CARIBBEAN UTILITIES COMPANY, LTD. ANNOUNCES UNAUDITED RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

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, July 31, 2024 /CNW/ – Caribbean Utilities Company, Ltd. (“CUC” or the “Company”) has announced its consolidated unaudited results for the three and six months ended June 30, 2024. The following are key highlights (all figures stated in United States Dollars).   

Capital Expenditures

The Company invested $44.0 million in the first half of 2024 on projects with various objectives including grid resiliency, upgrading generation assets, and supporting the transition to lower carbon energy. These projects included distribution system extensions and upgrades, generation replacements, lifecycle upgrades, alternative energy technologies, installation of Battery Energy Storage Systems (“BESS”), and facility and auxiliary asset replacements.

The resiliency investments by the Company proved successful following the passing of Hurricane Beryl. The Company was able to successfully restore electricity service to all impacted customers within approximately 24 hours of the all clear being issued.

Sustainability Initiatives

In April 2024, the Cayman Islands Government approved the 2024-2045 National Energy Policy (“NEP”). The NEP establishes a framework by which all stakeholders can identify objectives for the achievement of the territory’s energy goals, including the imperative need to reduce greenhouse gas emissions. The revised NEP focuses on renewable energy, energy conservation methods and the promotion of energy efficiency.

CUC aligns with the NEP and the commitment to sustainability and carbon reduction through the following projects:

Liquid Natural Gas (“LNG”) Procurement Strategy: The Company has completed the strategy for Liquid Natural Gas as a transitional fuel and has presented it to stakeholders, in preparation for the Request for Proposal stage. LNG use will assist Grand Cayman to achieve emissions reduction targets set out by the NEP by reducing CO2 output by 40%.

Future Projects: The Company submitted a Certificate of Need (“CON”) for consideration by the regulator comprised of 100 MW of solar plus storage and 36.1 MW of thermal generation by June 1, 2027. This initiative aligns with the 2024-2045 NEP, which aims to reduce greenhouse gas emissions and achieve 39% renewable energy penetration by 2027 and reduce emissions by 28% (in comparison with 2019).

Community and Industry Recognition

In April 2024, the Company established its Green Financing Framework (“Framework”) which was assessed by a second-party opinion provider, Sustainable Fitch, as “Excellent” on the scale of Not Aligned, Aligned, Good and Excellent. This endorsement underscores the Framework’s robustness and the Company’s dedication to transparency and accountability in its environmental initiatives. Proceeds from transactions under the Framework can be allocated to four categories: renewable energy, energy efficiency, climate change adaptation, and clean transportation.

Subsequently, on May 15, 2024, CUC announced the closing of a US$80 million of Senior Unsecured Notes (the “Notes”) consisting of US$40 million 6.17% Senior Unsecured Green Notes due May 15, 2039, US$10 million 6.37% Senior Unsecured Green Notes due May 15, 2049, and US$30 million 6.37% Senior Unsecured Notes due May 15, 2049. 

This offering marked the Company’s inaugural release of notes under the Framework and was also the premier instance of a green bond issuance by a corporate entity in the Cayman Islands to date. The Company plans to allocate $50 million of the net proceeds from these Notes to fund or refinance new and existing qualifying green initiatives.

Financial Performance

Net Earnings for the three months ended June 30, 2024 (“Second Quarter 2024” or “Q2 2024”) totaled $10.1 million, 1% increase compared to the three months ended June 30, 2023 (“Second Quarter 2023” or “Q2 2023”).Net earnings for the six months ended June 30, 2024, were $16.3 million, a $1.1 million increase from net earnings of $15.2 million for the six months ended June 30, 2023.5% increase in kilowatt-hour (“kWh”) sales when compared to Q2 2023. 2% increase in total customers when compared to Q2 2023.  

Net Earnings and Sales Revenues  

Net earnings for Q2 2024 were $10.1 million, a $0.1 million increase when compared to net earnings of $10.0 million for Q2 2023. After adjusting for dividends on the preference shares of the Company, earnings on Class A Ordinary Shares for Q2 2024 were $10.0 million, or $0.26 per share, compared to $9.9 million, or $0.26 per share for Q2 2023.     

Sales in kWh for Q2 2024 were 194.8 million kWh, a 5% increase (9.6 million kWh) from Q2 2023. This increase was due to a 2% growth in customer numbers. The average temperature for Q2 2024 was 84.7 degrees Fahrenheit, higher than the average temperature of 84.5 degrees Fahrenheit in Q2 2023, contributing to increased consumption by customers.

Fuel factor and renewable energy costs are passed through to customers without any markup. The Fuel Factor consists of charges from diesel fuel and lubricating oil costs, which are passed through to consumers on a two-month lag basis. The average Fuel Cost Charge rate for Q2 2024 was $0.23 per kWh, compared to the $0.24 per kWh in Q2 2023.  In Q2 2024, the fuel cost charge accounted for approximately 58% of the customer bill.

“The Company continues to focus on our capital investment and infrastructure projects with an emphasis on sustainability. The lifecycle upgrades to our MAN engines will increase fuel efficiency and allow for cost savings for our customers.  The most recent submission of a certificate of need to the regulator requesting 100 MW of solar plus storage demonstrates our Company’s commitment to the reduction of emissions and to deliver least cost energy for the people of Grand Cayman,” said Mr. Richard Hew, President and Chief Executive Officer.   

Additional Information

CUC’s Second Quarter 2024 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 2024 results, the Cayman Islands economy, liquidity and capital resources, capital expenditures and the business risks facing the Company. The release and the Second Quarter 2024 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 License” 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.