Earnings call transcript: Canadian Utilities Q2 2025 results miss expectations

Canadian Utilities Limited reported its Q2 2025 earnings, revealing a notable shortfall against analyst expectations. The company posted an earnings per share (EPS) of $0.3768, falling short of the forecasted $0.438 by nearly 14%. Revenue also came in below estimates at $842 million compared to the anticipated $938.24 million, marking a 10.26% miss. Following the earnings release, Canadian Utilities’ stock price fell by 2.71%, closing at $39.49. According to InvestingPro data, the company maintains strong fundamentals with a gross profit margin of 70.34% and has raised its dividend for 17 consecutive years, demonstrating consistent shareholder returns despite short-term volatility.

Key Takeaways

• Canadian Utilities’ Q2 EPS and revenue both missed forecasts significantly.
• Stock price declined by 2.71% in response to the earnings miss.
• The company continues to invest heavily in large infrastructure projects.
• Positive cash flow growth and increased capital expenditures reported.
• Guidance for moderate full-year earnings growth remains unchanged.

Company Performance

Canadian Utilities demonstrated resilience in Q2 2025 despite facing economic headwinds. Adjusted earnings rose to $121 million from $117 million in the same quarter last year. The company continues to leverage its strong position in Alberta’s utilities market, focusing on distribution cost reductions and strategic partnerships.

Financial Highlights

• Revenue: $842 million (missed forecast by 10.26%)
• Earnings per share: $0.3768 (missed forecast by 13.97%)
• Adjusted earnings: $121 million (up from $117 million in Q2 2024)
• Year-to-date cash flows: Increased by $105 million to $1 billion
• Capital expenditures: Increased by $145 million to $783 million

Earnings vs. Forecast

The Q2 2025 earnings per share of $0.3768 fell short of the $0.438 forecast, resulting in a negative surprise of 13.97%. Revenue also underperformed, coming in at $842 million against expectations of $938.24 million, a 10.26% miss. This performance contrasts with previous quarters where the company met or exceeded expectations, indicating a challenging period.

Market Reaction

In response to the earnings miss, Canadian Utilities’ stock saw a decline of 2.71%, closing at $39.49. This movement reflects investor concerns about the company’s ability to meet earnings expectations amid ongoing capital expenditures and market challenges. Trading near its 52-week high with a P/E ratio of 26.51, the stock demonstrates resilience despite market fluctuations. InvestingPro analysis indicates the stock is currently fairly valued, with additional ProTips and comprehensive valuation metrics available to subscribers. The company’s 44-year history of maintaining dividend payments further reinforces its stability in the utilities sector.

Outlook & Guidance

Looking ahead, Canadian Utilities maintains its guidance for moderate full-year earnings growth in 2025. The company is focused on executing large capital projects, including the Yellowhead pipeline and the Hydrogen Hub, while exploring new growth opportunities in gas storage across North America.

Executive Commentary

CEO Bob Miles emphasized the company’s leadership in cost reduction and strategic growth areas, stating, "We are the only utility in Alberta to reduce distribution costs during the PBR2 regulatory term." He also highlighted the importance of the hydrogen project, noting, "We believe there’s a short window that we have to execute."

Risks and Challenges

• Economic headwinds impacting revenue and earnings.
• Execution risks associated with large capital projects like the Yellowhead pipeline.
• Regulatory approvals needed for the Hydrogen Hub project.
• Potential market volatility affecting stock performance.
• Competition in the utilities and energy sectors.

Q&A

During the earnings call, analysts focused on the company’s growth strategies, particularly in gas storage and hydrogen projects. Questions addressed potential inorganic growth opportunities and the possibility of selling minority stakes in the Yellowhead pipeline to optimize capital allocation.

Full transcript - Canadian Utilities Limited (CU) Q2 2025:

Conference Operator: Thank you for standing by. This is the conference operator. Welcome to the Second Quarter twenty twenty five Results Conference Call and Webcast for Canadian Utilities Limited. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.

I would now like to turn the conference over to Mr. Colin Jackson, Senior Vice President, Financial Operations. Please go ahead, Mr. Jackson.

