Atco Ltd. Class I · TSX:ACO.X
Atco Ltd. Class I — Investor Presentation (May 2021)
63 slides from Atco Ltd. Class I's investor presentation, May 2021
Slide 1: Disclaimer
DISCLAIMER Due to uncertainty surrounding the application of recent amendments to the Competition Act (Canada), the documents incorporated by reference herein are referenced for historical information purposes only and do not constitute active or current representations of ATCO Ltd. or any of its re
Slide 2: Investor Presentation May 2021
& INVESTOR PRESENTATION May 2021
Slide 3: Legal Disclaimer
LEGAL DISCLAIMER Statements made by representatives for ATCO Ltd. and Canadian Utilities Limited and information provided in this presentation may be considered forward-looking statements. By their nature, such statements are subject to numerous known and unknown risks and uncertainties and therefor
Slide 4: Table of Contents
TABLE OF CONTENTS ATCO Group Overview 4 Financial Strength 6 Sustainability 14 Canadian Utilities Limited 17 Regulated Utility Businesses 29 Puerto Rico T&D Contract 32 Energy Infrastructure Businesses 35 ATCO Investments 39 Structures & Logistics 41 Neltume Ports 51 Commercial Real Estate 55 Append
Slide 5: ATCO Group Overview
ATCO ATCO GROUP. OVERVIEW
Slide 6: Organizational Structure
ORGANIZATIONAL STRUCTURE (TSX: ACO.X / ACO.Y) ~$5 billion common equity capitalization (TSX: CU / CU.X) ~$10 billion common equity capitalization INVESTOR PRESENTATION MAY 2021 5
Slide 7: Financial Strength
ATCO FINANCIAL STRENGTH
Slide 8: Track Record of Adjusted Earnings
TRACK RECORD OF ADJUSTED EARNINGS $535 million $352 million ATCO Canadian Utilities in 2020 2016 Alberta wildfires in 2020 2015 GCOC decision and global commodity price declines 2016 Alberta wildfires 2020 COVID-19 Pandemic 2015 GCOC decision and 2013 Calgary floods global commodity price declines L
Slide 9: Track Record of Dividends
TRACK RECORD OF DIVIDENDS ATCO $1.76 per share Canadian Utilities $1.79 per share 28 years of annual dividend increases* 49 years of annual dividend increases* Longest track record of annual dividend increases of any Canadian publicly traded company 93 94 95 96 97 98 99 0 '01 '02 '03 '04 '05 '06 '07
Slide 10: 2020 Adjusted Earnings
2020 ADJUSTED EARNINGS Canadian Utilities $608 M Forgone earnings from businesses $87 M $535 M ATCO sold in 2019 Normalized $521 M adjusted earnings $365 M Forgone earnings $352 M from businesses $45 M sold in 2019 $320 M Normalized adjusted earnings 2019 2020 2019 2020 INVESTOR PRESENTATION MAY 202
Slide 11: ATCO 2020 Adjusted Earnings
ATCO 2020 ADJUSTED EARNINGS 73% $280 M Bulk of Adjusted 73% 27% Earnings Comes from the 5 Utilities 9% $57 M $15 M Neltume Ports Structures & Logistics Canadian Utilities INVESTOR PRESENTATION MAY 2021 10
Slide 12: First Quarter Adjusted Earnings
FIRST QUARTER ADJUSTED EARNINGS 73% Canadian Utilities $191 M $179 M ATCO 27% 73% $119 M $106 M 9% 14% 2019 2020 2019 2020 INVESTOR PRESENTATION MAY 2021 11
Slide 13: Strong Credit Ratings
STRONG CREDIT RATINGS ATCO Ltd. A (low) Stable “ATCO’s rating is supported by the credit strength of CU, which is an intermediate holding company with a sizable portion of Canadian Utilities Limited (CU) A Stable low-risk, well-diversified regulated businesses that has generated strong CU Inc. A (hi
Slide 14: Debt Maturity Profile
DEBT MATURITY PROFILE $200M $220M $200M $200M $185M $160M $160M $150M $125M $120M $125M $100M 2021 2022 2023 2024 …. 2028 …. 2034 2035 2036 2037 2038 2039 CU Inc. CU INVESTOR PRESENTATION MAY 2021 13
Slide 15: Sustainability
SUSTAINABILITY Environment, Social and Governance
Slide 16: ESG Highlights
ESG HIGHLIGHTS E Environmental S Social G Governance What we’ve accomplished: • 90% removal of direct GHG emissions from • $71.4M in economic benefit for Indigenous • 33% of ATCO board directors are women. our portfolio since 2019, almost 7.5 million groups in 2020. • 36% of CU board directors are w
Slide 17: 90% Reduction in Direct GHG Emissions
90% REDUCTION IN DIRECT GHG EMISSIONS Primarily from sale of our Canadian Fossil Fuel Generation Portfolio and 17 per cent direct GHG emission reduction within our retained assets INVESTOR PRESENTATION MAY 2021 16
