CALGARY,
AB, Feb. 29, 2024 /CNW/ - Canadian
Utilities Limited (TSX: CU)
Canadian Utilities Limited (Canadian Utilities or the Company)
today announced adjusted earnings in 2023 of $596 million ($2.21
per share), which were $59 million
($0.22 per share) lower compared to
$655 million ($2.43 per share) in 2022. Fourth quarter adjusted
earnings in 2023 of $192 million
($0.71 per share), were $12 million ($0.05
per share) higher compared to $180
million ($0.66 per share) in
the fourth quarter of 2022.
2023 earnings attributable to equity owners of the Company
reported in accordance with International Financial Reporting
Standards (IFRS earnings) were $707
million ($2.33 per Class A and
Class B share), which were $75
million ($0.26 per Class A and
Class B share) higher compared to $632
million ($2.07 per Class A and
Class B share) in 2022. Fourth quarter earnings attributable to
equity owners of the Company reported in accordance with
International Financial Reporting Standards (IFRS earnings) were
$185 million ($0.61 per Class A and Class B share),
$40 million ($0.15 per Class A and Class B share) higher
compared to $145 million
($0.46 per Class A and Class B share)
in the fourth 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
- Received the Alberta Utilities Commission (AUC) decisions with
respect to the parameters of the third generation of
performance-based regulation and the future Generic Cost of Capital
parameters, on October 4, 2023 and
October 9, 2023, respectively. We
began operating under these new frameworks in 2024.
- The Alberta Court of Appeal
issued a favourable decision in the second quarter of 2023 in
connection with the Fort McMurray
(Wood Buffalo) wildfire. This decision resulted in the AUC issuing
its decision in December 2023
permitting ATCO Electric to include the net book value of its
electric distribution assets destroyed in the Wood Buffalo fire
within rate base.
- In October 2023, the South
Australian Government announced an Early Contractor Involvement
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 operations and maintenance contracts
for delivery and operations of the project.
- Incurred $394 million in capital
expenditures in the fourth quarter of 2023, of which 91 per cent
was invested in ATCO Energy Systems and 9 per cent mainly in ATCO
EnPower.
Corporate
- On January 19, 2024, the Company
announced the retirement of Executive Vice President and Chief
Financial Officer, Brian P.
Shkrobot, effective March 1,
2024. Concurrently, it was announced that with the support
of the Canadian Utilities' Board of Directors, Katie Patrick, Executive Vice President, Chief
Financial & Investment Officer, ATCO, will broaden her
portfolio to include Chief Financial Officer for Canadian Utilities
effective March 1, 2024.
- On January 11, 2024, Canadian
Utilities declared a first quarter dividend of 45.31 cents per share or $1.81 per Class A and Class B shares on an
annualized basis.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED
EARNINGS
A financial summary and reconciliation of adjusted earnings to
earnings attributable to equity owners of the Company is provided
below:
|
Three Months
Ended
December
31
|
Year
Ended
December
31
|
|
($ millions except
share data)
|
2023
|
2022
|
2023
|
2022
|
|
|
|
|
|
|
Adjusted
Earnings
|
192
|
180
|
596
|
655
|
|
Impairment (charge)
reversal (1)
|
(36)
|
4
|
(44)
|
4
|
|
Unrealized gains
(losses) on mark-to-market forward and swap
commodity contracts
(2)
|
47
|
(19)
|
185
|
(67)
|
|
Rate-regulated
activities (3)
|
(32)
|
(36)
|
(78)
|
10
|
|
IT Common Matters
decision (4)
|
(5)
|
(4)
|
(20)
|
(15)
|
|
Transition of managed
IT services (5)
|
—
|
—
|
(9)
|
—
|
|
Dividends on equity
preferred shares of Canadian Utilities Limited
|
19
|
20
|
77
|
75
|
|
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
|
185
|
145
|
707
|
632
|
|
Weighted average shares
outstanding (millions of shares)
|
270.6
|
269.2
|
270.1
|
269.1
|
|
(1)
|
In the fourth
quarter of 2023, the Company recognized an impairment of $36
million (after-tax) of certain computer software assets that are no
longer expected to be used in the business. Also, in the second
quarter of 2023, the Company recognized an impairment of $8 million
(after-tax) relating to certain electricity generation assets as it
was determined that they no longer had any remaining value. In
2022, a reversal of impairment for $4 million (after-tax) was
recorded mainly related to a join venture investment in a
co-generation facility.
|
|
(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 each have a 50 per cent
ownership interest.
|
This news release should be read in concert with the full
disclosure documents. Canadian Utilities' consolidated financial
statements and management's discussion and analysis for the year
ended December 31, 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, February 29, 2024 at
1-800-319-4610. No pass code is required.
Brian Shkrobot, Executive Vice
President & Chief Financial Officer, Wayne Stensby, Chief Operating Officer, ATCO
Energy Systems, and Bob Myles, Chief
Operating Officer, ATCO EnPower, will discuss year-end 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 March 29, 2024. Please call 1-800-319-6413 and
enter pass code 0640. An archive of the webcast will be
available on February 29, 2024 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 9,000 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. ATCO Energy Systems delivers energy for an evolving
world through its electricity and natural gas transmission and
distribution, and international operations segments. ATCO EnPower
creates sustainable energy solutions in the areas of renewables,
energy storage, industrial water and clean fuels. ATCO Australia develops, builds, owns and operates
energy and infrastructure assets. ATCOenergy and Rümi provide
retail electricity and natural gas services, home maintenance
services and professional home advice that bring exceptional
comfort, peace of mind and freedom to homeowners and customers.
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.
Other Financial and Non-GAAP 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" in the Company's Management's Discussion and
Analysis for the year ended December 31,
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 hydrogen production, electricity generation and
hydrogen storage capabilities of the facilities planned in
connection with the South Australian Hydrogen Jobs Plan project;
and the payment of dividends.
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; future demand for
resources; 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,
extreme weather conditions, explosions, blow-outs, equipment
failures, transportation incidents, and other accidents or similar
events; global pandemics; geopolitical tensions and wars; 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, 2023.
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 CU Inc.