Colin Jackson, Senior Vice President, Financial Operations, Canadian Utilities Limited: Thank you, and good morning, everyone. We are pleased you could join us for the Canadian Utilities Second Quarter twenty twenty five Conference Call. On the line today, we have Bob Miles, Chief Executive Officer, Canadian Utilities Limited and Katie Patrick, Executive Vice President, Chief Financial and Investment Officer. Before we move into today’s remarks, I would like to take a moment to acknowledge the numerous traditional territories and homelands on which our global facilities are located. Today, I am speaking to you from our Aco Park head office in Calgary, which is located in the Treaty 7 region.

This is the ancestral territory of the Blackfoot Confederacy comprised of the Sisika, the Kainai and the Bikani Nations, the Sultina Nation and the Stoney Nakoda Nations, which include the Chinookie, Bear’s Paw and Good Stoney First Nations. I also want to recognize that the City Of Calgary is home to the Metis Nation of Alberta Districts 5 And 6. During our second quarter, we proudly celebrated National Indigenous History Month in Canada, a time to honor the stories, achievements and resilience of indigenous peoples. May we continue to respect and celebrate the diverse history, languages and culture of indigenous peoples beyond the month of June. Today, you’ll hear from Bob, who will deliver opening comments along with key developments within our ACCO Energy Systems and ACCO Empower businesses.

And then you’ll hear from Katie, who will discuss our Q2 financial results. Following today’s remarks, the Canadian Utilities team will take questions from the investment community. Please note that a replay of the conference call, a copy of the presentation and today’s transcript will be available on our website at canadianutilities.com following the call. The materials can be found in the Investors section under Events and Presentations. Today’s remarks will include forward looking statements that are subject to important risks and uncertainties.

For more information on these risks and uncertainties, please refer to our filings with the Canadian Securities Regulators. During today’s presentation, we may refer to certain non GAAP and other financial measures, including adjusted earnings and adjusted earnings per share. These measures do not have any standardized meaning under IFRS and as a result, they may not be comparable to similar measures presented with other entities. Please refer to our filings with the Canadian Securities Regulators for more information. And with that, I’ll turn the call over to Bob for his opening remarks.

Bob Miles, Chief Executive Officer, Canadian Utilities Limited: Thanks Colin and good morning everyone. Thank you for joining us today. Let’s begin with our largest asset ATCO Energy Systems, which includes our Alberta utilities. As we strategize and execute on our plans through 2027, we expect growth to be predominantly driven by projects in our transmission businesses in addition to pursuing efficiencies across all of our utilities. Our growth plan is the largest capital plan on which our company has ever embarked and encompasses a robust project pipeline, including the Central East Transfer Out project and the Yellowhead pipeline project.

These combined with other future opportunities including those we expect to be directly assigned by the ISO sets us up to deliver significant growth for our share owners and investors over the long term. We look forward to sharing our plans beyond 2027 and we’ll update our three year capital forecast in our year end disclosures. Now jumping into our current major projects. Our Central East Transfer Out project or SITO is well into the construction phase and remains on track to be completed in mid-twenty twenty six. This CAD280 million project upgrades and strengthens the transmission system in Central East Alberta to the rest of Alberta’s interconnected electric system, improving the reliability and reducing congestion in this area.

We are proud of this project and the impact it will have on our customers across Alberta. CETO is essential for integrating additional renewable energy resources and enhancing the reliability of the transmission system. As Alberta’s energy landscape continues to evolve, it’s crucial we invest in projects that address our province’s changing energy needs, enhancing Alberta’s energy infrastructure, while enabling a modernized system that can readily accommodate generation. We also continue to see positive momentum on our $2,800,000,000 Yellowhead pipeline project. The impact of this project cannot be understated.

