CALGARY,
AB, Feb. 29, 2024 /CNW/ - ATCO Ltd.
(TSX: ACO.X) (TSX: ACO.Y)
ATCO Ltd. (ATCO or the Company) today announced adjusted
earnings in 2023 of $432 million
($3.82 per share), which were
$9 million ($0.11 per share) higher compared to $423 million ($3.71
per share) in 2022. Fourth quarter adjusted earnings in 2023 of
$127 million ($1.13 per share) were $17
million ($0.16 per share)
higher compared to $110 million
($0.97 per share) in the fourth
quarter of 2022.
2023 earnings attributable to Class I and Class II Shares
reported in accordance with International Financial Reporting
Standards (IFRS earnings) were $432
million ($3.82 per share),
which were $62 million ($0.57 per share) higher compared to $370 million ($3.25
per share) in 2022. Fourth quarter 2023 IFRS earnings of
$95 million ($0.85 per share) were $14
million ($0.13 per share)
higher compared to $81 million
($0.72 per share) in the fourth
quarter of 2022.
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 are not included in adjusted earnings.
RECENT DEVELOPMENTS
ATCO Structures
- Awarded a $13 million contract to
supply a 296-person accommodation complex to be deployed to a gold
and silver mine in Western Canada.
Delivery of the units is expected in the second quarter of
2024.
- In the fourth quarter of 2023, ATCO Structures was awarded a
$12 million contract to manufacture,
deliver and install 45 workforce housing units to BPX Energy
operating sites in West Texas.
Manufacturing is scheduled to commence in the first quarter of 2024
with installation expected to be complete by the second quarter of
2024.
- Awarded a $12 million contract
for the manufacture, transport, and installation of a 102-person
accommodation camp for a mine in New
South Wales. Manufacturing commenced during the fourth
quarter of 2023 and full handover and completion is anticipated in
the second quarter of 2024.
ATCO Frontec
- On October 24, 2023, ATCO Frontec
was awarded a contract to provide camp services to Victoria Gold for a 350‐bed camp in the
Yukon, Canada. The contract was
mobilized as of January 1, 2024 for a
3‐year term.
Neltume Ports
- On October 11, 2023, Vancouver
Bulk Terminal, a joint venture between Neltume Ports and
Nautilus International Holding Corporation, announced it is working
with Solvay, a global leader in the soda ash market, on the
development of Terminal 2, Berth 7 at the Port of Vancouver, in Washington State.
Canadian Utilities
- Received the Alberta Utilities Commission (AUC) decisions with
respect to the parameters of the third generation of
performance-based regulation and the future Generic Cost of Capital
parameters, on October 4, 2023 and
October 9, 2023, respectively. We
began operating under these new frameworks in 2024.
- The Alberta Court of Appeal
issued a favourable decision in the second quarter of 2023 in
connection with the Fort McMurray
(Wood Buffalo) wildfire. This decision resulted in the AUC issuing
its decision in December 2023
permitting ATCO Electric to include the net book value of its
electric distribution assets destroyed in the Wood Buffalo fire
within rate base.
- In October 2023, the South
Australian Government announced an Early Contractor Involvement
agreement with ATCO Australia and
our joint venture partner, BOC Linde, for the South Australian
Hydrogen Jobs Plan project, a 250-MW Hydrogen production facility,
a 200-MW Hydrogen-fuelled electricity generation facility and a
Hydrogen storage facility. Activities under this agreement include
developing a contract offer price, and negotiation of engineering,
procurement, construction and operations and maintenance contracts
for delivery and operations of the project.
- Incurred $394 million in capital
expenditures in the fourth quarter of 2023, of which 91 per cent
was invested in ATCO Energy Systems and 9 per cent mainly in ATCO
EnPower.
Corporate
- On January 11, 2024, ATCO
declared a first quarter dividend of 48.98
cents per share or $1.96 per
share on an annualized basis per Class I non-voting and Class II
voting share.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED
EARNINGS
A financial summary of the consolidated subsidiaries of ATCO and
a reconciliation of adjusted earnings to earnings attributable to
Class I non-voting shares and Class II voting shares is provided
below:
|
Three Months
Ended
December
31
|
Year
Ended
December
31
|
|
($ millions except
share data)
|
2023
|
2022
|
2023
|
2022
|
|
|
|
|
|
|
Adjusted
Earnings
|
127
|
110
|
432
|
423
|
|
Impairment (charge)
reversal (1)
|
(19)
|
2
|
(23)
|
2
|
|
Unrealized gains
(losses) on mark-to-market forward and swap
commodity contracts
(2)
|
24
|
(11)
|
97
|
(36)
|
|
Rate-regulated
activities (3)
|
(19)
|
(18)
|
(43)
|
6
|
|
IT Common Matters
decision (4)
|
(3)
|
(2)
|
(11)
|
(8)
|
|
Madeira additional
income taxes (5)
|
(15)
|
—
|
(15)
|
—
|
|
Transition of managed
IT services (6)
|
—
|
—
|
(5)
|
—
|
|
AUC enforcement
proceeding (7)
|
—
|
—
|
—
|
(14)
|
|
Workplace COVID-19
vaccination standard (8)
|
—
|
—
|
—
|
(5)
|
|
Gain on sale of
ownership interest in a subsidiary company
(9)
|
—
|
—
|
—
|
3
|
|
Other
|
—
|
—
|
—
|
(1)
|
|
|
|
|
|
|
Earnings attributable
to Class I non-voting and Class II voting shares
|
95
|
81
|
432
|
370
|
|
Weighted average shares
outstanding (millions of shares)
|
112.7
|
113.9
|
113.2
|
114.0
|
|
(1)
|
In the fourth
quarter of 2023, the Company recognized an impairment of $19
million (after-tax and non-controlling interests) related to
certain computer software assets that are no longer expected to be
used in the business. Also, in the second quarter of 2023, the
Company recognized an impairment of $4 million (after-tax and
non-controlling interests) related to certain electricity
generation assets as it was determined that they no longer had any
remaining value. In 2022, a reversal of impairment of $2 million
(after-tax and non-controlling interests) was recorded mainly
related to a joint venture investment in a co-generation
facility.
