"Operational performance remained strong in the third quarter across all our utilities," said Stuart Lee, EPCOR President & CEO. "Across our footprint, employees and infrastructure responded well during challenging weather – including record heat waves in the southwestern United States, and frequent wet weather events in central Alberta."
"Financial performance was consistent with our expectations, with third quarter net income of $92 million improving year over year, despite headwinds due to the pandemic," Mr. Lee said. "Capital investment levels remained strong over the first nine months of 2020, with $624 million invested to maintain service reliability and support growth. This work was safely performed by employees and contractors who achieved record safety performance while consistently implementing our pandemic protection protocols."
"Subsequent to quarter end, an EPCOR subsidiary entered into an agreement to acquire assets of Johnson Utilities LLC, subject to regulatory approval," Mr. Lee continued. "The addition will add a 160 square miles service area and nearly 70,000 customer connections to EPCOR's footprint in metropolitan Phoenix – one of the fastest growing regions in North America."
Highlights of EPCOR's financial performance are as follows:
- Net income was $92 million and $212 million for the three and nine months ended September 30, 2020, respectively, compared with net income of $76 million and $172 million for the comparative periods in 2019. The increase of $16 million and $40 million for the three and nine months ended September 30, 2020, respectively was primarily due to higher Adjusted EBITDA, as described below.
- Adjusted EBITDA was $218 million and $576 million for the three and nine months ended September 30, 2020, respectively, compared with $201 million and $536 million for the comparative periods in 2019. The increase of $17 million and $40 million for the three and nine months ended September 30, 2020, respectively, was primarily due to higher water and wastewater rates and customer growth, higher electricity distribution and transmission customer rates, and higher water consumption in Arizona due to hot and dry weather conditions, partially offset by higher provisions for expected credit losses from customers resulting from the deferral of utility bill payments and lower Energy Price Setting Plan margins. In addition, for the nine months ended September 30, 2020, water revenues were higher in Arizona due to a tax reform adjustment credit on customer bills in 2019 with no corresponding credit in 2020.
- Investment in capital projects was $624 million for the nine months ended September 30, 2020, compared with $510 million for the corresponding period in 2019, and included higher capital spending across most of our operating segments, partially offset by lower spending on business acquisition.
Interim management's discussion and analysis and the unaudited condensed consolidated interim financial statements are available in our financial information 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, sanitary and stormwater systems, and infrastructure 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 75 employer.
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