Without the Yellowhead pipeline, we believe there will be a shortfall of gas delivery on Alberta system due to capacity constraints. At already 90% contracted, the Yellowhead pipeline will serve communities across Alberta strengthening the province’s natural gas network and supporting Alberta’s growing industrial sector, including petrochemicals and refining. As I’ve indicated previously, with construction set to begin in 2026, the Yellowhead pipeline will deliver long term economic benefits, including 24,000 jobs by 2028, dollars 20,000,000,000 in investments and will contribute $3,900,000,000 annually to Alberta’s GDP. Regarding our needs application for the Yellowhead pipeline project, we expect to hear back from the AUC in August. We will then file our facilities application in Q4.

As we move through the regulatory process for Yellowhead, our teams are proactively working through the procurement process for key project materials, including the sourcing of our steel pipe. Moving to the regulatory front, in 2024, the Alberta Utilities Commission issued its decision on Phase one of the second generation of the performance based regulation or PBR2 framework review. The AUC claimed that the distribution businesses failed to quantify or attribute all efficiency gains under PBR2 to specific programs or initiatives. We disagree and our appeal with the Alberta Court of Appeal is expected to be heard in the 2026. In May 2025, the AUC issued a second decision related to PBR2 reopen or proceeding involving a refund to customers.

Following this Phase two decision, we submitted a review and variance and a permission to appeal the AUC and Alberta Court of Appeal last month. At the core of its framework, PBR incentivizes utilities to reduce costs while maintaining safe and reliable service and then share these cost savings with customers. With that, we are extremely disappointed with the position announced by the AUC and we fundamentally disagree with its recent decisions. We are the only utility in Alberta to reduce distribution costs during the PBR2 regulatory term, delivering more than $500,000,000 of savings in distribution costs, which customers are already benefiting from over the twenty twenty three to 2028 period. As we move forward, we remain focused on being a leader in advocating for a fair, affordable and efficient regulatory and business environment in Alberta.

Before we jump into the other parts of the business, I want to take a moment to address the current wildfire situation in certain parts of our service territory. Currently, there are over 50 active wildfires across Alberta. Addressing wildfires is a collaborative effort and I want to thank everybody who continues to support these efforts including our team members, first responders, businesses, government and local authorities who are working around the clock to keep our communities safe. At this time, we remain focused on the safety of our employees and communities where we operate. While there’s been no impact material impact to our assets, we continue to work with all parties to ensure the safety of the communities and to take proactive measures, including wildfire mitigation and fireproofing of our infrastructure.

We have an ambitious capital program and are committed to building a resilient energy system that can withstand the impacts of extreme weather related events, including wildfires. As part of our plan and spend, our focus continues to be on wildfire mitigation. Investing in a robust energy system includes resilient hardware such as composite poles and undergrounding. This protects our assets and the communities where we operate and having a stable, reliable and resilient power grid has never been more important. Now moving to our ATCO and power business.

Starting with our hydrogen development at the ATCO Heartland Hydrogen Hub or AH3 as we call it, we are optimistic on recent policy developments, including Bill C5, which includes the Building Canada Act. This act aims to reduce project approval duplication between federal and provincial governments with a one project, one review approach. We believe this is a positive step in the right direction, accelerating the regulatory process for national interest projects and signaling investor confidence. We continue to engage in conversations with key stakeholders, including federal and provincial governments to ensure our project is seen both as a nation building project priority and part of Canada’s ambition to be an energy superpower. We, along with our identified strategic partners, remain committed to advancing the development of this project once the regulatory framework is in place to ensure the production and transport of ammonia economically to Asia and any other consuming nations.

We await a final decision by all levels of the Canadian government to enable both the approvals for transport and the economic frameworks to move forward with this project. For our Storage and Industrial Water segment, gas storage remains a fundamental asset to AtcoEnpower. Looking at our history, since 2021, we have more than doubled our capacity from 52 petajoules to 117 petajoules and expect to see our per annum revenue in 2025 more than triple from that of 2021. We would like to acknowledge both our commercial, our project and our operational teams for this performance and the results achieved to date. Within Alberta, we continue to see strong fundamentals with increased demand for storage stemming from the start of the LNG exports and continued development of further export volumes in the coming years.

