(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 December 15, 2015, to holders of record as of December 1,
2015. The Company, an operator of regulated electric, gas
and water utilities, announced today the results for the quarter
and twelve months ended September 30, 2015.
The Company reported consolidated earnings for the third quarter
of 2015 of $25.3 million, or $0.58 per share (basic and diluted),
compared to same quarter 2014 earnings of $23.9 million, or $0.55
per share (basic and diluted). Earnings for the twelve months ended
September 30, 2015 were $57.8 million, or $1.33 per share ($1.32 on
a diluted basis), compared to earnings of $71.2 million, or $1.65
per share (basic and diluted), for the twelve months ended
September 30, 2014.
Earnings were higher this quarter compared to the same quarter
last year, primarily due to the new Missouri retail on-system rate
increase which took effect July 26, 2015, warmer weather resulting
in a 10.1% increase in cooling degree days and lower generation
maintenance expense. These gains were partially offset by higher
depreciation and amortization expense, property and other tax
expenses and interest charges primarily related to the Asbury Air
Quality Control System (AQCS) environmental upgrade.
For the twelve month period ended September 30, 2015, increased
revenue attributable to the Missouri rate case mentioned above was
more than offset by milder weather, especially in the 4th quarter
of 2014 and 1st quarter of 2015 when compared to the prior year
period. The Company also experienced increased operations,
maintenance, depreciation and interest expenses during the same
time period.
According to Brad Beecher, President and CEO, “Third quarter
2015 results were on target with our 2015 earnings guidance. With
recovery of the cost of our Asbury environmental upgrade now
included in our Missouri rates, and as we continue to execute our
rate base growth plan, our full-year weather normal earnings
guidance range of $1.30 to $1.45 per share we provided in February
of this year remains unchanged.”
Third Quarter 2015 Results
Electric segment gross margin (electric revenue less cost of
fuel and purchased power) increased approximately $8.7 million or
8.1% during the third quarter 2015 compared to the third quarter
2014. Electric segment gross margin was positively impacted by the
new Missouri retail on-system rate increase. A 3.3% increase in
on-system kWh sales during the third quarter of 2015 as compared to
the third quarter of 2014 was primarily driven by more favorable
weather and improved customer counts and usage.
Gas segment gross margin (gas revenues less cost of gas sold and
transported) of $3.8 million was virtually flat compared to the
third quarter of 2014.
Consolidated quarterly earnings were also favorably impacted by
lower maintenance and repair expense which decreased $0.6 million,
while unfavorable impacts included the following:
- Operating expense increase of $0.8
million,
- Depreciation and amortization expense
increase of approximately $1.5 million
- Other taxes increases of $1.0 million
resulting from higher property taxes,
- Interest expense increase of
approximately $1.0 million, and
- Changes in Allowance For Funds Used
During Construction (AFUDC), which decreased earnings by
approximately $0.8 million.
Consolidated net income increased approximately $1.4 million or
5.8% in the third quarter of 2015 compared to the 2014 quarter.
Twelve Months Ended September 2015 Results
Electric segment gross margin increased approximately $4.1
million or 1.1% during the twelve month period ended September 30,
2015 versus the comparable prior year period. Rate increases, net
of a January 2015 FERC refund, more than offset the negative impact
from a 0.9% decrease in on-system sales which was primarily caused
by milder weather.
Gas segment gross margin decreased approximately $1.4 million or
5.4% on decreased revenues of $7.0 million versus the comparable
prior year period. Gas segment results were unfavorably impacted by
the milder heating season during the twelve month period ended
September 30, 2015 versus the comparable prior year period.
Consolidated twelve month ended earnings were also negatively
impacted by:
- Operating expense increase of
approximately $3.7 million, primarily due to increased transmission
expense,
- Maintenance expense increase of
approximately $5.7 million driven by the timing of a planned
maintenance outage at our SLCC facility and increased costs related
to a Riverton maintenance contract,
- Depreciation and amortization expense
increase of approximately $6.3 million,
- Property and other taxes increase of
approximately $2.1 million,
- Interest expense increase of
approximately $2.7 million, and
- Changes in AFUDC which decreased
earnings $0.8 million.
These negative factors are largely reflective of under recovery
due to the timing of the Company’s rate increases.
The increased electric margin from rates offset by an increase
in expenses noted above resulted in a decrease in consolidated net
income of approximately $13.3 million in the 2015 twelve month
ended period compared to 2014.
