Hydro One energizes life in Ontario with a focus on sustainability and the
safe return to normal operations while supporting customers and
communities
TORONTO, Aug. 11, 2020 /PRNewswire/ - Hydro One Limited
(Hydro One or the Company) today announced its financial and
operating results for the second quarter ended June 30, 2020.
Second Quarter Highlights
- Second quarter earnings per share (EPS) was $1.84 and adjusted EPS was $0.39, compared to EPS and adjusted EPS of
$0.26, for the same period in 2019.
The change in EPS was driven by the Ontario Divisional Court's
decision on the deferred tax asset appeal, as well as hotter
weather, one-time and ongoing revenues and costs associated with
the transmission rate decision, that were partially offset by
higher COVID-19 related expenses net of lower operating,
maintenance and administration (OM&A) costs due to timing of
work programs.
- Hydro One published its sustainability report that demonstrates
its continued progress and was recognized as one of the Best 50
Corporate Citizens in Canada by
Corporate Knights.
- Hydro One partnered with GlobalMedic to deliver 10,000 kits of
food and safety supplies to First Nations communities across
Ontario. The Company also provided
scholarships for young Indigenous leaders and support for the
Indigenous economy.
- Measures taken by Hydro One during the early parts of the
COVID-19 pandemic to ensure employee and customer safety remain in
place. Since the beginning of June, the Company returned
effectively all of its field crews to work on the capital and
maintenance programs where it is safe to do so.
- The Company's capital investments and in-service additions for
the second quarter were $429 million
and $165 million, respectively,
compared to $370 million and
$276 million in the same quarter in
2019.
- Ongoing productivity savings of approximately $86 million represent a 61.7% increase
year-over-year compared to the second quarter of 2019.
- Improved reliability in the transmission segment with an
approximate 38% reduction in System Average Interruption Duration
Index (SAIDI) in comparison to the second quarter
of 2019.
- In the second quarter, distribution customer satisfaction score
with residential and small businesses was 86%, a 2% increase
over 2019.
- Hydro One, as part of its commitment to enhance its customer
experience through new and innovative services and tools, launched
its new online outage reporting tool.
- Reversal of the previously recognized impairment charge of the
deferred income tax regulatory asset for both the transmission and
distribution businesses on account of the Ontario Divisional Court
decision led to a one-time net income increase of
$867 million.
- Subsequent to the quarter, Hydro One announced the achievement
of tentative settlements for two collective agreements with the
Power Workers' Union (PWU).
- Subsequent to the quarter, the Company completed the purchase
of the business and distribution assets of Peterborough
Distribution Inc. from the City of
Peterborough on August 1st.
- Hydro One announced that Stacey
Mowbray has been appointed to the Company's Board of
Directors.
- Quarterly dividend declared at $0.2536 per share, payable September
30, 2020.
"Hydro One is helping to build a brighter, more sustainable
future for all Ontarians by focusing on safety and social
responsibility at this critical time. Since the pandemic began,
we've found new ways to collaborate, we've developed innovative
solutions and we're more in-tune than ever with the needs of our
employees, customer and communities," said Mark Poweska, President and CEO, on Hydro One's
release of its 2019 sustainability report. "We also remain
steadfast in our rejection of racism and our commitment to build a
more inclusive and diverse team that promote different
perspectives, ideas and insights."
Selected Consolidated Financial and Operating
Highlights
|
Three months ended
June 30
|
Six months ended
June 30
|
(amounts throughout
in millions of Canadian dollars, except as otherwise
noted)
|
2020
|
2019
|
2020
|
2019
|
Revenues
|
1,670
|
1,413
|
3,520
|
3,172
|
Purchased
power
|
808
|
653
|
1,815
|
1,460
|
Revenues, net of
purchased power1
|
862
|
760
|
1,705
|
1,712
|
Net income attributable
to common shareholders
|
1,103
|
155
|
1,328
|
326
|
Adjusting
items
|
(867)
|
—
|
(867)
|
140
|
Adjusted net income
attributable to common shareholders1
|
236
|
155
|
461
|
466
|
|
|
|
|
|
Basic EPS
|
$1.84
|
$0.26
|
$2.22
|
$0.55
|
Diluted EPS
|
$1.84
|
$0.26
|
$2.21
|
$0.54
|
Basic Adjusted
EPS1
|
$0.39
|
$0.26
|
$0.77
|
$0.78
|
Diluted Adjusted
EPS1
|
$0.39
|
$0.26
|
$0.77
|
$0.78
|
|
|
|
|
|
Net cash from operating
activities
|
375
|
297
|
923
|
415
|
Capital
investments
|
429
|
370
|
801
|
681
|
Assets placed
in-service
|
165
|
276
|
390
|
421
|
Transmission: Average
monthly Ontario 60-minute peak demand (MW)
|
19,097
|
18,226
|
19,172
|
19,494
|
Distribution: Electricity distributed to Hydro
One customers (GWh)
|
6,213
|
6,073
|
13,697
|
13,811
|
|
|
1
|
Non-GAAP Measures
- Hydro One uses financial measures that do not have a
standardized meaning under the United States generally accepted
accounting principles (US GAAP) and may not be comparable to
similar measures presented by other entities. Hydro One calculated
the non-GAAP measures by adjusting certain US GAAP measures for
specific items that impact comparability but which the Company does
not consider part of normal, ongoing operations. Refer to the
Non-GAAP Measures section of the Company's Management's Discussion
and Analysis (MD&A) for further discussion of these
items.
