Hy­dro One earns $194-mil­lion in Q3

Stockwatch Daily - - INDUSTRIALS & MATERIALS - Mr. Paul Dob­son re­ports

HY­DRO ONE Ltd. has re­leased its fi­nan­cial and op­er­at­ing re­sults for the third quar­ter ended Sept. 30, 2018.

Third quar­ter high­lights:

• Favourable weather cou­pled with con­tin­ued ef­fi­cien­cies in op­er­a­tion, main­te­nance and ad­min­is­tra­tive (OM&A) costs led to earn­ings per share (EPS) of 33 cents and ad­justed EPS of 38 cents, com­pared to 37 cents and 40 cents, re­spec­tively, in the prior year when reg­u­la­tory catch-up rev­enues and a lower ef­fec­tive tax rate had pre­vi­ously boosted earn­ings.

• Fol­low­ing Hy­dro One’s mo­tion to re­view and vary re­gard­ing a 2017 de­ferred tax as­set rul­ing, the On­tario En­ergy Board (OEB) granted the mo­tion and the mat­ter will now re­turn back to the OEB for fur­ther con­sid­er­a­tion.

• Trans­mis­sion rate ap­pli­ca­tion for 2019 filed with the OEB, seek­ing an in­crease close to in­fla­tion.

“Hy­dro One con­tin­ues to pro­duce strong quar­terly fi­nan­cial re­sults cou­pled with con­tin­u­ously im­prov­ing op­er­a­tional and cus­tomer ser­vice met­rics. The pos­i­tive fig­ures high­light the un­der­ly­ing strength of the busi­ness and the un­wa­ver­ing ded­i­ca­tion at all lev­els of the or­ga­ni­za­tion to im­prove the com­pany’s core func­tions. The en­tire team is also ex­cited with the progress the com­pany is mak­ing with the Avista merger and is look­ing for­ward to the ap­proach­ing close of the trans­ac­tion,” said Paul Dob­son, act­ing pres­i­dent and chief ex­ec­u­tive of­fi­cer. “Fi­nally, the man­age­ment team has en­joyed spend­ing time with the new board of di­rec­tors dur­ing the quar­ter and the fo­cused dis­cus­sions on ar­eas that are a pri­or­ity for our cus­tomers and share­hold­ers.

The ex­pe­ri­ence has been mu­tu­ally ben­e­fi­cial and Hy­dro One has seen a ben­e­fit from the unique per­spec­tives and depth of ex­pe­ri­ence the new board brings to the ta­ble.”

(See H Ta­ble 1 on page 33)

For the three months ended Sept. 30, 2018, the com­pany re­ported net in­come at­trib­ut­able to com­mon share­hold­ers of $194-mil­lion (2017 — $219-mil­lion), an 11.4-per-cent de­crease from last year, and EPS of 33 cents (2017 — 37 cents). Ad­justed EPS, which ex­clude the im­pact of $33-mil­lion costs re­lated to the Avista trans­ac­tion, was 38 cents for the quar­ter.

Rev­enues, net of pur­chased power, for the third quar­ter were higher than last year by 3.1 per cent. This re­flects in­creased trans­mis­sion and dis­tri­bu­tion rev­enues due to higher en­ergy con­sump­tion re­sult­ing from favourable weather, par­tially off­set by lower trans­mis­sion rev­enues driven by tim­ing of On­tario En­ergy Board’s de­ci­sion on the 2017/2018 trans­mis­sion rate fil­ing re­sult­ing in recog­ni­tion of year-to-date rev­enues in the third quar­ter of 2017.

The com­pa­ra­bil­ity of third quar­ter earn­ings was pos­i­tively im­pacted by lower costs re­lated to the ac­qui­si­tion of Avista, sav­ings re­lated to a new in­for­ma­tion tech­nol­ogy (IT) out­sourc­ing con­tract and lower cus­tomer pro­gram costs, par­tially off­set by one-time cor­po­rate sup­port costs. Higher fi­nanc­ing charges, pri­mar­ily due to the reval­u­a­tion of the deal-con­tin­gent for­eign ex­change for­ward con­tract and in­creased in­ter­est ex­pense on long-term debt and con­vert­ible deben­tures is­sued in Au­gust, 2017, con­trib­uted to the over­all de­crease in net in­come in the third quar­ter of 2018.

We seek Safe Har­bor.

Erika Flores con­densed this news re­lease (erikaf@stock­watch.com).

Ian Alexan­der Bourne, Charles Brindamour, Mar­cello Caira, Christie James Beck­ett Clark, Ge­orge L Cooke, David Fran­cis Deni­son, Mar­garet Har­ris, James David Hinds, Roberta L Jamieson, Frances L Lankin, Philip S Orsino, Jane Leslie Pev­erett, Gale Ruben­stein, Mayo M Sch­midt

(H) Shares: 595,882,438

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