EPCOR Announces Quarterly Results and Release of 2023 Sustainability Report

EDMONTON, AB, May 1, 2024 /CNW/ - EPCOR Utilities Inc. (EPCOR) today filed its quarterly results for the period ended March 31, 2024.

"First quarter financial performance was strong, with continued growth in EPCOR's geographies and ongoing execution of the company's commercial projects," said John Elford, EPCOR President & CEO. "Progress continued on the construction of two commercial water projects in Texas and we funded $120 million of our long-term investment in the groundwater supply system."

Management's Discussion and Analysis - EPCOR Utilities Inc. For three months ended March 31, 2024 (CNW Group/Epcor Utilities Inc.)

"EPCOR's operations had solid reliability performance in the first quarter, however our Alberta customers were impacted by two unusual supply interruptions," said Mr. Elford. "An electrical infrastructure failure at one of EPCOR's Edmonton water treatment plants led to water demand management measures being implemented for four days. These measures restricted non-essential water use, while maintaining essential water supplies throughout the event – and had no impact on water quality. In addition, on January 13, 2024, all Alberta electricity users were impacted by a shortage in power generation supplies, leading the Province to make an emergency appeal for power conservation. Subsequently, on April 5, 2024 another shortage in power generation supplies led the Alberta Electric System Operator to order power distribution utilities to implement rotating power outages for about 30 minutes, in order to maintain the integrity of the provincial electricity grid. These incidents underline the importance of ongoing investment in utility systems and energy supplies, in order to maintain and improve reliability for customers."

"Today marks the release of EPCOR's 2023 Sustainability Report," added Mr. Elford. "This year begins a new three-year cycle for sustainability target setting and performance reporting, informed by our latest materiality assessment and the company's business strategy. We've refreshed our Sustainability Scorecard to reflect the progress we've made over the several years, and ensure we're focused on achieving the governance, environmental, and social performance that's needed for our long-term success. Reliability and affordability remain important components of our Sustainability Scorecard, and a focus for management across all our utilities."

Highlights of EPCOR's financial performance are as follows:

• Net income was $104 million for the three months ended March 31, 2024, compared with net income of $46 million for the comparative period in 2023. The increase of $58 million for the three months ended March 31, 2024 was primarily due to fair value adjustments related to financial electricity purchase contracts and higher Adjusted EBITDA¹, partially offset by higher income tax expense and lower transmission system access service charge net collections.
• Adjusted EBITDA¹ was $260 million for the three months ended March 31, 2024, compared with $244 million for the comparative period in 2023. The increase of $16 million for the three months ended March 31, 2024, was primarily due to higher rates, higher consumption, and customer growth, partially offset by higher operating costs and lower construction activity.
• Capital expenditures were $190 million for the three months ended March 31, 2024, compared with $183 million for the corresponding period in 2023.

Interim management's discussion and analysis and the unaudited condensed consolidated interim financial statements are available on EPCOR's website (www.epcor.com) and SEDAR+ (www.sedarplus.ca).

1.    Adjusted EBITDA is a non-GAAP financial measure. See the Non-GAAP Financial Measures section in Appendix 1 to this media release.

EPCOR builds, owns and operates electrical, natural gas and water transmission and distribution networks, water and wastewater treatment facilities, and sanitary and stormwater systems in Canada and the United States. EPCOR also provides electricity, natural gas and water products and services to residential and commercial customers. EPCOR, headquartered in Edmonton, is committed to conducting its business and operations safely and responsibly. Environmental stewardship, public health and community well-being are at the heart of EPCOR's mission to provide clean water and safe, reliable energy. EPCOR is one of Alberta's Top 80 Employers, is ranked among Corporate Knights' 2023 Best 50 Corporate Citizens in Canada, and is designated a Utility of the Future Today by the Water Environment Federation.

Appendix 1 Non-GAAP Financial Measures

EPCOR uses earnings before finance expenses, income tax recovery (expense), depreciation and amortization, changes in the fair value of derivative financial instruments, transmission system access service charge net collections and other unusual items (collectively, Adjusted EBITDA) to discuss operating results for EPCOR's lines of business. Adjusted EBITDA is a non-GAAP financial measure and is not a standardized financial measure under IFRS Accounting Standards and might not be comparable to similar financial measures disclosed by other issuers.

The reconciliation between Adjusted EBITDA to Net income as reported under IFRS Accounting Standards is shown below:

(Unaudited, $ millions)
Three months ended March 31,	2024	2023 (restated)^1
Adjusted EBITDA by Segment
Water Services segment	$                106	$               92
Distribution and Transmission segment	70	60
Energy Services segment	15	22
North American Commercial Services segment	24	26
U.S. Regulated Water segment	37	34
Other	8	10
Adjusted EBITDA	260	244
Finance expenses	(50)	(47)
Income tax expense	(9)	8
Depreciation and amortization	(103)	(100)
Change in fair value of financial electricity purchase contracts^2	7	(71)
Transmission system access service charge net collections^3	(1)	12
Net income	$              104	$              46

1.	During the fourth quarter of 2023, the Company realigned its operating segments to reflect the results of an internal reorganization. The reorganization resulted in the formation of a new operating segment, North American Commercial Services, which combines certain previously existing businesses in a new reportable segment. Comparative segmented results for 2023 have been restated to align with the 2024 reportable segment presentation.
2.	The change in fair value of derivative financial instruments represents the change in fair value of financial electricity purchase contracts between the electricity market forward prices and the contracted prices at the end of the reporting period, for the contracted volumes of electricity.
3.	Transmission system access service charge net collections are the difference between the transmission system access service charges paid to the provincial system operators and the transmission system access service charges collected from electricity retailers. Transmission system access service charge net collections are timing differences, which are collected from or returned to electricity retailers as the transmission system access service charges and customer billing determinants are finalized.

SOURCE Epcor Utilities Inc.

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