CARIBBEAN UTILITIES COMPANY LTD (CUC) ANNOUNCES UNAUDITED SECOND QUARTER RESULTS
The Caribbean Utilities Company, Ltd. is listed for trading in United States dollars on the Toronto Stock Exchange under the trading symbol "CUP.U".
GRAND CAYMAN, Cayman Islands, Aug. 2, 2023 /CNW/ - Caribbean Utilities Company, Ltd. ("CUC or "the Company") announced its unaudited results for the three- and six months ended June 30, 2023 (all figures are stated in United States Dollars).
Highlights
- Net earnings for the three months ended June 30, 2023 ("Second Quarter 2023" or "Q2 2023") were $10.0 million, a $1.7 million increase compared to three months ended June 30, 2022 ("Second Quarter 2022" or "Q2 2022").
- 3% increase in the regular quarterly dividend from $0.175 to $0.18 per class ordinary share.
- 2% increase in customers when compared to Second Quarter 2022.
- 8% kilowatt-hours ("kWh") increase in electricity sales compared to Second Quarter 2022.
- Credit rating agency, Moody's released the Cayman Islands AAA country ceiling rating and has referenced that the Cayman Islands' political environment, strong policy continuity and sound financial management allows for a stable economic outlook.
- Continual progress on the installation of Battery Energy Storage Systems with potential completion in Q2 2024.
- Continual progress with the conversion of the 5 MAN generating units to natural gas.
- 6 megawatts ("MW") of capacity approved by the Utility Regulation and Competition Office ("OfReg") for Customer Owned Renewable Energy Programmes.
"Q2 2023 sales were strong, supported by a growing economy and hotter than normal temperatures. We are pleased to release another 6 megawatts of renewable capacity for customers to participate in the carbon reduction efforts. We look forward to the long-awaited utility scale renewable energy bid to be conducted by OfReg, and to advancing our natural gas procurement project. Both initiatives will significantly reduce carbon emissions as well as reduce and stabilize energy costs for our customers," said Mr. Richard Hew, President and Chief Executive Officer of CUC.
Net Earnings and Sales Revenues
Net earnings for Second Quarter 2023, were $10.0 million, a $1.7 million increase from net earnings of $8.3 million for Second Quarter 2022. This increase is primarily attributable to higher operating income partially offset by higher finance charges. For the six months ended June 30, 2023, net earnings were $15.2 million which is a $1.4 million increase from net earnings of $13.8 million for the six months ended June 30, 2022.
Sales in kWh for Q2 2023 were 185.2 million kWh which is an increase of 13.9 million kWh or 8% compared to Q2 2022. Sales in kWh for the six months ended June 30, 2023, totaled 344.1 million, an increase of 23.4 million or 7% when compared to 320.7 million for the six months ended June 30, 2022. The increase in sales for kWh is driven by a 2% growth in the overall customer numbers and the increase in the average consumption of residential and general commercial customers. Total customers as at June 30, 2023, were 33,356 which is an increase of 803 customers or 2% when compared to June 30, 2022.
Electricity sales revenues increased by $3.2 million for Q2 2023 to $28.7 million when compared to electricity sales revenues of $25.5 million for Q2 2022. Electricity sales revenues for the six months ended June 30, 2023 were $53.4 million compared to $47.6 million for the six months ended June 30, 2022. The increase in electricity sales is primarily driven by 8% kWh sales growth and the base rate increase of 5.4% and 3.7% effective June 1, 2022 and June 1, 2023, respectively.
Fuel factor and renewable revenues are pass-through costs to customers. The fuel cost constitutes about 58% of the customer bill for Q2 2023 and there has been a downward trend in fuel cost for 2023. The Company's average price per imperial gallon of fuel for the three months ended June 30, 2023, decreased by 22% to $3.71 in comparison to $4.77 for the three months ended June 30, 2022.
Key Updates
Average monthly temperatures continue to have an impact on consumption in Grand Cayman. As at June 30, 2023, the average monthly temperature for Q2 2023 was 84.5 degrees Fahrenheit (F) compared to 83.1F in Q2 2022.
The Cayman Islands Consumer Price Index released by the Cayman Islands Economics and Statistics Office for the First Quarter of 2023 was 130.6, which is 6.6% higher in comparison with the corresponding quarter in 2022. In June 2023, the credit rating agency, Moody's affirmed the Cayman Islands AAA country ceiling rating and has referenced that the Cayman Islands political environment, strong policy continuity and sound financial management allows for a stable economic outlook.
In May 2023, the Board of Directors approved a 3% increase in the regular quarterly dividend from $0.175 to $0.18 per class ordinary share. The Class A ordinary share (CUP.U) traded on the Toronto Stock Exchange at a high of US$14.27 per share during Q2 2023.
The Company released another 6 MW of capacity for the Customer Owned Renewable Energy and Distributed Energy Resources programmes after approval from the Regulator. With this additional capacity, there will be 29MW dedicated to renewable energy on the grid.
Capital Expenditures
Capital expenditures for the six months ended June 30, 2023, were $48.5 million, an increase of $10.9 million, or 29% in comparison to the $37.6 million for the six months ended June 30, 2022. These expenditures were primarily related to several projects which are highlighted below:
- Generation replacements,
- Diesel generation conversion to natural gas,
- Alternate energy technologies,
- Installation of utility scale battery storage
- Facility and auxiliary asset replacement costs and other
- Resiliency projects
CUC's Second Quarter 2023 results and related Management's Discussion and Analysis ("MD&A"), are attached to this release and incorporated by reference.
The MD&A section of this report contains a discussion of CUC's unaudited Second Quarter results, the Cayman Islands economy, liquidity and capital resources, capital expenditures and the business risks facing the Company. The release and Second Quarter 2023 MD&A can be accessed at www.cuc-cayman.com (Investor Relations/Press Releases) and at www.sedarplus.ca.
The principal activity of the Company is to generate, transmit and distribute electricity in its licence area of Grand Cayman, Cayman Islands pursuant to a 20-year Transmission & Distribution ("T&D") Licence and a 25-year non-exclusive Generation Licence (the "Generation Licence" and together with the T&D licence, the "Licences") granted by the Cayman Islands Government (the "Government", "CIG"). The T&D Licence, which expires in April 2028, contains provisions for an automatic 20-year renewal and the Company has reasonable expectation of renewal until April 2048. The Generation Licence expires in November 2039. Further information is available at www.cuc-cayman.com.
Certain statements in the MD&A, other than statements of historical fact, are forward-looking statements concerning anticipated future events, results, circumstances, performance or expectations with respect to the Company and its operations, including its strategy and financial performance and condition.
Forward looking statements include statements that are predictive in nature, depend upon future events or conditions, or include words such as "expects", "anticipates", "plan", "believes", "estimates", "intends", "targets", "projects", "forecasts", "schedule", or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could". Forward looking statements are based on underlying assumptions and management's beliefs, estimates and opinions, and are subject to inherent risks and uncertainties surrounding future expectations generally that may cause actual results to vary from plans, targets and estimates. Some of the important risks and uncertainties that could affect forward looking statements are described in the MD&A in the section labeled "Business Risks" and include but are not limited to operational, general economic, market and business conditions, regulatory developments and weather. CUC cautions readers that actual results may vary significantly from those expected should certain risks or uncertainties materialize, or should underlying assumptions prove incorrect. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise except as required by law.
SOURCE Caribbean Utilities Company, Ltd.
Letitia Lawrence, Vice President Finance and Chief Financial Officer, Phone: (345) 914-1124, E-Mail: [email protected]
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