ATCO Reports Higher Third Quarter 2018 Earnings
Press Release
CALGARY, Alberta – ATCO Ltd. (TSX: ACO.X, ACO.Y)
ATCO today announced third quarter 2018 adjusted earnings of $87 million, or $0.76 per share, compared to $54 million, or $0.47 per share, in the third quarter of 2017. Higher earnings were recorded in all investments.
Structures & Logistics recorded $2 million in higher earnings in the third quarter of 2018, mainly due to improved margins on both fleet sales and fleet rentals, as well as increased activity in Mexico and Chile in the Modular Structures business.
ATCO subsidiary Canadian Utilities recorded $18 million in higher earnings in the third quarter of 2018 mainly due to the termination of the Battle River unit 5 Power Purchase Arrangement by the Alberta Balancing Pool and the associated availability incentive and performance earnings. Higher earnings were also due to improved market conditions for Independent Power Plants.
On September 12, 2018, ATCO invested in a 40 per cent interest in Neltume Ports for approximately $450 million. Neltume Ports is a leading port operator and developer in South America with 16 port facilities and three stevedoring businesses primarily located in Chile and Uruguay. Neltume Ports’ portfolio is highly diversified across cargo types and volume mix. Neltume Ports employs approximately 3,900 people and, in 2017, handled nearly 51 million tonnes of product, including copper, forestry products, consumer goods and agricultural products. Neltume Ports’ contribution to ATCO adjusted earnings in the third quarter of 2018 was $1 million.
ATCO’s Corporate segment adjusted earnings in the third quarter of 2018 were $12 million higher than the same period in 2017, mainly due to higher earnings in ATCO Investments. In the third quarter of 2018, ATCO Investments sold four properties in its commercial real estate portfolio for total adjusted earnings of $13 million.
RECENT DEVELOPMENTS
- On October 11, 2018, ATCO declared a fourth quarter dividend for 2018 of 37.66 cents per Class I Non-Voting and Class II Voting Share.
- On August 30, 2018, Dominion Bond Rating Service affirmed its ‘A (low)’ long-term corporate credit rating and stable outlook on ATCO.
- On September 27, 2018, S&P Global Ratings affirmed its ‘A-‘ long-term issuer credit rating and stable outlook on ATCO Ltd. and its subsidiaries Canadian Utilities Limited and CU Inc.
- In the third quarter of 2018, Structures & Logistics acquired 264 space rental units in Mexico. This increases Modular Structures’ rental fleet in Mexico to 468 units. These units are 100 per cent utilized on existing rental contracts. Structures & Logistics continues to evaluate opportunities to acquire additional rental fleet and modular structures manufacturing capabilities in Mexico.
- Canadian Utilities plans to be the first coal-fired electricity generator in Alberta to end coal-fired power generation in its fleet. In the first quarter of 2018, Canadian Utilities successfully completed a project to co-fire natural gas at Battle River unit 4, enabling the use of natural gas for 50 per cent of the unit’s 150 MW generating capacity. In the next phase of this initiative, a conversion project will allow co-firing of natural gas on Battle River unit 5 for 100 per cent of its 385 MW capacity, with an expected completion in late 2019.
- Canadian Utilities’ natural gas transmission business is advancing the Pembina-Keephills project, a 59-km natural gas pipeline to support coal-to-gas conversion of power producers in the Genesee and surrounding areas of Alberta. Construction is expected to be complete by the fourth quarter of 2019.
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:
TELECONFERENCE AND WEBCAST
ATCO will hold a live teleconference and webcast to discuss our third quarter 2018 financial results. Dennis DeChamplain, Senior Vice President and Chief Financial Officer, will discuss third quarter 2018 financial results and recent developments at 9:30 am Mountain Time (11:30 am Eastern Time) on Thursday, October 25, 2018 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 of the call and request to join the ATCO teleconference.
Management invites interested parties to listen via live webcast at:
http://www.atco.com/Investors/Events-and-Presentations/
A replay of the teleconference will be available approximately two hours after the conclusion of the call until November 25, 2018. Please call 1-800-319-6413 and enter pass code 2640#. An archive of the webcast will be available on October 25, 2018 and a transcript of the call will be posted on http://www.atco.com/Investors/Events-and-Presentations/ within a few business days.
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 September 30, 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 $23 billion, ATCO is a diversified global holding corporation with investments in Structures & Logistics (workforce housing, innovative modular facilities, construction, site support services, and logistics and operations management); Energy Infrastructure (electricity generation, transmission, and distribution; natural gas transmission, distribution and infrastructure development; energy storage and industrial water solutions; and electricity and natural gas retail sales); Transportation (ports and transportation logistics); and Commercial Real Estate. More information can be found at www.ATCO.com.
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