Renewed strategy focuses on Hydro One's
commitment to all Ontarians and operational excellence that
continues to deliver strong performance
TORONTO, Nov. 7, 2019
/PRNewswire/ -
Hydro One Limited (Hydro One or the Company) today announced its financial
and operating results for the third quarter ended September 30, 2019.
Third Quarter Highlights
- Earnings per share (EPS) of $0.40
and adjusted EPS of $0.40, compared
to $0.33 and $0.38, respectively, for the same period in 2018,
an increase of 21% and 5%. This reflects the update
to 2019 distribution rates, a decrease in operation,
maintenance and administration (OM&A) costs due to lower
corporate support costs in the quarter, partially offset by lower
revenues due to less favourable weather.
- Hydro One released its updated corporate strategy which
reaffirms its commitment to Ontario and the provision of safe, reliable,
and affordable electricity.
- Partnering with Six Nations of the Grand River Development
Corporation and Mississaugas of the Credit First Nation, Hydro One
announced the completion of the 76 km double circuit, 230 kV
transmission Niagara Reinforcement Line.
- The Company moved forward with plans to build a new
Ontario grid control centre in
Orillia. This new,
state-of-the-art facility is expected to serve as one of the
Company's technology hubs and will ensure the safe, reliable
delivery of electricity to communities across all of Ontario for years to come.
- In the third quarter of 2019, the distribution customer
satisfaction score with residential and small businesses continued
to rise and averaged 86% year-to-date.
- Enhancing the framework around its sustainability objectives,
the Company released its report on the Carbon Disclosure Project
(CDP) in which it outlined actions to address climate change.
- The Ontario Energy Association (OEA) presented two awards to
Hydro One employees, for Customer Service and for Contributor of
the Year.
- Quarterly dividend declared at $0.2415 per share, payable December 31, 2019.
"The roll out of our corporate strategy will involve sticking to
our strengths and continuing to champion for our customers and the
electricity sector in Ontario. Our
main focus has been and will remain operational excellence as we
continue to drive performance," said Mark
Poweska, President and Chief Executive Officer of Hydro One.
"We are a leader in Ontario and
continue to build relationships with all partners in our region. We
are taking a focused lens on creating a brighter, sustainable
future for Ontarians, and are steadfast in improving the safety,
reliability, affordability, and environmental impacts of our
operations."
Selected Consolidated Financial and Operating
Highlights
|
Three months ended
September 30
|
Nine months ended
September 30
|
(amounts throughout
in millions of Canadian dollars, except as otherwise
noted)
|
2019
|
2018
|
2019
|
2018
|
Revenues
|
1,593
|
1,606
|
4,765
|
4,659
|
Purchased
power
|
737
|
733
|
2,197
|
2,158
|
Revenues, net of
purchased power1
|
856
|
873
|
2,568
|
2,501
|
Net income attributable
to common shareholders
|
241
|
194
|
567
|
616
|
Costs related to
acquisition of Avista
|
—
|
33
|
140
|
15
|
Adjusted net income
attributable to common shareholders1
|
241
|
227
|
707
|
631
|
Basic EPS
|
$0.40
|
$0.33
|
$0.95
|
$1.03
|
Diluted EPS
|
$0.40
|
$0.32
|
$0.95
|
$1.03
|
Adjusted basic
EPS1
|
$0.40
|
$0.38
|
$1.19
|
$1.06
|
Adjusted diluted
EPS1
|
$0.40
|
$0.38
|
$1.18
|
$1.06
|
Net cash from operating
activities
|
648
|
508
|
1,063
|
1,176
|
Capital
investments
|
424
|
402
|
1,105
|
1,108
|
Assets placed
in-service
|
433
|
239
|
854
|
861
|
Transmission: Average
monthly Ontario 60-minute peak demand (MW)
|
20,954
|
22,759
|
19,981
|
20,841
|
Distribution: Electricity distributed to Hydro
One customers (GWh)
|
6,627
|
6,817
|
20,438
|
20,334
|
1
|
Non-GAAP
Measures - Hydro One uses financial measures that do not have a
standardized meaning under generally accepted accounting principles
in the United States of America (US GAAP) and may not be comparable
to similar measures presented by other entities. Hydro One
calculated the non-GAAP measures by adjusting certain US GAAP
measures for specific items that impact comparability but which the
Company does not consider part of normal, ongoing operations. Refer
to the Non-GAAP Measures section of the Company's Management's
Discussion and Analysis for further discussion of these
items.
|
Key Financial Highlights
For the three months ended September 30,
2019, the Company reported net income attributable to common
shareholders of $241 million (2018 -
$194 million), a 24.2% increase from
last year, and EPS of $0.40 (2018 -
$0.33). With no costs or income
related to the proposed Avista Corporation acquisition (Merger) in
the third quarter of 2019, adjusted EPS was $0.40 for the quarter (2018 - $0.38).
