Caribbean Utilities Company, Ltd. (TSX:CUP.U) ("CUC" or "the Company") announced its unaudited results for the Fourth Quarter ended December 31, 2013 (all figures in United States dollars).
Net earnings for the three months ended December 31, 2013 ("Fourth Quarter 2013") were $5.8 million, a $1.7 million increase when compared to $4.1 million for the three months ended December 31, 2012 ("Fourth Quarter 2012"). A 6% increase in kilowatt ("kWh") sales, lower operating expenditure and higher other income contributed to the Fourth Quarter increase in net earnings. These items were partially offset by higher finance charges for the Fourth Quarter 2013 when compared to the Fourth Quarter 2012.
After the adjustment for dividends on the preference shares of the Company, earnings on Class A Ordinary Shares for the Fourth Quarter 2013 were $5.2 million, or $0.18 per Class A Ordinary Share, as compared to $3.5 million, or $0.12 per Class A Ordinary Share for the Fourth Quarter 2012.
Net earnings for the twelve months ended December 31, 2013 were $20.4 million. This represents a $2.7 million increase from net earnings of $17.7 million for the twelve months ended December 31, 2012. This increase is attributable to a 1% increase in kWh sales, base rate increases effective June 1, 2012 and June 1, 2013 respectively, lower general and administration and maintenance costs and increased other income. These items were partially offset by higher depreciation costs for the twelve months ended December 31, 2013 when compared to the twelve months ended December 31, 2012.
After the adjustment for dividends on the preference shares of the Company, earnings on Class A Ordinary Shares for the twelve months ended December 31, 2013 were $19.5 million, or $0.68 per Class A Ordinary Share, as compared to $16.8 million, or $0.58 per Class A Ordinary Share for the twelve months ended December 31, 2012.
For the Fourth Quarter 2013, kWh sales were 140.3 million compared to 132.4 million for the Fourth Quarter 2012. Sales were driven by warmer weather conditions which impacted customer air conditioning usage. The average monthly temperature for the Fourth Quarter 2013 was 2.7 degrees Fahrenheit higher than the average monthly temperature experienced during the Fourth Quarter 2012.
Electricity sales revenue increased $1.3 million in the Fourth Quarter 2013 to $18.1 million when compared to electricity sales revenues of $16.8 million for the Fourth Quarter 2012. This increase is due to a 6% increase in kWh sales and the 1.8% base rate increase which took effect June 1 st, 2013.
For the twelve months ended December 31, 2013 kWh sales were 555.7 million kWh, an increase of 7.9 million kWh when compared to 547.8 million for the year ended December 31, 2012. Sales were positively impacted by a 1% growth in customer numbers and warmer weather conditions that affected customer air conditioning use. The average monthly temperature for 2013 was 82.2 degrees Fahrenheit compared to 81.9 degrees for 2012.
Electricity sales revenue increased $2.0 million in the year ended December 31, 2013 to $71.1 million when compared to electricity sales revenues of $69.1 million for the year ended December 31, 2012. The increase in electricity sales revenues for the year ended December 31, 2013 was due to a 1% increase in total customers, a 1% increase in kWh sales and the 0.7% and 1.8% base rate increases effective June 1 st 2012 and June 1 st 2013 respectively.
Total customers as at December 31, 2013 were 27,364, an increase of 1% compared to 27,035 customers as at December 31, 2012. The Company connected 188 customers for the three- month period ended December 31, 2013. These connections comprised of 159 residential customers and 29 commercial customers.
In December 2013, the Electricity Regulatory Authority ("ERA") approved the Company's 2014-2018 Capital Investment Plan (CIP) in the amount of $143 million for non-generation expansion costs. During this period of continued low growth, CIP initiatives focus on improving reliability of service and operational efficiencies. Generation expansion projects are subject to competitive bid.
In October 2013 the Company issued a Certificate of Need ("CON") for new generating capacity. This action was driven primarily by the upcoming retirements of some of the Company's generating units which will begin in 2014. The CON listed a requirement of 36 megawatts (MW) of generating capacity, with 18 MW to be operational no later than April 2016 and the remaining 18 MW to be operational no later than May 2016.
In November 2013, the ERA issued a solicitation for Statements of Qualifications from prospective bidders. The deadline for submissions was December 20, 2013 and the ERA has since announced the listing of qualified bidders and issued a request for proposals.
During the period under review the Company resumed the roll out of new meters as part of the Advanced Metering Infrastructure project. Following the installation of the first 7,000 meters, further installation was delayed to allow for manufacturer software and hardware upgrades. This project will bring efficiencies in the meter reading and services such as performing disconnects and reconnects directly from CUC's offices, providing real-time electricity consumption information and a 'pay as you go' payment option to assist consumers with the monitoring and controlling of their electricity consumption. The project should be substantially completed by the end of 2014.
Richard Hew, President and Chief Executive Officer of the Company, stated, "The Fourth Quarter 2013 yielded overall positive results in sales, earnings and other developments with the announcement of the companies which were selected to develop large scale renewables, and the start of the competitive solicitation process for firm generation. Large scale renewables, combined with the replacement of older diesel generators by more efficient and firm generation, will bring price, reliability and environmental benefits to consumers."
During the Fourth Quarter 2013, two Renewable Energy developers were chosen to provide large scale renewable energy to the CUC grid. This process is subject to approval by the ERA of the negotiated final Power Purchase Agreements. New Generation Power ("NGP") has proposed to provide 3 MW of wind generation and 5 MW of solar generation and International Electric Power LLC (IEP) has proposed to provide an additional 5 MW of solar power. It is estimated that the projects will be completed in 2015, barring regulatory or other delays.
CUC's Fourth Quarter Report for the period ended December 31, 2013 is attached to this release. This report contains a detailed discussion of CUC's unaudited fourth quarter financial results, the Cayman Islands economy, liquidity and capital resources, capital expenditures and the business risks facing the Company. The release and Fourth Quarter Report can be accessed at www.cuc-cayman.com (Investor Relations/Press Releases) and at www.sedar.com.
CUC provides electricity to Grand Cayman, Cayman Islands, under an Electricity Generation Licence expiring in 2029 and an exclusive Electricity Transmission and Distribution Licence expiring in 2028. 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.