Q2 2026 Canadian Utilities Ltd Earnings Call

July 29, 2026

Speaker #1: Thank you for standing by. This is the conference operator. Welcome to the second quarter 2026 results conference call and webcast for Canadian Utilities Limited.

Operator: Thank you for standing by. This is the conference operator. Welcome to the Q2 2026 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. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may reach an operator by pressing star then zero. I would now like to turn the conference over to Mr. Colin Jackson, Senior Vice President, Financial Operations. Please go ahead, Mr. Jackson.

Operator: Thank you for standing by. This is the conference operator. Welcome to the Q2 2026 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.

Speaker #1: 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.

Speaker #1: To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may reach an operator by pressing star, then zero.

Operator: To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may reach an operator by pressing star then zero. I would now like to turn the conference over to Mr. Colin Jackson, Senior Vice President, Financial Operations. Please go ahead, Mr. Jackson.

Speaker #1: I would now like to turn the conference over to Mr. Colin Jackson, Senior Vice President, Financial Operations. Please go ahead, Mr. Jackson.

Speaker #2: Thank you, Ushia. And good morning, everyone. We are pleased you could join us for Canadian Utilities' second quarter 2026 conference call. On the line today, we have Bob Miles, Chief Executive Officer.

Colin Jackson: Thank you, Ashia, and good morning, everyone. We are pleased you could join us for Canadian Utilities Q2 2026 conference call. On the line today, we have Bob Myles, Chief Executive Officer, and Katie Patrick, 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 ATCO 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 Siksika, the Kainai, the Piikani Nations, the Tsuut'ina Nation, and the Stoney Nakoda Nations, which include the Chiniki, Bearspaw, and Goodstoney First Nations. I also want to recognize that the City of Calgary is home to the Métis Nation of Alberta, Districts Five and Six.

Colin Jackson: Thank you, Ashia, and good morning, everyone. We are pleased you could join us for Canadian Utilities Q2 2026 Conference Call. On the line today, we have Bob Myles, Chief Executive Officer, and Katie Patrick, 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.

Speaker #2: And Katherine-Jane Patrick, 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.

Speaker #2: Today, I am speaking to you from our ACCO 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 Siksika, the Kainai, the Piikani Nations, and the Tsuut’ina Nation.

Colin Jackson: Today, I am speaking to you from our ATCO 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 Siksika, the Kainai, the Piikani Nations, the Tsuut'ina Nation, and the Stoney Nakoda Nations, which include the Chiniki, Bearspaw, and Goodstoney First Nations. I also want to recognize that the City of Calgary is home to the Métis Nation of Alberta, Districts Five and Six.

Speaker #2: And the Stony Dakota Nations, which include the Tsuu T’ina, Bearspaw, and Good Stony First Nations. I also want to recognize that the City of Calgary is home to the Métis Nation of Alberta, Districts 5 and 6.

Speaker #2: During our second quarter, we proudly celebrated National Indigenous History Month in Canada, a time to honor the stories achievements and resiliency of Indigenous peoples.

Colin Jackson: During our Q2, we proudly celebrated National Indigenous History Month in Canada, a time to honor the stories, achievements, and resiliency of Indigenous peoples. We continue to respect and celebrate the diverse history, languages, and culture of Indigenous peoples beyond the months of June. 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 Canadian securities regulators. During today's presentation, we may refer to certain non-GAAP and other financial measures, including adjusted earnings, adjusted earnings per share, and capital investment. These measures do not have any standardized meaning under IFRS, and as a result, they may not be comparable to similar measures presented by other entities. Please refer to our filings with the Canadian securities regulators for more information.

Speaker #2: We continue to respect and celebrate the diverse history, languages, and culture of Indigenous peoples beyond the month of June. Today's remarks will include forward-looking statements that are subject to important risks and uncertainties.

Speaker #2: For more information on these risks and uncertainties, please refer to our filings with Canadian securities regulators. During today's presentation, we may refer to certain non-GAAP and other financial measures, including adjusted earnings, adjusted earnings per share, and capital investment.

Colin Jackson: For more information on these risks and uncertainties, please refer to our filings with Canadian securities regulators. During today's presentation, we may refer to certain non-GAAP and other financial measures, including adjusted earnings, adjusted earnings per share, and capital investment.

Speaker #2: These measures do not have any standardized meaning under IFRS, and as a result, they may not be comparable to similar measures presented by other entities.

Colin Jackson: These measures do not have any standardized meaning under IFRS, and as a result, they may not be comparable to similar measures presented by other entities. Please refer to our filings with the Canadian securities regulators for more information. Now I'll turn the call over to Bob for his opening remarks.

Speaker #2: Please refer to our filings with the Canadian Securities Regulators for more information. And now, I'll turn the call over to Bob for his opening remarks.

