CALGARY,
AB, April 27, 2022 /CNW/ - Canadian
Utilities Limited (TSX: CU) (TSX: CU.X)
Canadian Utilities Limited (Canadian Utilities or the Company)
today announced first quarter 2022 adjusted earnings of
$219 million ($0.81 per share), $28
million ($0.11 per share)
higher compared to $191 million
($0.70 per share) in the first
quarter of 2021.
First quarter earnings attributable to equity owners of the
Company reported in accordance with International Financial
Reporting Standards (IFRS earnings) were $227 million ($0.78
per Class A and Class B share), $86
million ($0.32 per Class A and
Class B share) higher compared to $141
million ($0.46 per Class A and
Class B share) in the first quarter of 2021.
IFRS earnings include timing adjustments related to
rate-regulated activities, dividends on equity preferred shares of
the Company, 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 FIRST QUARTER OF 2022
- On April 14, 2022, a joint
settlement agreement was filed with the AUC with respect to the AUC
enforcement proceeding with an agreed administrative penalty of
$31 million. Customers were never
impacted as these costs were not included in customer rates and the
administrative penalty and excluded project costs will not be
recovered from customers.
- Invested $263 million in capital
projects of which 83 per cent was invested in regulated utilities
and 17 per cent mainly in Energy Infrastructure.
- Entered into a share purchase agreement with Denendeh
Investments Incorporated (DII) to increase DII's ownership interest
from 14 per cent to 50 per cent in Northland Utilities Enterprises
Ltd. (NUE). NUE is an electric utility company operating in the
Northwest Territories, Canada and
a subsidiary of ATCO Electric Ltd. The transaction results in ATCO
Electric Ltd. and DII each having a 50 per cent ownership interest
in NUE and highlights our continued commitment to foster community
ownership and self-sustaining economic development.
- Closed the transaction to transfer a 30-km segment of the
Pioneer Natural Gas Pipeline to Nova Gas Transmission Ltd. for
$63 million in the Natural Gas
Transmission business on February 25,
2022.
- Announced a 15-year power purchase agreement with Microsoft
Corporation to purchase all renewable energy generated by ATCO's
Deerfoot solar project in Calgary,
Alberta. Once operational, the Deerfoot solar project will
be one of the largest solar installations in a major urban centre
in Western Canada, at 37-MW.
- On April 14, 2022, Canadian
Utilities declared a second quarter dividend of 44.42 cents per share or $1.78 per Class A non-voting and Class B common
share on an annualized basis.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED
EARNINGS
A financial summary and reconciliation of adjusted earnings to
earnings attributable to equity owners of the Company is provided
below:
|
Three Months
Ended
March
31
|
|
($ millions except
share data)
|
2022
|
2021
|
|
|
|
|
Adjusted
Earnings
|
219
|
191
|
|
Unrealized (losses)
gains on mark-to-market forward and swap commodity contracts
(1)
|
(12)
|
1
|
|
Rate-regulated
activities (2)
|
36
|
(52)
|
|
IT Common Matters
decision (3)
|
(4)
|
(4)
|
|
Transition of managed
IT services (4)
|
—
|
(11)
|
|
Dividends on equity
preferred shares of Canadian Utilities Limited
|
18
|
17
|
|
AUC enforcement
proceeding (5)
|
(27)
|
—
|
|
Workplace COVID-19
vaccination standard (6)
|
(8)
|
—
|
|
Gain on sale
(7)
|
5
|
—
|
|
Other
|
—
|
(1)
|
|
Earnings attributable
to equity owners of the Company
|
227
|
141
|
|
Weighted average shares
outstanding (millions of shares)
|
268.9
|
272.0
|
|
|
|
(1)
|
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.
|
|
(2)
|
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 current year, revenues to be billed
in future years, regulatory decisions received, and settlement of
regulatory decisions and other items.
|
|
(3)
|
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.
|
|
(4)
|
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.
|
|
(5)
|
In the fourth quarter of 2021 and first quarter of
2022, the Company recognized the $31 million penalty, $11 million
of project costs and other costs of $2 million ($14 million in Q4
2021 and $27 million in Q1 2022 (after tax)) related to the
potential outcome of the AUC enforcement proceeding. The settlement
was filed with the AUC on April 14, 2022 and the AUC is currently
determining the next process steps.
|
|
(6)
|
In the three months ended March 31, 2022, the Company
incurred $8 million (after-tax) in severance and related costs
associated with the Workplace COVID-19 vaccination
standard.
|
|
(7)
|
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 $5 million (after-tax).
