(NYSE:EDE) At the Board of Directors meeting of The
Empire District Electric Company held today, the Directors declared
a quarterly dividend of $0.26 per share. The dividend is payable
June 15, 2015, to holders of record as of June 1, 2015. The
Company, an operator of regulated electric, gas and water
utilities, announced today the results for the quarter and twelve
months ended March 31, 2015.
The Company reported consolidated earnings for the first quarter
of 2015 of $14.6 million, or $0.34 per share, compared to same
quarter 2014 earnings of $20.9 million, or $0.48 per share.
Earnings for the twelve months ended March 31, 2015 were $60.8
million, or $1.40 per share, compared to earnings of $71.7 million,
or $1.67 per share, for the 2014 twelve month period.
Earnings were lower this quarter over the same quarter last
year, primarily due to decreased electric and gas sales and higher
depreciation expense. Temperatures in the first quarter of 2015
moderated from the extremely cold temperatures in the first quarter
of 2014, lowering sales and driving a cumulative pre-tax decrease
in gross electric and gas margins of approximately $5.0 million.
Electric depreciation expense, reflecting the completion of the
Asbury Air Quality Control System (AQCS) environmental upgrade,
increased by $2.0 million, also negatively impacting first quarter
2015 results when compared to the 2014 first quarter.
The decrease in earnings for the twelve month ending period was
primarily driven by increased operating, maintenance and
depreciation expenses.
The Company’s full-year weather normal earnings guidance range
of $1.30 to $1.45 per share, provided in February 2015, remains
unchanged.
First Quarter 2015 Results
Electric segment gross margin (electric revenue less cost of
fuel and purchased power) decreased approximately $3.8 million
during the first quarter 2015 compared to the first quarter 2014 on
decreased revenues of approximately $10.5 million. Electric segment
gross margin was negatively impacted by:
- Milder weather and other volumetric
factors combined to decrease sales, driving an estimated decrease
in revenues of $6.2 million,
- A $1.4 million January 2015 refund to
FERC wholesale customers reflecting the acceleration of a pass
through of lower fuel costs from the SPP integrated market,
and
- Miscellaneous revenues which decreased
$0.2 million.
Positive impacts to electric segment gross margin included:
- Increased customer counts, which added
an estimated $0.5 million to revenues, and
- Increased customer rates, which added
an estimated $0.5 million to revenues.
Changes in off-system revenues related to the Southwest Power
Pool (SPP) Integrated Marketplace and fuel recovery revenues
combined to reduce revenues by $3.6 million during the first
quarter 2015 compared to the first quarter 2014, however this
decrease is offset by a similar decrease in fuel expense, resulting
in only a negligible impact on gross margin.
Gas segment gross margin (gas revenues less cost of gas sold and
transported) decreased approximately $1.2 million quarter over
quarter. Gas segment retail sales decreased approximately 18.4%
compared to the 2014 quarter due to the milder weather described
above.
Consolidated quarterly earnings were negatively impacted
by:
- Depreciation and Amortization expense
increases of $2.1 million,
- Operating and maintenance expense
increases of $0.7 million,
- Interest expense increases of $0.7
million, and
- Changes in Allowance For Funds Used
During Construction (AFUDC), which decreased earnings by $0.5
million.
Consolidated net income decreased approximately $6.3 million in
the first quarter of 2015 compared to the 2014 quarter.
Twelve Months Ended March 2015 Results
Electric segment gross margin decreased approximately $1.4
million during the twelve month period ended March 31, 2015 despite
increased revenues of approximately $21.4 million. This revenue
increase was primarily driven by an increase in off-system revenues
of approximately $26.4 million related to combined SPP Integrated
Marketplace and fuel recovery revenues. As described above, this
change is offset by a similar change in fuel expense, resulting in
no material change to gross margin.
Electric segment gross margin was negatively impacted by:
- Weather and other volumetric factors,
which decreased revenues an estimated $10.4 million, and
- The $1.4 million January 2015 refund to
the Company’s FERC wholesale customers mentioned above.
Positive impacts to electric segment gross margin included:
- Increased customer counts, which added
an estimated $1.6 million to revenues,
- Increased customer rates, which added
an estimated $5.1 million to revenues, and
- Miscellaneous revenue changes which
added $0.1 million to revenues.