Colin Jackson: Now I'll turn the call over to Bob for his opening remarks.

Speaker #3: Thanks, Colin, and good morning, everyone. As we move through 2026, I want to again remind everyone of our focus to remain anchored on our three strategic priorities of growth and prosperity, operational excellence, and financial leadership, which Katie will address in more detail shortly.

Bob Myles: Thanks, Colin. Good morning, everyone. As we move through 2026, I want to again remind everyone of our focus to remain anchored on our three strategic priorities of growth and prosperity, operational excellence, and financial leadership, which Katie will address in more detail shortly. Consistent execution across these priorities positions us well to continue to deliver on our growth objectives. On our first pillar, growth and prosperity, I want to begin my remarks by congratulating our team on the successful completion of the Central East Transfer-Out Project in June of this year. Thanks to our dedicated employees, I'm very pleased to share that CETO was completed ahead of project schedule, below expected project spend, and with zero lost time injuries. CETO is a critical energy infrastructure investment that reduces congestion and enhances the efficiency of electric transmission across Alberta's electric grid.

Speaker #3: Consistent execution across these priorities positions us well to continue to deliver on our growth objectives. On our first pillar, growth and prosperity, I want to begin my remarks by congratulating our team on the successful completion of the Central East Transfer Out Project in June of this year.

Bob Myles: On our first pillar, growth and prosperity, I want to begin my remarks by congratulating our team on the successful completion of the Central East Transfer-Out Project in June of this year. Thanks to our dedicated employees, I'm very pleased to share that CETO was completed ahead of project schedule, below expected project spend, and with zero lost time injuries. CETO is a critical energy infrastructure investment that reduces congestion and enhances the efficiency of electric transmission across Alberta's electric grid.

Speaker #3: Thanks to our dedicated employees, I'm very pleased to share that CETO was completed ahead of project schedule, below expected project spend, and with zero lost time injuries.

Speaker #3: CETO is a critical energy infrastructure investment that reduces congestion and enhances the efficiency of electric transmission across Alberta's electric grid. I'd also like to take a moment to recognize our team for their hard work on our yellowhead pipeline project, all major contracts have been awarded and I'm pleased to share that the project received its facility application approval earlier this month.

Bob Myles: I'd also like to take a moment to recognize our team for their hard work on our Yellowhead Pipeline Project. All major contracts have been awarded, and I'm pleased to share that the project received its facility application approval earlier this month, which was the final regulatory milestone we've been pursuing. This approval cleared the way for construction to begin, which we expect to occur in August, ahead of schedule. The Yellowhead Pipeline Project serves as a key growth driver in our current five-year plan. More importantly, it remains a critical, needed piece of infrastructure for the province. The Yellowhead Pipeline is 100% contracted with customers, which underscores the clear demand for this project and the role this pipeline plays in Alberta. As a reminder, we expect the project to be in service in Q4 of next year.

Speaker #3: Which was the final regulatory milestone we've been pursuing. This approval cleared the way for construction to begin which we expect to occur in August, ahead of schedule.

Speaker #3: The yellowhead pipeline project serves as a key growth driver in our current five-year plan. More importantly, it remains a critical needed piece of infrastructure for the province.

Bob Myles: The Yellowhead Pipeline Project serves as a key growth driver in our current five-year plan. More importantly, it remains a critical, needed piece of infrastructure for the province. The Yellowhead Pipeline is 100% contracted with customers, which underscores the clear demand for this project and the role this pipeline plays in Alberta. As a reminder, we expect the project to be in service in Q4 of next year.

Speaker #3: The yellowhead pipeline is 100% contracted with customers, which underscores the clear demand for this project and the role this pipeline plays in Alberta. As a reminder, we expect the project to be in service in the fourth quarter of next year.

Speaker #3: Other positive regulatory decisions we received this month include the ACCO Pipelines General Rate Application. Which approved the yellowhead pipeline capital deferral account to manage uncertainties for the project, along with 100% of construction work in progress for CWEP being placed into rate base for 2026 and 2027.

Bob Myles: Other positive regulatory decisions we received this month include the ATCO Pipelines' general rate application, which approved the Yellowhead Pipeline capital deferral account to manage uncertainties for the project, along with 100% of construction work in progress for CEWEP being placed into rate base for 2026 and 2027. CEWEP provides temporary credit relief during the construction period of Yellowhead by increasing our cash flows for this project. The application also approved the proposed depreciation placeholder and IT operating costs for both ATCO Pipelines and ATCO Electric Transmission, providing certainty on the recovery of these costs. On the electric transmission side, the revised negotiated settlement agreement regarding ATCO Electric's general tariff application was also approved by the Alberta Utilities Commission. I commend the strong collaboration between our teams, the interveners, and the regulator in reaching this agreement.

