CALGARY,
AB, March 2, 2023 /CNW/ - Canadian
Utilities Limited (TSX: CU) (TSX: CU.X)
Canadian Utilities Limited (Canadian Utilities or the Company)
today announced adjusted earnings in 2022 of $655 million ($2.43
per share), which were $69 million
($0.26 per share) higher compared to
$586 million ($2.17 per share) in 2021. Fourth quarter adjusted
earnings in 2022 of $180 million
($0.66 per share) were $12 million ($0.05
per share) lower compared to $192
million ($0.71 per share) in
the fourth quarter of 2021.
2022 earnings attributable to equity owners of the Company
reported in accordance with International Financial Reporting
Standards (IFRS earnings) were $632
million ($2.07 per Class A and
Class B share), which were $239
million ($0.86 per Class A and
Class B share) higher compared to $393
million ($1.21 per Class A and
Class B share) in 2021. Fourth quarter 2022 IFRS earnings of
$145 million ($0.46 per Class A and Class B share) were
$31 million ($0.13 per Class A and Class B share) lower
compared to $176 million
($0.59 per Class A and Class B 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, as well as dividends on equity preferred shares of the
Company, are not included in adjusted earnings.
RECENT DEVELOPMENTS
- Invested $452 million in capital
expenditures in the fourth quarter of 2022, of which 85 per cent
was invested in regulated utilities and 15 per cent mainly in
Energy Infrastructure.
- 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.
- On January 12, 2023, Canadian
Utilities declared a first quarter dividend of 44.86 cents per share or $1.79 per Class A non-voting and Class B common
share on an annualized basis, a 1 per cent increase over the
44.42 cents per share paid in each of
the four previous quarters. Canadian Utilities has increased its
dividend per share for 51 consecutive years, the longest track
record of annual dividend increases of any publicly traded Canadian
company.
FINANCIAL SUMMARY AND
RECONCILIATION OF ADJUSTED EARNINGS
A financial summary and reconciliation of adjusted earnings to
earnings attributable to equity owners of the Company is provided
below:
|
|
|
|
Three Months Ended
December 31
|
Year Ended
December 31
|
($ millions except
share data)
|
2022
|
2021
|
2022
|
2021
|
Adjusted
Earnings
|
180
|
192
|
655
|
586
|
Impairment reversal
(charge) and other costs (1)
|
4
|
—
|
4
|
(65)
|
Unrealized (losses)
gains on mark-to-market forward
and swap commodity contracts (2)
|
(19)
|
7
|
(67)
|
(18)
|
Rate-regulated
activities (3)
|
(36)
|
(27)
|
10
|
(118)
|
IT Common Matters
decision (4)
|
(4)
|
(4)
|
(15)
|
(14)
|
Transition of managed
IT services (5)
|
—
|
(8)
|
—
|
(42)
|
Dividends on equity
preferred shares of
Canadian Utilities Limited
|
20
|
16
|
75
|
65
|
AUC enforcement
proceeding (6)
|
—
|
(14)
|
(27)
|
(14)
|
Workplace COVID-19
vaccination standard (7)
|
—
|
—
|
(8)
|
—
|
Gain on sale of
ownership interest in a subsidiary
company (8)
|
—
|
—
|
5
|
—
|
Project cost recovery
(9)
|
—
|
17
|
—
|
17
|
Other
|
—
|
(3)
|
—
|
(4)
|
Earnings attributable
to equity owners of the Company
|
145
|
176
|
632
|
393
|
Weighted average shares
outstanding (millions of shares)
|
269.3
|
268.9
|
269.1
|
269.9
|
(1)
|
In 2021, Canadian
Utilities recorded impairments and other costs not in the normal
course of business of $65 million (after-tax). The Company incurred
$54 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 $4
million (after-tax) 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 w9ith 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 $14 million and $27 million (after-tax),
respectively, related to the proceeding.
|
(7)
|
In 2022, the Company
incurred $8 million (after-tax) 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
$5 million (after-tax). 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 $17 million (after tax) 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. Canadian Utilities' consolidated financial
statements and management's discussion and analysis for the year
ended December 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, March 2, 2023 at
1-800-319-4610. No pass code is required.
Brian Shkrobot, Executive Vice
President & Chief Financial 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 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 April 2, 2023. Please call 1-800-319-6413 and
enter pass code 9761. An archive of the webcast will be
available on March 2, 2023 and a
transcript of the call will be posted on
https://www.canadianutilities.com/en-ca/investors/events-presentations.html
within a few business days.
With approximately 5,000 employees and assets of $22 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 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 the
Company's Management's Discussion and Analysis for the year ended
December 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: the expected timing of commencement and
term of contracts; the expected commencement of facility
operations; 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.
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 Canadian Utilities Limited