CALGARY, AB, Oct. 27, 2022 /CNW/ - ATCO Ltd.
(TSX: ACO.X) (TSX: ACO.Y)
ATCO Ltd. (ATCO or the Company) today announced third quarter
2022 adjusted earnings of $87 million
($0.76 per share), $18 million ($0.16
per share) higher compared to $69
million ($0.60 per share) in
the third quarter of 2021.
Third quarter earnings attributable to Class I and Class II
Shares reported in accordance with International Financial
Reporting Standards (IFRS earnings) were $71
million ($0.62 per share),
$19 million ($0.16 per share) higher compared to $52 million ($0.46
per share) in the third 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 THIRD QUARTER OF 2022
ATCO Structures
- Completed the stage one milestone of the Bechtel Pluto Train II
project as detailed in our Company's Management's Discussion and
Analysis for the year ended December 31,
2021. This included the handover of manufactured units for
construction of a 2,500-person accommodation village.
- Awarded a rental contract for 40 space rentals units for a data
center in the Northwestern United
States. The contract commenced in August 2022 for an initial term of 14
months.
- Awarded a rental contract for 50 space rentals units to support
the LNG export facility construction project in Plaquemines Parish, Louisiana. The contract
term is 36 months and commenced in September
2022.
- In August 2022, ATCO Espaciomovil
completed construction of a hospital that includes 168 beds in
Escuintla, Guatemala, about 60-km
southwest of Guatemala City.
ATCO Frontec
- On September 30, 2022, transition
work was completed for the previously announced North Warning
System contract awarded in February
2022, with the Operations and Maintenance contract year one
beginning on October 1, 2022.
- On October 3, 2022, announced
Nasittuq Corporation was awarded a $122
million contract to provide support services at the Canadian
Forces Station (CFS) Alert on Ellesmere Island, by Public Services
and Procurement Canada, on behalf of the Department of National
Defence. Nasittuq is an Inuit majority‐owned corporation and a
partnership between ATCO Frontec and Nunasi Corporation and Pan
Arctic Inuit Logistics Corporation. Nasittuq has been the incumbent
provider since 2012 for this contract, and the new contract is set
to commence June 1, 2023.
- Secured a three year contract for the provision of camp
services to Pogo Gold Operations at Pogo Mine near Fairbanks, Alaska. The project is set to
commence on November 1, 2022.
Canadian Utilities
- 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.
Corporate
- On October 13, 2022, ATCO
declared a fourth quarter dividend of 46.17
cents per share or $1.85 per
share on an annualized basis per Class I Non-Voting and Class II
Voting Share.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED
EARNINGS
A financial summary of the consolidated subsidiaries of ATCO and
a reconciliation of adjusted earnings to earnings attributable to
Class I and Class II Shares is provided below:
|
Three Months
Ended
September
30
|
Nine Months
Ended
September
30
|
($ millions except
share data)
|
2022
|
2021
|
2022
|
2021
|
|
|
|
|
|
Adjusted
Earnings
|
87
|
69
|
313
|
268
|
Impairments and other
costs (1)
|
—
|
—
|
—
|
(33)
|
Unrealized losses on
mark-to-market forward and
swap commodity
contracts (2)
|
(7)
|
(6)
|
(25)
|
(12)
|
Rate-regulated
activities (3)
|
(7)
|
(6)
|
24
|
(49)
|
IT Common Matters
decision (4)
|
(2)
|
(1)
|
(6)
|
(5)
|
Transition of managed
IT services (5)
|
—
|
(6)
|
—
|
(23)
|
AUC enforcement
proceeding (6)
|
—
|
—
|
(14)
|
—
|
Workplace COVID-19
vaccination standard (7)
|
—
|
—
|
(5)
|
—
|
Gain on sale
(8)
|
—
|
—
|
3
|
—
|
Other
|
—
|
2
|
(1)
|
1
|
|
|
|
|
|
Earnings attributable
to Class I and Class II Shares
|
71
|
52
|
289
|
147
|
Weighted average shares
outstanding (millions of shares)
|
113.9
|
114.1
|
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 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 September 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, October 27, 2022 at 1-800-319-4610. No
pass code is required.
Katie Patrick, Executive Vice
President, Chief Financial & Investment 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 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 November 27, 2022. Please call 1-800-319-6413 and
enter pass code 9462. An archive of the webcast will be
available on October 27, 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 $24 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:
To receive ATCO Ltd.
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 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 nine months ended September 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; the expected timing of contracts that have been
secured or awarded; 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 ATCO Ltd.