The increased demand from additional gas power generation and other industrial demand within Alberta. We see similar market fundamentals throughout North America as we explore opportunities for ADCO and Power to achieve further growth in storage capacity and revenues beyond Alberta. Our storage facilities are highly contracted next year and positions us well to repeat this record performance that we saw in 2026 or sorry, that we’ve seen in 2025. We have made final investment decisions to expand our existing storage capacity by approximately 10% through further well development and facility improvement projects with expected in service dates of 2026. Over the next year, we will evaluate further expansion opportunities, including possible pool extensions at both our Carbon and Alberta hub natural gas storage facilities.

In addition to these organic opportunities, we will continue to review inorganic growth available to complement our storage portfolio both within Alberta and in other jurisdictions. With that, I’ll pass the call to Katie to discuss our Q2 financial results.

Katie Patrick, Executive Vice President, Chief Financial and Investment Officer, Canadian Utilities Limited: Thanks, Bob, and good morning, everyone. Looking at our second quarter performance for Canadian Utilities as a whole, we delivered positive earnings growth year over year. We achieved adjusted earnings of $121,000,000 or $0.45 per share, up from $117,000,000 for the same period in 2024. This was despite significant headwinds, including a reduction in our ROE for our Alberta utilities, conclusion of the efficiency carryover mechanism or ECM and challenges in renewable generation, more of which I’ll touch on in a moment. Atco Energy Systems delivered adjusted earnings of $116,000,000 in the quarter, dollars 4,000,000 higher year over year.

Despite over $6,000,000 of headwinds faced from the reset in our allowable ROE and conclusion of the ECM for our distribution utilities, we still delivered growth within Energy Systems. This performance was driven by growth in rate base across our utilities and cost efficiencies. It has been a great start to the year at Energy Systems with earnings up over 4% year over year. In 2025, we will generate quality earnings, but expect full year earnings growth to be more moderate at year end, impacted in part by positive tax efficiencies that we had in the 2024. Moving to ATCO and Power, we delivered adjusted earnings of $12,000,000 for the quarter.

Although earnings were down year over year, this was primarily due to a challenging wind environment in Alberta and the higher compensation we received in the prior year period related to turbine availability guarantees at our 40 mile wind facility. Excluding these events, the nPower business performed well as strong earnings growth was delivered within natural gas storage. As Bob outlined earlier, we have strong fundamentals at our natural gas storage assets and we plan to further capitalize on the opportunities available in the coming years. Australia delivered adjusted earnings of $21,000,000 in Q2. This is $4,000,000 or 24% higher than the same period last year.

As a reminder, on 01/01/2025, ACCO Gas Australia moved to operate under the Sixth Access Arrangement or AA6, which has a higher ROE of 8.23%. ATCO Australia continues to execute its strategy and be a provider of stable cash generation while driving consistent earnings for CUO. In the financing and other segment, adjusted earnings were $2,000,000 higher compared to the same period in 2024. This was mainly due to the timing of some corporate expenses. As I outlined at the beginning, our business performance performed very well achieving positive earnings for the quarter despite headwinds.

We continue to actively monitor our cash generation, which we used in combination with external funding to finance our enhanced capital program. Year to date, our cash flows from operating activities increased by $105,000,000 year over year to $1,000,000,000 This demonstrates growth within our businesses yielding additional cash flow, which in turn allows us to increase capital spending and investment in the business. Year to date, our capital expenditures increased by $145,000,000 year over year to $783,000,000 This increase in spending is reflective of the funding required for system upgrades and maintenance to our existing infrastructure along with investments into the growth projects that Bob highlighted earlier. Our strong start to the year positions us well to deliver the financial plan we set for ourselves in 2025. Currently, we remain focused on finding efficiencies across our organization and continuing to execute on our strategy to generate long term value for all stakeholders, including shareowners.

That concludes our prepared remarks. I will now turn the call back to Colin.

Colin Jackson, Senior Vice President, Financial Operations, Canadian Utilities Limited: Thank you, Katie. Thank you, Katie and Bob. In the interest of time, we ask that you limit yourself to two questions. If you have additional questions, you are welcome to rejoin the queue. I will now turn it back to our conference coordinator for questions.