Revenues, net of purchased power, for the third quarter were
lower than last year by 1.9% driven by less favourable weather, as
well as deferred tax asset sharing and accelerated tax depreciation
(Accelerated CCA), both of which will flow through to customers
and are offset in lower taxes, with no impact on regulated
return on equity. This has been partially offset by the update
to 2019 distribution rates. Third quarter OM&A costs were
lower than prior year due to lower corporate support costs, which
were partially offset by insurance proceeds received last year.
Financing costs decreased in the third quarter of 2019 compared
to the same quarter last year primarily due to recognition of an
unrealized loss on the foreign-exchange contract and interest
expense related to convertible debentures in the third quarter of
2018. The decrease due to these Merger-related charges was
partially offset by an increase in interest expense on long-term
debt driven by higher weighted-average long-term debt balance
outstanding in 2019.
Lower income tax expense for the third quarter of 2019 was
primarily attributable to a combination of incremental tax
deductions resulting from the deferred tax asset sharing as
mandated by the OEB, Accelerated CCA resulting from the enactment
of certain 2019 federal and Ontario budget measures in the second quarter,
and lower income before taxes. Lower taxes as a result of deferred
tax asset sharing and Accelerated CCA are offset by lower revenues,
as these savings will be returned to customers. The latter has no
impact on the regulated return on equity.
Hydro One continues to invest in the reliability and performance
of Ontario's electricity
transmission and distribution systems, address aging power system
infrastructure, facilitate connectivity to new load customers and
generation sources, and improve service to customers. The Company
made capital investments of $424
million during the third quarter, and placed $433 million worth of new assets in-service.
Selected Operating Highlights
Hydro One released its updated corporate strategy that
reaffirmed its commitment to Ontarians through five priorities,
including building a grid for the future, becoming the safest and
most efficient utility, being a trusted partner, advocating for
customers and helping them make informed decisions, and growing the
business innovatively.
On September 5, 2019, Hydro One,
with Six Nations of the Grand River Development Corporation, a
community owned corporation of the Six Nations of the Grand River
First Nation, and Mississaugas of the Credit First Nation,
announced the completion of the Niagara Reinforcement Line. This
line was completed in collaboration with these First Nations and is
expected to provide long-term benefits through an equity ownership
model, which could serve as a framework for future infrastructure
projects across Ontario. The
Niagara Reinforcement Line is a 76 km double circuit, 230 kV
transmission line primarily along an existing Hydro One
right-of-way between Allanburg Transformer Station and Middleport
Transformer Station. The line was brought to completion by A6N, a
joint venture between Six Nations of the Grand River Development
Corporation and Aecon Group Inc. As part of the project's
partnership model, both First Nation partners have an equity
ownership in the line, which would provide an annual income to
these partners over the life of the asset, supporting investments
in local community priorities.
During the quarter, the Company announced that it is moving
forward with plans to build a new Ontario grid control centre in Orillia. This new, state-of-the-art facility
is expected to serve as one of the Company's technology hubs and
will ensure the safe, reliable delivery of electricity to
communities across all of Ontario
for years to come. Total investment is approximately $150 million.
In the third quarter of 2019, the distribution customer
satisfaction score with residential and small businesses reached
87%, bringing the year-to-date average to 86%.
Hydro One released its 2018 CDP report on September 30, 2019, as it works to limit its
environmental impact and increase the resiliency of its assets to
better withstand the impacts of climate change.
Two of the Company's employees were presented with OEA awards. One
was the OEA's Customer Service Award and the other was the
Contributor of the Year.
Common Share Dividends
Following the conclusion of the third quarter, on November 6, 2019, the Company declared a
quarterly cash dividend to common shareholders of $0.2415 per share to be paid on December 31, 2019 to shareholders of record on
December 11, 2019.