Slide 18: Canadian Utilities
ATCO CANADIAN UTILITIES
Slide 19: Organizational Structure
ORGANIZATIONAL STRUCTURE CU Inc. Canadian Utilities ~$8 billion (TSX: CU / CU.X) debt ~$10 billion common capitalization equity capitalization INVESTOR PRESENTATION MAY 2021 18
Slide 20: Canadian Utilities 2020 Adjusted Earnings
CANADIAN UTILITIES 2020 ADJUSTED EARNINGS 73% $572 M Bulk of Adjusted Earnings 73% 27% Comes from the 5 Utilities 9% $28 M $12 M $(77M) Energy Infrastructure LUMA Utilities Corporate 14% INVESTOR PRESENTATION MAY 2021 19
Slide 21: Canadian Utilities Key Themes
CANADIAN UTILITIES KEY THEMES Protect the core utility assets by investing in activities to advance the energy transition and ensure long term resiliency OPTIMIZE Optimize energy infrastructure assets and add new growth platforms INVEST IN NON-REG THE CORE ASSETS Geographic diversification: Ou
Slide 22: Energy Transition
ENERGY TRANSITION “We are uniquely positioned to help our customers achieve their decarbonization goals. In today’s context of change, our forward focus is on cleaner fuels and renewable energy, modernizing our energy infrastructure to integrate decentralized sources of energy, and digitalization to
Slide 23: Energy Transition - Hydrogen
ENERGY TRANSITION - HYDROGEN Actively piloting several new and innovative applications for hydrogen: Clean Energy Innovation Hub in Western Australia Clean Energy Innovation Park in Western Australia First Australian operation test bed for energy solutions integrating Completing pre-FID work on
Slide 24: Energy Transition - Hydrogen
ENERGY TRANSITION - HYDROGEN Actively piloting several new and innovative applications for hydrogen: Hydrogen Refueling Facility in Western Australia Hydrogen Blending Project in Alberta Partnering with Fortescue Metals Group to build and operate green Building Alberta’s first hydrogen blending
Slide 25: Energy Transition - Hydrogen
ENERGY TRANSITION - HYDROGEN Actively piloting several new and innovative applications for hydrogen: Proposed World-Scale Clean Hydrogen JV Project with Suncor in Alberta ATCO/Suncor partnership has received welcome support from Government of Canada and Government of Alberta. Collaboration betwe
Slide 26: Energy Transition - Why Hydrogen?
ENERGY TRANSITION – WHY HYDROGEN? We are committed to be a leader in promoting a more environmentally sustainable future by providing cleaner, reliable and affordable energy. Hydrogen can play a role in affordably decarbonizing the production of heat, particularly in our cold Canadian climate.
Slide 27: Regulated Utilities
REGULATED UTILITIES ELECTRICITY TRANSMISSION ELECTRICITY DISTRIBUTION $5.1B Rate Base $2.6B Rate Base NATURAL GAS DISTRIBUTION NATURAL GAS TRANSMISSION INTERNATIONAL NATURAL GAS $2.9B Rate Base $2.2B Rate Base DISTRIBUTION $1.2B Rate Base (1) 2020 estimated Mid Year Rate Base included in 2020 Manage
Slide 28: Returns on Equity
RETURNS ON EQUITY 10.7% ALBERTA UTILITIES ACHIEVE TOP 8.5% 9.0% TIER RETURNS ON EQUITY - CU Inc.’s average ROE +2.2 per cent above average AUC approved over last 10 years. - Operational excellence and lower costs benefit our customers and share owners 10 Year Average (2011-2020) AUC Approved Alberta
Slide 29: AB Utilities - Operational Excellence
AB UTILITIES - OPERATIONAL EXCELLENCE Over the past five years, we have reduced our operations and In 2020 we reduced our maintenance costs per kilometer of line by: Natural Gas Distribution cost per customer compared to 2019 by: 9% per KM of Line 22% per KM of line 4% per Customer Electricity Distr
Slide 30: Regulatory Process
REGULATORY PROCESS Electricity Regulatory Transmission Certainty Natural Gas Regulatory Transmission Certainty Electricity and Regulatory Natural Gas Distribution Certainty Generic Cost of Capital (GCOC) Regulatory Certainty Australia Natural Gas Regulatory Distribution Certainty 2021 2022 2023 INVE
Slide 31: Pioneer Pipeline
PIONEER PIPELINE On September 30, 2020 we announced the purchase of the Pioneer Natural Gas Pipeline from Tidewater Midstream & Infrastructure Ltd. for a purchase price of $255 million. The 131-km pipeline transports natural gas to TransAlta’s generating units at Sundance and Keephills – facilit
