CALGARY, AB, Oct. 27, 2022 /CNW/ - Canadian Utilities
Limited (TSX: CU) (TSX: CU.X)
Canadian Utilities Limited (Canadian Utilities or the Company)
today announced third quarter 2022 adjusted earnings of
$120 million ($0.45 per share), $32
million ($0.12 per share)
higher compared to $88 million
($0.33 per share) in the third
quarter of 2021.
Third quarter earnings attributable to equity owners of the
Company reported in accordance with International Financial
Reporting Standards (IFRS earnings) were $109 million ($0.33
per Class A and Class B share), $38
million ($0.13 per Class A and
Class B share) higher compared to $71
million
($0.20 per Class A and Class B share)
in the third quarter of 2021.
IFRS earnings include timing adjustments related to
rate-regulated activities, dividends on equity preferred shares of
the Company, 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 are not
included in adjusted earnings.
RECENT DEVELOPMENTS IN THE THIRD QUARTER OF 2022
- Invested $374 million in capital
projects of which 78 per cent was invested in regulated utilities
and 22 per cent mainly in Energy Infrastructure.
- Subsequent to quarter-end, on October 5,
2022, Canadian Utilities announced it has entered into a
definitive agreement with Suncor Energy Inc. to acquire a portfolio
of assets that includes a 252-MW suite of operational wind
facilities and a more than 1,500-MW development pipeline of wind
and solar projects in Alberta and
Ontario for a purchase price of
approximately $730 million, subject
to closing adjustments. This investment drives meaningful progress
towards our previously announced goal of owning, developing or
managing more than 1,000-MW of renewable energy by 2030 and is
expected to be earnings and cash flow accretive in the first year
of operations. The transaction is expected to close in the first
quarter of 2023 and is subject to regulatory approvals and closing
conditions.
- Announced a $9 million AUD
recoverable grant had been awarded from the New South Wales
Government to help fund pre-investment activities in the
development of the 325-MW Central West Pumped Storage Hydro project
in Australia. A final investment
decision on project construction is expected in 2023.
- In August 2022, the Government of
the Northwest Territories
announced it is providing Northland Utilities, a 50/50
joint-venture partnership between ATCO Ltd. and Denendeh
Investments, with up to $300,000 to
support the installation of two public electric vehicle (EV)
fast-charger stations in Yellowknife. This collaboration is the first
step in the planned EV charging corridor between Yellowknife and the Alberta border.
- On October 13, 2022, Canadian
Utilities declared a fourth quarter dividend of 44.42 cents per share or $1.78 per Class A non-voting and Class B common
share on an annualized basis.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED
EARNINGS
A financial summary and reconciliation of adjusted earnings to
earnings attributable to equity owners of the Company is provided
below:
|
Three Months
Ended
September
30
|
Nine Months
Ended
September
30
|
($ millions except
share data)
|
2022
|
2021
|
2022
|
2021
|
|
|
|
|
|
Adjusted
Earnings
|
120
|
88
|
475
|
394
|
Impairments and other
costs (1)
|
—
|
—
|
—
|
(65)
|
Unrealized losses on
mark-to-market forward and swap
commodity contracts (2)
|
(17)
|
(13)
|
(48)
|
(25)
|
Rate-regulated
activities (3)
|
(10)
|
(10)
|
46
|
(91)
|
IT Common Matters
decision (4)
|
(4)
|
(3)
|
(11)
|
(10)
|
Transition of managed
IT services (5)
|
—
|
(7)
|
—
|
(34)
|
Dividends on equity
preferred shares of
Canadian Utilities
Limited
|
20
|
16
|
55
|
49
|
AUC enforcement
proceeding (6)
|
—
|
—
|
(27)
|
—
|
Workplace COVID-19
vaccination standard (7)
|
—
|
—
|
(8)
|
—
|
Gain on sale
(8)
|
—
|
—
|
5
|
—
|
Other
|
—
|
—
|
—
|
(1)
|
|
|
|
|
|
Earnings attributable
to equity owners of the Company
|
109
|
71
|
487
|
217
|
Weighted average shares
outstanding (millions of shares)
|
269.2
|
268.9
|
269.1
|
270.2
|
(1)
|
In 2021, Canadian
Utilities recorded impairments and other costs not in the normal
course of business of $65 million (after-tax). The Company incurred
$54 million of these costs in Mexico, related mainly to its
Veracruz hydro facility within its Energy Infrastructure segment.
The charge reflected an adverse arbitration decision, changes in
market regulations, ongoing political uncertainty, and a
challenging operating environment, resulting in an impairment of
the carrying value of the assets. Other costs recorded were
individually immaterial.
|
(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 fourth quarter
of 2020 and first quarter of 2021, the Company signed Master
Services Agreements (MSA) with IBM Canada Ltd. (subsequently
novated to Kyndryl Canada Ltd.) and IBM Australia Limited,
respectively, to provide managed IT services. These services were
previously provided by Wipro under a ten-year MSA expiring in
December 2024. The transition of the managed IT services from Wipro
to IBM commenced on February 1, 2021 and is complete.
|
(6)
|
In the fourth quarter
of 2021 and first quarter of 2022, the Company recognized a $31
million penalty, $11 million of project costs and other costs of $2
million ($14 million in Q4 2021 and $27 million in Q1 2022
(after-tax)) related to the AUC enforcement proceeding. The
settlement was filed with the AUC on April 14, 2022 and on June 29,
2022, the AUC issued its decision approving the settlement between
the AUC Enforcement branch and ATCO Electric in its
entirety.
|
(7)
|
In 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, 2022 will be available on the
Canadian Utilities website (www.canadianutilities.com), via SEDAR
(www.sedar.com) 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 27, 2022 at
1-800-319-4610. No pass code is required.
Brian Shkrobot, Executive Vice
President & Chief Financial Officer, will discuss third quarter
2022 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 27, 2022. Please call 1-800-319-6413 and
enter pass code 9463. An archive of the webcast will be
available on October 27, 2022 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.
With approximately 4,800 employees and assets of $22 billion, Canadian Utilities Limited is an
ATCO company. Canadian Utilities 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, Risk &
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 IFRS 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, 2022, which is
available on www.sedar.com.
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 plans and targets; the acquisition of a
portfolio of wind and solar assets from Suncor Energy Inc. and the
timing for the closing of that transaction; the expectation that
the renewables projects acquired from Suncor will be earnings and
cash flow accretive in the first year of operations; the goal of
owning, developing or managing more than 1,000-MW of renewable
energy by 2030; the commitment to achieve net-zero greenhouse gas
emissions by 2050; the development of a 325-MW pumped hydro project
in New South Wales, Australia and
the expected timing for the final investment decision in respect of
the construction of that project.
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 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 and
government policies; regulatory decisions; competitive factors in
the industries in which the Company operates; prevailing economic
conditions (including as may be affected by the COVID-19 pandemic);
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
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, 2021.
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