|
Key Financial Highlights
2020 Second Quarter Highlights
The Company reported net income attributable to common
shareholders of $1,103 million during
the quarter, compared to $155 million
in the same period of 2019. This resulted in EPS and adjusted
EPS of $1.84 and $0.39, respectively, compared to EPS and adjusted
EPS of $0.26 in the prior year.
Revenues, net of purchased power, for the second quarter were
$102 million higher than last year,
mainly due to higher transmission revenues primarily due to higher
peak demand driven by hotter weather, the recognition of the 2020
transmission decision received this quarter, including approved
rates retroactive to January 1,
2020, the recovery of additional other post-employment
benefit (OPEB) costs through OM&A, and the recognition of
Conservation and Demand Management (CDM) revenues, as well as
higher revenues resulting from higher 2020 distribution rates and
revenue related to Niagara Reinforcement LP assets placed
in-service in the third quarter of 2019.
OM&A costs in the second quarter of 2020, which include
COVID-19 related costs as further discussed below, were slightly
higher than last year, due to additional OPEB costs that are
recognized in OM&A subsequent to the 2020-2022 OEB transmission
decision and recovered in rates, therefore net income neutral,
partially offset by lower corporate support costs.
Income tax recovery for the second quarter of 2020 was higher
than the prior year due to the income tax recovery recognized
following the July 2020 decision of
the Ontario Divisional Court and higher net tax deductions
primarily related to tax depreciation in excess of depreciation,
partially offset by higher income before taxes.
Hydro One continues to invest in the reliability and performance
of Ontario's electricity
transmission and distribution systems, address
aging power system infrastructure,
facilitate connectivity to new load
customers and generation sources, and improve service to customers.
The Company made capital investments of $429
million during the second quarter of 2020, and placed
$165 million of new assets in-
service.
COVID-19
Throughout the COVID-19 pandemic, our decisions and actions have
been guided by two priorities: to protect Hydro One's employees and
to maintain the safe and reliable supply of electricity to Hydro
One's customers. While we continue to operate under our business
continuity plan and have almost all office and administrative staff
working remotely, we have implemented enhanced safety measures for
all field staff.
Following the guidance of the Province and public health experts
in April, Hydro One developed its own pandemic recovery plan, which
consists of a similar gradual and staged approach to returning its
employees to work that has allowed for the gradual ramp-up of work
crews. After focusing on high priority and essential work earlier
in the quarter, the Company has returned almost all of its field
crews to work after taking a measured approach to advancing the
work on deferred capital and operating work programs, where it is
safe to do so.
Included in the Company's results for the second quarter and six
months ended June 30, 2020 are costs
associated with the temporary stand-down of the Company's work
force and the purchase of additional facility related and cleaning
supplies as a result of the COVID-19 pandemic. These costs have
largely been offset in the second quarter by lower OM&A
resulting from the timing of work program expenditures impacted by
the COVID-19 pandemic.
Looking ahead, it is very difficult to determine or estimate the
exact impacts of COVID-19 on Hydro One's operations as they will be
largely dependent on the duration of the pandemic and severity of
the measures implemented to combat this virus. Electricity
consumption can be impacted by numerous variables, including
weather, changing economic conditions and conservation efforts
making it difficult to estimate the impact of COVID-19 with any
level of precision. Hydro One has continued to take the necessary
steps to mitigate the impact of COVID-19 on the
Company's operations.
Selected Operating Highlights
Hydro One released its sustainability report that provides a
balanced account of its environmental, social and governance (ESG)
performance. Hydro One is committed to creating a brighter,
sustainable future for all Ontarians and producing an annual
sustainability update and to continuously increase the transparency
and accountability of our ESG disclosures. The sustainability
report is available at www.hydroone.com/sustainability.
