CALGARY,
AB, July 27, 2023 /CNW/ - ATCO Ltd.
(TSX: ACO.X) (TSX: ACO.Y)
ATCO Ltd. (ATCO or the Company) today announced second quarter
2023 adjusted earnings of $87 million
($0.77 per share), $5 million ($0.04
per share) lower compared to $92
million ($0.81 per share) in
the second quarter of 2022.
Second quarter earnings attributable to Class I and Class
II Shares reported in accordance with International Financial
Reporting Standards (IFRS earnings) were $79
million ($0.70 per share),
$11 million ($0.09 per share) lower compared to $90 million ($0.79
per share) in the second 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 are not included in adjusted earnings.
RECENT DEVELOPMENTS
ATCO Structures
- Executed a contract for the sale and installation of a 42-unit
modular hospital complex in Quebec. The complex was previously on a
long-term rental contract, which concluded earlier in the year.
Dismantling of the complex has commenced, and installation in the
new location is scheduled to be completed in the fourth quarter of
2023.
- Reached substantial completion of the Bechtel Pluto Train II
project. This included handover of all remaining accommodations and
facilities for the stage four milestone and associated siteworks.
The final handover was completed approximately four months ahead of
the original project schedule.
ATCO Frontec
- Commenced work on two fire relief camps made available for
displaced people. One of the fire relief camps is the Valemount
Lodge in BC, which ATCO had previously operated for the Trans
Mountain Expansion Project. The second fire relief camp is a
350-bed camp for Dene Tha' First
Nation.
Canadian Utilities
- Announced the executive appointment of Wayne Stensby as Chief Operating Officer of ATCO
Energy Systems, the newly branded gas and electrical utility
services business, which also oversees our interests in LUMA
Energy.
- Announced the executive appointment of Bob Myles as Chief Operating Officer of ATCO
EnPower, the newly branded non-regulated energy business, including
renewables, clean fuels, and energy storage.
- Invested $332 million in capital
expenditures in the second quarter of 2023, of which 86 per cent
was invested in ATCO Energy Systems and 14 per cent mainly in ATCO
EnPower. (1)
- The Barlow solar project achieved full commercial operations.
Our other Calgary solar
development project, Deerfoot, is expected to commence energization
in the third quarter of 2023, with full commercial operations
expected in the fourth quarter of 2023.
- Since acquiring the renewable energy portfolio in January 2023, the 232-MW of operating Forty Mile
and Adelaide wind assets have
contributed revenues of $46 million
for the six months ended June 30,
2023. Uprating work continues 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.
- Despite significant wildfire activity within Alberta in the first half of 2023, Canadian
Utilities' businesses have been successful in limiting customer
outages and avoiding any safety incidents related to these events.
Wildfire activity in the province of Alberta has slowed significantly from its peak
earlier in the second quarter and our teams continue to stay
focused on restoration efforts. We do not expect to see any
negative impact to earnings as a result of these events.
- Significant opportunities for growth continue to be expected in
connection with the energy transition, including existing and new
opportunities within both ATCO Energy Systems and ATCO EnPower. To
support this potential growth, Canadian Utilities intends to
explore various financing alternatives including the possibility of
creating ATCO EnPower as a separate entity.
Corporate
- On July 13, 2023, ATCO declared a
third quarter dividend of 47.56 cents
per share or $1.90 per share on an
annualized basis per Class I Non-Voting and Class II Voting
Share.
______________________________________
|
(1)
|
ATCO Energy Systems
and ATCO EnPower are referred to as Regulated Utilities and Energy
Infrastructure, respectively, in the Company's Management's
Discussion and Analysis for the six months ended June 30,
2023.
|
FINANCIAL SUMMARY AND
RECONCILIATION OF ADJUSTED EARNINGS
A financial summary of the consolidated subsidiaries of ATCO and
a reconciliation of adjusted earnings to earnings attributable to
Class I and Class II Shares is provided below:
|
Three Months
Ended
June
30
|
Six Months
Ended
June
30
|
($ millions except
share data)
|
2023
|
2022
|
2023
|
2022
|
Adjusted
Earnings
|
87
|
92
|
224
|
226
|
Impairment
(1)
|
(4)
|
—
|
(4)
|
—
|
Unrealized gains
(losses) on mark-to-market forward and swap
commodity contracts
(2)
|
3
|
(12)
|
35
|
(18)
|
Rate-regulated
activities (3)
|
(4)
|
12
|
1
|
31
|
IT Common Matters
decision (4)
|
(2)
|
(2)
|
(5)
|
(4)
|
Transition of managed
IT services (5)
|
—
|
—
|
(5)
|
—
|
AUC enforcement
proceeding (6)
|
—
|
—
|
—
|
(14)
|
Workplace COVID-19
vaccination standard (7)
|
—
|
—
|
—
|
(5)
|
Gain on sale of
ownership interest in a subsidiary company
(8)
|
—
|
—
|
—
|
3
|
Other
|
(1)
|
—
|
—
|
(1)
|
Earnings attributable
to Class I and Class II Shares
|
79
|
90
|
246
|
218
|
Weighted average shares
outstanding (millions of shares)
|
113.2
|
114.1
|
113.4
|
114.1
|
(1)
|
In the second quarter of 2023, the Company recognized
an impairment of $4 million (after-tax and non-controlling
interests) relating to certain electricity generation assets in
Electricity Transmission. These assets had been removed from
service and it was determined that they no longer had any remaining
value.
|
(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 six months of 2023, the Company
recognized legal and other costs of $5 million (after-tax and
non-controlling interests) 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 $14 million (after-tax and
non-controlling interests) related to the
proceeding.
|
(7)
|
In the first quarter of 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, 2023 will be available on the ATCO website
(www.ATCO.com), via SEDAR+ (www.sedarplus.ca) 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 27, 2023 at 1-800-319-4610. No
pass code is required.
Katie Patrick, Executive Vice
President, Chief Financial & Investment Officer, will discuss
second 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 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 27, 2023. Please call 1-800-319-6413 and
enter pass code 0269. An archive of the webcast will be
available on July 28, 2023 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.
ATCO Ltd. and its subsidiary and affiliate companies have
approximately 19,000 employees and assets of $25
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 & 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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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 International Financial Reporting Standards 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, 2023, which is
available at 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 timing for the completion of contract and/or project
milestones; the expected timing and term of contracts; the impact
or benefits of contracts; the expected timing of energization and
full commercial operations for the Deerfoot solar project; expected
growth opportunities; potential financing alternatives, including
the possibility of creating ATCO EnPower as a separate entity; the
expected uprating of electricity generation at Forty Mile Wind; and
the expectation that there will not be any negative impact to
earnings as a result of wildfire activity in Alberta during the first half of 2023.
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; 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 ATCO Ltd.