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EPCOR Announces 2017 Financial results

February 15, 2018
Published In: Corporate Information

​"In 2017 EPCOR made significant progress on advancing our strategic plan. The year was highlighted by the transfer of the City of Edmonton's Drainage utility to EPCOR in September, and EPCOR's entry into the natural gas distribution business with our Hughes Gas Resources, Inc. acquisition in Texas and the purchase of the assets and assumption of operations of Natural Resources Gas Limited (NRGL) in Ontario" said Stuart Lee, EPCOR President & CEO. "We also reached final completion of the Regina Wastewater Upgrade Project in late 2017".

"The growth and development of EPCOR's business has supported increasing returns to our Shareholder, the City of Edmonton," said Mr. Lee. "EPCOR's dividend increased from $141 million in 2016 to $153 million in 2017, and will rise to $166 million in 2018."

The assumption of NRGL's operations marked EPCOR's return to Ontario and was followed by an October agreement to acquire 100% of Collus Powerstream Utility Services Corp (Collus), an electric distribution company located in Collingwood, Ontario. "The pending Collus acquisition provides EPCOR with a strong platform to grow our business in Ontario" said Mr. Lee.

While consolidated earnings for 2017 were lower than 2016 owing to significant gains related to sales of Capital Power shares in 2016, they were in line with expectations for 2017 with solid operational and reliable performance across all business units.

Highlights of EPCOR's financial performance are as follows:

  • Net income was $87 million and $256 million for the three and twelve months ended December 31, 2017, respectively, compared with net income of $88 million and $309 million for the corresponding periods in the previous year. Net income was lower for the three months ended December 31, 2017, primarily due to gains from the sale of Capital Power shares in 2016 and no favorable fair value adjustments related to interest rate swaps in 2017, partially offset by higher favorable changes in the fair value of contracts-for-differences in 2017 and higher income from core operations in 2017, as described below. Net income was lower for the twelve months ended December 31, 2017, primarily due to gains from the sale of Capital Power shares and dividend income from Capital Power in 2016, lower favorable fair value of contract-for-differences in 2017 and lower income from core operations in 2017, as described below, partially offset by no unfavorable changes related to interest rate swaps in 2017.
  • Income from core operations was $84 million and $253 million for the three and twelve months ended December 31, 2017, respectively, compared with $51 million and $255 million for the comparative periods in 2016, respectively. The increase of $33 million in the quarter was driven primarily by lower income tax expense, higher water, wastewater and electricity distribution customer rates, income from Drainage operations, and higher U.S. water sales volumes, partially offset by lower net system access service collections and higher financing expense. The decrease of $2 million for the twelve months ended December 31, 2017 was driven by lower income from industrial services contracts primarily due to the termination of the Suncor financing and operating agreements in 2016, lower net system access service collections, lower Energy Price Setting Plan margins, lower water sales volumes in Canada, higher depreciation expense, higher financing expense and losses on sale of surplus land in 2017. These decreases were partially offset by lower income tax expense, higher water, wastewater and electricity distribution and transmission customer rates, higher U.S. water sales volumes and income from Drainage operations.
  • Net cash flows from operating activities were $263 million for the three months ended December 31, 2017, compared with $109 million for the corresponding period in the previous year. The increase reflects increased funds from operations, including funds generated by Drainage operations, and higher funds from changes in non-cash operating working capital. Net cash flows from operating activities were $526 million for the twelve months ended December 31, 2017, compared with $475 million for the corresponding period in the previous year. The increase reflects increased funds from operations, including funds generated by Drainage operations, partially offset by lower funds from changes in non-cash operating working capital.
  • Investment in capital projects and acquisitions was $236 million and $634 million for the three and twelve months ended December 31, 2017, respectively, compared with $161 million and $553 million for the corresponding periods in the previous year. The $81 million increase for the twelve months ended December 31, 2017 was primarily due Drainage capital spending during September to December 2017, increased spending on acquisitions in 2017 and various upgrades at the Gold Bar wastewater treatment facility in the Water Services segment, partially offset by lower spending in 2017 on the Advance Meter Infrastructure project in the Distribution and Transmission segment.

Management's discussion and analysis and the audited annual consolidated financial statements are available on EPCOR's website and SEDAR.

EPCOR, through its wholly owned subsidiaries, builds, owns and operates electrical, natural gas and water transmission and distribution networks, water and wastewater treatment facilities and sanitary and stormwater systems in Canada and the United States. The Company also provides electricity, natural gas and water products and services to residential and commercial customers. EPCOR, headquartered in Edmonton, is an Alberta Top 70 employer.

Contact

For more information, please contact:

Media Relations
Phone: (780) 721-9001


Matt Lemay
Investor/Corporate Relations
Phone: (780) 412-3711
Toll Free: 1-877-969-8280

 

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