Conference Operator: Thank you. We’ll now begin the question and answer session. Our first question is from Rob Hope with Scotiabank. Please go ahead.

Colin Jackson, Senior Vice President, Financial Operations, Canadian Utilities Limited: In the prepared remarks, you mentioned the potential for inorganic growth in other jurisdictions on the gas storage side. Maybe more broadly, how are you thinking about inorganic growth across the business? And what geographies would be of most interest to you?

Bob Miles, Chief Executive Officer, Canadian Utilities Limited: Hi Rob, Bob here. Yes, we’re absolutely interested in looking at inorganic growth for sure in our gas storage business. We’d be interested in looking at gas storage opportunities across North America. As you know, we’re very comfortable with the environment in Alberta, but we believe in the fundamentals of gas storage and we think there’s great opportunities across North America. So we’re definitely interested in that.

With regards to other inorganic opportunities, we continue to look at opportunities across our midstream sector. So that would be in the other complementary areas of our gas storage. So NGL storage, we’d look at that as well. And then we continue to look at opportunities in generation, but I would say the generation opportunities are more tied to the things not in the renewable space and more in the gas fired generation. We’d continue to look at that opportunity as well.

And then, of course, we’re always interested in our utility space, but that’s we’ve got enough growth in our current province. So we’re probably not going to look at inorganic in the utility space right now.

Conference Operator: The next question is from Ben Pham with BMO. Please go ahead.

Ben Pham, Analyst, BMO: Hi, thanks. Based on the storage side of things with your update. Thanks for that. Can you remind us with your existing storage business, is it mostly a contracted revenue model versus the seasonal spreads that maybe some other players have been engaging in?

Bob Miles, Chief Executive Officer, Canadian Utilities Limited: Ben, I’d say it’s both. We actually do enter into longer term contracts. I mean that is definitely a key part to our business. But we also in addition to that, do look to do day to day deals as well, which tie back to the daily spreads. And so it’s a combination of both.

And obviously, our objective is to maximize our revenue opportunities.

Ben Pham, Analyst, BMO: Okay. Got it. And then I know you’ve been mentioning on the financing side with First Nations monetization, but I think that’s in reference to the Yell Head. Can you talk about progression so far on that funding initiative? And then is it also maybe more expansive to even monetizations of existing utility assets you have?

Katie Patrick, Executive Vice President, Chief Financial and Investment Officer, Canadian Utilities Limited: Hi, Ben. It’s Katie. Thanks for the question. I think we are we’re very proud of our long history of partnering with indigenous communities. We could cite many examples when we talk about how we do that, and we will continue to have broad relationships with those communities.

I would say specifically in reference to Yellowhead, we are progressing those discussions. We are in the early stages of meeting with many of the communities and starting to discuss the partnership arrangement. We don’t have any definitive terms as yet and we won’t keep everyone updated as we continue that dialogue with the indigenous communities. But there’s certainly interest. It’s a great project for Alberta and there’s lots of interest in participating.

Ben Pham, Analyst, BMO: And it sounds like just the way that the policy is set with the loan guarantees and the Canada Infrastructure Bank, it’s limited to newer projects. Is that correct?

Bob Miles, Chief Executive Officer, Canadian Utilities Limited: Well, maybe I’ll jump in. Then I would say that we’ve looked at both. If you look at our solar projects that we have here in Calgary, we constructed those projects and then we partnered with indigenous communities to become owners in those assets after they were built. So we continue to always look at opportunities where we can partner with those with different indigenous communities. Yellowhead is a very large project.

And so obviously there’s a lot more focus on that right now. And as Katie said, we’re making some good progress. We have informed the AUC of that process as well. So it’s just it’s obviously a much larger opportunity.

Katie Patrick, Executive Vice President, Chief Financial and Investment Officer, Canadian Utilities Limited: Okay, understood. Thank you.

Conference Operator: Apologies. The next question is from Maurice Choi with RBC. Please go ahead.