Selected unaudited consolidated financial data for the quarters
and twelve months ended September 30, 2015 and September 30, 2014
is presented in the following table.
(dollars in millions, except Per Share
data)
Three Months EndedSeptember
30,
Twelve Months EndedSeptember
30,
2015 2014 Change* 2015
2014 Change* Electric Margin
116.6 107.9 8.7 383.0
378.9 4.1 Gas Margin 3.8
3.8 (0.0) 23.5 24.9 (1.4)
Other Revenues 2.2 2.0
0.2 8.3 8.0 0.3 Gross
Margin 122.6 113.7 8.9
414.8 411.8 3.0
Less: Operating and Maintenance Expenses 40.8
40.6 0.2 165.7 156.5 9.2
Depreciation and Amortization 20.1 18.5
1.6 78.8 72.5 6.3 Taxes
25.9 22.9 3.0 74.5
78.3 (3.8) Operating Income 35.8
31.7 4.1 95.8 104.5 (8.7)
Interest Expense and Other, net 10.5
7.8 2.7 38.0 33.3
4.7 Net Income $25.3 $23.9
$1.4 $57.8 $71.2
($13.4) Earnings Per Share (Basic)
$0.58 $0.55 $0.03 $1.33 $1.65
($0.32) Earnings Per Share (Diluted) $0.58
$0.55 $0.03 $1.32 $1.65 ($0.33)
Three Months EndedSeptember
30,
Twelve Months EndedSeptember
30,
2015
2014
% Change*
2015
2014
% Change* Electric On-System kWh Sales (in
millions): Residential 514 495 3.9%
1,895 1,990 (4.7%) Commercial
437 427 2.4% 1,595 1,588
0.4% Industrial 287 276 3.9%
1,061 1,015 4.5% Other 128
124 2.8% 465 466
(0.3%) Total On-System Electric Sales 1,366
1,322 3.3% 5,016
5,059 (0.9%) Retail Gas Sales
(billion cubic feet): Residential 0.11
0.09 19.7% 2.46 2.87 (14.3%)
Commercial/Industrial 0.10 0.09 16.3%
1.19 1.42 (16.1%) Other 0.00
0.00 50.00% 0.03 0.03
(15.0%) Total Retail Gas Sales 0.21
0.18 18.1% 3.68 4.32
(14.9%)
* Slight differences from actual
results may occur due to rounding to millions.
Reconciliation of Earnings Per
Share
QuarterEnded
Twelve
MonthsEnded
Basic Earnings Per Share – September 30, 2014 $
0.55 $ 1.65 Gross Margins Electric
segment 0.13 0.06 Gas segment 0.00 (0.02 ) Other segment
0.00 0.00 Total
Gross Margin 0.13 0.04
Expenses Operating (0.01 )
(0.05 ) Maintenance and repairs 0.01 (0.08 ) Depreciation and
amortization (0.02 ) (0.09 ) Other taxes (0.02 ) (0.03 ) Change in
effective income tax rates (0.02 ) (0.02 ) Other income and
deductions (0.02 ) (0.03 ) Interest charges (0.01 ) (0.04 ) AFUDC
(0.01 ) (0.01 ) Dilutive effect of additional shares issued
0.00 (0.01 )
Basic Earnings Per Share – September 30, 2015
$ 0.58
$ 1.33
Diluted Earnings Per Share – September
30, 2015
$
0.58
$
1.32
The reconciliation of basic earnings per share (EPS) presented
above compares the quarter and twelve month period ended September
30, 2015 versus September 30, 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 of $1.30 to $1.45 per share communicated in
February 2015 remains unchanged. This range assumed 30-year average
weather, overall system energy growth of less than 1%, and
increased operating costs, driven by a full year of service from
our Asbury AQCS upgrade. Our guidance range remains unchanged as
the Missouri rate case order effective July 26, 2015 reflected
lower fuel costs which has little impact on margin. 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, October 30, 2015, at 1:00 p.m. Eastern Time to discuss
earnings for the third quarter and twelve months ended September
30, 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 and Form
10-Q.
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version on businesswire.com: http://www.businesswire.com/news/home/20151029006783/en/
The Empire District Electric CompanyInvestor
Relations:Dale Harrington, 417-625-4222Director of Investor
Relationsdharrington@empiredistrict.comorMedia
Communications:Julie Maus, 417-625-5101Director of Corporate
Communicationsjmaus@empiredistrict.com
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