Speaker #3: CWEP provides temporary credit relief during the construction period of Yellowhead by increasing our cash flows for this project. The application also approved the proposed depreciation placeholder and IT operating costs for both ATCO Pipelines and ATCO Electric Transmission, providing certainty on the recovery of these costs.

Bob Myles: The application also approved the proposed depreciation placeholder and IT operating costs for both ATCO Pipelines and ATCO Electric Transmission, providing certainty on the recovery of these costs. On the electric transmission side, the revised negotiated settlement agreement regarding ATCO Electric's general tariff application was also approved by the Alberta Utilities Commission. I commend the strong collaboration between our teams, the interveners, and the regulator in reaching this agreement.

Speaker #3: On the electric transmission side, the revised negotiated settlement agreement regarding ATCO Electric's general tariff application was also approved by the Alberta Utilities Commission. I commend the strong collaboration between our teams, the interveners, and the regulator in reaching this agreement.

Speaker #3: Reaching these milestones through a negotiated settlement is a positive outcome and is reflective of our coordinated efforts to productively work with the regulatory body particularly in a jurisdiction that we believe is supportive of infrastructure investments.

Bob Myles: Reaching these milestones through a negotiated settlement is a positive outcome and is reflective of our coordinated efforts to productively work with the regulatory body, particularly in a jurisdiction that we believe is supportive of infrastructure investments. The achievement of these regulatory milestones marks meaningful progress and represents an important step in advancing our strategic objectives. Within our regulated utilities, we see a strong runway for growth beyond our Yellowhead Pipeline Project. To support this, we continue to advance our CAD 12 billion capital program over the next 5 years. This capital program is comprised of highly certain projects, and we believe there are opportunities for upside to this plan. The latter half of the 5-year outlook does not reflect several major infrastructure opportunities across the province in which we expect to participate. As these projects are secured, they will represent incremental growth beyond the current plan.

Speaker #3: The achievement of these regulatory milestones marks meaningful progress and represents an important step in advancing our strategic objectives. Within our regulated utilities, we see a strong runway for growth beyond our yellowhead project.

Bob Myles: Within our regulated utilities, we see a strong runway for growth beyond our Yellowhead Pipeline Project. To support this, we continue to advance our CAD 12 billion capital program over the next 5 years. This capital program is comprised of highly certain projects, and we believe there are opportunities for upside to this plan.

Speaker #3: The support this we continue to advance our $12 billion capital program over the next five years. This capital program is comprised of highly certain projects and we believe there are opportunities for upside to this plan.

Speaker #3: The latter half of the five-year outlook does not reflect several major infrastructure opportunities across the province in which we expect to participate. As these projects are secured, they will represent incremental growth beyond the current plan.

Bob Myles: The latter half of the five-year outlook does not reflect several major infrastructure opportunities across the province in which we expect to participate. As these projects are secured, they will represent incremental growth beyond the current plan.

Speaker #3: I want to emphasize that, across all of our regulated investments, we remain very focused on balancing customer affordability while ensuring we maintain a resilient energy system that is stable, reliable, and can withstand the impact of severe weather events.

Bob Myles: I want to emphasize that across all of our regulated investments, we remain very focused on balancing customer affordability while ensuring we maintain a resilient energy system that is stable, reliable, and can withstand the impact of severe weather events. The capital plan underpins a 5-year compound annual growth rate of 6.9%, driven by our regulated utility businesses, including the Yellowhead Pipeline Project. It's also important to note that this outlook does not reflect growth from our non-regulated businesses, including opportunities such as natural gas storage expansion, which we expect will provide additional upsides for Canadian Utilities. As we look beyond our current capital and growth plan, the broader operating environment continues to improve and is creating a larger runway for investment across the Canadian utility sector. First, we're seeing renewed momentum in energy infrastructure development. Recent pipeline proposals signal growing confidence in long-term resource investments.

Speaker #3: The capital plan underpins a five-year compound annual growth rate of 6.9%, driven by our regulated utility businesses, including the yellowhead pipeline project. It's also important to note that this outlook does not reflect growth from our non-regulated businesses, including opportunities such as natural gas storage expansion which we expect will provide additional upside for Canadian utilities.

Bob Myles: It's also important to note that this outlook does not reflect growth from our non-regulated businesses, including opportunities such as natural gas storage expansion, which we expect will provide additional upsides for Canadian Utilities.

Speaker #3: As we look beyond our current capital and growth plan, the broader operating environment continues to improve and is creating a larger runway for investment across the Canadian utility sector.