Gas segment gross margin decreased approximately $1.6 million on
decreased revenues of $7.1 million. Gas segment results were
unfavorably impacted by the milder heating season during the twelve
month period ended March 15, 2015.
Consolidated twelve month ended earnings were negatively
impacted by:
- Operating and maintenance expense
increases of $10.0 million,
- Depreciation and amortization expense
increases of $4.1 million,
- Property and other tax increases of
$1.1 million, and
- Interest expense increases of $0.9
million.
Twelve month ended consolidated earnings were positively
impacted by $2.4 million from AFUDC changes.
Consolidated net income decreased approximately $10.9 million in
the 2015 twelve month ended period compared to 2014.
Selected unaudited consolidated financial data for the quarters
and twelve months ended March 31, 2015 and March 31, 2014 is
presented in the following table.
(dollars in millions, except Per Share
data)
Three Months EndedMarch
31,
Twelve Months EndedMarch
31,
2015 2014 Change* 2015
2014 Change* Electric Revenues
$ 142.6 $ 153.1 $
(10.5 ) $ 582.1 $
560.7 $ 21.4 Electric Fuel and
Purchased Power 48.9 55.6
(6.7 ) 208.5
185.7 22.8 Electric
Margin 93.7 97.5 (3.8 )
373.6 375.0 (1.4 ) Gas
Revenues 19.8 24.6 (4.8 )
47.0 54.1 (7.1 ) Cost of Gas Sold
and Transported 11.4 15.0
(3.6 ) 23.4
28.9 (5.5 ) Gas Margin
8.4 9.6 (1.2 ) 23.6 25.2
(1.6 ) Other Revenues 2.0
2.0 0.0
8.1 8.0 0.1
Gross Margin 104.1 109.1
(5.0 ) 405.3
408.2 (2.9 )
Less: Operating and Maintenance Expenses 39.6
38.9 0.7 161.2 151.2 10.0
Depreciation and Amortization 20.0 18.0
2.0 75.3 71.1 4.2 Taxes
19.8 22.7 (2.9
) 73.6 78.6
(5.0 ) Operating Income 24.7
29.5 (4.8 ) 95.2 107.3
(12.1 ) Interest Expense and Other, net
10.1 8.6 1.5
34.4 35.6
(1.2 ) Net Income $ 14.6
$ 20.9 $ (6.3 ) $
60.8 $ 71.7 $
(10.9 ) Earnings Per Share $
0.34 $ 0.48 $ (0.14 )
$ 1.40 $ 1.67 $ (0.27
)
Three Months EndedMarch
31,
Twelve Months EndedMarch
31,
2015
2014
%Change*
2015
2014
%Change*
Electric On-System kWh Sales (in millions):
Residential 590 642 (8.1 )%
1,899 2,007 (5.4 )% Commercial
377 389 (2.9 )% 1,573
1,571 0.1 % Industrial 246
237 3.6 % 1,040 1,012 2.8
% Other 116 119
(2.7 )% 461 474
(2.8 %) Total On-System Electric Sales
1,329 1,387 (4.2
)% 4,973 5,064
(1.8 )% Retail Gas Sales (billion
cubic feet): Residential 1.27 1.54
(17.3 )% 2.49 2.95 (15.5
)% Commercial/Industrial 0.56 0.71
(20.6 )% 1.20 1.48 (19.8
)% Other 0.02 0.02
(19.1 )% 0.03 0.04
(15.7 )% Total Retail Gas Sales
1.85 2.27 (18.4
)% 3.72 4.47
(17.0 )%
* Slight differences from actual results
may occur due to rounding.