|
|
(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 2023, ATCO Structures and Logistics recognized income
taxes and interest of $15 million relating to the 2009-2016
reassessment notices received from the Portuguese Tax
Authority.
|
|
(6)
|
In the first quarter
of 2023, the Company recognized legal and other costs of $5 million
(after-tax and non-controlling interests) related to the Wipro Ltd.
master services agreements matter that was concluded on February
26, 2023.
|
|
(7)
|
On April 14, 2022,
the AUC Enforcement branch and ATCO Electric Transmission filed a
settlement with 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 first
quarter of 2022, the Company recognized costs of $14 million
(after-tax and non-controlling interests) related to the
proceeding.
|
|
(8)
|
In the first quarter
of 2022, the Company incurred $5 million (after-tax and
non-controlling interests) in severance and related costs
associated with its Workplace COVID-19 vaccination
standard.
|
|
(9)
|
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
$3 million (after-tax and non-controlling interests). With this
transaction, ATCO Electric Ltd. and Denendeh Investments
Incorporated each have a 50 per cent ownership
interest.
|
This news release should be read in concert with the full
disclosure documents. ATCO's consolidated financial statements and
management's discussion and analysis for the year ended
December 31, 2023 will be available on the ATCO website
(www.ATCO.com), via SEDAR+ (www.sedarplus.ca) or can be requested
from the Company.
TELECONFERENCE AND WEBCAST
ATCO will hold a live teleconference and webcast at 10:00 am Mountain Time (12:00 pm Eastern Time) on Thursday, February 29, 2024 at 1-800-319-4610. No
pass code is required.
Katie Patrick, Executive Vice
President, Chief Financial & Investment Officer and
Adam Beattie, President, Structures,
will discuss year-end 2023 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 ATCO teleconference.
Management invites interested parties to listen via live webcast
at:
https://www.atco.com/en-ca/about-us/investors/events-presentations.html.
A replay of the teleconference will be available approximately
two hours after the conclusion of the call until March 29, 2024. Please call 1-800-319-6413 and
enter pass code 0638. An archive of the webcast will be
available on February 29, 2024 and a
transcript of the call will be posted on
https://www.atco.com/en-ca/about-us/investors/events-presentations.html
within a few business days.
As a global enterprise ATCO Ltd. and its subsidiary and
affiliate companies have approximately 20,000 employees and assets
of $25 billion. ATCO is committed to
future prosperity by working to meet the world's essential energy,
housing, security and transportation challenges. ATCO Structures
designs, builds and delivers products to service the essential need
for housing and shelter around the globe. ATCO Frontec provides
operational support services to government, defence and commercial
clients. ATCO Energy Systems delivers essential energy for an
evolving world through its electricity and natural gas transmission
and distribution, and international operations. ATCO EnPower
creates sustainable energy solutions in the areas of renewables,
energy storage, industrial water and clean fuels. ATCO Australia develops, builds, owns and operates
energy and infrastructure assets. ATCOenergy and Rümi provide
retail electricity and natural gas services, home maintenance
services and professional home advice that bring exceptional
comfort, peace of mind and freedom to homeowners and customers.
ATCO also has investments in ports and transportation logistics,
the processing and marketing of fly ash, retail food services and
commercial real estate. More information can be found at
www.ATCO.com.
Investor & Analyst Inquiries:
Colin Jackson
Senior Vice President, Finance, Treasury & Sustainability
Colin.Jackson@atco.com
(403) 808 2636
Media Inquiries:
Kurt Kadatz
Director, Corporate Communications
Kurt.Kadatz@atco.com
(587) 228 4571
Subscription Inquiries:
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Other Financial and Non-GAAP 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 reported in accordance with
International Financial Reporting Standards is "earnings
attributable to Class I and Class II shares". For additional
information, see "Financial Summary and Reconciliation of Adjusted
Earnings" in this news release, and "Other Financial and Non-GAAP
Measures" in the Company's Management's Discussion and Analysis for
the year ended December 31, 2023,
which is available at www.sedarplus.ca.
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 value, timing and term of contracts; the expected
timing of commencement, completion or commercial operations of
activities, contracts and projects; the expected hydrogen
production, electricity generation and hydrogen storage
capabilities of the facilities planned in connection with the South
Australian Hydrogen Jobs Plan project; and the payment of
dividends.
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 business
partners, and 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,
regulations and government policies; regulatory decisions;
competitive factors in the industries in which the Company
operates; prevailing market and economic conditions; credit risk;
interest rate fluctuations; the availability and cost of labour,
materials, services, and infrastructure; future demand for
resources; 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,
extreme weather conditions, explosions, blow-outs, equipment
failures, transportation incidents, and other accidents or similar
events; global pandemics; geopolitical tensions and wars; 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, 2023.
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.