Bob Myles: As we look beyond our current capital and growth plan, the broader operating environment continues to improve and is creating a larger runway for investment across the Canadian utility sector. First, we're seeing renewed momentum in energy infrastructure development. Recent pipeline proposals signal growing confidence in long-term resource investments.

Speaker #3: First, we're seeing renewed momentum in energy infrastructure development. Recent pipeline proposals signal growing confidence in long-term resource investments. These developments create additional opportunities for utilities to support expanding energy systems, and the scale is quite material, as natural gas is a critical input for oil sands extraction, processing, and upgrading.

Bob Myles: These developments create additional opportunities for utilities to support expanding energy systems, and the scale is quite material as natural gas is a critical input for oil sands extraction, processing, and upgrading. Second, policy direction around emissions is becoming clearer. Commitments from the Pathways Alliance provides greater visibility on future carbon-related requirements, helping large industrial customers make investment decisions with more confidence in reducing uncertainty around major hydrocarbon project development. Our Atlas Carbon Storage Hub, in partnership with Shell, positions us to generate long-term growth from future carbon capture investments. Third, numerous federal government announcements have driven ambitious plans to expand grid capacity, enhance inter-provincial connections, and introduce financing and tax incentives that will improve the economics of large-scale infrastructure projects.

Speaker #3: Second, policy direction around emissions is becoming clearer. Commitments from the oil sands alliance provides greater visibility on future carbon-related requirements helping large industrial customers make investment decisions with more confidence and reducing uncertainty around major hydrocarbon project development.

Bob Myles: Commitments from the Pathways Alliance provides greater visibility on future carbon-related requirements, helping large industrial customers make investment decisions with more confidence in reducing uncertainty around major hydrocarbon project development. Our Atlas Carbon Storage Hub, in partnership with Shell, positions us to generate long-term growth from future carbon capture investments.

Speaker #3: Our atlas carbon storage hub in partnership with Shell positions us to generate long-term growth from future carbon capture investments. Third, numerous federal government announcements have driven ambitious plans to expand grid capacity enhance interprovincial connections and introduce financing and tax incentives that will improve the economics of large-scale infrastructure projects.

Bob Myles: Third, numerous federal government announcements have driven ambitious plans to expand grid capacity, enhance inter-provincial connections, and introduce financing and tax incentives that will improve the economics of large-scale infrastructure projects.

Speaker #3: This supports new transmission opportunities such as our McNeil Alberta Saskatchewan Interti where the federal government has designated it as one of five high priority interprovincial power line projects designed to strengthen the national electricity grid.

Bob Myles: This supports new transmission opportunities such as our McNeill, Alberta, Saskatchewan intertie, where the federal government has designated it as one of five high-priority inter-provincial power line projects designed to strengthen the national electricity grid. Finally, we have not included speculative upside related to data centers in our 5-year forecast. Should Alberta continue to be successful in capturing significant data center activity, this could drive supporting infrastructure investments for our business and therefore for our growth outlook. Taken together, these developments reinforce a constructive backdrop for long-term growth given our expertise at Canadian Utilities, with opportunities spanning power generation, transmission, natural gas infrastructure, and other critical energy assets. Now let's look at operational excellence, which focuses on safety, reliability, and operational outperformance.

Speaker #3: Finally, we have not included speculative upside related to data centers in our five-year forecast. Should Alberta continue to be successful in capturing significant data center activity, this could drive supporting infrastructure investments for our business and therefore for our growth outlook.

Bob Myles: Should Alberta continue to be successful in capturing significant data center activity, this could drive supporting infrastructure investments for our business and therefore for our growth outlook.

Speaker #3: Taken together, these developments reinforce a constructive backdrop for long-term growth, given our expertise at Canadian Utilities, with opportunities spanning power generation, transmission, natural gas infrastructure, and other critical energy assets.

Bob Myles: Taken together, these developments reinforce a constructive backdrop for long-term growth given our expertise at Canadian Utilities, with opportunities spanning power generation, transmission, natural gas infrastructure, and other critical energy assets. Now let's look at operational excellence, which focuses on safety, reliability, and operational outperformance.

Speaker #3: Now let's look at operational excellence, which focuses on safety, reliability, and operational outperformance. As seen on the top half of the slide, both ATCO Gas and ATCO Electric distribution attained return on equities that are better than peers by an average of 2% each year from 2013 to 2025.

Bob Myles: As seen on the top half of the slide, both ATCO Gas and ATCO Electric Distribution achieved return on equities that are better than peers by an average of 2% each year from 2013 to 2025. This reinforces our ability to drive efficiencies across the business by reducing operating costs and improving productivity. As shown on the bottom half of the slide, during this same period, both ATCO Gas and ATCO Electric teams have driven substantial efficiencies across previous and current performance-based regulation, or PBR cycles, resulting in lower distribution charges and creating savings for our customers. We're proud to be recognized as one of the most efficient utilities in Canada, and we continue to drive efficiencies across our businesses to maintain customer affordability. Turning to our non-regulated assets in Canada, natural gas storage continues to be a valuable contributor to our business.

