Canadian Utilities Reports 2014 Second Quarter Earnings
July 28 2014 - 7:36AM
Marketwired Canada
Canadian Utilities Limited (TSX:CU) (TSX:CU.X)
Canadian Utilities today reported second quarter adjusted earnings of $85
million in 2014 compared to $131 million in 2013. Adjusted earnings were $271
million for the six months ended June 30, 2014 compared to $311 million for the
same period of 2013. Major drivers of this decrease were unfavourable market
conditions in the Company's power generation business and an Alberta Utilities
Commission (AUC) decision received by the Utilities in the second quarter.
The decrease in earnings in ATCO Power was primarily due to a 66% decline in the
average Alberta Power Pool price in the second quarter of 2014 over the same
period in 2013 and higher natural gas input costs. Also contributing to the
decrease were higher business development costs to pursue power generation
opportunities and the launch of ATCO Power's recently announced commercial and
industrial sales program.
The decrease in earnings was also impacted by the AUC decision for information
technology (IT) in the second quarter of 2014. The decision covers an unusually
long period from the start of 2010 to the end of 2014. It reduced the Company's
adjusted earnings in the second quarter by $26 million, of which only $2 million
related to the second quarter of 2014, and $24 million related to prior periods.
The Utilities continued to invest in electricity and natural gas transmission
and distribution facilities to support growth in the province and replace aging
infrastructure. ATCO Electric, ATCO Gas and ATCO Pipelines collectively invested
$501 million in the second quarter, bringing the total for the first half of
2014 to $1 billion.
Earnings attributable to equity owners were $115 million for the quarter ended
June 30, 2014 compared to $160 million in the same period of 2013. Earnings
attributable to equity owners were $336 million for the six months ended June
30, 2014 compared to $343 million in the same period of 2013.
RECENT DEVELOPMENTS
-- Canadian Utilities declared a third quarter dividend for 2014 of 26.75
cents per Class A non-voting and Class B common share. Canadian
Utilities' annual dividend per share has increased for 42 consecutive
years.
-- The Company announced it has competitively outsourced its information
technology (IT) services to Wipro Ltd. (Wipro), a global IT, consulting
and business process services company. Wipro will provide the Company
with a complete suite of IT services. Wipro will also acquire the shares
of ATCO I-Tek and the assets of ATCO I-Tek Australia. The sale is
expected to close in the third quarter of 2014 subject to customary
closing conditions.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED EARNINGS
A financial summary and reconciliation of adjusted earnings to earnings
attributable to equity owners is provided below:
For the Three Months For the Six Months
Ended June 30 Ended June 30
----------------------------------------------------------------------------
($ Millions except share
data) 2014 2013 2014 2013
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted earnings (1) 85 131 271 311
Adjustments for rate-
regulated activities (2) 28 17 51 12
Impairment (3) (11) - (11) -
Dividends on equity
preferred shares 13 12 25 20
----------------------------------------------------------------------------
Earnings attributable to
equity owners 115 160 336 343
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenues 856 845 1,873 1,721
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Funds generated by
operations (4) 366 431 883 842
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Weighted average shares
outstanding (millions of
shares) 261.7 257.9 261.3 257.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Adjusted earnings are earnings attributable to equity owners after
adjusting for the timing of revenues and expenses associated with rate-
regulated activities and dividends on equity preferred shares of
Canadian Utilities. Adjusted Earnings also exclude one-time gains and
losses, significant impairments and items that are not in the normal
course of business or 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 3 to the consolidated financial statements for
descriptions of the adjustments for rate-regulated activities and the
timing of their recovery from or refund to customers.
(3) Refer to Note 4 to the consolidated financial statements for an
explanation of ATCO Power Australia's Bulwer Island power station
impairment.
(4) This measure is cash flow from operations before changes in non-cash
working capital. It does not have standardized meaning under IFRS and
may not be comparable to similar measures used by other companies.
The increase in revenues in the second quarter and the first six months of 2014
was due primarily to increased rate base in the Utilities segment, and higher
recoveries from customers related to colder weather and increased recoverable
costs.
The $65 million decrease in funds generated by operations for the second quarter
was due primarily to lower earnings and lower contributions from utility
customers, while year-to-date funds generated by operations increased overall
due to higher contributions received from customers in the first quarter for
utility capital expenditures.
Canadian Utilities' consolidated financial statements and management's
discussion and analysis for the three and six months ended June 30, 2014, will
be available on the Canadian Utilities website (www.canadianutilities.com), via
SEDAR (www.sedar.com) or can be requested from the Company.
Canadian Utilities Limited, an ATCO company, with more than 7,400 employees and
assets of approximately $16 billion, delivers service excellence and innovative
business solutions worldwide with leading companies engaged in Utilities
(pipelines, natural gas and electricity transmission and distribution), Energy
(power generation, natural gas gathering, processing, storage and liquids
extraction) and Technologies (business systems solutions). More information can
be found at www.canadianutilities.com.
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. 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. 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.
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Canadian Utilities Limited
B.R. (Brian) Bale
Senior Vice President & Chief Financial Officer
(403) 292-7502
Canadian Utilities (TSX:CU.PR.D)
Historical Stock Chart
From Oct 2024 to Nov 2024
Canadian Utilities (TSX:CU.PR.D)
Historical Stock Chart
From Nov 2023 to Nov 2024
