ATCO Ltd. (ATCO or the Company) today announced adjusted earnings (1) in 2024 of $481 million ($4.29 per share), which were $49 million ($0.47 per share) higher compared to $432 million ($3.82 per share) in 2023. Fourth quarter adjusted earnings in 2024 of $146 million ($1.30 per share) were $19 million ($0.17 per share) higher compared to $127 million ($1.13 per share) in the fourth quarter of 2023.
2024 earnings attributable to Class I and Class II Shares reported in accordance with International Financial Reporting Standards (IFRS earnings) were $430 million ($3.83 per share) compared to $432 million ($3.82 per share) in 2023. Fourth quarter 2024 IFRS earnings were $138 million ($1.23 per share) compared to $95 million ($0.85 per share) in the fourth quarter of 2023.
(1) Adjusted earnings is a total of segments measure. See Other Financial and Non-GAAP Measures Advisory included in this News Release.
RECENT DEVELOPMENTS
ATCO Structures
Awarded multiple contracts totaling $29 million to supply and install an accommodation camp, and to design and supply mine dry and administrative facilities for a uranium mine in Western Canada. Delivery of units commenced during the fourth quarter of 2024 with final site completion expected in the second quarter of 2025.
Awarded a $12 million contract to decommission and relocate a rapid deployment camp in the Pilbara region of Western Australia. The project commenced during the fourth quarter of 2024 and is expected to be completed during the second quarter of 2025.
Awarded a $4 million contract to supply and install auxiliary buildings in support of an expansion project for a mine site located in north-central Chile. The rental term of 19 months is expected to commence in the first quarter of 2025.
Ashcor
Subsequent to year end, on January 6, 2025, Ashcor announced an agreement with Consumers Energy to extract and repurpose impounded coal ash from the soon to be retired J.H. Campbell Generating Complex, located near Holland, Michigan. This project represents Ashcor's first RAM™ facility in the United States. Construction of the facility is expected to begin in the second quarter of 2025 with operations anticipated to begin early 2027.
Canadian Utilities
On November 8, 2024, ATCO Gas Australia received the final Access Agreement (AA6) decision from the Economic Regulation Authority (ERA). This final decision is a result of a constructive and collaborative regulatory process. The decision from the ERA approves the prices for ATCO Gas Australia's gas distribution network for the next five years. The decision also determines the rate of return for the AA6 period, which adopts a return on equity of 8.23 per cent, compared to 5.02 per cent in the previous Access Arrangement.
In 2024, ATCO Energy Systems has advanced two large utility infrastructure projects; Yellowhead Mainline Project (Yellowhead) in Natural Gas Transmission and the Central East Transfer Out Project (CETO) in Electricity Transmission.
Stakeholder engagement for Yellowhead has begun and is progressing well. ATCO Pipelines has hosted 10 open houses in various communities along the proposed project route. Yellowhead consists of approximately 200-230 kilometres of high-pressure natural gas pipeline and is on-track for construction to commence in 2026, subject to regulatory and the Company's approvals.
Electricity Transmission began construction in the third quarter of 2024 of the CETO project. The construction of the 135-km 240kV transmission line will support renewable energy integration in Alberta and transport electricity in the counties of Red Deer, Lacombe and Stettler, supplying more than 1,500 megawatts of electricity to Alberta's grid. Electricity Transmission is building 85-km of the transmission line and AltaLink LP is constructing the remaining 50-km.
Incurred $559 million and $1,611 million in capital expenditures in the fourth quarter and full year of 2024, of which 89 per cent and 92 per cent, respectively, were invested in our regulated utilities in ATCO Energy Systems and ATCO Australia, with the remaining 11 per cent and 8 per cent largely invested in ATCO EnPower.
The Regulated Utilities' capital expenditure plan for 2025 - 2027 includes a minimum expected expenditure of $6.1 billion.