Speaker #3: This reinforces our ability to drive efficiencies across the business by reducing operating costs and improving productivity. As shown on the bottom half of the slide, during this same period both ACCO Gas and ACCO Electric teams have driven substantial efficiencies across previous and current performance-based regulation or PBR cycles resulting in lower distribution charges and creating savings for our customers.

Bob Myles: As shown on the bottom half of the slide, during this same period, both ATCO Gas and ATCO Electric teams have driven substantial efficiencies across previous and current performance-based regulation, or PBR cycles, resulting in lower distribution charges and creating savings for our customers.

Speaker #3: We're proud to be recognized as one of the most efficient utilities in Canada and we continue to drive efficiencies across our businesses to maintain customer affordability.

Bob Myles: We're proud to be recognized as one of the most efficient utilities in Canada, and we continue to drive efficiencies across our businesses to maintain customer affordability. Turning to our non-regulated assets in Canada, natural gas storage continues to be a valuable contributor to our business.

Speaker #3: Turning to our non-regulated storage, it continues to be a valuable contributor to our business. In 2026, we continue to advance our strategy to grow and enhance our storage platform through a series of low-cost organic growth initiatives.

Bob Myles: In 2026, we continue to advance our strategy to grow and enhance our storage platform through a series of low-cost organic growth initiatives. As shown on this slide, we expect the carbon storage expansion and the Alberta Hub expansion to enter commercial operations in the Q3 of this year. These projects will increase our storage portfolio to approximately 130 petajoules. Beyond increasing our capacity, these expansions are expected to further strengthen the financial performance of our storage business, which continues to generate strong cash flow and earnings. Looking ahead, we are well-positioned to pursue additional gas storage expansion opportunities in the year to come. Our third pillar is financial leadership. With that, I'll pass the call to Katie to discuss this in further detail.

Speaker #3: As shown on this slide, we expect the carbon storage expansion and the Alberta hub expansion to enter commercial operations in the third quarter of this year.

Speaker #3: These projects will increase our storage portfolio to approximately 130 petajoules beyond increasing our capacity. These expansions are expected to further strengthen the financial performance of our storage business which continues to generate strong cash flow and earnings.

Bob Myles: Beyond increasing our capacity, these expansions are expected to further strengthen the financial performance of our storage business, which continues to generate strong cash flow and earnings. Looking ahead, we are well-positioned to pursue additional gas storage expansion opportunities in the year to come. Our third pillar is financial leadership. With that, I'll pass the call to Katie to discuss this in further detail.

Speaker #3: Looking ahead, we are well positioned to pursue additional gas storage expansion opportunities in the year to come. Our third pillar is financial leadership. With that, I'll pass the call to Katie to discuss this in further detail.

Speaker #2: Thank you, Bob, and good morning, everyone. As shown in the slide in the past—and I think it's worth a reminder—this is how we will finance our plan.

Katie Patrick: Thank you, Bob. Good morning, everyone. I've shown this slide in the past, but I think it is a worth a reminder of how we will finance our plan. We have a clear and disciplined financing plan to support our growth ambitions while maintaining balance sheet strength. As a reminder, our regulated utilities operate under an approved capital structure. To meet our regulated debt requirements, we expect to issue debentures annually over the five-year period. On the equity side, our regulated utilities continue to generate significant cash flow. We expect to fund our regulated equity requirements through internally generated cash, the CAD 700 million of capital we raised in late 2025, and approximately CAD 850 million more of additional capital securities. Based on our current five-year plan, we do not anticipate the need to issue common equity to support our regulated utility growth.

Speaker #2: We have a clear and disciplined financing plan to support our growth ambitions while maintaining balance sheet strength. As a reminder, our regulated utilities operate under an approved capital structure.

Speaker #2: To meet our regulated debt requirements, we expect to issue debentures annually over the five-year period. On the equity side, our regulated utilities continue to generate significant cash flow.

Katie Patrick: On the equity side, our regulated utilities continue to generate significant cash flow. We expect to fund our regulated equity requirements through internally generated cash, the CAD 700 million of capital we raised in late 2025, and approximately CAD 850 million more of additional capital securities. Based on our current five-year plan, we do not anticipate the need to issue common equity to support our regulated utility growth.

Speaker #2: We expect to fund our regulated equity requirements through internally generated cash, the 700 million dollars of capital we raised in late 2025, and approximately 850 million dollars more of additional capital securities.

