Vectren Corporation (NYSE:VVC) today reported second quarter 2017
net income of $37.6 million, or $0.45 per share, compared to net
income of $32.3 million, or $0.39 per share, in the second quarter
of 2016. For the six months ended June 30, 2017, net income was
$92.9 million, or $1.12 per share, compared to $80.6 million, or
$0.97 per share for the six months ended June 30, 2016.
Summary and highlights of results
- Utility Group earnings were $25.5 million, or $0.31 per share,
in the second quarter of 2017, compared to $26.3 million, or $0.32
per share, in 2016. For the year-to-date period, net income for the
Utility Group was $91.4 million, or $1.10 per share, compared to
earnings of $87.4 million, or $1.06 per share in 2016. Utility
Group results for the quarter and year-to-date reflect the returns
from the continued investment in the gas infrastructure programs in
both Indiana and Ohio. Results also reflect the expected decrease
in usage of a large electric customer that completed its transition
to a co-generation facility.
- Nonutility Group earnings were $12.2 million, or $0.15 per
share, in the second quarter of 2017, compared to $6.5 million, or
$0.08 per share, in the second quarter of 2016. For the
year-to-date period, nonutility results were earnings of $1.7
million, or $0.02 per share, compared to losses of ($6.2) million,
or ($0.08) per share, in 2016. Results improved in both the quarter
and year-to-date periods due to strong performance for VISCO’s
distribution and transmission businesses.
"Utility Group results continue on track, largely driven by our
continued investment in gas infrastructure programs in both Indiana
and Ohio,” said Carl Chapman, Vectren’s chairman, president and
CEO. “And, while not yet impacting earnings, we continue to
advance our electric grid modernization and generation
diversification plans that will set the stage for future
growth.”
“For our Nonutility Group, our Infrastructure Services business
performed very well in the quarter with record second quarter
revenues,” said Chapman. “Demand for distribution services remains
high, and our large Ohio transmission pipeline project is off to a
great start."
2017 earnings guidance affirmed
The company affirms its 2017 consolidated earnings guidance
range of $2.55 to $2.65 per share. The 2017 consolidated earnings
guidance expectation includes Utility Group earnings within a range
of $2.10 to $2.15 per share and the Nonutility Group/Corporate and
Other earnings within a range of $0.45 to $0.50 per share.
Guidance ranges are based on assumptions and information
currently available, but changes in these assumptions or other
circumstances could materially impact earnings and result in 2017
earnings significantly above or below this guidance. These targeted
ranges are subject to such factors discussed below under
"Forward-Looking Statements".
Utility Group discussion
The Utility Group consists of the company’s regulated utility
operations and other operations that provide information technology
and other support services to those regulated operations. The
company segregates its regulated utility operations between a Gas
Utility Services operating segment and an Electric Utility Services
operating segment. The Utility Group also earns a return on shared
assets, such as customer billing systems and the customer contact
center, used by the company’s utility operations.
For the three months ended June 30, 2017, Utility Group earnings
were $25.5 million, compared to $26.3 million in 2016. For the six
months ended June 30, 2017, the Utility Group earned $91.4 million,
compared to $87.4 million in 2016. Both the quarter and
year-to-date periods reflect increases in gas utility margin from
returns on the Indiana and Ohio infrastructure replacement programs
and increased gas large customer margin and are partially offset by
the expected reduction in electric large customer usage as a
customer completed its transition to a co-generation facility.
Gas Utility Services: provides natural gas
distribution and transportation services to nearly two-thirds of
Indiana and about 20 percent of Ohio, primarily in the west-central
area.
The Gas Utility Services operating segment earned $7.0 million
during the second quarter of 2017, compared to $4.7 million in the
second quarter of 2016. For the six months ended June 30, 2017, Gas
Utility Services earned $54.9 million, compared to earnings of
$45.1 million in 2016. The improved earnings in both periods
reflect increased returns on the Indiana and Ohio infrastructure
replacement programs, large customer margins, and small customer
growth, reduced somewhat by the impacts of warmer weather and
resulting lower usage by small commercial customers in Ohio.
Through rate design, the margin from residential gas customers in
both Indiana and Ohio and commercial customers in Indiana is
largely unaffected by weather. However, compared to normal weather,
results are unfavorably impacted by approximately $2.2 million
year-to-date for large and general service gas customers. In the
year-to-date period, earnings were also favorably impacted by a
reduction in property tax expense.
Following is more detailed information related to the earnings
from Gas Utility Services. Identified items are presented after the
impact of income taxes.
|
|
|
|
|
(millions) |
|
Quarter |
|
Year-to-Date |
2016 Gas Utility
Earnings |
|
$ |
4.7 |
|
|
$ |
45.1 |
|
|
|
|
|
|
Gas
Infrastructure replacement programs |
|
|
2.5 |
|
|
|
6.3 |
|
Weather
impact on customer usage |
|
|
(0.3 |
) |
|
|
(0.8 |
) |
Large
customer margin |
|
|
1.1 |
|
|
|
2.2 |
|
Small
customer growth |
|
|
0.4 |
|
|
|
1.0 |
|
All
other |
|
|
(1.4 |
) |
|
|
1.1 |
|
|
|
|
|
|
2017 Gas Utility
Earnings |
|
$ |
7.0 |
|
|
$ |
54.9 |
|
|
|
|
|
|
Electric Utility Services: provides electric
transmission and distribution services to southwestern Indiana and
includes its power generating and wholesale power operations.
