CALGARY, AB, Oct. 29, 2020 /CNW/ - ATCO Ltd. (TSX:
ACO.X) (TSX: ACO.Y) ATCO today announced third quarter
2020 adjusted earnings of $54
million, or $0.47 per share,
compared to $74 million, or
$0.65 per share, in the third quarter
of 2019.
Lower adjusted earnings in the third quarter of 2020 were mainly
due to Canadian Utilities' sale of the Canadian fossil fuel-based
electricity generation business and 80 per cent ownership interest
in Alberta PowerLine in 2019, which
together contributed $19 million in
adjusted earnings in the third quarter of 2019.
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 the third quarter and first nine months of 2020, the
Company's operations, financial position and performance have not
been significantly impacted by the COVID-19 pandemic and changing
global macroeconomic conditions. ATCO's investments are essential
services and are largely focused on regulated utilities and
long-term contracted businesses with strong counterparties which
creates a resilient investment portfolio.
RECENT DEVELOPMENTS
ATCO Structures & ATCO Frontec
- Awarded a United Nations Office project services contract to
supply two healthcare complexes for the treatment of patients with
COVID-19 in Guatemala which are
expected to be installed before the end of 2020.
- Awarded a second rental contract and lodging services contract
for a 592-person camp to house workers and support the construction
of the Trans Mountain Expansion project. A previously awarded
600-person camp was completed and handed over to the client during
the third quarter of 2020.
- Selected to provide modular classrooms for public schools
across Alberta on a three-year rental supply contract.
- Deployed and mobilized modular housing units with 2,000 beds
across Louisiana and Alabama within six days of Hurricanes Laura
and Sally to assist with disaster and emergency response.
Canadian Utilities
- Announced the acquisition of the Pioneer Pipeline for
$255 million. The 131-km natural gas
pipeline west of Edmonton, Alberta
facilitates the conversion of the Sundance and Keephills coal-fired electricity generating
plants to cleaner-burning natural gas. Nova Gas Transmission
Limited (NGTL) and Canadian Utilities have agreed that, consistent
with the geographic areas defined in their Integration Agreement,
Canadian Utilities will transfer to NGTL the 30 km segment of the
Pioneer Pipeline located in the NGTL Footprint for approximately
$63 million. These transactions are
subject to regulatory and other customary approvals which are
expected by the second quarter of 2021.
- Received an Alberta Utilities Commission decision on the 2021
Generic Cost of Capital proceeding. The Commission approved the
extension of the current return on equity of 8.5% and equity
thickness ratio of 37% on a final basis for 2021.
- Continued transition work under LUMA Energy's Operations and
Maintenance Agreement to transform, modernize and operate
Puerto Rico's 30,000-km
electricity and transmission system.
Corporate
- Declared a fourth quarter dividend on October 8, 2020 of 43.52
cents per share or $1.74 per
Class I Non-Voting and Class II Voting Share on an annualized
basis.
- S&P Global Ratings affirmed its 'A-' long-term issuer
credit ratings on ATCO and Canadian Utilities with their outlooks
revised from stable to negative on September
17, 2020.
- S&P Global Ratings affirmed ATCO subsidiary CU Inc.'s 'A'
long term issuer credit rating and maintained stable outlook
reflecting S&P's decision to insulate CU Inc.'s issuer credit
rating from ATCO's issuer credit rating.
- Dominion Bond Rating Service affirmed its 'A' long-term
corporate credit rating and stable outlook on ATCO subsidiary
Canadian Utilities and its 'A (low)' long-term corporate credit
rating and stable outlook on ATCO.
- CU Inc. issued $150 million of
2.609 per cent 30-year debentures.
Proceeds from this issuance were used to fund capital investments,
to repay existing indebtedness, and for other general corporate
purposes of the Alberta Utilities.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED
EARNINGS
A financial summary of the consolidated subsidiaries of ATCO and
a reconciliation of adjusted earnings to earnings attributable to
Class I and Class II Shares is provided below:
|
For the Three
Months
Ended September 30
|
For the Nine
Months
Ended September 30
|
($ millions except
share data)
|
2020
|
2019
|
2020
|
2019
|
Adjusted earnings
(1)
|
54
|
74
|
230
|
264
|
Gain on sale of
operations (2)
|
—
|
77
|
—
|
73
|
Transaction costs
(2)
|
—
|
—
|
—
|
(1)
|
Impairment and other
costs (2)
|
—
|
—
|
(20)
|
—
|
Unrealized (losses)
gains on mark-to-market forward
and swap commodity contracts (2)
|
(5)
|
1
|
—
|
1
|
Rate-regulated
activities (2)
|
5
|
9
|
(17)
|
102
|
IT Common Matters
decision (2)
|
(1)
|
(1)
|
(5)
|
(9)
|
Other
(2)
|
1
|
—
|
(2)
|
—
|
Earnings attributable
to Class I and Class II Shares
|
54
|
160
|
186
|
430
|
Weighted average
shares outstanding (millions of shares)
|
114.4
|
114.4
|
114.4
|
114.4
|
(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)
|
In the third
quarter of 2019, the Company closed a series of transactions
related to the sale of its Canadian fossil fuel-based electricity
generation business. The sale resulted in an aggregate gain of $153
million ($73 million after-tax and non-controlling interests
(NCI)). As the gain was related to a series of one-time
transactions, it was excluded from adjusted earnings. This gain
includes $10 million ($4 million after-tax and NCI) of transaction
costs that were recognized and excluded from adjusted earnings in
the second quarter of 2019. In 2019, Canadian Utilities incurred
transactions costs for the announced sale of Alberta PowerLine
Limited Partnership. As these costs were related to a one-time
transaction, they were excluded from adjusted earnings. In the
second quarter of 2020, impairment and other costs not in the
normal course of business of $20 million, after tax and
non-controlling interests, were recorded. These costs mainly relate
to certain assets that no longer represent strategic value to the
Company. Each quarter, the Company adjusts the deferred tax
asset which was recognized as a result of the 2015 Tula Pipeline
Project impairment. During the three and nine months ended
September 30, 2020, the Company recorded a foreign exchange gain of
$1 million and a foreign exchange loss of $2 million (2019 - $nil)
due to a difference between the tax base currency, which is the
Mexican peso, and the US dollar functional
currency.
|
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
September 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.