ATCO REPORTS FIRST QUARTER 2025 EARNINGS
CALGARY, AB, May 7, 2025 /CNW/ - ATCO Ltd. (TSX: ACO.X) (TSX: ACO.Y)
ATCO Ltd. (ATCO or the Company) today announced first quarter 2025 adjusted earnings (1) of $160 million ($1.43 per share), which were $12 million ($0.11 per share) higher compared to $148 million ($1.32 per share) in 2024.
First quarter 2025 earnings attributable to Class I and Class II Shares reported in accordance with International Financial Reporting Standards (IFRS earnings) were $144 million ($1.28 per share) compared to $147 million ($1.31 per share) in 2024.
RECENT DEVELOPMENTS
ATCO Structures
ATCO Structures continued to demonstrate the resiliency of its base business growth with awarded contracts that illustrate the diversity of geographies and industries that ATCO Structures services:
- Awarded multiple contracts in Canada totaling $50 million; including contracts to provide space rental and workforce housing solutions supporting uranium exploration, nuclear generation and urban infrastructure projects.
- Awarded two contracts in the US to provide space rental solutions supporting the construction of a data centre in Alabama, and standalone modular offices for use by the US Navy. These awards comprise 55 modular units and total $8 million.
- Executed a $7 million contract to supply a 42-unit, 300-person accommodation camp in support of mining operations in New South Wales, Australia. The camp comprises existing fleet assets and was handed over in the first quarter of 2025.
Frontec
- Awarded the $49 million Polar Over-the-Horizon Radar contract to design, build, install and operate a new radar defence system in the Northwest Territories. The Government of Canada awarded the contract to Inuvialuit Frontec Services, a joint venture partnership between ATCO Frontec and Inuvialuit Development Corporation. The contract commenced on March 28, 2025, with a term of two years and potential for three additional one-year options.
Canadian Utilities
- Canadian Utilities invested $401 million of capital expenditures in the first quarter of 2025, of which 91 per cent was invested in our regulated utilities in ATCO Energy Systems and ATCO Australia, with the remaining 9 per cent largely invested in ATCO EnPower.
- ATCO Energy Systems continues to work on many utility infrastructure opportunities, including two previously announced projects: the Yellowhead Pipeline Project (Yellowhead) in Natural Gas Transmission and the Central East Transfer-Out Project (CETO) in Electricity Transmission.
- Yellowhead is on-track for construction to commence in 2026, subject to Alberta Utilities Commission and Company approvals. As part of the regulatory application process that establishes the need for the project, the oral argument and reply portion of the needs application took place in March 2025. A decision is expected in the second or third quarter of 2025. As well, we continue to progress discussions on Indigenous ownership in the pipeline.
- Electricity Transmission began construction of CETO in the third quarter of 2024, completed the winter season construction in the first quarter of 2025, and will begin fall season construction in the third quarter of 2025. CETO 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.
- ATCO EnPower continues to see favourable market conditions for natural gas storage operations which supports its long-term revenue growth strategy. The $98 million of revenues in the first quarter 2025, an increase of $7 million compared to the same period in 2024, underlines the strength in our natural gas and natural gas liquids storage assets.
Corporate
- On April 10, 2025, ATCO declared a second quarter dividend of 50.45 cents per share or $2.02 per Class I non-voting and Class II voting share on an annualized basis.
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(1) Adjusted earnings is a total of segments measure. See Other Financial and Non-GAAP Measures Advisory included in this News Release. |
This news release should be read in concert with the full disclosure documents. ATCO's unaudited interim consolidated financial statements and management's discussion and analysis for the quarter ended March 31, 2025 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 and Adam Beattie, President, Structures at 10:00 am Mountain Time (12:00 pm Eastern Time) on Wednesday, May 7, 2025 at 1-833-821-0222. 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 June 7, 2025. Please call 1-855-669-9658 and enter pass code 3069408.
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. ATCO Energy provides 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
Subscription Inquiries:
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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 non-voting and Class II voting 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 and Class II voting shares is provided below.
Three Months Ended | ||
($ millions except share data) | 2025 | 2024 |
Adjusted Earnings | 160 | 148 |
Restructuring (1) | (8) | — |
Transition of managed IT services (2) | (5) | — |
Unrealized (losses) gains on mark-to-market forward and swap commodity contracts (3) | (4) | 6 |
Rate-regulated activities (4) | 2 | (4) |
IT Common Matters decision (5) | (1) | (3) |
Earnings attributable to Class I non-voting and Class II voting shares | 144 | 147 |
Weighted average shares outstanding (millions of shares) | 112.3 | 112.2 |
(1) | In the first quarter of 2025, the Company recorded restructuring costs of $8 million (after-tax and non-controlling interests) mainly related to staff reductions and associated severance costs. As these costs are not in the normal course of business, they have been excluded from adjusted earnings. |
(2) | In the first quarter of 2025, the Company recognized IT transition costs of $5 million (after-tax and non-controlling interests). The transition costs were primarily related to activities to shift the managed IT services from a single-vendor service provider to a hybrid model of multiple new vendors and internal teams. As these costs are not in the normal course of business, they have been excluded from adjusted earnings. |
(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 ATCO Investments segment, 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. |
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' and ATCO Frontec's various projects; the anticipated timing for commencement of construction on the Yellowhead project and for a decision on the needs application for the project; the anticipated capacity and benefits of the CETO project and expectations regarding construction of the 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 applicability and stability of legal and regulatory requirements in the jurisdictions in which we invest and/or operate; the payment of fees owing pursuant to applicable contracts; certain regulatory applications being made and approved in 2025; 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 and regulations and the interpretation and manner of enforcement of such laws and regulations; changes to government policies; regulatory decisions; competitive factors in the industries in which the Company operates; evolving market or 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; potential cancellation, termination, default, non-compliance, or breach of contract by contract counterparties; the risk that payments owed may not be collected or received in a timely manner, or at all; risks associated with potential litigation proceedings; potential damage to our brand and/or reputation that may result from a failure to perform, or from factors outside of our control, or negative publicity related to significant projects, investments, operations or activities; the risk of operational disruptions, outages, or force majeure events; 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 or changes to 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.
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.