CALGARY,
AB, Oct. 26, 2023 /CNW/ - ATCO Ltd.
(TSX: ACO.X) (TSX: ACO.Y)
ATCO Ltd. (ATCO or the Company) today announced third quarter
2023 adjusted earnings of $81 million
($0.71 per share), $6 million ($0.05
per share) lower compared to $87
million ($0.76 per share) in
the third quarter of 2022.
Third quarter earnings attributable to Class I and Class II
Shares reported in accordance with International Financial
Reporting Standards (IFRS earnings) were $91
million ($0.80 per share),
$20 million ($0.18 per share) higher compared to $71 million ($0.62
per share) in the third 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
Neltume Ports
- Subsequent to quarter-end, on October
11, 2023, Vancouver Bulk Terminal, a joint venture between
Neltume Ports and Nautilus International Holding Corporation,
announced it is working with Solvay, a global leader in the soda
ash market, on the development of Terminal 2, Berth 7 at the Port
of Vancouver, in Washington State. The newly designed terminal
will have the capability to annually export more than 2.5 million
tonnes of soda ash, supporting soda ash volumes from Solvay's
Green River, Wyoming operations
while providing additional export capacity to the North American
soda ash industry. Construction to allow for the transfer of soda
ash is set to begin in 2024 and is expected to be completed in
early 2026.
Canadian Utilities
- Announced a partnership agreement between the Chiniki and
Goodstoney First Nations for the Deerfoot and Barlow Solar power projects, the largest solar
installation in an urban centre in Western Canada. Under the terms of the
agreement, the Chiniki and Goodstoney First Nations have become the
majority owners with a 51 per cent ownership stake in the
facilities.
- Entered into a 12.5-year virtual power purchase agreement with
Lafarge, an industry leader in sustainable building solutions, in
September 2023. Under the terms of
the agreement, Lafarge's Exshaw
cement plant will notionally purchase 100 per cent of the solar
power generated from the 38.5-MW Empress solar project.
- Received the Alberta Utilities Commission (AUC) decisions with
respect to the parameters of the third generation of
performance-based regulation (PBR3) and the future Generic Cost of
Capital parameters, on October 4,
2023 and October 9, 2023,
respectively. We will begin to operate under these new frameworks
in 2024. The receipt of both of these critical regulatory decisions
in advance of the respective operating years reinforces the strides
we've seen in reducing regulatory lag.
- In October 2023, the South
Australian Government announced an Early Contractor Involvement
(ECI) agreement with ATCO Australia and our joint venture
partner BOC Linde for the South Australian Hydrogen Jobs Plan
project, a 250-MW Hydrogen production facility, a 200-MW
Hydrogen-fuelled electricity generation facility and a Hydrogen
storage facility. Activities under this agreement include
developing a contract offer price, and negotiation of engineering,
procurement, construction and O&M contracts for delivery
and operations of the project. The ECI phase of the project is due
for completion in the second quarter of 2024.
- Appointed John Ivulich to Chief Executive Officer & Country
Chair of ATCO Australia, our
regulated gas utility and non-regulated renewables, power, and
clean fuels businesses in Australia, effective October 1, 2023.
- Incurred $330 million in capital
expenditures in the third quarter of 2023, of which 88 per cent was
invested in ATCO Energy Systems and 12 per cent mainly in ATCO
EnPower.
Corporate
- On September 12, 2023, ATCO
declared a fourth quarter dividend of 47.56
cents per share or $1.90 per
share on an annualized basis per Class I Non-Voting and Class II
Voting Share.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED
EARNINGS
A financial summary of the consolidated subsidiaries of ATCO and
a reconciliation of adjusted earnings to earnings attributable to
Class I and Class II Shares is provided below:
|
Three Months
Ended
September
30
|
Nine Months
Ended
September
30
|
($ millions except
share data)
|
2023
|
2022
|
2023
|
2022
|
|
|
|
|
|
Adjusted
Earnings
|
81
|
87
|
305
|
313
|
Impairment
(1)
|
—
|
—
|
(4)
|
—
|
Unrealized gains
(losses) on mark-to-market forward and swap
commodity contracts
(2)
|
38
|
(7)
|
73
|
(25)
|
Rate-regulated
activities (3)
|
(25)
|
(7)
|
(24)
|
24
|
IT Common Matters
decision (4)
|
(3)
|
(2)
|
(8)
|
(6)
|
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)
|
|
|
|
|
|
Earnings attributable
to Class I and Class II Shares
|
91
|
71
|
337
|
289
|
Weighted average shares
outstanding (millions of shares)
|
113.4
|
113.9
|
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 quarter 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 September 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, October 26, 2023 at 1-800-319-4610. No
pass code is required.
Katie Patrick, Executive Vice
President, Chief Financial & Investment Officer, will discuss
third 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 November 26, 2023. Please call 1-800-319-6413 and
enter pass code 0443. An archive of the webcast will be
available on October 27, 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:
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
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 nine months ended
September 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 value, timing and term of contracts; the delivery of
workforce housing units by ATCO Sabinco in the fourth quarter of
2023; the expected timing for the construction of the development
of Terminal 2, Berth 7 at the Port of Vancouver and the export capacity expected
when construction is complete; the expected electricity generation
capacity of the Empress solar project and the purchase of power by
Lafarge pursuant to a virtual power purchase agreement; and the
uprating of capacity for the Forty Mile wind assets that is
expected to be completed in the first quarter of 2024; and the
expected hydrogen production, electricity generation and hydrogen
storage capacity of the facilities planned in connection with the
South Australian Hydrogen Jobs Plan project and the expected timing
of the 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 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.