CALGARY,
AB, July 28, 2022 /CNW/ - ATCO Ltd. (TSX:
ACO.X) (TSX: ACO.Y)
ATCO Ltd. (ATCO or the Company) today announced second quarter
2022 adjusted earnings of $92 million
($0.81 per share), $12 million ($0.11
per share) higher compared to $80
million ($0.70 per share) in
the second quarter of 2021.
Second quarter earnings attributable to Class I and Class II
Shares reported in accordance with International Financial
Reporting Standards (IFRS earnings) were $90
million ($0.79 per share),
$78 million ($0.69 per share) higher compared to $12 million ($0.10
per share) in the second quarter of 2021.
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 are not included in adjusted earnings.
RECENT DEVELOPMENTS IN THE SECOND QUARTER OF 2022
ATCO Structures
- Awarded a contract from Seabridge Gold for the supply and
installation of a 120-person camp for the Kerr-Sulphurets-Mitchell
(KSM) Project in Northwest British
Columbia.
- Commenced manufacturing on the construction of a 2,500-person
accommodation village and supplemental parallel modular facility
for the Bechtel Pluto Train II project in Western Australia. Demobilization and
relocation of the client's existing assets is underway. Delivery of
these projects is expected to commence in the third and fourth
quarters of 2022.
ATCO Frontec
- Delivered a training camp for the US Defense Threat Reduction
Agency (DTRA) as a sub-contractor to Bechtel Inc. and Black &
Veatch. The field camp was provided for 130 personnel from DTRA and
US Department of Energy in order to test their mobile
facilities.
- Commenced the North Warning System contract on April 1, 2022 with transition work underway.
Care, custody and control of the system is expected to commence in
August 2022.
Canadian Utilities
- Announced an agreement with Canadian Pacific (CP) to provide
engineering, procurement and construction services for two hydrogen
production and refueling facilities in Calgary and Edmonton. The construction of these facilities
will advance CP's innovative Hydrogen Locomotive Program, which has
its sights set on building its first line-haul hydrogen-powered
freight locomotive.
Corporate
- On July 14, 2022, ATCO declared a
third quarter dividend of 46.17 cents
per share or $1.85 per share on an
annualized basis per Class I Non-Voting and Class II Voting
Share.
- Released ATCO's 2021 Sustainability Report which highlights our
progress and key achievements in energy transition, climate change
and environmental stewardship, operational reliability and
resilience, community and Indigenous relations, diversity, equity
and inclusion, and safety.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED
EARNINGS
A financial summary of the consolidated subsidiaries of ATCO and
a reconciliation of adjusted earnings to earnings attributable to
Class I and Class II Shares is provided below:
|
Three Months
Ended
June
30
|
Six Months
Ended
June
30
|
($ millions except
share data)
|
2022
|
2021
|
2022
|
2021
|
|
|
|
|
|
Adjusted
Earnings
|
92
|
80
|
226
|
199
|
Impairments and other
costs (1)
|
—
|
(33)
|
—
|
(33)
|
Unrealized losses on
mark-to-market forward and
swap commodity
contracts (2)
|
(12)
|
(6)
|
(18)
|
(6)
|
Rate-regulated
activities (3)
|
12
|
(15)
|
31
|
(43)
|
IT Common Matters
decision (4)
|
(2)
|
(2)
|
(4)
|
(4)
|
Transition of managed
IT services (5)
|
—
|
(11)
|
—
|
(17)
|
AUC enforcement
proceeding (6)
|
—
|
—
|
(14)
|
—
|
Workplace COVID-19
vaccination standard (7)
|
—
|
—
|
(5)
|
—
|
Gain on sale
(8)
|
—
|
—
|
3
|
—
|
Other
|
—
|
(1)
|
(1)
|
(1)
|
|
|
|
|
|
Earnings attributable
to Class I and Class II Shares
|
90
|
12
|
218
|
95
|
Weighted average shares
outstanding (millions of shares)
|
114.1
|
114.2
|
114.1
|
114.2
|
(1)
|
In 2021, ATCO recorded
impairments and other costs not in the normal course of business of
$33 million (after-tax and non-controlling interests). Canadian
Utilities incurred $28 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 ($7 million in Q4 2021 and $14 million in Q1 2022
(after-tax and non-controlling interests)) 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 the six months ended
June 30, 2022, the Company incurred $5 million (after-tax and
non-controlling interests) 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 $3 million
(after-tax and non-controlling interests). 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. ATCO's unaudited consolidated financial
statements and management's discussion and analysis for the quarter
ended June 30, 2022 will be available on the ATCO website
(www.ATCO.com), via SEDAR (www.sedar.com) or can be requested from
the Company.
TELECONFERENCE AND WEBCAST
ATCO will hold a live teleconference and webcast at 10:00 am Mountain Time (12:00 pm Eastern Time) on Thursday, July 28, 2022 at 1-800-319-4610. No
pass code is required.
Katie Patrick, Executive Vice
President, Chief Financial & Investment Officer, will discuss
second 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 ATCO
teleconference.
Management invites interested parties to listen via live webcast
at:
https://www.atco.com/en-ca/about-us/investors/events-presentations.html
A replay of the teleconference will be available approximately
two hours after the conclusion of the call until August 28, 2022. Please call 1-800-319-6413 and
enter pass code 9102. An archive of the webcast will be available
on July 28, 2022 and a transcript of
the call will be posted on
https://www.atco.com/en-ca/about-us/investors/events-presentations.html
within a few business days.
With approximately 6,400 employees and assets of $23 billion, ATCO is a diversified global
corporation with investments in the essential services of
Structures & Logistics (workforce and residential housing,
innovative modular facilities, construction, site support services,
workforce lodging services, facility operations and maintenance,
defence operations services, and disaster and emergency management
services); Utilities (electricity and natural gas transmission and
distribution, and international operations); Energy Infrastructure
(energy storage, energy generation, industrial water solutions, and
clean fuels); Retail Energy (electricity and natural gas retail
sales, and whole-home solutions); Transportation (ports and
transportation logistics); and Commercial Real Estate. More
information can be found at www.ATCO.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:
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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 reported in accordance with
IFRS is "earnings attributable to Class I and Class II shares". 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 Class I and Class II Shares" in the
Company's Management's Discussion and Analysis for the six months
ended June 30, 2022, which is
available at 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, including the engineering, procurement and
construction of hydrogen production and refueling facilities to
advance CP's hydrogen locomotive program; and the timing for the
delivery of the facilities being constructed for the Bechtel Pluto
Train II projects.
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 ATCO Ltd.