Hydro One's focus on customer advocacy,
partnership, and long-term financial stability results in positive
performance
TORONTO, Nov. 6, 2020
/CNW/ - Hydro One Limited (Hydro One or the Company) today
announced its financial and operating results for the third quarter
ended September 30, 2020.
Third Quarter Highlights
- High demand for electricity led to earnings per share (EPS) of
$0.47, compared to EPS of
$0.40, for the same period in
2019.
- Hydro One continued to support its customers by extending its
ban on residential electricity disconnections and keeping in place
its Pandemic Relief Program.
- A Silver level certification from the Canadian Council for
Aboriginal Business and the Ontario Energy Association's Leader of
the Year award demonstrated the continued commitment to
excellence.
- Hydro One announced that members of the Power Workers' Union
(PWU) ratified the renewal of two collective agreements.
- The Company's capital investments and in-service additions for
the third quarter were $500 million
and $371 million, respectively,
compared to $424 million and
$433 million in the same quarter in
2019.
- Hydro One Limited announced that it will exercise its option to
redeem all of its outstanding Series 1 Preferred Shares on
November 20, 2020. The shares will be
replaced by $425 million notes issued
by the Company in October 2020 at
competitive rates.
- Subsequent to the quarter, Hydro One Inc. successfully issued
$1.2 billion of Medium Term Notes at
competitive rates.
- The Company completed the purchase of the business and
distribution assets of Peterborough Distribution Inc. on
August 1st, 2020 and completed the
acquisition of Orillia Power Distribution Corporation on
September 1, 2020.
- Quarterly dividend declared at $0.2536 per share, payable December 31, 2020.
"Hydro One's team remains dedicated to delivering exceptional
service and support to our customers," said Mark Poweska, President and CEO, of Hydro One.
"By focusing on the priorities of the business and executing
against our plans, we continue to demonstrate long-term benefits to
our customers, employees and shareholders."
Selected Consolidated Financial and Operating
Highlights
|
|
Three months ended
September 30
|
|
|
Nine months ended
September 30
|
|
(amounts
throughout in millions of Canadian dollars, except as otherwise
noted)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Revenues
|
|
1,903
|
|
1,593
|
|
|
5,423
|
|
4,765
|
|
Purchased
power
|
|
993
|
|
737
|
|
|
2,808
|
|
2,197
|
|
Revenues, net of
purchased power1
|
|
910
|
|
856
|
|
|
2,615
|
|
2,568
|
|
Net income
attributable to common shareholders
|
|
281
|
|
241
|
|
|
1,609
|
|
567
|
|
Adjusting
items
|
—
|
|
—
|
|
|
(867)
|
|
140
|
|
Adjusted net income
attributable to common shareholders1
|
281
|
|
241
|
|
|
742
|
|
707
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
$0.47
|
|
$0.40
|
|
|
$2.69
|
|
$0.95
|
|
Diluted
EPS
|
|
$0.47
|
|
$0.40
|
|
|
$2.68
|
|
$0.95
|
|
Basic Adjusted
EPS1
|
|
$0.47
|
|
$0.40
|
|
|
$1.24
|
|
$1.19
|
|
Diluted Adjusted
EPS1
|
|
$0.47
|
|
$0.40
|
|
|
$1.24
|
|
$1.18
|
|
|
|
|
|
|
|
|
Net cash from
operating activities
|
|
680
|
|
648
|
|
|
1,603
|
|
1,063
|
|
Capital
investments
|
|
500
|
|
424
|
|
|
1,301
|
|
1,105
|
|
Assets placed
in-service
|
|
371
|
|
433
|
|
|
761
|
|
854
|
|
|
|
|
|
|
|
|
Transmission: Average
monthly Ontario 60-minute peak demand (MW)
|
22,831
|
|
20,954
|
|
|
20,392
|
|
19,981
|
|
Distribution: Electricity
distributed to Hydro One customers (GWh)
|
7,132
|
|
6,627
|
|
|
20,829
|
|
20,438
|
|
|
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 Third Quarter Highlights
The Company reported net income attributable to common
shareholders of $281 million during
the quarter, compared to $241 million
in the same period of 2019. This resulted in EPS and adjusted EPS
of $0.47, compared to EPS and
adjusted EPS of $0.40 in the prior
year.