Slide 32: 3-Year Capital Investment Plan
3-YEAR CAPITAL INVESTMENT PLAN $3.2 BILLION OF PLANNED CAPITAL INVESTMENT EXPECTED MID-YEAR RATE BASE GROWTH (C$ Billions) INVESTOR PRESENTATION MAY 2021 31
Slide 33: Puerto Rico Electric T&D Contract
PUERTO RICO ELECTRIC T&D CONTRACT In June 2020, the Puerto Rico Public-Private Partnerships Authority (P3A) selected LUMA Energy, LLC (LUMA) to manage and modernize Puerto Rico’s electric transmission and distribution (T&D) system $15 16-year contract to operate the T&D system: → One-year transition
Slide 34: Key Contract Terms & Objectives
KEY CONTRACT TERMS & OBJECTIVES Front-End O&M Services Period Transition Period (2021 – 2035) (2020 – 2021) $15 • Preparatory work to enable • LUMA assumes responsibility for all in-scope operational matters to transform full transition of operations the T&D system into an efficient and modern utili
Slide 35: Compensation & PREPA Bankruptcy
COMPENSATION & PREPA BANKRUPTCY ($US millions) Front-End Service Fee Fixed Fee Potential Incentive Fee (Paid Monthly) Transition Period 60 $15 Contract Year 1 70 13 Contract Year 2 90 17 Contract Year 3 100 19 Contract Year 4+ 105 20 • All compensation figures above are at the LUMA level. Canadian U
Slide 36: Energy Infrastructure Businesses
ENERGY INFRASTRUCTURE BUSINESSES ELECTRICITY GENERATION ELECTRICITY GENERATION ELECTRICITY GENERATION CANADA AUSTRALIA LATIN AMERICA 24 MW 177 MW 47 MW INDUSTRIAL WATER SERVICES HYDROCARBON STORAGE NATURAL GAS STORAGE CANADA CANADA CANADA 85,200 m3/day 400,000 m3 52 PJ INVESTOR PRESENTATION MAY 2021
Slide 37: Unregulated Electricity Generation
UNREGULATED ELECTRICITY GENERATION Highly Contracted Portfolio Long-Term Contracted 220 MW (89%) Merchant 28 MW (11%) INVESTOR PRESENTATION MAY 2021 36
Slide 38: Storage & Industrial Water
STORAGE & INDUSTRIAL WATER We build, own and operate energy infrastructure assets across Alberta and the Northwest Territories We provide integrated water services including pipeline transportation, storage, water treatment, recycling and disposal to a number of our industrial customers. The nat
Slide 39: Canadian Utilities Summary
CANADIAN UTILITIES SUMMARY 10.7% $535 M 9.0% 8.5% AUC AB AUC ROE Peers Peers CU Inc. CUInc. Inc. AUC PEERS CU 10 Year Average (2011-2020) UTILITIES ACHIEVE HIGH QUALITY EARNINGS LONG TRACK RECORD OF 2020 ADJUSTED EARNINGS TOP TIER RETURNS ON EQUITY EARNINGS & DIVIDEND GROWTH INVESTOR PRESENTATION MA
Slide 40: ATCO Investments
ATCO ATCO INVESTMENTS
Slide 41: ATCO Focus: Global Essential Services
ATCO FOCUS: GLOBAL ESSENTIAL SERVICES INVESTOR PRESENTATION MAY 2021 40
Slide 42: Structures & Logistics
ATCO STRUCTURES & LOGISTICS
Slide 43: Structures & Logistics
STRUCTURES & LOGISTICS Lodging & Support Services Modular Structures • Lodging, catering • Permanent modular construction • Maintenance • Waste management Logistics and Facility O&M Services Workforce Housing & Space Rentals • Facility operations • Mobile office trailers • Maintenance services • Rel
Slide 44: Structures & Logistics
STRUCTURES & LOGISTICS Infrastructure Since 2015, on-going diversification of customer base into new market segments such as infrastructure projects, public education facilities, high density residential housing, hotels, hospitals and Rentals Hotels correctional facilities Not reliant on O&G sec
Slide 45: Structures & Logistics Adjusted Earnings
STRUCTURES & LOGISTICS ADJUSTED EARNINGS $57M $37M $15M $6M 2017 2018 2019 2020 INVESTOR PRESENTATION MAY 2021 44
Slide 46: Structures & Logistics
STRUCTURES & LOGISTICS Modular Structures rental fleet grew by 4,342 units or 25% since 2017 21,506 2,679 18,095 18,424 17,164 3,008 18,827 2,774 3,708 15,321 15,416 13,456 2017 2018 2019 2020 Global Space Rentals Global Workforce Housing INVESTOR PRESENTATION MAY 2021 45
Slide 47: Space Rentals
SPACE RENTALS Continuing to expand our space rental fleet in existing space rental geographies and through continued strategic expansion in targeted regions of Canada and the US. ATCO Sabinco S.A. Acquisition Acquired remaining 50 per cent interest in its ATCO Sabinco S.A. joint venture partnershi