Reconciliation of Earnings Per
Share
QuarterEnded
Twelve
MonthsEnded
Basic Earnings Per Share – March 31, 2014 $
0.48 $ 1.67 Gross Margins Electric
segment (0.05 ) (0.02 ) Gas segment (0.02 ) (0.02 ) Other segment
0.00 0.00
Total Gross Margins (0.07 ) (0.04 )
Expenses
Operating (0.01 ) (0.08 ) Maintenance and repairs 0.00 (0.07 )
Depreciation and amortization (0.03 ) (0.06 ) Other taxes (0.01 )
(0.02 ) Other income and deductions 0.00 (0.01 ) Interest charges
(0.01 ) (0.01 ) AFUDC (0.01 ) 0.04 Dilutive effect of additional
shares
0.00 (0.02
) Basic Earnings Per Share – March 31,
2015 $ 0.34
$ 1.40
The reconciliation of basic earnings per share (EPS) presented
above compares the quarter and year ended March 31, 2015 versus
March 31, 2014 and is a non-GAAP presentation. The economic
substance behind this non-GAAP EPS measure is to present the after
tax impact of significant items and components of the statement of
income on a per share basis before the impact of additional stock
issuances. The Company believes this presentation is useful to
investors because the statement of income does not readily show the
EPS impact of the various components, including the effect of new
stock issuances. This could limit the readers’ understanding of the
reasons for the EPS change from previous years. This information is
useful to management, and the Company believes useful to investors,
to better understand the reasons for the fluctuation in EPS between
the prior and current years on a per share basis.
In addition, although a non-GAAP presentation, the Company
believes the presentation of gross margin (reflected in the table
above and elsewhere in this press release) is useful to investors
and others in understanding and analyzing changes in operating
performance from one period to the next, and have included the
analysis as a complement to the financial information provided in
accordance with GAAP. This reconciliation and margin information
may not be comparable to other companies or more useful than the
GAAP presentation included in the statements of income. The
presentation does not purport to be an alternative to EPS
determined in accordance with GAAP as a measure of operating
performance or any other measure of financial performance presented
in accordance with GAAP. Management compensates for the limitations
of using non-GAAP financial measures by using them to supplement
GAAP results to provide a more complete understanding of the
factors and trends affecting the business than GAAP results alone.
The dilutive effect of additional shares issued in this table
reflects the impact of all shares issued in the respective periods
presented.
Earnings Guidance
The guidance range assumed 30-year average weather, overall
system energy growth of less than 1%, an August 1, 2015 effective
date for our pending Missouri rate case at the filed amount, and
increased operating costs, driven by a full year of service from
our Asbury AQCS upgrade. A stipulation currently on file for our
pending Missouri rate case, if approved by the Missouri Public
Service Commission, will not impact our guidance range of $1.30 to
$1.45. Other factors that may impact earnings include variations in
customer growth and usage projections and unanticipated or
unplanned events that may impact operating and maintenance costs.
The effects of assumptions and other factors evaluated for the
purpose of providing guidance are not necessarily independent of
one another, and the combination of effects can cause individual
impacts smaller or larger than the indicated guidance range.
Earnings Conference Call
Brad Beecher, President and CEO, will host a conference call
Friday, May 1, 2015, at 1:00 p.m. Eastern Time to discuss earnings
for the first quarter and twelve months ended March 31, 2015. To
phone in to the conference call, parties in the United States
should dial 1-888-243-4451, any time after 12:45 p.m. Eastern Time.
The webcast presentation and accompanying presentation slides can
also be accessed from Empire’s website at www.empiredistrict.com. The webcast presentation
will be available for replay for one year from today’s date.
Forward-looking and other material information may be discussed
during the conference call.
Based in Joplin, Missouri, The Empire District Electric Company
(NYSE:EDE) is an investor-owned, regulated utility providing
electric, natural gas (through its wholly owned subsidiary, The
Empire District Gas Company) and water service, with approximately
218,000 customers in Missouri, Kansas, Oklahoma, and Arkansas. A
subsidiary of the Company also provides fiber optic services.
Certain matters discussed in this press release are
“forward-looking statements” intended to qualify for the safe
harbor from liability established by the Private Securities
Litigation Reform Act of 1995. Such statements address future
plans, objectives, expectations, earnings, and events or conditions
concerning various matters. Actual results in each case could
differ materially from those currently anticipated in such
statements, by reason of the factors noted in the Company’s filings
with the SEC, including the most recent Form 10-K.
The Empire District Electric CompanyINVESTOR RELATIONSDale Harrington,
417-625-4222Director of Investor
Relationsdharrington@empiredistrict.comorMEDIA COMMUNICATIONSAmy Bass, 417-625-5114Director
of Corporate Communicationsabass@empiredistrict.com
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