Speaker #2: Based on our current five-year plan, we do not anticipate the need to issue common equity to support our regulated utility growth. Turning to the non-regulated business, our current organic investments are expected to be financed through cash flow generated by existing operations.

Katie Patrick: Turning to the non-regulated business, our current organic investments are expected to be financed through cash flow generated by existing operations, supplemented by project-level debt and financing and strategic partnerships. Overall, our funding approach positions us to execute our growth strategy while maintaining flexibility and preserving balance sheet strength. Moving on to the Q2 performance for Canadian Utilities, I'm pleased to share that we have delivered another quarter of strong year-over-year earnings growth. CU achieved adjusted earnings of CAD 140 million, up from CAD 121 million in Q2 2025. This impressive 16% growth was primarily driven by the impact of inflation indexing on rate base and increased rates in ATCO Gas Australia and growth in rate base in ATCO Energy Systems.

Speaker #2: Supplemented by project-level debt and financing, and strategic partnerships. Overall, our funding approach positions us to execute our growth strategy while maintaining flexibility and preserving balance sheet strength.

Speaker #2: Moving on to the second-quarter performance for Canadian Utilities, I'm pleased to share that we have delivered another quarter of strong year-over-year earnings growth.

Katie Patrick: Moving on to the Q2 performance for Canadian Utilities, I'm pleased to share that we have delivered another quarter of strong year-over-year earnings growth. CU achieved adjusted earnings of CAD 140 million, up from CAD 121 million in Q2 2025. This impressive 16% growth was primarily driven by the impact of inflation indexing on rate base and increased rates in ATCO Gas Australia and growth in rate base in ATCO Energy Systems.

Speaker #2: CU achieved adjusted earnings of $140 million, up from $121 million in Q2 2025. This impressive 16% growth was primarily driven by the impact of inflation indexing on rate base and increased rates in ATCO Gas Australia, as well as growth in rate base in ATCO Energy Systems.

Speaker #2: Drilling down into the business units, what is most impressive and visible on the slide is the strong growth we delivered at each of our three key business units during the quarter.

Katie Patrick: Drilling down into the business units, what is most impressive and visible on the slide is the strong growth we delivered at each of our three key business units during the quarter. ATCO Energy Systems achieved adjusted earnings of CAD 124 million in Q2, CAD 8 million higher year over year. This was primarily driven by rate-based growth and year-to-date recognition of final rates resulting from Electric Transmission's recent GTA application decision that Bob spoke to earlier. ATCO EnPower delivered modestly higher results year over year. This is an impressive result given the continued headwinds in the renewable portfolio. Adjusted earnings were CAD 15 million for the quarter due to gas storage services achieving stronger seasonal spreads and higher generation from the Veracruz Hydro facility in Mexico.

Speaker #2: ACCO Energy Systems achieved adjusted earnings of $124 million in the second quarter, $8 million higher year-over-year. This was primarily driven by rate base growth and year-to-date recognition of final rates resulting from Electric Transmission's recent GTA application decision that Bob spoke to earlier.

Speaker #2: ACCO Empower delivered modestly higher results year-over-year. This is an impressive result given the continued headwinds in the renewable portfolio. Adjusted earnings were 15 million dollars for the quarter, due to gas storage services achieving stronger seasonal spreads and higher generations from the Veracruz Hydro facility in Mexico.

Katie Patrick: ATCO EnPower delivered modestly higher results year over year. This is an impressive result given the continued headwinds in the renewable portfolio. Adjusted earnings were CAD 15 million for the quarter due to gas storage services achieving stronger seasonal spreads and higher generation from the Veracruz Hydro facility in Mexico.

Speaker #2: ACCO Australia had another excellent quarter and was a key driver of growth at Canadian Utilities. Delivering adjusted earnings of 34 million dollars up 13 million dollars year-over-year.

Katie Patrick: ATCO Australia had another excellent quarter and was a key driver of growth at Canadian Utilities, delivering adjusted earnings of CAD 34 million, up CAD 13 million year over year. As a reminder, inflation indexing can impact our overall earnings in Australia, with higher inflation leading to an increase in earnings for ATCO Gas Australia. In 2025, Australia inflation indexing reflected a full-year inflation of 3.4%. Australia inflation indexing in 2026 currently reflects an inflation assumption of 4.2%. Inflation indexing on rate base had a CAD +9 million impact year over year. As a rule of thumb, for every 10 basis points of increased inflation, our earnings benefit by CAD 1.2 million. From a cash flow perspective, our cash flow from operating activities increased by CAD 116 million year over year, largely driven by higher earnings across our businesses and higher customer rates in gas distribution.

Speaker #2: As a reminder, inflation indexing can impact our overall earnings in Australia, with higher inflation leading to an increase in earnings for ACCO Gas Australia.

