Hydro One's customers.
Furthermore, as part of its commitment to customers, Hydro One
implemented a number of measures including (i) launching a Pandemic
Relief Fund to assist customers affected, (ii) offering financial
assistance and increased payment flexibility to customers, and
(iii) extending its Winter Relief program. Hydro One has also
temporarily suspended late fees for all customers, returned
$5 million in security deposits to
over 4,000 eligible business customers and implemented fixed
commodity prices for regulated price plan customers paying
Time-of-Use prices, as mandated and funded by the Province of
Ontario.
As a result of these measures, Hydro One incurred approximately
$5 million of OM&A costs directly
attributable to measures taken to help flatten the curve. The
impact of COVID-19 on the Company's operations for the balance of
2020 will be dependent on a number of factors, including the
duration of the pandemic and severity of measures implemented to
combat this virus.
Selected Operating Highlights
On April 23, 2020, subsequent to
the quarter end, Hydro One received a decision from the OEB on its
2020-2022 Transmission Rate Application. With this decision, both
distribution and transmission are under an incentive rate making
framework until the end of 2022.
On April 30, 2020, subsequent to
the quarter end, the OEB approved the applications for the
acquisitions of Ontario-based
utilities Orillia Power Distribution Corporation from the
City of Orillia, and the business
and distribution assets of Peterborough Distribution Inc., from the
City of Peterborough.
In February, Hydro One's wholly-owned subsidiary, Hydro One
Inc., raised $1.1 billion of Medium
Term Notes consisting of $400 million
aggregate principal amount of 1.76% Medium Term Notes, Series 45,
due 2025, $400 million aggregate
principal amount of 2.16% Medium Term Notes, Series 46, due 2030,
and $300 million aggregate principal
amount of 2.71% Medium Term Notes, Series 47, due 2050. Hydro One
Inc. expects to use the net proceeds of this offering to repay
maturing long-term and short-term debt and for general corporate
purposes.
Continued productivity savings of $45
million in the first quarter of 2020 represent a 29.9%
increase year- over-year. Productivity improvements are a result of
ongoing work being undertaken in the areas of supply chain
optimization, corporate costs reduction, and fleet
optimization.
Improved reliability in the transmission segment with an
approximate 31% reduction in SAIDI in comparison to the first
quarter of 2019. The decrease was due to less interruptions as well
as faster restoration time.
Common Share Dividends
Following the conclusion of the first quarter, on May 7, 2020, the Company declared a quarterly
cash dividend to common shareholders of $0.2536 per share to be paid on June 30, 2020 to shareholders of record on
June 10, 2020.
Supplemental
Segment Information
|
|
|
Three months
ended March 31
|
(millions of
dollars)
|
2020
|
2019
|
Revenues
|
|
|
Transmission
|
400
|
428
|
Distribution
|
1,439
|
1,321
|
Other
|
11
|
10
|
Total
revenues
|
1,850
|
1,759
|
Revenues, net of
purchased power
|
|
|
Transmission
|
400
|
428
|
Distribution
|
432
|
514
|
Other
|
11
|
10
|
Total revenues, net of
purchased power
|
843
|
952
|
Operation,
maintenance and administration costs
|
|
|
Transmission
|
102
|
99
|
Distribution
|
148
|
146
|
Other
|
15
|
171
|
Total operation,
maintenance and administration costs
|
265
|
416
|
Income (loss) before
financing charges and taxes
|
|
|
Transmission
|
186
|
216
|
Distribution
|
186
|
270
|
Other
|
(6)
|
(162)
|
Total income before
financing charges and taxes
|
366
|
324
|
Capital
investments
|
|
|
Transmission
|
236
|
206
|
Distribution
|
135
|
103
|
Other
|
1
|
2
|
Total capital
investments
|
372
|
311
|
Assets placed
in-service
|
|
|
Transmission
|
129
|
54
|
Distribution
|
95
|
88
|
Other
|
1
|
3
|
Total assets placed
in-service
|
225
|
145
|
This press release should be read in conjunction with the
Company's first quarter 2020 unaudited consolidated financial
statements and MD&A. These financial statements and MD&A
together with additional information about Hydro One, including the
audited consolidated financial statements and MD&A for the year
ended December 31, 2019 can be
accessed at www.HydroOne.com/Investors and www.sedar.com.