Maurice Choi, Analyst, RBC: Thank you and good morning everyone. Just want to follow-up on a previous comment about inorganic growth. You mentioned non renewables. So let’s assume for now it’s gas fired power generation. Do you mean you’re looking at inorganic growth relating to these type of assets in Alberta or are you kind of referencing that you might be open to U.

S. Deals as well?

Bob Miles, Chief Executive Officer, Canadian Utilities Limited: Sorry, Maurice, just so I’m clear. Did you say just with regards to generation or all inorganic growth outside Alberta? Sorry, just so I’m Just generation. This generation. I mean, our focus, I’d say priority focus would be looking at generation in Alberta.

We just feel a lot more, I guess comfortable understanding the marketplace here with regards to our current generation. But if the right opportunity came along outside Alberta, would definitely evaluate it and consider it as well. I would say outside Alberta though, my view is more looking at opportunities in the gas storage space.

Maurice Choi, Analyst, RBC: Got it. And I guess when you think about the size of these type of deals, if these ever do emerge, how do you think about funding these recognizing that there is a funding need associated with Yellowhead, particularly next year?

Katie Patrick, Executive Vice President, Chief Financial and Investment Officer, Canadian Utilities Limited: Yes. I mean, I think thanks, Maurice. We’ve talked a lot about our financing strategy and we continue to progress on that, including specifically the need for Yellowhead. We do as we saw in the quarter, we did access the capital markets for long term debt at CU and there was very strong demand for that product. So I think we have a multitude of different financing sources should we choose to access them.

And obviously each project or initiative that we would look at would be judged against its ability to be accretive for shareholders and how we can make sure that we do that through the combination of financing sources we have.

Maurice Choi, Analyst, RBC: Understood. And if I could just finish off with just on a project front, particularly on the hydrogen, I quite like the timeline you’ve laid out on Slide six for Sito and Yellowhead. So I wonder whether or not you could paint a similar timeline for the hydrogen project. I know you mentioned in your prepared remarks that you’re waiting for final positions by all governments on approvals and transport and economic frameworks. So if you could just help us understand quarter by quarter play or maybe half a half year play, what we should expect on this project?

Bob Miles, Chief Executive Officer, Canadian Utilities Limited: Maurice, I am on the hydrogen opportunity and ammonia by rail is it really is coming down to our ability to work with government to address the ammonia by rail situation and getting everyone in agreement that we can transport ammonia by rail and do it efficiently and mostly cost efficiently. So without that, there really won’t be an opportunity to develop that in Canada, unfortunately. So we’re working closely with government to try to get that in place. And so I’d like to think that we can get that done if it’s going to get done in the next six months. So in other words, in 2025.

Maurice Choi, Analyst, RBC: Got you. Is there any bottlenecks or complications on export terminal side or was that all pretty clear what the solution is?

Bob Miles, Chief Executive Officer, Canadian Utilities Limited: No, believe that there’s the terminal is definitely interested in expanding for ammonia. It really comes down to the rail getting ammonia by rail in place. And a lot of interest, not to go into the details and too much on it, but there’s a lot of interest in the Asian market to source ammonia from Canada, but we just have to be able to show that we can actually provide get product to Asia.

Colin Jackson, Senior Vice President, Financial Operations, Canadian Utilities Limited: Understood. Thank you very much. The

Conference Operator: next question is from John Mould with TD Cowen. Please go ahead.

John Mould, Analyst, TD Cowen: Good morning, everybody. On Echo and Power and mainly renewables, but also on gas fired power, just given your prior comments in the Q and A. We may have some line of sight on a more normalized power price in Alberta, given the potential for large loads later in the decade. At what point do you start to get more active on development in anticipation of that rebound? And on renewables, how does uncertainty around TIER and the direction of those credits play into that investment decision?

And then on the gas side, what kind of a barrier do the clean electricity regulations represent to kind of spending real effort on that in your minds?