Revenues, net of purchased power, for the third quarter were
$54 million higher than last year,
mainly due to higher transmission revenues primarily due to higher
peak demand, and higher distribution revenues as a result of
Ontario Energy Board (OEB)-approved rates, as well as stronger
consumption.
Operation, maintenance and administration (OM&A) costs in
the third quarter of 2020, which include COVID-19 related costs as
further discussed below, were slightly higher than last year. The
increase is attributable to additional OPEB costs that are
recognized in OM&A following the 2020-2022 OEB transmission
decision and recovered in rates, therefore net income neutral,
which have been offset by lower vegetation management
expenditures.
Income tax expense for the third quarter of 2020 was higher than
the prior year due to higher income before taxes, partially offset
by higher net tax deductions primarily related to tax depreciation
in excess of 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 $500
million during the third quarter of 2020, and placed
$371 million of new assets
in-service.
COVID-19
Throughout the COVID-19 pandemic, the Company's decisions and
actions have been guided by two priorities: to protect Hydro One's
employees and to maintain the safe and reliable supply of
electricity to Hydro One's customers. To date, Hydro One has been
successful in achieving these priorities as the Company has
returned to full capacity within its field operations and has
experienced only one suspected case of workplace transmission,
which occurred following the end of the quarter.
While most of Hydro One's office and administrative staff
continue to work remotely, the Company has opened office locations
to a portion of its workforce throughout the province, following
the implementation of enhanced safety measures. Hydro One remains
focused on ensuring that its teams are equipped to operate safely
as the Company continues to advance its work on capital and
operating work programs that were deferred earlier in the year,
where it is safe to do so.
Included in the Company's results for the third quarter and nine
months ended September 30, 2020 are
costs incurred as a result of the COVID-19 pandemic. OM&A costs
in the quarter include $5 million of
COVID-19 related expenses, which are primarily attributable to
additional facility related expenditures. On a year-to-date basis,
COVID-19 related OM&A expenditures of $32 million also include costs associated with
the temporary stand-down of the Company's work-force and other
sustainment work performed in prior quarters, and have been
partially offset by the timing of work program expenditures which
have been temporarily deferred.
Looking ahead, it is very difficult to determine or estimate the
exact impacts of COVID-19 on Hydro One's operations as they will be
largely dependent on the duration of the pandemic and severity of
the measures implemented to combat this virus. Electricity
consumption and demand can be impacted by numerous variables,
including weather, changing economic conditions and conservation
efforts making it difficult to estimate the impact of COVID-19 with
any level of precision. Hydro One has continued to take the
necessary steps to mitigate the impact of COVID-19 on the Company's
operations.
Selected Operating Highlights
Hydro One announced the extension on its ban on residential
electricity disconnections to ensure that no customer is
disconnected at a time when support is needed most. Hydro One
also announced that its Pandemic Relief Program will remain in
place to provide financial relief and payment flexibility to
customers experiencing hardship.
A Silver level certification from the Canadian Council for
Aboriginal Business was awarded to Hydro One for its commitments to
building lasting, strong and mutually beneficial relationships with
Indigenous communities. The Ontario Energy Association's Leader of
the Year award was given to Mark
Poweska which demonstrates Hydro One's continued commitment
to excellence.
The PWU members voted in favour of two renewal collective
agreements: the main collective agreement, which includes
front-line staff, and the Customer Service Operations collective
agreement, which includes staff in customer facing roles.
Hydro One Limited announced that it will exercise its option to
redeem all of its outstanding Series 1 Preferred Shares on
November 20, 2020 for an aggregate
redemption price of $423 million. The
shares will be replaced by Hydro One Limited's $425 million principal amount of 1.41% notes due
October 15, 2027.
In October 2020, following the end
of the quarter, Hydro One Inc. raised $1.2
billion of Medium Term Notes consisting of $600 million aggregate principal amount of 0.71%
Medium Term Notes, Series 48, due 2023, $400
million aggregate principal amount of 1.69% Medium Term
Notes, Series 49, due 2031, and $200
million aggregate principal amount issued through a
reopening of its 2.71% Medium Term Notes, Series 47, due 2050.
