Canadian Utilities Limited

Thank you for standing by. This is the conference operator. Welcome to the third quarter 2024 results conference call and webcast for Canadian Utilities Limited. As a reminder, all participants are in a listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star and then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and then zero. I would now like to turn the conference over to Mr. Colin Jackson, Senior Vice President, Financial Operations. Please go ahead, Mr. Jackson.

Thank you, and good morning, everyone. We are pleased you could join us for the Canadian Utilities Third Quarter 2024 conference call. On the line today, we have Katie Patrick, Executive Vice President and Chief Financial Officer of Canadian Utilities, Wayne Stensby, Chief Operating Officer of ACCO Energy Systems, and Bob Miles, Chief Operating Officer of ACCO Empower. Before we move into today's remarks, we'd like to take a moment to acknowledge the numerous traditional territories and homelands on which our global facilities are located. Today, I am speaking to you from our ACCO Park head office in Calgary, which is located in the Treaty 7 region. This is the ancestral territory of the Blackfoot Confederacy, comprised of the Siksika, the Kainai, and the Pagani Nations, the Tsutina Nation, and the Stony Dakota Nations, which includes the Chiniki, Bears Paw, and Good Stony First Nations. I also want to recognize that the City of Calgary is home to the Métis Nation of Alberta, Districts 5 and 6. During the quarter, employees across Canada participated in the National Day for Truth and Reconciliation, by walking together to honour Indigenous communities and their experiences. May we continue to reflect, learn, and respect the diverse history, languages, ceremonies, and cultures of Indigenous peoples as we move towards understanding, feeling, and reconciliation. Today we'll hear from Katie, who will deliver opening comments on our financial results, recent company developments, and an update on our Australian businesses. followed by an update from Wayne and Bob on their respective business segments. Following today's remarks, the Canadian Utilities team will take questions from the investment community. Please note that a replay of the conference call, a copy of the presentation, and today's transcript will be available on our website at canadianutilities.com. The materials can be found in the investor section under events and presentations. Today's remarks will include forward-looking statements that are subject to important risks and uncertainties. For more information on these risks and uncertainties, please refer to our filings with the Canadian Securities Regulators. During today's presentation, we may refer to certain non-GAAP and other financial measures, including adjusted earnings, adjusted earnings per share, and capital investment. I also note that we provide adjusted earnings before interest, taxes, depreciation, and amortization, or adjusted EBITDA, for ACCO Empower. These measures do not have any standardized meaning under IFRS, and as a result, they may not be comparable to similar measures presented by other entities. Please refer to our filings with the Canadian Securities Regulators for further information. And now, I'll turn the call over to Katie for her opening remarks.

Thanks, Colin, and good morning, everyone. Thank you all very much for joining us today. This quarter's results highlight growth in our base business and our continued focus on operational execution. Canadian Utilities delivered another strong quarter with adjusted earnings of $102 million in the third quarter of 2024, up from $87 million in the same period last year. This translates to adjusted earnings per share of 38 cents. ATCO Energy Systems delivered adjusted earnings of $94 million, an increase of 9.3% compared to Q3 last year. Results are reflective of rate-based growth, a higher allowed ROE, and the benefit of the earnings carryover mechanism, which Wayne will dive into during the Energy Systems results later on this call. ATCO Empower delivered adjusted earnings of $14 million in the quarter, up $5 million from the same period last year. Specific to the energy storage side, adjusted earnings increased $6 million year-over-year to $13 million for the quarter. The business continues to perform well due to strong seasonal spreads and high demand for natural gas and liquid storage. Bob will provide additional commentary on the NPower results later on today's call. In the third quarter of 2024, Canadian Utilities sold its 100% investment in Atco Energy to its parent company, Atco, for $85 million. The purchase price represents the estimated fair market value of Atco Energy, which was supported by independent fairness opinions. As a result of this transaction, Atco Energy will no longer be reported under the corporate and other segment for Canadian utilities as of August 1st, 2024. Atco Australia delivered adjusted earnings of $15 million in the third quarter of this year. This fell by $3 million compared to the same period in 2023. The slight decrease was mainly due to the impact of inflation indexing on the rate base in natural gas Australia. In 2023, Australian inflation indexing reflected a full year inflation assumption of 4 to 5%. It is expected that inflation for 2024 will be closer to 3%. As a leading gas distributor in Western Australia, we deliver gas to over 800,000 households and businesses through our regulated gas network. Last week, we received the final decision for the sixth access arrangement, known as AA6, from the Economic Regulation Authority, or ERA. As a reminder, the AA6 plan sets out our regulated rate of return and is based on a detailed review of our demand forecast and expenditure plans for the period January 2025 through December 2029. As we mentioned in the press release, We do want to commend the ERA and our team in Australia for what we feel was a constructive and collaborative process to get to this result. The ERA decision set out an ROE of 8.23% for the AA6 period, up from 5.02% under the previous access arrangement, AA5. The ERA's decision reflects the findings of our own research, which shows that natural gas continues to be an important and valued source of energy for Western Australians, with 84,000 new customer connections expected to connect to the network over the next five years. Finally, we continue to make progress on the South Australian hydrogen jobs plan we previously announced. ACCO Australia is actively engaged in discussions with the South Australian government on the genuine offer bid for engineering, procurement, construction, and operation and maintenance contracts associated with a 200 megawatt hydrogen-fueled power plant. The hydrogen plant is a component of the South Australian Hydrogen Jobs Plan project. A final decision on the bid is expected in the fourth quarter of this year. We are very excited about this opportunity, which would allow us to be part of the first of its kind commercial operation of a hydrogen-fueled power plant. Looking at Canadian utilities as a whole, cash flow from operations was $419 million in the quarter, up 9% from the prior year. This supported our operations capital program and normal course financial commitments. Currently, our portfolio of operating assets generates enough cash flow to fund our development pipeline, and we do not anticipate the need for additional equity financing in the near term. More specifically, we have closely examined our strategy and financing plan for AccuLend Power and appropriately scaled our growth in this business to be self-funding over the medium term. With an overall macro backdrop for Alberta that continues to be robust, we see a number of positive trends that we expect will underpin long-term growth for both our Apto Energy systems and Apto Empower businesses. In Alberta, we continue to see significant population and related housing growth along with increased industrial investment. With this continued growth and economic expansion, a reliable and resilient energy system is critical for Alberta. To achieve this, more investment is required in both our electric and natural gas networks, and Wayne will discuss later on the call the projects his team are working on to build these solutions. Similarly, we expect Atwell Empower to play a role in enabling Alberta's energy transition ambitions. With significant industrial investment occurring, we are strategically positioned with the assets and capabilities to drive the decarbonization of Alberta's energy sector. Later in the call, Bob will provide additional updates on our development projects, including our clean fuels initiatives and our renewables development portfolio. With that, let's dive into each segment in more detail. I will now turn the call over to Wayne to discuss the ASCO Energy Systems results.