Bob Miles, Chief Executive Officer, Canadian Utilities Limited: Yes. And that’s a big question. I believe that the long term outlook for power prices in this province is very attractive. And so, but with in saying that there still is a lot of uncertainty with the restructured energy market and how that’s going to play out. There’s also uncertainty around the transmission regulations and with regards to congestion and the policies that are going to be put in place here.

So we still need to see more certainty on that before we make any really large investments in the province on generation. And I think not to speak for others, but I think that’s probably shared by many players as well. And so those are the first things we really need to see happen. We are a believer in gas. We think gas will be here for a long time.

And so we’re very committed to gas investments here. And with regards to expanding and developing some of our renewable opportunities in this province, and we do have some opportunities to do that, we really need to see a lot more certainty around the electricity structure here before we would do that.

John Mould, Analyst, TD Cowen: Okay, great. Thanks for that. And then maybe just one on Luma. Can you provide some insight into your ongoing discussions stakeholders in Puerto Rico around that contract?

Bob Miles, Chief Executive Officer, Canadian Utilities Limited: Yes. Sure, John. The situation in Puerto Rico is, I believe everyone is committed. I could tell you we’re committed to improving the electricity situation on the island. However, it’s really it’s rather complicated when you look at the current conflict, current difficulties we have with the current political environment there.

And so we need to continue to work on that, which we are. Our partner, Quanta and ourselves are probably dealing with that daily. And there definitely is a need for a significant investment to improve the system and we’re committed to being the partner to do that. But it’s definitely there’s a lot more work to be done on the political side down there as well.

Unidentified Speaker: Okay. Thank you.

Conference Operator: The next question is from Mark Jarvi with CIBC Capital Markets. Please go ahead.

Mark Jarvi, Analyst, CIBC Capital Markets: Yes. Thanks. Good morning, everyone. Maybe just coming back to the Hydrogen Hub project. You talked about maybe clarity on the rail in six months.

I’m just curious if the window is shrinking here on the opportunity like in terms of your engagement with customers, are they going to look to other markets? I’m just curious if it takes longer than six months, does this opportunity pass you by then in terms of exports?

Bob Miles, Chief Executive Officer, Canadian Utilities Limited: Yes. Mark, my beliefs on hydrogen, I am a believer in it. I think it’s a great opportunity for not only ourselves, but for our country as you and I have discussed a few times. I think one of the things that’s happened is the customers in the Asian market, they really see this as three different sources. One is The Middle East.

The second one is The Gulf Coast and the third one is Canada. And in all three locations, there’s uncertainty right now as to the availability of supply as well as the price of the supply. So I do think we have this window of an opportunity to actually execute on this, but we have to move quickly. Otherwise, the Asian market will contract elsewhere and we will have lost it, as you have said. So I do think there is a short window that we have to execute.

Mark Jarvi, Analyst, CIBC Capital Markets: And then your comments about the rail and both cost and safety, if you had to rank one or the other, is it more the safety and just in terms of who bears the risk of any issues in terms of spillage? Is that bigger than the cost? Or are they pretty equal?

Bob Miles, Chief Executive Officer, Canadian Utilities Limited: I would say they’re I don’t know if they’re exactly equal Mark, but they’re both important. And even if we solve the safety side and the risk assessment that we and we want to operate safely as well. I think we’re all committed to doing that. But even if we do that, the rail improvements that we the industry wants to make, you can’t have one project pay for all improvements. And that’s the challenge we have is that you need more than just one project to proceed.

We believe there will be more. We’re interested in building more than just one project. And but it’s the first one that we need to figure out how to make that work. So it’s bit of both.

Mark Jarvi, Analyst, CIBC Capital Markets: And then coming to the funding conversation, potential sell down with Yellowhead, how would you think about the likelihood of issuing equity at this point? That was something you considered. There was minority sell downs, partnerships. Are you do you feel like you’re getting enough traction on partnerships and sell downs that issuing equity is very remote at this point? Or just sort of how you’re weighing those different opportunities?

Katie Patrick, Executive Vice President, Chief Financial and Investment Officer, Canadian Utilities Limited: Yes. Thanks. It’s Katy. I think that we are so the partnerships and the indigenous partnerships, certainly wouldn’t solve the entire external need that we have, but we’re very confident in our ability to get that done and that will help with some of the funding required for the project. We’re not taking equity completely off the table.