(1) Mid-year rate base is a non-GAAP financial measure and mid-year rate base CAGR is a non-GAAP ratio. Mid-year rate base and mid-year rate base CAGR are not standardized financial measures under IFRS and may not be comparable to similar financial measures disclosed by other issuers. Mid-year rate base for a given year is calculated as the average of the opening rate base and the closing rate base. Growth in mid-year rate base is a leading indicator of the business' earnings trend, depending on changes in the approved equity component of the mid-year rate base and the rate of return on common equity. Management views mid- year rate base as a key metric for determining the Companyʼs profitability. See Other Financial and Non-GAAP Measures Advisory included in this News Release. (2) CAGR means compound annual growth rate. (CNW Group/ATCO Ltd.)
Corporate
On January 9, 2025, ATCO declared a first quarter dividend of 50.45 cents per share or $2.02 per share Class I non-voting and Class II voting share on an annualized basis.
This news release should be read in concert with the full disclosure documents. ATCO's consolidated financial statements and management's discussion and analysis for the year ended December 31, 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 Adam Beattie, President, Structures and Katie Patrick, Executive Vice President, Chief Financial & Investment Officer at 11:00 am Mountain Time (1:00 pm Eastern Time) on Thursday, February 27, 2025 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.
A replay of the teleconference will be available approximately two hours after the conclusion of the call until March 27, 2025. Please call 1-855-669-9658 and enter pass code 8512290.
As a global enterprise, ATCO Ltd. and its subsidiary and affiliate companies have approximately 21,000 employees and assets of $27 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 electricity operations. ATCO EnPower creates sustainable energy solutions in the areas of electricity generation, energy storage, industrial water and cleaner 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 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
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Other Financial and Non-GAAP Measures Advisory Adjusted Earnings
Consolidated adjusted earnings is a "total of segments measure", as defined in National Instrument 52-112 – Non-GAAP and Other Financial Measures Disclosure ("NI 52-112"). The most directly comparable measure to adjusted earnings reported in accordance with IFRS is "earnings attributable to Class I and Class II shares". 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. 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 December 31
Year Ended December 31
($ millions except share data)
2024
2023
2024
2023
Adjusted Earnings
146
127
481
432
Restructuring (1)
(4)
—
(33)
—
ATCO Electric settlement decision (2)
—
—
(4)
—
Unrealized gains on mark-to-market forward and swap
commodity contracts (3)
24
24
30
97
Rate-regulated activities (4)
(24)
(19)
(39)
(43)
IT Common Matters decision (5)
(4)
(3)
(12)
(11)
Impairments (6)
—
(19)
—
(23)
Madeira additional income taxes (7)
—
(15)
—
(15)
Transition of managed IT services (8)
—
—
—
(5)
Other (9)
—
—
7
—
Earnings attributable to Class I non-voting and Class II voting shares
138
95
430
432
Weighted average shares outstanding (millions of shares)
112.2
113.4
112.2
113.2
(1)In the fourth quarter and year ended December 31, 2024, the Company recorded restructuring costs of $4 million (after-tax and non- controlling interests) and $33 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 Alberta Utilities Commission (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 segment and Corporate & Other, 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 IFRS 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)For the year ended December 31, 2023, impairments of $23 million (after-tax and non-controlling interests) were recognized, relating to assets that no longer represent value to the Company. Of these impairments, $17 million (after-tax and non-controlling interests) related to impairments of certain computer software assets which are no longer expected to be used in the business and $4 million (after-tax and non- controlling interests) related to certain electricity generation assets in Electricity Transmission which had been removed from service.
(7)In the fourth quarter of 2023, ATCO Structures and Logistics recognized income taxes and interest of $15 million relating to the 2009-2016 reassessment notices received from the Portuguese Tax Authority.
(8)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.
(9)In the third quarter of 2024, Canadian Utilities Limited transferred ownership of ATCO Energy Ltd. to ATCO Ltd. Canadian Utilities Limited recorded a loss of $14 million ($7 million after non-controlling interests) which is eliminated on consolidation with ATCO.