Supplemental Segment Information
|
Three months ended
September 30
|
Nine months ended
September 30
|
(millions of
dollars)
|
2019
|
2018
|
2019
|
2018
|
Revenues
|
|
|
|
|
Transmission
|
443
|
493
|
1,245
|
1,344
|
Distribution
|
1,140
|
1,103
|
3,490
|
3,284
|
Other
|
10
|
10
|
30
|
31
|
Total
revenues
|
1,593
|
1,606
|
4,765
|
4,659
|
Revenues, net of
purchased power
|
|
|
|
|
Transmission
|
443
|
493
|
1,245
|
1,344
|
Distribution
|
403
|
370
|
1,293
|
1,126
|
Other
|
10
|
10
|
30
|
31
|
Total revenues, net of
purchased power
|
856
|
873
|
2,568
|
2,501
|
Income (loss) before
financing charges and taxes
|
|
|
|
|
Transmission
|
232
|
287
|
607
|
728
|
Distribution
|
153
|
120
|
541
|
397
|
Other
|
(7)
|
(18)
|
(174)
|
(41)
|
Total income before
financing charges and taxes
|
378
|
389
|
974
|
1,084
|
Capital
investments
|
|
|
|
|
Transmission
|
276
|
261
|
724
|
693
|
Distribution
|
146
|
138
|
375
|
409
|
Other
|
2
|
3
|
6
|
6
|
Total capital
investments
|
424
|
402
|
1,105
|
1,108
|
Assets placed
in-service
|
|
|
|
|
Transmission
|
294
|
112
|
509
|
466
|
Distribution
|
129
|
126
|
331
|
389
|
Other
|
10
|
1
|
14
|
6
|
Total assets placed
in-service
|
433
|
239
|
854
|
861
|
This press release should be read in conjunction with the
Company's third quarter 2019 Consolidated Financial Statements and
Management's Discussion and Analysis (MD&A). These financial
statements and MD&A together with additional information about
Hydro One, including the audited amended consolidated financial
statements and amended MD&A for the year ended December 31, 2018 can be accessed at
www.HydroOne.com/Investors and www.sedar.com.
Quarterly Investment Community Teleconference
The Company's third quarter 2019 results teleconference with the
investment community will be held on November 7, 2019 at 8 a.m.
ET, a webcast of which will be available at
www.HydroOne.com/Investors. Members of the financial community
wishing to ask questions during the call should dial 1-866-221-1674
prior to the scheduled start time and request access to Hydro One's
third quarter 2019 results call, conference ID 2469538
(international callers may dial 1-270-215-9604). Media and other
interested parties are welcome to participate on a listen-only
basis. A webcast of the teleconference will be available at the
same link following the call. Additionally, investors should note
that from time to time Hydro One management presents at brokerage
sponsored investor conferences. Most often, but not always, these
conferences are webcast by the hosting brokerage firm, and when
they are webcast, links are made available on Hydro One's website
at www.HydroOne.com/Investors and are posted generally at
least two days before the conference.
About Hydro One Limited
We are Ontario's largest
electricity transmission and distribution provider with almost 1.4
million valued customers, almost $25.8
billion in assets and 2018 annual revenues of almost
$6.2 billion. Our team of
approximately 8,600 skilled and dedicated employees proudly build
and maintain a safe and reliable electricity system which is
essential to supporting strong and successful communities. In 2018,
Hydro One invested almost $1.6
billion in its 30,000 circuit kilometres of high-voltage
transmission and 123,000 circuit kilometres of primary distribution
networks and injected approximately $1.3
billion into the economy by buying goods and services in
Ontario. We are committed to the
communities where we live and work through community investment,
sustainability and diversity initiatives. We are designated as a
Sustainable Electricity Company by the Canadian Electricity
Association. Through Hydro One Telecom Inc.'s extensive fibre optic
network, we also provide advanced broadband telecommunications
services on a wholesale basis. Hydro One Limited's common shares
are listed on the Toronto Stock Exchange (TSX: H).
For More Information
For more information about everything Hydro One, please visit
www.HydroOne.com where you can find additional information
including links to securities filings, historical financial
reports, and information about the Company's governance practices,
corporate social responsibility, customer solutions, and further
information about its business.
Forward-Looking Statements and Information
This press release may contain "forward-looking information"
within the meaning of applicable securities laws. Such information
includes, but is not limited to, statements related to: Hydro One's
corporate strategy; new Ontario
grid control centre; operational excellence; performance; building
relationships with the Company's partners; creating a sustainable
future; improvements to safety, reliability, resiliency,
affordability and environmental impacts; customer service and
satisfaction; reliability and performance; connections; ongoing and
planned investments, projects and initiatives; the Niagara
Reinforcement Line and expected impacts, as well as anticipated
impacts of equity ownership in the line; dividends; anticipated
impacts of Accelerated CCA; and anticipated impacts relating to the
deferred tax asset. Words such as "expect," "anticipate," "intend,"
"attempt," "may," "plan," "will," "can," "believe," "seek,"
"estimate," and variations of such words and similar expressions
are intended to identify such forward-looking information. These
statements are not guarantees of future performance or actions and
involve assumptions and risks and uncertainties that are difficult
to predict. Therefore, actual outcomes and results may differ
materially from what is expressed, implied or forecasted in such
forward-looking information. Some of the factors that could cause
actual results or outcomes to differ materially from the results
expressed, implied or forecasted by such forward-looking
information, including some of the assumptions used in making such
statements, are discussed more fully in Hydro One's filings with
the securities regulatory authorities in Canada, which are available on SEDAR at
www.sedar.com. Hydro One does not intend, and it disclaims any
obligation, to update any forward-looking information, except as
required by law.
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SOURCE Hydro One Limited