Speaker #2: In 2025, Australia inflation indexing reflected a full-year inflation of 3.4%. Australia inflation indexing in 2026 currently reflects an inflation assumption of 4.2%. Inflation indexing on rate base had a $9 million positive impact year-over-year.

Katie Patrick: In 2025, Australia inflation indexing reflected a full-year inflation of 3.4%. Australia inflation indexing in 2026 currently reflects an inflation assumption of 4.2%. Inflation indexing on rate base had a CAD +9 million impact year over year.

Speaker #2: As a rule of thumb, for every 10 basis points of increased inflation, our earnings benefit by $1.2 million. From a cash flow perspective, our cash flow from operating activities increased by $116 million year-over-year, largely driven by higher earnings across our businesses and higher customer rates in Gas Distribution.

Katie Patrick: As a rule of thumb, for every 10 basis points of increased inflation, our earnings benefit by CAD 1.2 million. From a cash flow perspective, our cash flow from operating activities increased by CAD 116 million year over year, largely driven by higher earnings across our businesses and higher customer rates in gas distribution.

Speaker #2: Entering into the back half of the year, we will continue executing on our strategy while identifying efficiencies across the business to drive substantial shareholder value.

Katie Patrick: Entering into the H2 of the year, we will continue executing on our strategy while identifying efficiencies across the business to drive substantial shareholder value. I will now turn the call back to Bob for his closing remarks.

Speaker #2: I will now turn the call back to Bob for his closing remarks.

Speaker #3: Thanks, Katie. Following a strong start to the first half of the year, we remain focused on delivering on our strategic priorities and capitalizing on our growth opportunities in the back half of 2026.

Bob Myles: Thanks, Katie. Following a strong start to the H1 of the year, we remain focused on delivering on our strategic priorities and capitalizing on our growth opportunities in the H2 of 2026. We are encouraged by our outlook for the remainder of the year and beyond. This concludes our prepared remarks. I will now turn the call back to Colin for questions from the investment community.

Speaker #3: We are encouraged by our outlook for the remainder of the year and beyond. This concludes our prepared remarks. I'll now turn the call back to Colin for questions from the investment community.

Speaker #1: Thank you. Bob and Katie. 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.

Colin Jackson: Thank you, Bob and Katie. 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 over to Ashia, our conference coordinator, for questions.

Speaker #1: I will now turn it over to Ashia, our conference coordinator, for questions.

Speaker #4: To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys.

Operator: To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. Once again, anyone on the conference call wishes to ask a question may press star one at this time. The first question comes from John Mould with TD Cowen. Please go ahead.

Speaker #4: To withdraw your question, please press star, then two. Once again, anyone on the conference call who wishes to ask a question may press star one at this time.

Speaker #4: The first question comes from John Mould with TD Cowen. Please go ahead.

Speaker #5: Hi, good morning, everybody. Thanks for taking my questions. Let me just start with ACCO Empower, excuse me. I'm wondering if you can just dig in a little more to how your team is spending time in terms of looking at incremental growth.

John Mould: Hi, good morning, everybody. Thanks for taking my questions. Maybe just starting with ATCO EnPower, excuse me. I'm wondering if you can just dig in a little more to how your team is spending time in terms of looking at incremental growth, the kind of projects that those are weighted to, just given the challenges in the power business right now. I'm wondering, more specifically, is there anything on the unregulated side beyond gas storage or power where you would consider more meaningful growth and what could the nature and scale of investments, if you are looking at those kinds of initiatives, look like? Excuse me.

John Mould: Good morning, everybody. Thanks for taking my questions. Maybe just starting with ATCO EnPower, excuse me. I'm wondering if you can just dig in a little more to how your team is spending time in terms of looking at incremental growth, the projects that those are weighted to, just given the challenges in the power business right now.

Speaker #5: The kind of projects that those are weighted to, you know, just given the challenges in the power business right now, you know, and I'm wondering more specifically, is there anything on the unregulated side beyond gas storage or power where you would consider more meaningful growth and what could the nature and scale of investments, if you are looking at those kinds of initiatives, look at, look like, excuse me?

John Mould: I'm wondering, more specifically, is there anything on the unregulated side beyond gas storage or power where you would consider more meaningful growth and what could the nature and scale of investments, if you are looking at those kinds of initiatives, look like? Excuse me.

Speaker #3: Yeah, John, thanks for that. The short answer is yes. And maybe the little longer answer is you're right with regard to our concerns as well regarding the generation and the struggles we've had there, and the headwinds still on the renewable side.

