ATCO Reports First Quarter 2023 Earnings
ATCO Ltd. (ATCO or the Company) today announced first quarter 2023 adjusted earnings of $137 million ($1.21 per share), $3 million ($0.04 per share) higher compared to $134 million ($1.17 per share) in the first quarter of 2022.
First quarter earnings attributable to Class I and Class II Shares reported in accordance with International Financial Reporting Standards (IFRS earnings) were $167 million ($1.47 per share), $39 million ($0.35 per share) higher compared to $128 million ($1.12 per share) in the first 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.
- Completed the stage three milestone of the Bechtel Pluto Train II project in the first quarter of 2023. This included relocation and refurbishment of the 2,200-person accommodation village and central facilities. The project continues to track ahead of planned progress with the stage four milestone expected to be handed over in the second quarter of 2023.
- In the first quarter of 2023, ATCO Structures was awarded a supplemental contract for 79 additional space rental units to support the LNG export facility construction in Plaquemines Parish, Louisiana. This brings the total contract value to $11 million for 129 units with terms ranging from 30 to 36 months.
- In February 2023, Wicehtowak Frontec Services (WFS), ATCO Frontec’s joint venture partnership with George Gordon Developments Ltd., was awarded a three-and-a-half-year $86 million base contract to provide camp support services for the BHP Jansen Discovery Lodge in Saskatchewan. WFS will provide management and administration, food services, retail, housekeeping and janitorial, and maintenance work for the 2,500-person facility. As of April 1, 2023, WFS has successfully transitioned to operating the Jansen Discovery Lodge.
- Subsequent to quarter-end, on April 25, 2023, Neltume Ports and its partner Nautilus entered into a contract with the Port Authority of Vancouver in Washington to operate Terminal 2 within the port for a 30-year term. The contract allows for the opportunity to renew the contract for two additional terms of 10 years each. The Port of Vancouver is strategically located on the US Pacific Coast for export of mineral and other bulk material.
- Closed the acquisition of the renewable generation portfolio on January 3, 2023. The 232-MW of operating Forty Mile and Adelaide wind assets have contributed revenues of $27 million for the three months ended March 31, 2023. Uprating work is currently underway for the Forty Mile wind assets with expected completion in the fourth quarter of 2023. This uprating is expected to increase Forty Mile Wind generation capacity from 202-MW to 225-MW.
- In 2023, the Electricity Distribution and Natural Gas Distribution businesses, following the conclusion of the second performance-based regulation (PBR) term, began a one-year cost-of-service rebasing. The cost efficiencies generated over the second generation PBR term are now being passed along to customers, providing lower rates and creating long-term savings for Albertans. Following a one-year cost-of-service rebasing in 2023, these businesses will move to a third generation of performance-based regulation (PBR3) beginning in 2024.
- On April 13, 2023, ATCO declared a second quarter dividend of 47.56 cents per share or $1.90 per share on an annualized basis per Class I Non-Voting and Class II Voting Share.
Financial Summary and Reconciliation of Adjusted Earnings
A financial summary of the consolidated subsidiaries of ATCO and a reconciliation of adjusted earnings to earnings attributable to Class I and Class II Shares is provided below:
|Three Months Ended March 31|
|($ millions except share data)||2023||2022|
|Unrealized gains (losses) on mark-to-market forward and swapcommodity contracts (1)||32||(6)|
|Rate-regulated activities (2)||5||19|
|IT Common Matters decision (3)||(3)||(2)|
|Transition of managed IT services (4)||(5)||—|
|AUC enforcement proceeding (5)||—||(14)|
|Workplace COVID-19 vaccination standard (6)||—||(5)|
|Gain on sale of ownership interest in a subsidiary company (7)||—||3|
|Earnings attributable to Class I and Class II Shares||167||128|
|Weighted average shares outstanding (millions of shares)||113.6||114.1|
|(1)||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.|
|(2)||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.|
|(3)||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.|
|(4)||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.|
|(5)||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.|
|(6)||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.|
|(7)||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 (DII) each have a 50 per cent ownership interest.|
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 March 31, 2023 will be available on the ATCO website (www.ATCO.com), via SEDAR (www.sedar.com) or can be requested from the Company.
For the complete press release, click here.
With approximately 6,400 employees and assets of $23 billion, ATCO is a diversified global corporation with investments in the essential services of Structures & Logistics (workforce and residential housing, innovative modular facilities, construction, site support services, workforce lodging services, facility operations and maintenance, defence operations services, and disaster and emergency management services); Utilities (electricity and natural gas transmission and distribution, and international operations); Energy Infrastructure (energy storage, energy generation, industrial water solutions, and clean fuels); Retail Energy (electricity and natural gas retail sales, and whole-home solutions); Transportation (ports and transportation logistics); and Commercial Real Estate. More information can be found at www.ATCO.com.
Colin Jackson – Senior Vice President, Finance, Treasury, Risk & Sustainability – Colin.Jackson@atco.com – (403) 808–2636
Source: ATCO Ltd.