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ATCO Reports First Quarter 2018 Earnings

by pmnationtalk on April 26, 201832 Views

CALGARY, Alberta, April 26, 2018 — ATCO Ltd. (TSX:ACO.X) (TSX:ACO.Y)

ATCO today announced first quarter adjusted earnings for 2018 of $99 million, or $0.87 per share, compared to $116 million, or $1.01 per share, in the first quarter of 2017. Lower earnings in the Company’s utility businesses were mainly due to rate rebasing under Alberta’s regulated model, partially offset by higher earnings from Alberta PowerLine.

ATCO invested $772 million in capital growth projects in the first quarter of 2018, of which 98 per cent was invested in assets that earn a return under a regulated business model or are under commercially secured long-term contracts.

In the period 2018 to 2020, ATCO expects to invest an additional $4.5 billion in regulated utility and commercially secured capital growth projects. This capital investment is expected to contribute significant earnings and cash flow, and create long-term value for share owners.

On April 4, 2018, ATCO declared a second quarter dividend for 2018 of 37.66 cents per Class I Non-Voting and Class II Voting Share.

RECENT DEVELOPMENTS

  • In April 2018, Structures & Logistics executed a contract extension for accommodations for 750 persons at the Lake Charles, Louisiana project. The 29-month contract, originally awarded in 2015 for the design, construction, transportation, installation and rental of modular units for a 1,900-person village, was scheduled for completion in May 2018. The extension agreement runs until the end of 2018, with an option to extend to April 2019.
  • On February 20, 2018, Canadian Utilities, an ATCO company, completed the acquisition of Electricidad del Golfo, which owns a long-term contracted, 35 MW hydroelectric power station based in the state of Veracruz, Mexico. The transaction was recorded for an aggregate purchase price of $112 million.
  • In March 2018, ATCO announced we will build a 26 MW cogeneration project, known as the La Laguna Cogeneration facility, on the site of the Chemours Company Mexicana S. de R.L. de C.V.’s chemical facility near Gómez Palacio, in the state of Durango, Mexico. Developed in partnership with RANMAN Energy, the La Laguna Cogeneration facility will provide low-carbon and cost-effective electricity and heat under a long-term agreement. The total investment associated with the project is approximately $70 million, and the facility is expected to be operational in 2019.
  • On March 21, 2018, the Alberta Balancing Pool provided notice of its intent to terminate the Power Purchase Arrangement (PPA) for Battle River unit 5 and that dispatch control of Battle River unit 5 would be turned back to ATCO no later than September 30, 2018. As part of the turn back, the Balancing Pool is obligated to pay ATCO a PPA termination payment, the terms of which have not been finalized.
  • In March 2018, we completed work on Battle River unit 4 to enable the unit to co-fire with natural gas. Natural gas can now be used for approximately half of the unit’s 155 MW total electricity generation capacity.

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
Ended March 31
($ millions except share data) 2018 2017 (4)
(restated)
Adjusted earnings (1) 99 116
Unrealized losses on mark-to-market forward commodity contracts (2) (9 ) (3 )
Rate-regulated activities (2) (1 ) (13 )
Other (3) 1
Earnings attributable to Class I and Class II Shares 90 100
Weighted average shares outstanding (millions of shares) 114.4 114.4
(1) 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 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 ATCO’s earnings with other Canadian rate-regulated companies.
(2) Refer to Note 5 of the consolidated financial statements for detailed descriptions of the adjustments.
(3) The Company adjusted for 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.
(4) These numbers have been restated to account for the impact of IFRS 15. Additional details on IFRS 15 are discussed  in the Other Financial Information section of the MD&A.

This news release should be used as a preparation for reading the full disclosure documents. ATCO’s consolidated financial statements and management’s discussion and analysis for the quarter ended March 31, 2018 will be available on the ATCO website (www.ATCO.com), via SEDAR (www.sedar.com) or can be requested from the Company.

With approximately 7,000 employees and assets of $22 billion, ATCO is a diversified global corporation delivering service excellence and innovative business solutions in Structures & Logistics (workforce housing, innovative modular facilities, construction, site support services, and logistics and operations management); 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.ATCO.com.

Media & Investor Inquiries:

D.A. (Dennis) DeChamplain
Senior Vice President & Chief
Financial Officer
403-292-7502

NT4

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