Bob Myles: Yeah. John, thanks for that. The short answer is yes, maybe the little longer answer is, you're right with regards to our concerns as well with regards to the generation and the struggles we've had there and the headwinds still on the renewable side. We are very focused for sure on our gas storage expansion. In addition to that, we're also looking at areas where we can participate more in the full energy value chain. Looking at midstream, which as you know, is something that we've had in our portfolio for a long time, and I would say it's something that I have a lot of passion around the midstream sector. Midstream is an area that we are currently evaluating and we would look to actually pursue opportunities in that sector.

Speaker #3: We are very focused, for sure, on our gas storage expansion. But in addition to that, we're also looking at areas where we can participate more in the full energy value chain, so looking at midstream, which, as you know, is something that we've had in our portfolio for a long time.

Bob Myles: In addition to that, we're also looking at areas where we can participate more in the full energy value chain. Looking at midstream, which as you know, is something that we've had in our portfolio for a long time, and I would say it's something that I have a lot of passion around the midstream sector. Midstream is an area that we are currently evaluating and we would look to actually pursue opportunities in that sector.

Speaker #3: And I would say it's something that I have a lot of passion around the midstream sector. So midstream is an area that we are currently evaluating and we would look to actually pursue opportunities in that sector.

John Mould: Okay. We'll look forward to more on that. Maybe just more broadly on your comments around the National Electricity Strategy and Intertie. Intertie can be challenging to advance. It can take a while to move to fruition. I guess when investors are looking at just bigger picture electricity opportunities for your company, what key milestones should they be looking for and what are you hoping to see to get projects of this nature closer to reality?

John Mould: Okay. We'll look forward to more on that. Maybe just more broadly on your comments around the National Electricity Strategy and Intertie. Intertie can be challenging to advance. It can take a while to move to fruition. When investors are looking at just bigger picture electricity opportunities for your company, what key milestones should they be looking for and what are you hoping to see to get projects of this nature closer to reality?

Speaker #5: On that. Then, maybe just more broadly on your comments around the national electricity strategy and interties. Interties can be challenging to advance; they can take a while.

Speaker #5: To move to fruition. I guess, when investors are looking at just bigger-picture electricity opportunities for your company, what key milestones should they be looking for, and what are you hoping to see to get projects of this nature closer to reality?

Speaker #3: Yeah. John, you're right. Definitely a much larger project when you start talking interties. As I've said, we have the McNeill Interconnect with Saskatchewan that will be expanded.

Bob Myles: Yeah, John, you're right. Definitely a much larger project when you start talking Intertie. As I've said, we have the McNeill Interconnect with Saskatchewan that will be expanded. We also have in our capital forecast a lot of electric transmission growth in the northwest part of the province. We also think there's some great opportunities as oil sands develop to continue It's right in our service territory to continue expansion of our electric system in that area as well. We are spending a lot of time also working with both BC and Alberta on Intertie, and still a lot of work to be done on that. We do think it makes a lot of sense to continue the interconnections between our provinces. If you had to make me pick which one should probably have the lead right now, it's probably the BC, Alberta one.

Speaker #3: We also have, in our capital forecast, a lot of electric transmission growth in the northwest part of the province. We also think there are some great opportunities as oil sands develop—it's right in our service territory—to continue expansion of the electric system in that area as well.

Speaker #3: We are spending a lot of time also working with both B.C. and Alberta on interties, and there's still a lot of work to be done on that.

Bob Myles: We are spending a lot of time also working with both BC and Alberta on Intertie, and still a lot of work to be done on that. We do think it makes a lot of sense to continue the interconnections between our provinces. If you had to make me pick which one should probably have the lead right now, it's probably the BC, Alberta one. Still, we still have a lot of work to be done on that, John.

Speaker #3: But we do think it makes a lot of sense to continue the interconnections between our provinces. And so, if you had to make me pick which one should probably have the lead right now, it's probably the BC-Alberta one.

Speaker #3: And so, but still, we still have a lot of work to be done on that, John.

Bob Myles: Still, we still have a lot of work to be done on that, John.

Speaker #5: Okay. Thanks for all that detail. I'll get back in the queue.

John Mould: Okay. Thanks for all that detail. I'll get back in the queue.

Speaker #4: Once again, if you have a question, please press star then one. Sir, no further questions. I would like to turn the conference back over to Mr. Colin Jackson for any closing remarks.

Operator: Once again, if you have a question, please press star then one. Since there are no further questions, I would like to turn the conference back over to Mr. Colin Jackson for any closing remarks. Please go ahead.

Speaker #4: Please go ahead.

Speaker #1: Thank you, Ashia. And thank you all for participating today. We appreciate your interest in Canadian Utilities, and we look forward to speaking with you again soon.

Colin Jackson: Thank you, Ashia, and thank you all for participating today. We appreciate your interest in Canadian Utilities, and we look forward to speaking with you again soon.

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

Q2 2026 Canadian Utilities Ltd Earnings Call

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