Mr. Richard Hew reports

CARIBBEAN UTILITIES COMPANY, LTD. (CUC) ANNOUNCES QUARTER ONE (2024) RESULTS AND STRATEGIC MILESTONES

Caribbean Utilities Co. Ltd. has released its consolidated unaudited results for the three months ended March 31, 2024 (all figures are stated in U.S. dollars).

Highlights for first quarter 2024 were as follows.

Financial growth:

• Net earnings for Q1 2024 totalled $6.2-million, 18-per-cent increase compared with Q1 2023;
• 6-per-cent increase in kilowatt-hour sales when compared with three months ended March 31, 2023;
• 2-per-cent increase in total customers when compared with Q1 2023.

Capital expenditures:

• Investments in sustainability include purchase of more electric vehicles to add to the fleet, the utility-scale battery energy storage system project and the public electric vehicle charging station program;
• Total capital expenditures for the three months ended March 31, 2024, totalled $19.3-million, which included projects to improve grid resiliency, generation asset upgrades and construction of infrastructure to transition to lower carbon energy;
• Two 10-megawatt BESS located at Hydesville and Prospect substations; systems will be on-line in the first half of 2024, and the systems are anticipated to lower fuel costs and improve fuel efficiency by up to 5 to 6 per cent.

Carbon reduction initiatives:

• Request for qualification for the provision of liquid natural gas as a transitional fuel was completed in 2023; this project is progressing with the request for proposal to be issued in 2024;
• Life cycle upgrades for first generating unit were completed, and work has commenced on the second of five units planned for upgrade; upgrades will improve fuel efficiency and allow the engines to be easily converted to dual fuel when LNG is an option on Grand Cayman;
• 20 electric vehicle charging stations installed with an anticipated further 20 charging stations by the end of 2024.

Community commitment and recognition:

• Continued commitment to community development showcased through partnerships and support programs; programs assisted in Q1 2024 were Cayman Athletics through the hosting of the Carifta trials and Cayman Swimming through the hosting of the Caribbean Utilities sea swim;
• Green diamond award recipient in 2023 for recycling excellence and recycling over 2.7 million pounds of scrap metal, cable, transformers and other recyclable material.

The company continues to deliver reliable and safe electricity service to its customers. During the first quarter, the company continued to make progress on major projects that are aimed at reducing costs and carbon emissions.

Net earnings and sales revenues

Net earnings for Q1 2024 were $6.2-million, a $1.0-million increase when compared with net earnings of $5.2-million for Q1 2023. After the adjustment for dividends on the preference shares of the company, earnings on Class A ordinary shares for Q1 2024 were $6.0-million, or 16 cents per share, as compared with $5.1-million, or 14 cents per share for Q1 2023.

Sales in kilowatt-hours for Q1 2024 were 168.1 million kilowatt-hours, which are an increase of 9.3 million kilowatt-hours or 6 per cent compared with Q1 2023. The increase was due to the 7-per-cent sales growth in both residential and large commercial customers. For large commercial customers, this increase was driven by economic growth, and for residential customers, this growth was mainly attributed to increased average consumption. The average temperature for Q1 2024 was 80.8 F compared with the average temperature of 80.6 F in Q1 2023. Rising temperatures contributed to the overall growth in consumption for customers.

Fuel factor and renewable energy costs are passed through to customers with no markup. 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 charged to consumers for Q1 2024 was 23 cents per kilowatt-hour, compared with the fuel cost charge rate of 24 cents per kilowatt-hour for Q1 2023.

"The company continues to focus on our capital investment and infrastructure projects with an emphasis on sustainability. We continue to make investments that will allow CUC to increase fuel efficiency and reduce our reliance on diesel, all while continuing to safely deliver reliable and least cost energy," said Richard Hew, president and chief executive officer.

Key updates

In Q1 2024 the company continued to focus on its carbon reduction efforts through the EV charging station program. The EV charging station program was adopted as an action item, resulting from the company's goal to abide by and embrace the current national energy policy, which outlined the need to provide more options for electric vehicles throughout the island.

Two 10-megawatt BESS have been placed separately at the Hydesville and Prospect substation locations, and it is anticipated that these systems will be installed and in use by the end of May, 2024. These storage systems will allow for further renewable energy, upon approval by the regulator, on the grid, and allow for savings of up to $5-million per year in fuel costs.

Capital expenditures

Capital expenditures for the three months ended March 31, 2024, were $19.3-million, a decrease of $3.5-million or 15 per cent in comparison with the $22.8-million in capital expenditures for the three months ended March 31, 2023. The expenditures for the three months ended March 31, 2024, were primarily related to:

• Distribution system extension and upgrades;
• Generation replacements;
• Life cycle upgrades;
• Alternative energy technologies;
• Installation of BESS;
• Facility and auxiliary asset replacement costs, and other resiliency projects.

The above capital projects will enhance the reliability and safe delivery of electricity service to the customers of Grand Cayman. The company continues to be committed to carbon reduction targets of 60 per cent by 2030 and projects that will allow for cost reduction savings for the customers of Grand Cayman.

This news release contains a discussion of Caribbean Utilities' unaudited first quarter 2024 results, the Cayman Islands economy, liquidity and capital resources, capital expenditures, and the business risks facing the company. The release and the first quarter 2024 management's discussion and analysis can be viewed at the Caribbean Utilities (investor relations/press releases) and at SEDAR+.

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 and distribution licence and a 25-year non-exclusive generation licence granted by the Cayman Islands government. 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.

We seek Safe Harbor.