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Epcor Announces Third Quarter Results

November 07, 2017
Published In: Corporate Information

"EPCOR's third quarter was notable with the transfer of the City of Edmonton's Drainage utility on September 1. We were pleased to welcome approximately 700 new employees and continue the provision of safe and reliable Drainage services to our customers across Edmonton. Consistent with our commitment to the City of Edmonton on the transfer of Drainage, we are increasing the EPCOR dividend from $146 million to $153 million in 2017 with a further increase to $166 million in 2018" said Stuart Lee, EPCOR President & CEO.

On November 1, 2017, EPCOR also completed the acquisition of the natural gas distribution assets of Natural Resources Gas Limited, a distributor to more than 8,700 residential, commercial and industrial customers in in southwestern Ontario. "This further enhances our natural gas distribution business and increases our presence in Ontario" said Mr. Lee.

In the third quarter, EPCOR's earnings were in line with expectations with solid operational and reliability performance across all business units.

Highlights of EPCOR's financial performance are as follows:

  • Net income was $75 million and $169 million for the three and nine months ended September 30, 2017, respectively, compared with $76 million and $221 million for the corresponding periods in the previous year. Net income was lower primarily due to lower recognition of a fair value gain on sale of the remaining investment in Capital Power in January 2017 compared with the fair value gains recognized on sales of the investment in the third quarter of 2016, no dividend income due to the sale of the remaining Capital Power shares, and unfavorable fair value adjustments related to financial electricity purchase contracts in 2017. Partially offsetting these decreases were unfavorable fair value adjustments related to interest rate swaps in 2016 with no corresponding transactions in the current year. In addition, the three months ended September 30, 2017 include higher income from core operations and the nine months ended September 30, 2017 include lower income from core operations, as described below.

  • Income from core operations was $79 million and $169 million for the three and nine months ended September 30, 2017, respectively, compared with $61 million and $204 million for the corresponding periods in the previous year. The increase of $18 million for the three months ended September 30, 2017 was driven by higher water, wastewater and electricity distribution customer rates, higher net system access service collections and higher water and wastewater volumes due to weather conditions in Canada and U.S. Partially offsetting these increases were lower Energy Price Setting Plan margins, higher depreciation expense due to asset additions and lower income from industrial services contracts primarily due to the termination of the Suncor financing and operating agreements in 2016. The decrease of $35 million for the nine months ended September 30, 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 and wastewater volumes due to higher precipitation in Canada, higher depreciation expense due to asset additions and losses on sale of surplus land in 2017 compared with gains on sale of surplus land in 2016. Partially offsetting these decreases were higher water, wastewater and electricity distribution and transmission customer rates.

  • Net cash flows from operating activities were $263 million for the nine months ended September 30, 2017, compared with $366 million for the corresponding period in the previous year. The decrease reflects reduced income from operations and lower funds from changes in non-cash operating working capital.

  • Investment in capital projects and acquisitions was $146 million and $398 million for the three and nine months ended September 30, 2017, respectively, compared with $182 million and $392 million for the corresponding periods in the previous year. The $6 million increase for the nine months ended September 30, 2017 was primarily due Drainage capital spending in September 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 (MD&A) of the quarterly results are shown below. The MD&A and the unaudited condensed consolidated interim financial statements are available on EPCOR's website and SEDAR.

EPCOR, through its 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‚Äč


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

 

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