With this transaction, ATCO Electric Ltd. and DII each have a 50
per cent ownership interest.
|
This news release should be read in concert with the full
disclosure documents. Canadian Utilities' unaudited consolidated
financial statements and management's discussion and analysis for
the quarter ended March 31, 2022 will be available on the
Canadian Utilities website (www.canadianutilities.com), via SEDAR
(www.sedar.com) or can be requested from the Company.
TELECONFERENCE AND WEBCAST
Canadian Utilities will hold a live teleconference and webcast
at 9:00 am Mountain Time
(11:00 am Eastern Time) on
Thursday, April 28, 2022 at
1-800-319-4610. No pass code is required.
Brian Shkrobot, Executive Vice
President & Chief Financial Officer, will discuss first 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 Canadian Utilities
teleconference.
Management invites interested parties to listen via live webcast
at:
https://www.canadianutilities.com/en-ca/investors/events-presentations.html
A replay of the teleconference will be available approximately
two hours after the conclusion of the call until May 28, 2022. Please call 1-800-319-6413 and
enter pass code 8782. An archive of the webcast will be available
on April 28, 2022 and a transcript of
the call will be posted on
https://www.canadianutilities.com/en-ca/about-us/investors/events-presentations.html
within a few business days.
With approximately 4,800 employees and assets of $21 billion, Canadian Utilities Limited is an
ATCO company. Canadian Utilities is a diversified global energy
infrastructure corporation delivering essential services and
innovative business solutions in Utilities (electricity and natural
gas transmission and distribution, and international operations);
Energy Infrastructure (energy storage, energy generation,
industrial water solutions, and clean fuels); and Retail Energy
(electricity and natural gas retail sales, and whole-home
solutions). More information can be found at
www.canadianutilities.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 Canadian Utilities
Limited 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 that is reported in accordance with
International Financial Reporting Standards (IFRS) is "earnings
attributable to equity owners of the Company". 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 Equity Owners of the Company" in Management's
Discussion and Analysis for the three months ended March 31, 2022,
which is available on 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 general strategic plans and targets, including the
timing for construction, completion or commencement of the projects
highlighted under "Recent Developments in the First Quarter of
2022" and the expected revenues or anticipated size of such
projects; and the reference to the AUC's determination of the next
process steps with respect to the settlement filed on April 14,
2022.
|
|
|
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; demand levels for
oil, natural gas, gasoline, diesel and other energy sources;
certain levels of future energy use; future production rates;
future revenue and earnings; 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.
|
|
|
This news release
may contain information that constitutes future-oriented financial
information or financial outlook information, all of which are
subject to the same assumptions, risk factors, limitations and
qualifications set forth above. Readers are cautioned that the
assumptions used in the preparation of such information, although
considered reasonable at the time of preparation, may prove to be
imprecise or inaccurate and, as such, undue reliance should not be
placed on such future-oriented financial information or financial
outlook information. The Company's actual results, performance and
achievements could differ materially from those expressed in, or
implied by, the future-oriented financial information or financial
outlook information. The Company has included such information in
order to provide readers with a more complete perspective on its
future operations and its current expectations relating to its
future performance. Such information may not be appropriate for
other purposes and readers are cautioned that such information
should not be used for purposes other than those for which it has
been disclosed herein. Future-oriented financial information or
financial outlook information contained herein was made as of the
date of this news release.
|
|
|
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 CU Inc.