ATCO Reports Third Quarter 2011 Earnings
28 Ottobre 2011 - 2:07PM
Marketwired Canada
ATCO Ltd. (TSX:ACO.X) (TSX:ACO.Y)
ATCO Ltd. today reported earnings attributable to Class I and Class II shares of
$54 million ($0.93 per share) and Adjusted Earnings of $78 million ($1.36 per
share) for the quarter ended September 30, 2011. This compares to earnings of
$60 million ($1.03 per share) and Adjusted Earnings of $63 million ($1.08 per
share) for the same period in 2010, an increase of $15 million in Adjusted
Earnings (refer to Importance of Adjusted Earnings).
Earnings were $225 million ($3.89 per share) and Adjusted Earnings were $248
million ($4.30 per share) for the nine months ended September 30, 2011. This
compares to earnings of $209 million ($3.58 per share) and Adjusted Earnings of
$217 million ($3.73 per share) for the same period in 2010, an increase of $31
million in Adjusted Earnings.
On July 29, 2011, ATCO's subsidiary, Canadian Utilities Limited, acquired 100
per cent of a natural gas distribution utility in Perth, Western Australia. The
aggregate purchase price was approximately $1.1 billion, including the
assumption of $689 million of debt. The purchase price included transaction
costs, consisting of estimated stamp duty and legal and advisory services, of
$50 million, which reduced earnings, after non-controlling interests, by $2
million in the second quarter and $24 million in the third quarter; these
transaction costs have been adjusted (see Reconciliation of Adjusted Earnings).
Earnings from operations are included in the third quarter from the date of
acquisition.
Adjusted Earnings in the third quarter and first nine months of 2011 increased
due to higher power pool prices and related spark spreads for ATCO Power's
Alberta generating plants, higher infrastructure investment in the Utilities'
regulated rate base and continued strength in ATCO Structures & Logistics'
manufacturing and rental fleet activity. Nine month results also benefited from
lower dividends on preferred shares resulting from the redemption of ATCO's
Series 3 Preferred shares in March 2010. These increases were offset by expiry
of the Barking generating plant's revenue contract in the third quarter of 2010
and expiry of ATCO Structures & Logistics' Afghanistan infrastructure and
support services contracts at the end of March 2011.
Adjusted Earnings is a key measure used to assess segment performance, to
reflect the economics of rate regulation and to facilitate comparability of
ATCO's earnings with other Canadian rate regulated companies. The importance of
Adjusted Earnings is further explained after the Financial Summary and
Reconciliation of Adjusted Earnings section.
Earnings reflect ATCO's implementation of International Financial Reporting
Standards (IFRS). Comparative figures for 2010 have been presented on the same
basis.
RECENT DEVELOPMENTS
-- ATCO Structures & Logistics was awarded a contract by Bechtel to
construct a 2,600-person temporary accommodation facility for Australia
Pacific LNG on Curtis Island, Queensland, Australia. This is the third
major contract awarded to the company this year to support liquefied
natural gas projects on Curtis Island.
-- On September 21, 2011, Canadian Utilities issued $325 million of 4.00%
Cumulative Redeemable Second Preferred Shares Series Y.
-- On October 24, 2011, Canadian Utilities' subsidiary, CU Inc., issued
$500 million of 4.543% debentures maturing in 2041 and $200 million of
4.593% debentures maturing in 2061.
-- On October 25, 2011, Canadian Utilities announced its intention to
redeem all outstanding Series O, T and U Perpetual Cumulative Second
Preferred Shares totaling $100 million. The redemption is expected to
occur in the fourth quarter.
-- ATCO Ltd. declared a third quarter dividend for 2011 of 28.5 cents per
Class I Non-Voting and Class II Voting share.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED EARNINGS
A financial summary and reconciliation of Adjusted Earnings to earnings
attributable to Class I and Class II shares is provided below:
For the Three Months For the Nine Months
Ended September 30 Ended September 30
---------------------------------------------------------------------------
($ Millions except per
share data) 2011 2010 2011 2010
===========================================================================
(Unaudited)
Adjusted Earnings (1) 78 63 248 217
Adjustments for Rate
Regulated Activities - (3) 3 (8)
Acquisition Transaction
Costs (24) - (26) -
---------------------------------------------------------------------------
Earnings Attributable to
Class I and Class II
Shares 54 60 225 209
===========================================================================
Adjusted Earnings Per Share
(1) 1.36 1.08 4.30 3.73
===========================================================================
Earnings Per Share 0.93 1.03 3.89 3.58
===========================================================================
Revenues 957 772 2,857 2,531
===========================================================================
Funds Generated By
Operations (1) (2) 317 283 1,049 877
===========================================================================
1. These measures are not defined by IFRS and may not be comparable to
similar measures used by other companies.
2. This measure is cash flow from operations before changes in non-cash
working capital.
The increase in Revenues in the third quarter and first nine months of 2011 is
primarily due to increased manufacturing and rental activity in ATCO Structures
& Logistics, increased flow through natural gas sales in ATCO Midstream, higher
Alberta power pool prices in ATCO Power, higher Utilities revenues arising from
increased infrastructure investment and the Australia acquisition. These
increases were partially offset by expiry of the Barking generating plant's
revenue contract in the third quarter of 2010. Furthermore, the first nine
months of 2010 included one-time revenues of $130 million related to the lease
of the first and second units of the Karratha plant in Australia.
Funds Generated by Operations in the third quarter and first nine months of 2011
benefited from increased contributions by utility customers for extensions to
plant and lower income tax payments.
IMPORTANCE OF ADJUSTED EARNINGS
Adjusted Earnings are defined as earnings attributable to Class I and Class II
shares after adjusting for the timing of revenues and expenses associated with
rate regulated activities. Adjusted Earnings will present earnings on the same
basis as was used prior to adopting IFRS - that basis being the U.S. accounting
principles for rate regulated entities commonly used by regulated companies in
Canada. Adjusted Earnings also exclude one-time gains and losses and items that
are not in the normal course of business or day-to-day operations.
Adjusted Earnings is a key measure for several reasons:
-- It is used by ATCO in assessing segment performance and allocating
resources.
-- It is ATCO's view that this measure is a better reflection of the
economics of rate regulation that are directly affected by orders and
decisions of utility regulators.
-- It will facilitate comparison with those Canadian regulated companies
that choose to wait another year before adopting IFRS and with those
companies that may choose to adopt U.S. accounting principles instead of
IFRS.
For rate regulated activities, the differences between Adjusted Earnings and
earnings as reported under IFRS are strictly timing in nature: Adjusted Earnings
for the Utilities and ATCO Australia are recognized on the basis of accounting
principles that recognize the economics of rate regulation and take into account
the orders and decisions of the regulator, whereas earnings under IFRS are
recognized when billed to customers. Over time, there is no difference.
Refer to note 5 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.
ATCO Ltd.'s consolidated financial statements and management's discussion and
analysis for the three and nine months ended September 30, 2011, will be
available on ATCO Ltd.'s website (www.atco.com) or via SEDAR (www.sedar.com) or
can be requested from the Company.
Alberta-based ATCO Ltd., with more than 8,000 employees and assets of
approximately $12 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),
Structures & Logistics (manufacturing, logistics and noise abatement) and
Technologies (business systems solutions). More information can be found at
www.atco.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 Corporation 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
Corporation's expectations as of the date hereof, and is subject to change after
such date. The Corporation 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.
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