Hydro One Inc. expects to use the net proceeds of this offering to
repay and/or prepay maturing long-term and short-term debt and for
general corporate purposes.
On August 1st, 2020, the Company
completed the purchase of the business and distribution assets of
Peterborough Distribution Inc. from the City of Peterborough. On September 1, 2020, the Company completed the
acquisition of Orillia Power Distribution Corporation from the
City of Orillia.
Common Share Dividends
Following the conclusion of the third quarter, on
November 5, 2020, the Company declared a quarterly cash
dividend to common shareholders of $0.2536 per share to be paid on December 31,
2020 to shareholders of record on December 9, 2020.
Supplemental Segment Information
|
|
Three months ended
September 30
|
|
|
Nine months ended
September 30
|
|
(millions of
dollars)
|
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
Transmission
|
|
483
|
|
443
|
|
|
1,342
|
|
1,245
|
|
Distribution
|
|
1,410
|
|
1,140
|
|
|
4,050
|
|
3,490
|
|
Other
|
|
10
|
|
10
|
|
|
31
|
|
30
|
|
Total revenues
|
|
1,903
|
|
1,593
|
|
|
5,423
|
|
4,765
|
|
|
|
|
|
|
|
|
Revenues, net of
purchased power
|
|
|
|
|
|
|
Transmission
|
|
483
|
|
443
|
|
|
1,342
|
|
1,245
|
|
Distribution
|
|
417
|
|
403
|
|
|
1,242
|
|
1,293
|
|
Other
|
|
10
|
|
10
|
|
|
31
|
|
30
|
|
Total revenues, net of purchased power
|
|
910
|
|
856
|
|
|
2,615
|
|
2,568
|
|
|
|
|
|
|
|
|
Operation,
maintenance and administration costs
|
|
|
|
|
|
|
Transmission
|
|
102
|
|
96
|
|
|
318
|
|
296
|
|
Distribution
|
|
145
|
|
148
|
|
|
434
|
|
448
|
|
Other
|
|
15
|
|
15
|
|
|
45
|
|
198
|
|
Total operation, maintenance and administration
costs
|
262
|
|
259
|
|
|
797
|
|
942
|
|
|
|
|
|
|
|
|
Income
(loss) before financing charges and taxes
|
|
|
|
|
|
Transmission
|
|
268
|
|
232
|
|
|
690
|
|
607
|
|
Distribution
|
|
167
|
|
153
|
|
|
503
|
|
541
|
|
Other
|
|
(7)
|
|
(7)
|
|
|
(20)
|
|
(174)
|
|
Total income before financing charges and taxes
|
428
|
|
378
|
|
|
1,173
|
|
974
|
|
|
|
|
|
|
|
|
Capital
investments
|
|
|
|
|
|
|
Transmission
|
|
309
|
|
276
|
|
|
796
|
|
724
|
|
Distribution
|
|
190
|
|
146
|
|
|
502
|
|
375
|
|
Other
|
|
1
|
|
2
|
|
|
3
|
|
6
|
|
Total capital investments
|
|
500
|
|
424
|
|
|
1,301
|
|
1,105
|
|
|
|
|
|
|
|
|
Assets placed
in-service
|
|
|
|
|
|
|
Transmission
|
|
196
|
|
294
|
|
|
383
|
|
509
|
|
Distribution
|
|
174
|
|
129
|
|
|
376
|
|
331
|
|
Other
|
|
1
|
|
10
|
|
|
2
|
|
14
|
|
Total assets placed in-service
|
|
371
|
|
433
|
|
|
761
|
|
854
|
|
This press release should be read in conjunction with the
Company's third 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 third quarter 2020 results teleconference with the
investment community will be held on November 6, 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 third quarter 2020 results call, conference
ID 5952718 (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
Company's continued service and support to customers; including the
continued provision of the Pandemic Relief Program; investments in
reliability and performance of the electricity systems; statements
that the Company will redeem all of its outstanding Series 1
Preferred Shares and the timing for the redemption of such shares;
the anticipated use of the net proceeds from Hydro One Inc.'s
offering of medium term notes; the impact of COVID-19 on the
Company's business, operations and service; the Company's
priorities in its response to COVID-19 and the mitigation measures
taken; 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 Limited