"Beginning in early March, EPCOR's people mobilized in response to the COVID-19 pandemic, through every business unit and across all regions," said Stuart Lee, EPCOR President & CEO. "We are in the critical infrastructure business, and we will be called on to be there for our communities at every stage of this public health emergency. We have implemented comprehensive measures to protect the health and safety of our employees, contractors and customers, and we continue to deliver essential services, whether it's from our homes, our facilities, or in the field."
"First quarter net income of $50 million was in-line with expectations, with solid results across most of our business segments," continued Mr. Lee. "While we are expecting financial headwinds for the remainder of 2020 as a result of the pandemic, the Company is in a strong financial and operational position."
Highlights of EPCOR's financial performance are as follows:
Net income was $50 million for the three months ended March 31, 2020, compared with net income of $56 million for the comparative period in 2019. The $6 million decrease was primarily due to unfavorable fair value adjustments related to financial electricity purchase contracts, lower transmission system access service charge net collections and higher depreciation expense, partially offset by lower income tax expense and higher Adjusted EBITDA as described below.
Adjusted EBITDA was $173 million for the three months ended March 31, 2020, compared with $157 million for the comparative period in 2019. The $16 million increase was primarily due to higher water and wastewater rates, customer growth and higher water consumption, higher electricity distribution customer rates, higher work volumes and margins for commercial services work and higher Energy Price Setting Plan margins, partially offset by lower work volumes and margins for street lighting, traffic signals and light rail transit electrical services for the City of Edmonton and higher provisions for expected credit losses from customers.
Investment in capital projects was $143 million for the three months ended March 31, 2020, compared with $140 million for the corresponding period in the 2019 and included higher capital spending across most of our operating segments. The increase of $3 million was primarily due to higher spending in the Water Services segment on several sanitary sewer main projects and various lifecycle projects; higher spending in the Distribution and Transmission segment including on a 25 kV circuit duct bank under the North Saskatchewan River; higher spending in the U.S. Operations segment on the sewer main extension project in west of metropolitan Phoenix to accommodate new industrial and commercial customers; as well as, spending on our new customer billing system. Capital spending increases were partially offset by the acquisition of Rio Verde Utilities Inc. in 2019, with no corresponding acquisition year-to-date in 2020.
Interim management's discussion and analysis and the unaudited condensed consolidated interim financial statements are available on our financial information page 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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