Canadian Utilities Reports First Quarter 2018 Earnings
April 26 2018 - 7:40AM
Canadian Utilities Limited (TSX:CU) (TSX:CU.X)
Canadian Utilities today announced first quarter
adjusted earnings for 2018 of $181 million, or $0.67 per share,
compared to $213 million, or $0.79 per share, in the first quarter
of 2017. Lower earnings in the Company's utility businesses were
mainly due to rate rebasing under Alberta's regulated model,
partially offset by higher earnings from Alberta PowerLine.
Canadian Utilities invested $744 million in capital
growth projects in the first quarter of 2018, of which 99 per cent
was invested in assets that earn a return under a regulated
business model or are under commercially secured long-term
contracts.
In the 2018 to 2020 period, Canadian Utilities
expects to invest an additional $4.5 billion in regulated utility
and commercially secured capital growth projects. This capital
investment is expected to contribute significant earnings and cash
flow, and create long-term value for share owners.
On April 4, 2018, Canadian Utilities declared a
second quarter dividend for 2018 of 39.33 cents per Class A
non-voting and Class B common share.
RECENT DEVELOPMENTS
- On February 20, 2018, we completed the acquisition of
Electricidad del Golfo, which owns a long-term contracted, 35 MW
hydroelectric power station based in the state of Veracruz, Mexico.
The transaction was recorded for an aggregate purchase price of
$112 million.
- In March 2018, Canadian Utilities announced we will build a 26
MW cogeneration project, known as the La Laguna Cogeneration
facility, on the site of the Chemours Company Mexicana S. de R.L.
de C.V.'s chemical facility near Gómez Palacio, in the state of
Durango, Mexico. Developed in partnership with RANMAN Energy, the
La Laguna Cogeneration facility will provide low-carbon and
cost-effective electricity and heat under a long-term agreement.
The total investment associated with the project is approximately
$70 million, and the facility is expected to be operational in
2019.
- On March 21, 2018, the Alberta Balancing Pool provided notice
of its intent to terminate the Power Purchase Arrangement (PPA) for
Battle River unit 5 and that dispatch control of Battle River unit
5 would be turned back to Canadian Utilities no later than
September 30, 2018. As part of the turn back, the Balancing Pool is
obligated to pay Canadian Utilities a PPA termination payment, the
terms of which have not been finalized.
- In March 2018, we completed work on Battle River unit 4 to
enable the unit to co-fire with natural gas. Natural gas can now be
used for approximately half of the unit's 155 MW total electricity
generation capacity.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED
EARNINGS
A financial summary and reconciliation of adjusted earnings to
earnings attributable to Class A and Class B shares is provided
below:
|
|
|
For the Three MonthsEnded March 31 |
|
($ millions except share data) |
2018 |
|
2017 (4) (restated) |
|
Adjusted
earnings (1) |
181 |
|
213 |
|
Gain on
sales of operations (2) |
— |
|
30 |
|
Unrealized losses on mark-to-market forward commodity contracts
(2) |
(18 |
) |
(5 |
) |
Rate-regulated activities (2) |
(3 |
) |
(27 |
) |
Dividends
on equity preferred shares |
17 |
|
17 |
|
Other (3) |
2 |
|
— |
|
Earnings attributable to Class A and Class B shares |
179 |
|
228 |
|
Weighted
average shares outstanding (millions of shares) |
270.7 |
|
268.4 |
|
(1) |
|
|
Adjusted
earnings are defined as earnings attributable to Class A and Class
B shares after adjusting for the timing of revenues and expenses
associated with rate-regulated activities, dividends on equity
preferred shares of the Company, and unrealized gains or losses on
mark-to-market forward commodity contracts. Adjusted earnings also
exclude one-time gains and losses, significant impairments, and
items that are not in the normal course of business or a result of
day-to-day operations. Adjusted earnings present earnings on the
same basis as was used prior to adopting International Financial
Reporting Standards (IFRS) - that basis being the U.S. accounting
principles for rate- regulated entities - and they are a key
measure used to assess segment performance, to reflect the
economics of rate regulation and to facilitate comparability of
Canadian Utilities’ earnings with other Canadian rate-regulated
companies. |
(2) |
|
|
Refer to Note 5 of
the consolidated financial statements for detailed descriptions of
the adjustments. |
|
(3) |
|
|
The Company adjusted for the deferred tax asset which was
recognized as a result of the Tula Pipeline Project impairment. The
adjustment is due to a difference between the tax base currency,
which is the Mexican peso, and the U.S. dollar functional
currency. |
|
(4) |
|
|
These
numbers have been restated to account for the impact of IFRS 15.
Additional details on IFRS 15 are discussed in the Other Financial
Information section of the MD&A. |
|
|
|
|
|
|
This news release should be used as a preparation for reading
the full disclosure documents. Canadian Utilities’ consolidated
financial statements and management’s discussion and analysis for
the quarter ended March 31, 2018 will be available on the Canadian
Utilities website (www.canadianutilities.com), via SEDAR
(www.sedar.com) or can be requested from the Company.
With approximately
5,400 employees
and assets of $21
billion, Canadian Utilities Limited is an ATCO company. ATCO is a
diversified global corporation delivering service excellence and
innovative business solutions in Structures & Logistics
(workforce housing, innovative modular facilities, construction,
site support services, and logistics and operations management);
Electricity (electricity generation, transmission, and
distribution); Pipelines & Liquids (natural gas transmission,
distribution and infrastructure development, energy storage, and
industrial water solutions); and Retail Energy (electricity and
natural gas retail sales). More information can be found
at
www.canadianutilities.com.
Media & Investor Inquiries:
D.A. (Dennis) DeChamplain Senior Vice President & Chief
Financial Officer403-292-7502
Forward-Looking Information:
Certain statements
contained in this news release may 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”, and
similar expressions. |
|
The Company believes that
the expectations reflected in the forward-looking information are
reasonable, but no assurance can be given that these expectations
will prove to be correct and such forward-looking information
should not be unduly relied upon. |
|
|
|
Forward-looking
information involves known and unknown risks, uncertainties and
other factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
information. |
|
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. |
|
|
The Company’s actual
results could differ materially from those anticipated in this
forward-looking information as a result of regulatory decisions,
competitive factors in the industries in which the Company
operates, prevailing economic conditions, and other factors, many
of which are beyond the control of the Company. |
|
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