EPCOR Announces Quarterly Results

EDMONTON, AB, July 31, 2024 /CNW/ - EPCOR Utilities Inc. (EPCOR) today filed its quarterly results for the period ended June 30, 2024.

"EPCOR's second quarter financial performance was in line with expectations, reflecting continued customer growth across the company's footprint and higher levels of commercial activity," said John Elford, EPCOR President & CEO. "The safety and reliability of utility systems remains top of mind for us and our customers."

EPCOR Utilities Inc. Management's Discussion and Analysis For six months ended June 30, 2024 (CNW Group/Epcor Utilities Inc.)

"Commercial growth in our U.S. operations remained on-track, as EPCOR's progress continued on the construction of two commercial water projects in Texas, and we funded $134 million of our long-term investment in the groundwater supply system," said Mr. Elford. "Several regulated and commercial projects reached milestones in the second quarter. At the Genesee power plant site in Alberta, we energized and placed into service electricity transmission infrastructure that connects new generation units to the provincial grid, strengthening access to power supplies. In Ontario, EPCOR has begun supplying demineralized water to the Darlington nuclear facility as part of the project's performance testing phase. As previously announced, EPCOR also entered into an agreement to acquire the water and wastewater utility systems for the master-planned community of Harmony near Calgary, with regulatory approvals expected later this year."

Highlights of EPCOR's financial performance are as follows:

• Net income was $104 million and $208 million for the three and six months ended June 30, 2024, compared with net income of $102 million and $148 million for the comparative periods in 2023, respectively. The increase of $2 million for the three months ended June 30, 2024 was primarily due to higher Adjusted EBITDA¹, partially offset by fair value adjustments related to financial electricity purchase contracts. The increase of $60 million for the six months ended June 30, 2024 was primarily due to higher Adjusted EBITDA¹, and fair value adjustments related to financial electricity purchase contracts, partially offset by lower transmission system access service charge net collections and higher income tax expense.
• Adjusted EBITDA¹ was $274 million and $534 million for the three and six months ended June 30, 2024, compared with $258 million and $502 million for the comparative periods in 2023, respectively. The increase of $16 million and $32 million for the three and six months ended June 30, 2024, was primarily due to higher rates, and higher commercial activity, partially offset by lower construction activity.
• Capital expenditures were $431 million for the six months ended June 30, 2024, compared with $445 million for the corresponding period in 2023.

Interim management's discussion and analysis and the unaudited condensed consolidated interim financial statements are available on EPCOR's website (www.epcor.com) and SEDAR+ (www.sedarplus.ca).

EPCOR 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. EPCOR also provides electricity, natural gas and water products and services to residential and commercial customers. EPCOR, headquartered in Edmonton, is committed to conducting its business and operations safely and responsibly. Environmental stewardship, public health and community well-being are at the heart of EPCOR's mission to provide clean water and safe, reliable energy. EPCOR is one of Alberta's Top 80 Employers, is ranked among Corporate Knights' 2024 Best 50 Corporate Citizens in Canada and is designated a Utility of the Future Today by the Water Environment Federation.

1. Adjusted EBITDA is a non-GAAP financial measure. See the Non-GAAP Financial Measures section in Appendix 1 to this media release.

Appendix 1 Non-GAAP Financial Measures

EPCOR uses earnings before finance expenses, income tax recovery (expense), depreciation and amortization, changes in the fair value of derivative financial instruments, transmission system access service charge net collections and other unusual items (collectively, Adjusted EBITDA) to discuss operating results for EPCOR's lines of business. Adjusted EBITDA is a non-GAAP financial measure and is not a standardized financial measure under IFRS Accounting Standards and might not be comparable to similar financial measures disclosed by other issuers.

The reconciliation between Adjusted EBITDA to Net income as reported under IFRS Accounting Standards is shown below:

($ millions)	Three months ended June 30,		Six months ended June 30,
	2024	2023 (restated)^1	2024	2023 (restated)^1
Adjusted EBITDA by Segment
Water Services segment	$          123	$          116	$          229	$           208
Distribution and Transmission segment	71	62	141	122
Energy Services segment	13	8	28	30
North American Commercial Services segment	17	31	41	57
U.S. Regulated Water segment	38	37	75	71
Other	12	4	20	14
Adjusted EBITDA	274	258	534	502
Finance expenses	(51)	(47)	(101)	(94)
Income tax expense	(6)	(10)	(15)	(2)
Depreciation and amortization	(109)	(110)	(212)	(210)
Change in fair value of financial electricity purchase contracts^2	-	13	7	(58)
Transmission system access service charge net collections^3	(4)	(2)	(5)	10
Net income	$         104	$          102	$          208	$           148

1. During the fourth quarter of 2023, the Company realigned its operating segments to reflect the results of an internal reorganization. The reorganization resulted in the formation of a new operating segment, North American Commercial Services, which combines certain previously existing businesses in a new reportable segment. Comparative segmented results for 2023 have been restated to align with the 2024 reportable segment presentation.
2. The change in fair value of derivative financial instruments represents the change in fair value of financial electricity purchase contracts between the electricity market forward prices and the contracted prices at the end of the reporting period, for the contracted volumes of electricity.
3. Transmission system access service charge net collections are the difference between the transmission system access service charges paid to the provincial system operators and the transmission system access service charges collected from electricity retailers. Transmission system access service charge net collections are timing differences, which are collected from or returned to electricity retailers as the transmission system access service charges and customer billing determinants are finalized.

SOURCE Epcor Utilities Inc.

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