Slide 48: Workforce Housing
WORKFORCE HOUSING Streamlining our manufacturing platform to scale quickly and profitably when needed to capture workforce housing contracts China Lake Military Rebuild Completed installation on a $12 million, 450-person camp in first quarter of 2021. The rental contract extends for 31 months. T
Slide 49: Permanent Modular Construction
PERMANENT MODULAR CONSTRUCTION Diversifying the global customer base into non-traditional modular markets such as public education facilities, high density urban residential housing, hotels, hospitals, and correctional facilities COVID-19 support in Mexico Mobilized two modular hospital facilities
Slide 50: ATCO Frontec
ATCO FRONTEC Enabling our customers to focus on their core business Lodging & Support Services • Safely operating accommodation facilities during COVID-19, increasing client confidence and camp occupancies. Specialized Site Services for Military Operations • Facility management and support services
Slide 51: Structures & Logistics Key Highlights
STRUCTURES & LOGISTICS KEY HIGHLIGHTS Diversifying our customer Growing rental fleet Constantly replenishing our base into new market global customer lead list segments 21,506 17,164 2017 2020 Total Rental Fleet Size INVESTOR PRESENTATION MAY 2021 50
Slide 52: Neltume Ports
ATCO NELTUME PORTS
Slide 53: Neltume Ports
NELTUME PORTS • ATCO acquired a 40 per cent ownership interest in Neltume Ports in September 2018. • Neltume Ports is a leading port operator with 16 ports in four South American countries, and one port in the US. INVESTOR PRESENTATION MAY 2021 52
Slide 54: Neltume Ports Operations
NELTUME PORTS OPERATIONS DIVERSIFIED BY CARGO TYPE AND GEOGRAPHY BY CARGO TYPE IN 2020 BY GEOGRAPHY IN 2020 3% 13% Container 27% Brazil Break Bulk Approx. Uruguay Approx. 19% Chile Bulk 45 M 45 M Tonnes 52% Tonnes Argentina 65% 21% *Based on 100% of volumes of ports where Neltume Ports has an owners
Slide 55: Port Overview
PORT OVERVIEW PER CENT TERMINAL Puerto Angamos (PANG) Montecon (MON) PORT COUNTRY KEY CARGO OWNERSHIP TYPE Terminal Puerto Arica 50% CHL Container Mixed Terminal Puerto Angamos 40% CHL Multi Copper Terminal Graneles del Norte 40% CHL Dry Bulk Coal/Copper Puerto Mejillones 50% CHL Dry Bulk Zinc/Coppe
Slide 56: Commercial Real Estate
ATCO COMMERCIAL REAL ESTATE
Slide 57: Commercial Real Estate
COMMERCIAL REAL ESTATE • Held properties can be monetized opportunistically • Increase portfolio occupancy with 3rd party tenants • Increase portfolio value and earnings by investing in commercial real estate projects on high potential sites, already in our portfolio ASSET TYPE & NBV ($186 MILLION)
Slide 58: Key ATCO Highlights
KEY ATCO HIGHLIGHTS GEOGRAPHIC GLOBAL ESSENTIAL LONG TRACK RECORD DIVERSIFICATION SERVICES OF DIVIDEND GROWTH INVESTOR PRESENTATION MAY 2021 57
Slide 59: Appendix
ATCO APPENDIX
Slide 60: Electricity Distribution & Transmission
ELECTRICITY DISTRIBUTION & TRANSMISSION We build, own and operate electrical distribution and transmission facilities 260,000 farm, business and residential customers in 240 Alberta communities Approximately 11,000 km of transmission lines, and delivers power to and operates 3,500 km of lines ow
Slide 61: Natural Gas Distribution & Transmission
NATURAL GAS DISTRIBUTION & TRANSMISSION We build, own and operate natural gas distribution facilities in Alberta Alberta’s largest natural gas distribution company Serves over 1.2 million customers in nearly 300 Alberta communities We build, maintain, and operate 41,000 km of natural gas distr
Slide 62: Australia Utility
AUSTRALIA UTILITY We provide safe and reliable natural gas service to the Perth metropolitan area and the wider Western Australian community Approximately 766,000 customers 14,000 km of natural gas distribution pipelines INVESTOR PRESENTATION MAY 2021 61
Slide 63: www.ATCO.com
www.ATCO.com www.canadianutilities.com Tel: 403.292.7500 Investor Relations 5302 Forand Street SW Calgary, Alberta T3E 8B4 Canada