Hydro One placed 11th (#16 in 2019) on the annual list of Best
50 Corporate Citizens by Corporate Knights, an organization
dedicated to setting high standards in sustainability across
Canada. Hydro One has appeared on
the Best 50 Corporate Citizens in Canada list nine times in the last 11
years.
Hydro One announced additional measures to support Indigenous
customers, businesses and communities. These initiatives include
providing critical aid to First Nations and Métis communities,
scholarships for young Indigenous leaders and supporting the
Indigenous economy. Hydro One has partnered with GlobalMedic, a
registered Canadian charity specializing in disaster relief, to
deliver 10,000 kits of food and safety supplies to First Nations
communities across Ontario. Hydro
One is also supporting the Métis Nation of Ontario's (MNO) pandemic relief fund and its
31 community councils in providing necessities such as food,
medical and pharmaceutical supplies to its
vulnerable citizens.
Improved reliability in the transmission segment with an
approximate 38% reduction in SAIDI in comparison to the second
quarter of 2019. The improvements in reliability are multi-faceted,
including continued investment in the renewal of the grid, and
on-going continuous improvement efforts relating from lessons
learned on past events impacting reliability.
Continued productivity savings of $86
million in the second quarter of 2020 represent a 61.7%
increase year-over-year. Productivity improvements are mostly a
result of ongoing work being undertaken in the areas of forestry,
corporate costs reduction, settlement and customer contact centre
and new initiatives in real estate.
In the second quarter, distribution customer satisfaction score
with residential and small business stood at 86%, a 2%
increase over 2019. The increase has been driven by improvements in
time to restore power during outages and focusing on building and
communicating programs to address customers' needs.
Hydro One launched new online outage reporting in its efforts to
continuously look at ways to improve its customers' outage
experience including receiving information when it's needed most.
The ability to report an outage online complements the Company's
existing outage tools, which give customers options on how they
want to receive updates and other personalized features.
Subsequent to the quarter, Hydro One announced the achievement
of tentative settlements for two collective agreements with the
Power Worker's' Union covering approximately 3,800 regular
employees and approximately 1,400 casual employees in critical
front line roles across the Company's operations in Ontario. Union members will now vote on these
tentative agreements with the outcome anticipated by the end of
September.
On August 1, 2020, subsequent to
the quarter end, the Company completed the purchase of
the business and distribution assets of Peterborough
Distribution Inc. from the City of
Peterborough. Hydro One continues to progress on the closing
of its acquisition of Orillia Power Distribution Corporation from
the City of Orillia expected to be
in the third quarter of 2020.
On July 28, 2020, Hydro One
announced the appointment of Stacey
Mowbray to the Company's Board of Directors. Ms. Mowbray
fills the vacancy created when Anne
Giardini did not stand for re-election at the Company's 2020
annual general meeting of shareholders. She brings with her a
strong track record in leading successful publicly-traded consumer
brands and is highly complementary to the skills and experiences of
the existing board members.
Common Share Dividends
Following the conclusion of the second quarter, on August 10, 2020, the Company declared a quarterly
cash dividend to common shareholders of $0.2536 per share to be paid on September 30, 2020 to shareholders of record on
September 9, 2020.
Supplemental
Segment Information
|
Three months ended
June 30
|
Six months ended
June 30
|
(millions of
dollars)
|
2020
|
2019
|
2020
|
2019
|
Revenues
|
|
|
|
|
Transmission
|
459
|
374
|
859
|
802
|
Distribution
|
1,201
|
1,029
|
2,640
|
2,350
|
Other
|
10
|
10
|
21
|
20
|
Total
revenues
|
1,670
|
1,413
|
3,520
|
3,172
|
Revenues, net of
purchased power
|
|
|
|
|
Transmission
|
459
|
374
|
859
|
802
|
Distribution
|
393
|
376
|
825
|
890
|
Other
|
10
|
10
|
21
|
20
|
Total revenues, net of
purchased power
|
862
|
760
|
1,705
|
1,712
|
Operation,
maintenance and administration costs
|
|
|
|
|
Transmission
|
114
|
101
|
216
|
200
|
Distribution
|
141
|
154
|
289
|
300
|
Other
|
15
|
12
|
30
|
183
|
Total operation,
maintenance and administration costs
|
270
|
267
|
535
|
683
|
Income (loss)
before financing charges and taxes
|
|
|
|
|
Transmission
|
236
|
159
|
422
|
375
|
Distribution
|
150
|
118
|
336
|
388
|
Other
|
(7)
|
(5)
|
(13)
|
(167)
|
Total income before
financing charges and taxes
|
379
|
272
|
745
|
596
|
Capital
investments
|
|
|
|
|
Transmission
|
251
|
242
|
487
|
448
|
Distribution
|
177
|
126
|
312
|
229
|
Other
|
1
|
2
|
2
|
4
|
Total capital
investments
|
429
|
370
|
801
|
681
|
Assets placed
in-service
|
|
|
|
|
Transmission
|
58
|
161
|
187
|
215
|
Distribution
|
107
|
114
|
202
|
202
|
Other
|
—
|
1
|
1
|
4
|
Total assets placed
in-service
|
165
|
276
|
390
|
421
|
This press release should be read in conjunction with the
Company's second quarter 2020 unaudited consolidated financial
statements and MD&A. These financial statements and MD&A
together with additional information about Hydro One, including the
audited consolidated financial statements and MD&A for the year
ended December 31, 2019 can be
accessed at www.HydroOne.com/Investors and www.sedar.com.
