CALGARY, AB, Aug. 2, 2024 /CNW/ - ATCO Ltd. (TSX: ACO.X) (TSX: ACO.Y)
ATCO Ltd. (ATCO or the Company) today announced second quarter 2024 adjusted earnings of $96 million ($0.86 per share), $9 million ($0.09 per share) higher compared to $87 million ($0.77 per share) in the second quarter of 2023.
Second quarter earnings attributable to Class I and Class II Shares reported in accordance with International Financial Reporting Standards (IFRS earnings) were $52 million ($0.46 per share), $27 million ($0.24 per share) lower compared to $79 million ($0.70 per share) in the second quarter of 2023.
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 an $87 million contract for a 700-person rapid deployment construction camp in support of mining projects in the Pilbara region of Western Australia. Manufacturing and site works are expected to commence in the third quarter of 2024 with final site completion anticipated in the fourth quarter of 2025.
- Awarded a $78 million contract for a 410-person construction camp in Hughenden, Queensland, and a 230-person construction camp in Richmond, Queensland. Both camps are in support of the CopperString 2032 high-voltage transmission line project in North Queensland, Australia. Manufacturing and site works are expected to commence in the third quarter of 2024 with final site completion anticipated for the second quarter of 2025.
- Awarded a $34 million contract for a temporary 86-person camp and a permanent 252-person camp to tie into and expand an existing facility in Western Australia. Manufacturing is expected to commence in the third quarter of 2024 with site works anticipated to be concluded in early 2025.
- Awarded numerous contracts throughout the US including: a $5 million contract for 18 units configured as a 2-storey office complex in Silverdale, Washington, a $3 million contract to supply 54 space rental units in Plaquemines Parish, Louisiana, a $3 million contract to design, supply, transport and install a transportation building comprising of 14 complexed units for Highline Public Schools in Burien, Washington, and a $2 million rental contract for 30 space rentals units for a data centre in Wyoming.
Canadian Utilities
- On May 8, 2024, Canadian Utilities announced its largest ever energy infrastructure project, the Yellowhead Mainline, with a projected investment of over $2 billion. The project is expected to build approximately 200 kilometres of high-pressure natural gas pipeline and related control and compression facilities that will run from Peers, Alberta, to the northeast Edmonton area and have the capability to deliver about 1,000 terajoules (or 1 billion cubic feet) per day of incremental natural gas. Subject to regulatory and company approvals, construction is expected to commence in 2026 and the pipeline is expected to be on-stream in the fourth quarter of 2027.
- On June 26, 2024, ATCO EnPower, in partnership with Shell Canada Limited, announced that a Final Investment Decision has been made to proceed with the first phase of the Atlas Carbon Storage Hub. The first phase of the project is expected to be operational in late 2028, anchored by CO2 volumes from Shell's Polaris carbon capture project. Atlas represents the first step in ATCO EnPower's work to create a full value chain for hydrogen development – from production and carbon abatement to transport and export. The facility will be located east of Edmonton and able to store emissions from the Alberta Industrial Heartland region.
- Incurred $322 million in capital expenditures in the second quarter of 2024, of which 95 per cent was invested in our regulated utilities in ATCO Energy Systems and ATCO Australia, and 5 per cent mainly in ATCO EnPower.
Corporate
- On July 11, 2024, ATCO declared a third quarter dividend of 48.98 cents per share or
$1.96 per share on an annualized basis per Class I non-voting and Class II voting share.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED EARNINGS
A financial summary of the consolidated subsidiaries of ATCO and a reconciliation of adjusted earnings to earnings attributable to Class I non-voting shares and Class II voting shares is provided below:
Three Months Ended | Six Months Ended | |||
($ millions except share data) | 2024 | 2023 | 2024 | 2023 |
Adjusted Earnings | 96 | 87 | 244 | 224 |
Restructuring (1) | (23) | — | (23) | — |
ATCO Electric settlement application (2) | (4) | — | (4) | — |
Unrealized (losses) gains on mark-to-market forward and swap commodity contracts (3) | (11) | 3 | (5) | 35 |
Rate-regulated activities (4) | (4) | (4) | (8) | 1 |
IT Common Matters decision (5) | (2) | (2) | (5) | (5) |
Impairment (6) | — | (4) | — | (4) |
Transition of managed IT services (7) | — | — | — | (5) |
Other | — | (1) | — | — |
Earnings attributable to Class I non-voting and Class II voting shares | 52 | 79 | 199 | 246 |
Weighted average shares outstanding (millions of shares) | 112.2 | 113.2 | 112.2 | 113.4 |
(1) | In the second quarter of 2024, the Company recorded restructuring costs of $23 million (after-tax and non-controlling interests) mainly related to staff reductions and associated severance costs. |
(2) | In the second quarter of 2024, the Company recognized costs of $4 million (after-tax and non-controlling interests) related to an AUC enforcement proceeding on the settlement agreement of two matters the Electric Transmission business had self-reported to AUC Enforcement staff. |
(3) | The Company's electricity generation and retail electricity and natural gas businesses in Alberta enter 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 in the electricity generation and electricity and natural gas retail businesses are recognized in the earnings of the ATCO EnPower and Corporate & Other segments, respectively. Realized gains or losses are recognized in adjusted earnings when the commodity contracts are settled. |
(4) | 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. |
(5) | 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. |
(6) | In the second quarter of 2023, the Company recognized an impairment of $4 million (after-tax and non-controlling interests) relating to certain electricity generation assets in Electricity Transmission. These assets had been removed from service and it was determined that they no longer had any remaining value. |
(7) | 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. |
This news release should be read in concert with the full disclosure documents. ATCO's unaudited consolidated financial statements and management's discussion and analysis for the quarter ended June 30, 2024 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 with Katie Patrick, Executive Vice President, Chief Financial & Investment Officer at 9:00 am Mountain Time (11:00 am Eastern Time) on Friday, August 2, 2024 at 1-844-763-8274. 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 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 September 2, 2024. Please call 1-855-669-9658 and enter pass code 4372599.
As a global enterprise ATCO Ltd. and its subsidiary and affiliate companies have approximately 20,000 employees and assets of $26 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 alternative 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, Financial Operations
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 six months ended June 30, 2024, 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; including ATCO Structures' various projects; expectations regarding the Yellowhead Mainline project, including anticipated investment in the project, the timing for commencement of construction and bringing the project on-stream, and the anticipated size, specifications and incremental natural gas delivery capacity of the project; expectations regarding the timing of commercial operations of the Atlas Carbon Storage Hub project, the storage of industrial emissions, including from Shell's Polaris carbon capture 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; including uncertainty with respect to the interpretation of omnibus Bill C-59 and the related amendments to the Competition Act (Canada); 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.
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