CALGARY,
AB, April 27, 2023 /CNW/ - Canadian
Utilities Limited (TSX: CU) (TSX: CU.X)
Canadian Utilities Limited (Canadian Utilities or the Company)
today announced first quarter 2023 adjusted earnings of
$217 million ($0.81 per share), $2
million ($nil per share) lower compared to $219 million ($0.81
per share) in the first quarter of 2022.
First quarter earnings attributable to equity owners of the
Company reported in accordance with International Financial
Reporting Standards (IFRS earnings) were $292 million ($1.01
per Class A and Class B share), $65
million ($0.23 per Class A and
Class B share) higher compared to $227
million ($0.78 per Class A and
Class B share) in the first 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
- Invested $304 million in capital
expenditures in the first quarter of 2023, of which 86 per cent was
invested in regulated utilities and 14 per cent mainly in Energy
Infrastructure.
- Closed the acquisition of the renewable generation portfolio on
January 3, 2023. The 232-MW of
operating Forty Mile and Adelaide
wind assets have contributed revenues of $27
million for the three months ended March 31, 2023. Uprating work is currently
underway 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.
- In 2023, the Electricity Distribution and Natural Gas
Distribution businesses, following the conclusion of the second
performance-based regulation (PBR) term, began a one-year
cost-of-service rebasing. The cost efficiencies generated over the
second generation PBR term are now being passed along to customers,
providing lower rates and creating long-term savings for Albertans.
Following a one-year cost-of-service rebasing in 2023, these
businesses will move to a third generation of performance-based
regulation (PBR3) beginning in 2024.
- On April 13, 2023, Canadian
Utilities declared a second quarter dividend of 44.86 cents per share or $1.79 per Class A non-voting and Class B common
share on an annualized basis.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED
EARNINGS
A financial summary and reconciliation of adjusted earnings to
earnings attributable to equity owners of the Company is provided
below:
|
Three Months
Ended
March
31
|
($ millions except
share data)
|
2023
|
2022
|
|
|
|
Adjusted
Earnings
|
217
|
219
|
Unrealized gains
(losses) on mark-to-market forward and swap
commodity contracts
(1)
|
61
|
(12)
|
Rate-regulated
activities (2)
|
9
|
36
|
IT Common Matters
decision (3)
|
(5)
|
(4)
|
Transition of managed
IT services (4)
|
(9)
|
—
|
Dividends on equity
preferred shares of Canadian Utilities Limited
|
19
|
18
|
AUC enforcement
proceeding (5)
|
—
|
(27)
|
Workplace COVID-19
vaccination standard (6)
|
—
|
(8)
|
Gain on sale of
ownership interest in a subsidiary company
(7)
|
—
|
5
|
|
|
|
Earnings attributable
to equity owners of the Company
|
292
|
227
|
Weighted average shares
outstanding (millions of shares)
|
269.5
|
268.9
|
|
|
(1)
|
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.
|
(2)
|
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.
|
(3)
|
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.
|
(4)
|
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.
|
(5)
|
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.
|
(6)
|
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.
|
(7)
|
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 March 31, 2023 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, April 27, 2023 at
1-800-319-4610. No pass code is required.
Brian Shkrobot, Executive Vice
President & Chief Financial Officer, will discuss first 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 May 27, 2023. Please call 1-800-319-6413 and
enter pass code 0025. An archive of the webcast will be
available on April 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.
With approximately 5,000 employees and assets of $23 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 & 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 three months
ended March 31, 2023, 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: the expected electricity generation capacity of wind
assets, including the expected increase in generation capacity
following uprating work on the Forty Mile Wind assets.
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; 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