There could be equity for a number of different reasons including Yellowhead and other growth opportunities that we have. That said, I think we do have a path to use some of our balance sheet funding that we have available to fund this project in particular. But we’re going to monitor what’s the best cost of capital and the best option for shareholders over the coming year to finance that project.

Mark Jarvi, Analyst, CIBC Capital Markets: And then can you kind of frame how much of the project I’m talking about Yellowhead, you’d be willing to sell down? Like is it up to 49%? Like is it like more like a percent, 20% stake that you’d look to sell down?

Katie Patrick, Executive Vice President, Chief Financial and Investment Officer, Canadian Utilities Limited: Yes. We’re not looking for at the top end of what you were saying there. I think it’s more in around the 30% range. So we’d be looking to sell down on that from the indigenous partnership perspective.

Mark Jarvi, Analyst, CIBC Capital Markets: Okay, great. Thanks everyone.

Conference Operator: Our next question is from Patrick Kenny with National Bank Financial. Please go ahead.

Colin Jackson, Senior Vice President, Financial Operations, Canadian Utilities Limited: Thank you. Good morning everyone.

Unidentified Speaker: Just on the growing narrative and overall support around developing Canada’s resources and infrastructure in the Northern territories and regions. I was just curious if you’re starting to look at some larger scale opportunities, either partnering up with the federal government or other private partners just to accelerate some new either regulated or unregulated projects. Bit of an open ended question, I guess, just in terms of what role you expect to play in developing Canada’s North over the coming years?

Bob Miles, Chief Executive Officer, Canadian Utilities Limited: Patrick, I think you know ATCO, our organization, we’re very committed to the North. And that goes along with our commitments to indigenous communities as well and our partnerships with them. We are looking at a number of opportunities in the North, but I would say that would probably be more on our ATCO side of our business than on the Canadian Utilities side of the business. We do have an electric business in the North. We do have some gas midstream facilities in the North as well that we would look to continue to grow those as the opportunities arise.

But we think Northern Canada is a great opportunity for our ATCO organization. And Katie, I think you’d agree with that as well as we look at some of the opportunities that we’re pursuing across our group of companies.

Katie Patrick, Executive Vice President, Chief Financial and Investment Officer, Canadian Utilities Limited: Yes, absolutely. And certainly something we can probably we can discuss on the Echo call in terms of some of the opportunities we are seeing up in the North. We have a strong presence from the Echo FronTec business as well as just generally a long term history in the North.

Unidentified Speaker: Okay. Thanks for that. And this one’s probably for you, Katie, as well. Just on the PBR2 reopener and I guess some of the disputes with the AUC coupled with the heightened focus around needing to mitigate wildfire risks. Just wondering if your discussions with the rating agencies are leading to any requirement to build a little bit more cushion on any of your credit metrics?

Or, yes, just any update you have there?

Katie Patrick, Executive Vice President, Chief Financial and Investment Officer, Canadian Utilities Limited: Yes. I mean, as you know, we have a strong credit rating at A minus. Obviously, as we go in through some of this build through Yellowhead, will see some pressure on our credit metrics during that greenfield build time, but that is a temporary situation. The PBR reopeners we view that as a temporary as we said a temporary use of cash because we are confident in our ability to win on appeal on that. So I mean I think the rating agencies are aware of all these issues and we are currently in for annual review with them.

But we still feel very confident in the strength of our balance sheet and our credit rating.

Unidentified Speaker: Okay. That’s great. I’ll leave it there. Thank you.

Conference Operator: This concludes the question and answer session. I’d like to turn the conference back over to Mr. Colin Jackson for any closing remarks.

Colin Jackson, Senior Vice President, Financial Operations, Canadian Utilities Limited: Thank you, Galen, and thank you all for participating today. We appreciate your interest in Canadian Utilities, and we look forward to speaking with you again soon.

Conference Operator: This brings to a close today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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