Mid-Year Rate Base and Mid-Year Rate Base CAGR
Mid-year rate base is a "non-GAAP financial measure" and mid-year rate base CAGR is a "non-GAAP ratio" each as defined in NI 52-112. Growth in mid-year rate base is a leading indicator of a utility's earnings trend.
The Regulated Utilities finance infrastructure investments, referred to as rate base, through a combination of equity and debt. Regulatory proceedings establish the approved rate of return on equity (ROE) and the equity ratio – the proportion of utility investments financed with equity, with the remainder financed by debt.
Mid-year rate base for a given year is calculated as the average of the opening rate base and the closing rate base. The Company determines its customer rates by multiplying its rate base by the approved equity ratio and the approved rate of ROE, as well as recovering forecast costs and return of capital. As such, the Companyʼs earnings will trend based on changes in the approved ROE, the approved equity ratio, and the mid-year rate base.
The most directly comparable measures to mid-year rate base reported in accordance with IFRS are "property, plant and equipment" and "intangible assets". The following tables reconcile rate base and mid-year rate base to property, plant and equipment and intangible assets for the year ended December 31, 2024.
ATCO Energy Systems
Year Ended December 31
($ billions)
2024
2023
Property, plant and equipment (1)
Intangible assets (1)
19.8
1.1
19.0
1.0
20.9
20.0
Adjustments:
Property, plant and equipment, and intangible assets of non-regulated businesses
(2.2)
(2.2)
Customer contributions (2)
(2.0)
(2.0)
Removal costs collected from customer rates
(1.6)
(1.5)
Other
(0.3)
(0.2)
Rate Base (3)
14.8
14.1
Mid-Year Rate Base (3)
14.5
14.0
(1) Please refer to Note 3 - Geographic Information section (Canada) of the Company's 2024 Consolidated Financial Statements.
(2) Please refer to Note 16 - Customer Contributions section of the Company's 2024 Consolidated Financial statements.
(3) Non-GAAP financial measure.
ATCO Gas Australia
Year Ended December 31
($ billions)
2024
2023
Property, plant and equipment, and intangible assets (1)
1.5
1.5
1.5
1.5
Adjustments:
Property, plant and equipment, and intangible assets of non-regulated businesses
(0.2)
(0.2)
Other
0.1
0.1
Rate Base (2)
1.4
1.4
Mid-Year Rate Base (2)
1.4
1.4
(1) Please refer to Note 3 - Geographic Information section (Australia) of the Company's 2024 Consolidated Financial Statements.
(2) Non-GAAP financial measure.
Forward-Looking Information Advisory
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 and Ashcor's first RAM™ facility in the United States; the state of stakeholder engagement on the Yellowhead project, the anticipated size and specifications of the project, and the anticipated timing for commencement of construction on the project;
the anticipated size, capacity and benefits of the CETO project and expectations regarding construction of the project; the Regulated Utilities' capital expenditure plan for 2025 to 2027 and expected rate base growth; 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 recent 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; the imposition of customs duties, tariffs or other trade restrictions; 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, 2024.
This news release may contain information that constitutes future-oriented financial information or financial outlook information, all of which are subject to the same assumptions, risk factors, limitations and qualifications set forth above. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise or inaccurate and, as such, undue reliance should not be placed on such future-oriented financial information or financial outlook information. The Company's actual results, performance and achievements could differ materially from those expressed in, or implied by, such future-oriented financial information or financial outlook information. The Company has included such information in order to provide readers with a more complete perspective on its future operations and its current expectations relating to its future performance. Such information may not be appropriate for other purposes and readers are cautioned that such information should not be used for purposes other than those for which it has been disclosed herein. Future-oriented financial information or financial outlook information contained herein was made as of the date of this news release.
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.