Quarterly Investment Community Teleconference
The Company's first quarter 2020 results teleconference with the
investment community will be held on May 8,
2020 at 8 a.m. ET, a webcast
of which will be available at www.HydroOne.com/Investors. Members
of the financial community wishing to ask questions during the call
should dial 1-866-221-1674 prior to the scheduled start time and
request access to Hydro One's first quarter 2020 results call,
conference ID 1579538 (international callers may dial
1-270-215-9604). Media and other interested parties are welcome to
participate on a listen-only basis. A webcast of the teleconference
will be available at the same link following the call.
Additionally, investors should note that from time to time Hydro
One management presents at brokerage sponsored investor
conferences. Most often, but not always, these conferences are
webcast by the hosting brokerage firm, and when they are webcast,
links are made available on Hydro One's website at
www.HydroOne.com/Investors and are posted generally at least two
days before the conference.
Hydro One Limited (TSX: H)
Hydro One Limited, through its wholly-owned subsidiaries, is
Ontario's largest electricity
transmission and distribution provider with approximately 1.4
million valued customers, approximately $27.1 billion in assets as at December 31, 2019, and annual revenues in 2019 of
approximately $6.5 billion.
Our team of approximately 8,800 skilled and dedicated employees
proudly build and maintain a safe and reliable electricity system
which is essential to supporting strong and successful communities.
In 2019, Hydro One invested approximately $1.7 billion in its transmission and distribution
networks and supported the economy through buying approximately
$1.5 billion of goods and
services.
We are committed to the communities where we live and work
through community investment, sustainability and diversity
initiatives. We are designated as a Sustainable Electricity Company
by the Canadian Electricity Association.
Hydro One Limited's common shares are listed on the TSX and
certain of Hydro One Inc.'s medium term notes are listed on the
NYSE. Additional information can be accessed at www.hydroone.com;
www.sedar.com or www.sec.gov.
For More Information
For more information about everything Hydro One, please visit
www.hydroone.com where you can find additional information
including links to securities filings, historical financial
reports, and information about the Company's governance practices,
corporate social responsibility, customer solutions, and further
information about its business.
Forward-Looking Statements and Information
This press release may contain "forward-looking information"
within the meaning of applicable securities laws. Such information
includes, but is not limited to, statements related to: the impact
of COVID-19 on the Company's business, operations and service; the
Company's priorities in its response to COVID-19; the Company's
transmission and distribution rate applications, including
resulting decisions, rates and expected impacts and timing;
productivity improvements; Ivy Charging Network; operational
excellence; reliability and performance; ongoing and planned
investments, projects and initiatives; connections; meeting
customer needs and customer service; expectations regarding the
Company's financing activities; and dividends. Words such as
"expect," "anticipate," "intend," "attempt," "may," "plan," "will",
"can", "believe," "seek," "estimate," and variations of such words
and similar expressions are intended to identify such forward-
looking information. These statements are not guarantees of future
performance or actions and involve assumptions and risks and
uncertainties that are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed,
implied or forecasted in such forward-looking information. Some of
the factors that could cause actual results or outcomes to differ
materially from the results expressed, implied or forecasted by
such forward-looking information, including some of the assumptions
used in making such statements, are discussed more fully in Hydro
One's filings with the securities regulatory authorities in
Canada, which are available on
SEDAR at www.sedar.com. Hydro One does not intend, and it disclaims
any obligation, to update any forward-looking information, except
as required by law.
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SOURCE Hydro One Inc.