CALGARY, AB, July 29, 2020 /CNW/ - ATCO Ltd. (TSX:
ACO.X) (TSX: ACO.Y) ATCO today announced second quarter 2020
adjusted earnings of $70 million, or
$0.61 per share, compared to
$78 million, or $0.68 per share, in the second quarter of
2019.
Lower adjusted earnings in the second quarter of 2020 were
mainly due to ATCO subsidiary Canadian Utilities' sale of its
Canadian fossil fuel-based electricity generation business and 80
per cent ownership interest in Alberta
PowerLine in 2019, which together contributed $9 million in adjusted earnings in the second
quarter of 2019. Lower earnings were also due to $7 million in prior period adjusted earnings from
an Electricity Transmission regulatory decision received in the
second quarter of 2019.
Excluding the forgone earnings impact from the sale of these
businesses in 2019 and the prior period earnings impacts from the
regulatory decision received in the second quarter of 2019,
adjusted earnings in the second quarter of 2020 were $8 million higher than the same period in 2019.
Higher earnings were mainly due to strong results at ATCO
Structures as a result of higher workforce housing trade sale
activity, incremental earnings from the LNG Canada Cedar Valley
Lodge contract, and higher space rental activity.
COVID-19 AND GLOBAL MACROECONOMIC CONDITIONS
The COVID-19 pandemic, continued low oil prices and slowing
global economic activity have caused far-reaching concern and
economic hardship for consumers, businesses and communities across
the globe. In this time of uncertainty, our people are working hard
to ensure that we continue to support our customers and the
communities that depend on our essential services.
ATCO's Pandemic Response Plan was activated in February 2020 by our Crisis Management Committee.
Since then our teams across the globe have been responding to this
rapidly changing situation to ensure a coordinated approach across
ATCO. In late second quarter 2020, ATCO commenced a phased return
to office plan.
Please see management's discussion and analysis for the quarter
ended June 30, 2020 for a summary of
the impact of these economic conditions on ATCO's businesses.
RECENT DEVELOPMENTS
ATCO Structures
- Awarded a design, supply and installation contract for two
modular hospital facilities in Mexico
City and Tijuana to support
the fight against COVID-19.
- Closed the manufacturing facility located in Pocatello, Idaho and relocated materials and
equipment to ATCO Structures manufacturing facilities in
Calgary, Alberta and Diboll, Texas.
- Commenced manufacturing of a workforce lodging camp to house
approximately 600 persons to support the construction of the Trans
Mountain Expansion Project in British
Columbia (BC).
- Completed manufacturing activity for the LNG Canada Cedar
Valley Lodge. Installation activity will continue throughout 2020
and into 2021.
ATCO Frontec
- Awarded a workforce lodging services contract in BC for
approximately 600 persons to support the construction of the Trans
Mountain Expansion Project.
Canadian Utilities
- Announced on June 22, 2020, that
LUMA Energy, LLC, a newly-formed company owned 50 per cent by
Canadian Utilities and 50 per cent by Quanta Services, had been
selected by the Puerto Rico Public-Private Partnerships Authority
to transform, modernize and operate Puerto Rico's 30,000 km electricity
transmission and distribution system over a term of 15 years after
a one year transition period, which commenced in the second quarter
of 2020.
- Awarded funding from Emission Reductions Alberta's Natural Gas
Challenge to advance a first-of-its-kind hydrogen blending project
in Fort Saskatchewan,
Alberta.
Corporate
- Declared a third quarter dividend for 2020 on July 9, 2020 of 43.52
cents per share or $1.74 per
Class I Non-Voting and Class II Voting Share on an annualized
basis.
- Dominion Bond Rating Service affirmed its 'A (high)' long-term
corporate credit rating and stable outlook on ATCO subsidiary CU
Inc. on July 20, 2020.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED
EARNINGS
A financial summary of the consolidated subsidiaries of ATCO and
a reconciliation of adjusted earnings to earnings attributable to
Class I and Class II Shares is provided below:
|
For the Three
Months
Ended June 30
|
For the Six Months
Ended June 30
|
($ millions except
share data)
|
2020
|
2019
|
2020
|
2019
|
Adjusted earnings
(1)
|
70
|
78
|
176
|
190
|
Transaction costs
(2)
|
—
|
(5)
|
—
|
(5)
|
Impairment and other
costs (2)
|
(20)
|
—
|
(20)
|
—
|
Unrealized gains
(losses) on mark-to-market forward
and swap commodity
contracts (2)
|
2
|
(3)
|
5
|
—
|
Rate-regulated
activities (2)
|
(5)
|
96
|
(22)
|
93
|
IT Common Matters
decision (2)
|
(2)
|
(8)
|
(4)
|
(8)
|
Other
(2)
|
—
|
—
|
(3)
|
—
|
Earnings attributable
to Class I and Class II Shares
|
45
|
158
|
132
|
270
|
Weighted average
shares outstanding (millions of shares)
|
114.4
|
114.4
|
114.4
|
114.3
|
(1)
|
Adjusted earnings
are earnings attributable to Class I and Class II
Shares after adjusting for the timing of revenues and expenses
associated with rate-regulated activities and unrealized gains or
losses on mark-to-market forward and swap commodity contracts.
Adjusted earnings also exclude one-time gains and losses,
significant impairments, and items that are not in the normal
course of business or a result of 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 ATCO's earnings with other Canadian
rate-regulated companies.
|
|
|
(2)
|
Impairment and
other costs mainly relate to certain assets that no longer
represent strategic value for the Company. Each quarter, the
Company adjusts the deferred tax asset which was recognized as a
result of the Tula Pipeline Project impairment. The adjustment is
due to a difference between the tax base currency, which is the
Mexican peso, and the U.S. dollar functional currency. Refer to
Note 3 of the Unaudited Interim Consolidated Financial Statements
for the six months ended June 30, 2020 for detailed descriptions of
these adjustments and others.
|
This news release should be used as preparation for reading the
full disclosure documents. ATCO's consolidated financial statements
and management's discussion and analysis for the quarter ended
June 30, 2020 will be available on the ATCO website
(www.ATCO.com), via SEDAR (www.sedar.com) or can be requested from
the Company.
With approximately 6,500 employees and assets of $22 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 electricity operations); Energy
Infrastructure (electricity generation, energy storage and
industrial water solutions); Retail Energy (electricity and natural
gas retail sales); Transportation (ports and transportation
logistics); and Commercial Real Estate. More information can
be found at www.atco.com.
Investor & Analyst Inquiries:
Myles Dougan
Director, Investor Relations & External Disclosure
T: 403-292-7879 C: 403-828-2908
Media Inquiries:
Kurt Kadatz
Senior Manager, Corporate Communications
T: 587-228-4571
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's actual results could differ materially from
those anticipated in this forward-looking information as a result
of regulatory decisions, competitive factors in the industries in
which the Company operates, prevailing economic conditions
(including as may be affected by the COVID-19 pandemic), and other
factors, many of which are beyond the control of the
Company.
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.
SOURCE ATCO Ltd.