CALGARY,
AB, March 2, 2023 /CNW/ - ATCO Ltd. (TSX:
ACO.X) (TSX: ACO.Y)
ATCO Ltd. (ATCO or the Company) today announced adjusted
earnings in 2022 of $423 million
($3.71 per share), which were
$41 million ($0.36 per share) higher compared to $382 million ($3.35
per share) in 2021. Fourth quarter adjusted earnings in 2022 of
$110 million ($0.97 per share) were $4
million ($0.04 per share)
lower compared to $114 million
($1.01 per share) in the fourth
quarter of 2021.
2022 earnings attributable to Class I and Class II Shares
reported in accordance with International Financial Reporting
Standards (IFRS earnings) were $370
million ($3.25 per share),
which were $124 million ($1.09 per share) higher compared to $246 million ($2.16
per share) in 2021. Fourth quarter 2022 IFRS earnings of
$81 million ($0.72 per share) were $18
million ($0.15 per share)
lower compared to $99 million
($0.87 per share) in the fourth
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
ATCO Structures
- In December 2022, ATCO Structures
acquired a 100 per cent ownership interest in Triple M Housing Ltd.
(Triple M), a leading North American manufacturer of
pre-fabricated, modular residential homes. Triple M will operate as
a specialized housing division for ATCO Structures within
Canada, and has already
contributed earnings to ATCO Structures post-acquisition.
- Completed the stage two milestone of the Bechtel Pluto Train II
project in the fourth quarter of 2022. This included relocation and
refurbishment of the 2,200-person accommodation village and central
facilities. The project continues to track ahead of planned
progress with stage three and stage four milestones expected to be
handed over in the second quarter of 2023.
ATCO Frontec
- Received confirmation of a one-year contract extension to
December 31, 2023, for the
communication and information systems support contract with NATO
Support and Procurement Agency. For over 19 years, ATCO Frontec has
held this contract to provide support to the NATO headquarters at
the 820-person Camp Butmir near Sarajevo, Bosnia.
- In October 2022, Nasittuq
Corporation was awarded a $122
million contract to provide support services at the Canadian
Forces Station (CFS) Alert on Ellesmere Island. 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.
Canadian Utilities
- Subsequent to year-end, on January 3,
2023, Canadian Utilities closed the previously announced
acquisition of a portfolio of wind and solar assets and development
projects located in Alberta and
Ontario from Suncor Energy Inc.
Concurrent with the close of this acquisition, Canadian Utilities
entered into a new 15-year renewable energy purchase agreement with
Microsoft Corporation. Under the terms of the agreement, Microsoft
will purchase 150-MW per year of renewable energy generated by the
Forty Mile Wind Phase 1 Project in Alberta, acquired as part of the acquisition
from Suncor.
- In December 2022, The Yukon
Electrical Company Limited, a subsidiary of Canadian Utilities, and
Copper Niisüü Limited Partnership (CNLP), finalized a landmark
Electricity Purchase Agreement to underpin the Saa Sè Energy
Project in Beaver Creek and
enhance energy autonomy for White River First Nation. Under the
terms of the agreement, CNLP will build, own and operate the
Beaver Creek solar facility. Upon
completion, Canadian Utilities will purchase the solar electricity
generated, connect it to the grid and redistribute it back to the
community. The facility is expected to be fully operational by
2024.
- In December 2022, Canadian
Utilities announced the commissioning of two hydrogen projects at
the Clean Energy Innovation Hub in Australia. These include the blending of
hydrogen into the Western Australian (WA) natural gas network and
the first hydrogen fuelling station in partnership with Fortescue
Future Industries. This will enable Fortescue, Canadian Utilities
and third parties such as the WA Police to support their fleets of
hydrogen fuel cell vehicles.
- Subsequent to year-end, on February 3,
2023, Canadian Utilities executed an extension to the
current Power Purchase Agreement with Origin Energy Electricity
Limited (Origin) for the Osborne electricity cogeneration facility
in South Australia. The extension
is for a period of three years, commencing on January 1, 2024, with an option for Origin to
extend the term until December 31,
2027.
Corporate
- On January 12, 2023, ATCO
declared a first quarter dividend of 47.56
cents per share or $1.90 per
share on an annualized basis per Class I Non-Voting and Class II
Voting Share, a 3 per cent increase over the 46.17 cents paid in each of the four previous
quarters. ATCO has increased its dividend per share for 30
consecutive years.
FINANCIAL SUMMARY AND
RECONCILIATION OF ADJUSTED EARNINGS
A financial summary of the consolidated subsidiaries of ATCO and
a reconciliation of adjusted earnings to earnings attributable to
Class I and Class II Shares is provided below:
|
Three Months
Ended
December
31
|
Year
Ended
December
31
|
($ millions except
share data)
|
2022
|
2021
|
2022
|
2021
|
|
|
|
|
|
Adjusted
Earnings
|
110
|
114
|
423
|
382
|
Impairment reversal
(charge) and other costs (1)
|
2
|
—
|
2
|
(33)
|
Unrealized (losses)
gains on mark-to-market forward and
swap commodity
contracts (2)
|
(11)
|
2
|
(36)
|
(10)
|
Rate-regulated
activities (3)
|
(18)
|
(15)
|
6
|
(64)
|
IT Common Matters
decision (4)
|
(2)
|
(2)
|
(8)
|
(7)
|
Transition of managed
IT services (5)
|
—
|
(1)
|
—
|
(24)
|
AUC enforcement
proceeding (6)
|
—
|
(7)
|
(14)
|
(7)
|
Workplace COVID-19
vaccination standard (7)
|
—
|
—
|
(5)
|
—
|
Gain on sale of
ownership interest in a subsidiary
company
(8)
|
—
|
—
|
3
|
—
|
Project cost recovery
(9)
|
—
|
9
|
—
|
9
|
Other
|
—
|
(1)
|
(1)
|
—
|
|
Earnings attributable
to Class I and Class II Shares
|
81
|
99
|
370
|
246
|
Weighted average shares
outstanding (millions of shares)
|
113.7
|
114.1
|
114.0
|
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. In 2022, a reversal of
impairment of $2 million (after-tax and non-controlling interests)
was recorded mainly related to Energy Infrastructure's joint
venture investment in the Osborne electricity cogeneration facility
located in Southern Australia. The reversal resulted from an
improvement in the future outlook of power market
prices.
|
(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 (MSAs) 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 ten-year MSAs
expiring in December 2024. The transition of the managed IT
services from Wipro to IBM commenced on February 1, 2021 and is
complete.
|
(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
fourth quarter of 2021 and first quarter of 2022, the Company
recognized costs of $7 million and $14 million (after-tax and
non-controlling interests), respectively, related to the
proceeding.
|
(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.
|
(9)
|
In 2021, the Company
recorded earnings of $9 million (after tax and non-controlling
interests) following the conclusion of the Company's involvement in
an international project.
|
This news release should be read in concert with the full
disclosure documents. ATCO's consolidated financial statements and
management's discussion and analysis for the year ended
December 31, 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, March 2, 2023 at 1-800-319-4610. No
pass code is required.
Katie Patrick, Executive Vice
President, Chief Financial & Investment Officer, will discuss
year-end 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 April 2, 2023. Please call 1-800-319-6413 and
enter pass code 9762. An archive of the webcast will be
available on March 2, 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.
With approximately 7,600 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 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 year ended
December 31, 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:
the expected timing of commencement and term of contracts; the
expected commencement of facility operations; contract values; the
completion of contract milestones; and the purchase and sale of
electricity pursuant to the applicable Purchase and Sale
Agreements.
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; 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.
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 ATCO Ltd.