Canadian Utilities Reports Higher Second Quarter 2019 Earnings
CALGARY, Alberta, July 25, 2019 (GLOBE NEWSWIRE) -- Canadian Utilities Limited (TSX: CU, CU.X)
Canadian Utilities today announced second quarter 2019 adjusted earnings of $126 million, or $0.46 per share, compared to $107 million, or $0.39 per share, in the second quarter of 2018.
Higher earnings were mainly due to the favourable impact of the electricity transmission 2018-2019 general tariff application decision and natural gas transmission 2019-2020 general rate application decision, as well as ongoing growth in the regulated rate base, earnings growth in the hydrocarbon storage business, cost efficiencies, and lower income taxes.
In the second quarter of 2019, Canadian Utilities invested $241 million in capital projects, of which $215 million was invested in regulated utilities. The remaining $26 million invested includes planned capital maintenance in the electricity generation fleet.
In the period 2019 to 2021, Canadian Utilities plans to invest $3.5 billion in regulated utilities in Canada and Australia, which will continue to strengthen our high-quality earnings base.
- In May 2019, Canadian Utilities entered into definitive agreements to sell its entire Canadian fossil fuel-based electricity generation portfolio for aggregate proceeds of approximately $835 million, subject to customary closing adjustments. The sale will occur as three separate transactions. The transaction for Canadian Utilities’ 50 per cent ownership interest in the 260 MW Cory Cogeneration Station closed in July 2019. The remaining two transactions, one for 10 partly- or fully-owned natural gas-fired and coal-fired electricity generation assets located in Alberta and British Columbia, and the other for Canadian Utilities’ 50 per cent ownership in the 580 MW Brighton Beach Power joint venture, are expected to close in the second half of 2019.
- In June 2019, Canadian Utilities, along with its partner Quanta Services Inc., entered into definitive agreements to sell Alberta PowerLine Limited Partnership (APL) through a competitive process for total proceeds of approximately $300 million, and the assumption of approximately $1.4 billion of APL debt. As part of these agreements, Canadian Utilities is offering an opportunity for Indigenous communities along the transmission line route to obtain up to a 40 per cent equity interest in APL. The final ownership mix will be determined upon close of the purchase opportunity for Indigenous communities. Canadian Utilities will remain the operator of APL over its 35-year contract with the Alberta Electric System Operator. The sale is expected to close in the fourth quarter of 2019, subject to receipt of regulatory approvals and satisfaction of other customary closing conditions.
- In June 2019, the Alberta Utilities Commission issued its decision regarding the IT Common Matters proceeding. The decision had no impact on adjusted earnings.
- On July 9, 2019, Canadian Utilities declared a third quarter dividend for 2019 of 42.27 cents per Class A non-voting and Class B common share.
- On July 17, 2019, Dominion Bond Rating Service affirmed its 'A (high)' long-term corporate credit rating and stable outlook on Canadian Utilities' subsidiary CU Inc.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED EARNINGS
A financial summary and reconciliation of adjusted earnings to earnings attributable to equity owners of the Company is provided below:
|For the Three Months|
Ended June 30
|For the Six Months|
Ended June 30
|($ millions except share data)||2019||2018||2019||2018|
|Adjusted earnings (1)||126||107||326||288|
|Transaction costs (2)||(8)||—||(8)||—|
|Restructuring and other costs (2)||—||(60)||—||(60)|
|Unrealized (losses) gains on mark-to-market forward commodity contracts (2)||(5)||12||1||(6)|
|Rate-regulated activities (2) (3)||184||(74)||177||(77)|
|IT Common Matters decision (2)||(14)||—||(14)||—|
|Dividends on equity preferred shares||16||16||33||33|
|Other (2) (4)||—||(4)||1||(2)|
|Earnings (loss) attributable to equity owners of the Company||299||(3)||516||176|
|Weighted average shares outstanding (millions of shares)||272.6||271.2||272.6||270.9|
|(1)||Adjusted earnings are defined as earnings attributable to equity owners of the Company after adjusting for the timing of revenues and expenses associated with rate-regulated activities, dividends on equity preferred shares of the Company, and unrealized gains or losses on mark-to-market forward 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 Canadian Utilities’ earnings with other Canadian rate-regulated companies.|
|(2)||Refer to Note 4 of the Unaudited Interim Consolidated Financial Statements for the six months ended June 30, 2019 for detailed descriptions of this adjustment and others.|
|(3)||In the second quarter of 2019, the Government of Alberta enacted a phased decrease in the provincial corporate income tax rate from 12 per cent to 8 per cent. This decrease is being phased in increments from July 1, 2019 to January 1, 2022. As a result of this change, the Alberta Utilities decreased deferred income taxes and increased earnings for the three and six months ended June 30, 2019 by $203 million.|
|(4)||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.|
TELECONFERENCE AND WEBCAST
Canadian Utilities will hold a live teleconference and webcast to discuss our second quarter 2019 financial results. Dennis DeChamplain, Executive Vice President & Chief Financial Officer, will discuss second quarter 2019 financial results and recent developments at 8:00 am Mountain Time (10:00 am Eastern Time) on Thursday, July 25, 2019 at 1-800-319-4610. No pass code is required. 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 Canadian Utilities teleconference.
Management invites interested parties to listen via live webcast at: http://www.canadianutilities.com/Investors/Events-and-Presentations/
A replay of the teleconference will be available approximately two hours after the conclusion of the call until August 25, 2019. Please call 1-800-319-6413 and enter pass code 3380. An archive of the webcast will be available on July 25, 2019 and a transcript of the call will be posted on http://www.canadianutilities.com/Investors/Events-and-Presentations/ within a few business days.
This news release should be used as preparation for reading the full disclosure documents. Canadian Utilities’ unaudited interim consolidated financial statements and management’s discussion and analysis for the six months ended June 30, 2019 will be available on the Canadian Utilities website (www.canadianutilities.com), via SEDAR (www.sedar.com) or can be requested from the Company.
With approximately 5,000 employees and assets of $22 billion, Canadian Utilities Limited is an ATCO company. Canadian Utilities is a diversified global energy infrastructure corporation delivering service excellence and innovative business solutions in Electricity (electricity generation, transmission, and distribution); Pipelines & Liquids (natural gas transmission, distribution and infrastructure development, energy storage, and industrial water solutions); and Retail Energy (electricity and natural gas retail sales). More information can be found at www.canadianutilities.com.
D.A. (Dennis) DeChamplain
Executive Vice President &
Chief Financial Officer
Manager, Corporate Communications &
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, 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.