CALGARY,
AB, April 27, 2023 /CNW/ - ATCO Ltd.
(TSX: ACO.X) (TSX: ACO.Y)
ATCO Ltd. (ATCO or the Company) today announced first quarter
2023 adjusted earnings of $137
million ($1.21 per share),
$3 million ($0.04 per share) higher compared to $134 million ($1.17
per share) in the first quarter of 2022.
First quarter earnings attributable to Class I and Class II
Shares reported in accordance with International Financial
Reporting Standards (IFRS earnings) were $167 million ($1.47
per share), $39 million ($0.35 per share) higher compared to $128 million ($1.12
per share) in the first 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
- Completed the stage three milestone of the Bechtel Pluto Train
II project in the first quarter of 2023. 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 the stage four milestone expected to be handed over
in the second quarter of 2023.
- In the first quarter of 2023, ATCO Structures was awarded a
supplemental contract for 79 additional space rental units to
support the LNG export facility construction in Plaquemines Parish, Louisiana. This brings the
total contract value to $11 million
for 129 units with terms ranging from 30 to 36 months.
ATCO Frontec
- In February 2023, Wicehtowak
Frontec Services (WFS), ATCO Frontec's joint venture partnership
with George Gordon Developments Ltd., was awarded a
three-and-a-half-year $86 million
base contract to provide camp support services for the BHP Jansen
Discovery Lodge in Saskatchewan.
WFS will provide management and administration, food services,
retail, housekeeping and janitorial, and maintenance work for the
2,500-person facility. As of April 1,
2023, WFS has successfully transitioned to operating the
Jansen Discovery Lodge.
Neltume Ports
- Subsequent to quarter-end, on April 25,
2023, Neltume Ports and its partner Nautilus entered into a
contract with the Port Authority of Vancouver in Washington to operate Terminal 2 within the
port for a 30-year term. The contract allows for the opportunity to
renew the contract for two additional terms of 10 years each. The
Port of Vancouver is strategically
located on the US Pacific Coast for export of mineral and other
bulk material.
Canadian Utilities
- Closed the acquisition of the renewable generation portfolio on
January 3, 2023. The 232-MW of
operating Forty Mile and Adelaide
wind assets have contributed revenues of $27
million for the three months ended March 31, 2023. Uprating work is currently
underway 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.
- In 2023, the Electricity Distribution and Natural Gas
Distribution businesses, following the conclusion of the second
performance-based regulation (PBR) term, began a one-year
cost-of-service rebasing. The cost efficiencies generated over the
second generation PBR term are now being passed along to customers,
providing lower rates and creating long-term savings for Albertans.
Following a one-year cost-of-service rebasing in 2023, these
businesses will move to a third generation of performance-based
regulation (PBR3) beginning in 2024.
Corporate
- On April 13, 2023, ATCO declared
a second quarter dividend of 47.56
cents per share or $1.90 per
share on an annualized basis per Class I Non-Voting and Class II
Voting Share.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED
EARNINGS
A financial summary of the consolidated subsidiaries of ATCO and
a reconciliation of adjusted earnings to earnings attributable to
Class I and Class II Shares is provided below:
|
Three Months
Ended
March
31
|
($ millions except
share data)
|
2023
|
2022
|
|
|
|
Adjusted
Earnings
|
137
|
134
|
Unrealized gains
(losses) on mark-to-market forward and swap
commodity contracts
(1)
|
32
|
(6)
|
Rate-regulated
activities (2)
|
5
|
19
|
IT Common Matters
decision (3)
|
(3)
|
(2)
|
Transition of managed
IT services (4)
|
(5)
|
—
|
AUC enforcement
proceeding (5)
|
—
|
(14)
|
Workplace COVID-19
vaccination standard (6)
|
—
|
(5)
|
Gain on sale of
ownership interest in a subsidiary company
(7)
|
—
|
3
|
Other
|
1
|
(1)
|
|
|
|
Earnings attributable
to Class I and Class II Shares
|
167
|
128
|
Weighted average shares
outstanding (millions of shares)
|
113.6
|
114.1
|
|
|
(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 the 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 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.
|
(5)
|
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.
|
(6)
|
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.
|
(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 $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 March 31, 2023 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, April 27, 2023 at 1-800-319-4610. No
pass code is required.
Katie Patrick, Executive Vice
President, Chief Financial & Investment Officer, will discuss
first 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 May 27, 2023. Please call 1-800-319-6413 and
enter pass code 0024. An archive of the webcast will be
available on April 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.
With approximately 7,600 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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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 three months
ended March 31, 2023, 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 for the completion of project milestones; the
expected timing and term of contracts; the impact or benefit of
contracts, including expected contract value; and the expected
electricity generation capacity of wind assets, including the
expected increase in generation capacity following uprating work on
the Forty Mile Wind assets.
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.