Quarterly Investment Community Teleconference
The Company's second quarter 2020 results teleconference with
the investment community will be held on August 11, 2020 at 8 a.m.
ET, a webcast of which will be available at
www.HydroOne.com/Investors. Members of the financial community
wishing to ask questions during the call should dial 1-866-221-1674
prior to the scheduled start time and request access to Hydro One's
second quarter 2020 results call, conference ID 8798775
(international callers may dial 1-270-215-9604). Media and other
interested parties are welcome to participate on a listen-only
basis. A webcast of the teleconference will be available at the
same link following the call. Additionally, investors should note
that from time to time Hydro One management presents at brokerage
sponsored investor conferences. Most often, but not always, these
conferences are webcast by the hosting brokerage firm, and when
they are webcast, links are made available on Hydro One's website
at www.HydroOne.com/Investors and are posted generally at least two
days before the conference.
Hydro One Limited (TSX: H)
Hydro One Limited, through its wholly-owned subsidiaries, is
Ontario's largest electricity
transmission and distribution provider with approximately 1.4
million valued customers, approximately $27.1 billion in assets as at December 31, 2019, and annual revenues in 2019 of
approximately $6.5 billion.
Our team of approximately 8,800 skilled and dedicated employees
proudly build and maintain a safe and reliable electricity system
which is essential to supporting strong and successful communities.
In 2019, Hydro One invested approximately $1.7 billion in its transmission and distribution
networks and supported the economy through buying approximately
$1.5 billion of goods and
services.
We are committed to the communities where we live and work
through community investment, sustainability and diversity
initiatives. We are designated as a Sustainable Electricity Company
by the Canadian Electricity Association.
Hydro One Limited's common shares are listed on the TSX and
certain of Hydro One Inc.'s medium term notes are listed on the
NYSE. Additional information can be accessed at www.hydroone.com,
www.sedar.com or www.sec.gov.
For More Information
For more information about everything Hydro One, please visit
www.hydroone.com where you can find additional information
including links to securities filings, historical financial
reports, and information about the Company's governance practices,
corporate social responsibility, customer solutions, and further
information about its business.
Forward-Looking Statements and Information
This press release may contain "forward-looking information"
within the meaning of applicable securities laws. Such information
includes, but is not limited to, statements related to: ongoing
productivity savings; the company's focus on safety and social
responsibility, as well as the promotion of inclusivity and
diversity; investments in reliability and performance of the
electricity systems, facilitating connections and improving
customer service; the impact of COVID-19 on the Company's business,
operations and service; the Company's priorities in its response to
COVID-19 and the mitigation measures taken; corporate support for
Indigenous communities; outage reporting improvements; voting on
tentative collective agreements; and the acquisition of Orillia
Power Distribution Corporation; and dividends. Words such as
"expect," "anticipate," "intend," "attempt," "may," "plan," "will",
"can", "believe," "seek," "estimate," and variations of such words
and similar expressions are intended to identify such
forward-looking information. These statements are not guarantees of
future performance or actions and involve assumptions and risks and
uncertainties that are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed,
implied or forecasted in such forward-looking information. Some of
the factors that could cause actual results or outcomes to differ
materially from the results expressed, implied or forecasted by
such forward-looking information, including some of the assumptions
used in making such statements, are discussed more fully in Hydro
One's filings with the securities regulatory authorities in
Canada, which are available on
SEDAR at www.sedar.com. Hydro One does not intend, and it
disclaims any obligation, to update any forward-looking
information, except as required by law.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/hydro-one-reports-second-quarter-results-301109876.html
SOURCE Hydro One Limited