The Electric Utility Services operating segment earned $15.9
million in the second quarter of 2017, compared to $19.2 million in
the second quarter of 2016. Electric Utility Services earned
$29.6 million year-to-date in 2017, compared to earnings of $35.8
million for the six months ended June 30, 2016. Earnings in both
periods reflect the expected decrease in large customer margin as a
customer completed its transition to a co-generation facility,
resulting in lower usage of approximately 170 GWh in the quarter
and 335 GWh in the year-to-date period. Electric results, which are
not protected by weather normalizing mechanisms, reflect a $1.1
million decrease in the year-to-date period, primarily from the
warmer weather in the first quarter of 2017 as compared to last
year. Compared to normal, the warmer weather has unfavorably
impacted results by an estimated $2.0 million year-to-date in 2017.
Following is more detailed information related to the earnings
from Electric Utility Services. Identified items are presented
after the impact of income taxes.
(millions) |
|
Quarter |
|
Year-to-Date |
2016 Electric Utility
Earnings |
|
$ |
19.2 |
|
|
$ |
35.8 |
|
|
|
|
|
|
Weather
impact on small customer usage |
|
|
0.2 |
|
|
|
(1.1 |
) |
Large
customer usage |
|
|
(2.7 |
) |
|
|
(4.6 |
) |
All
other |
|
|
(0.8 |
) |
|
|
(0.5 |
) |
|
|
|
|
|
2017 Electric Utility
Earnings |
|
$ |
15.9 |
|
|
$ |
29.6 |
|
|
|
|
|
|
Other OperationsThe Utility Group also earns a
return on shared assets through currently approved rates as if
portions of the assets were in the rate base of each utility. Such
shared assets include customer billing systems and the customer
contact center, as examples. In the second quarter of 2017,
earnings from these operations were $2.6 million compared to $2.4
million in the second quarter of 2016. In the six months ended June
30, 2017, earnings from these operations were $6.9 million compared
to $6.5 million in 2016.
Nonutility Group discussion
Results reported by business group are after tax and net of
corporate expenses allocated to the Nonutility Group.
In the second quarter of 2017, Nonutility Group results were
earnings of $12.2 million, compared to earnings of $6.5 million in
2016. For the six months ended June 30, 2017, the Nonutility Group
reported earnings of $1.7 million, compared to losses of ($6.2)
million in 2016.
Infrastructure Services: provides underground
pipeline construction and repair services through wholly owned
subsidiaries Miller Pipeline, LLC and Minnesota Limited, LLC.
Results from Infrastructure Services’ operations for the quarter
ended June 30, 2017, were earnings of $11.4 million, compared
to earnings of $4.2 million in the second quarter of 2016. During
the six months ended June 30, 2017, results were earnings of $2.1
million, compared to losses of ($8.4) million in 2016. Total
Infrastructure Services revenues in the second quarter of 2017 were
a record $277.5 million compared to revenues of $189.2 million in
the second quarter of 2016. Year-to-date, 2017 revenues
totaled $424.8 million, compared to $301.7 million for the
year-to-date period in 2016. At June 30, 2017, Infrastructure
Services had an estimated backlog of blanket contracts of $420
million and bid contracts of $340 million, for a total backlog of
$760 million. This compares to an estimated backlog at March 31,
2017, of $780 million and $725 million at Dec. 31, 2016.
The distribution portion of the business is performing well as
gas utilities across the country continue to make significant
investments in their infrastructure systems. Along with the
continued strong demand for construction services from gas
utilities, the warm and dry weather in the first half of the year
resulted in record second quarter and year-to-date revenues for
this portion of the business.
Results for the transmission portion of the business have
significantly improved for the quarter and year-to-date periods as
the large transmission pipeline project in Ohio, started late in
the first quarter of 2017, contributed to record revenues in the
second quarter. Although transmission margins are much
improved in the quarter, the competitive environment in the repair
and maintenance market continues. While the focus remains on the
recurring integrity, station, and maintenance work, including
shorter pipeline projects, opportunities for large transmission
pipeline construction projects will continue to be pursued. The
fundamental business model related to the long cycle of integrity,
station and maintenance work in the transmission sector remains
unchanged. Demand remains high due to aging infrastructure and
evolving safety and reliability regulations. Margins from the
integrity, station and maintenance work are generally more
consistent from year to year as compared to margins derived from
the intermittent large projects.
Energy Services: provides energy performance
contracting and sustainable infrastructure, such as renewables,
distributed generation, and combined heat and power projects
through its wholly owned subsidiary Energy Systems Group, LLC
(ESG).
Results from Energy Services’ operations for the second quarter
of 2017 were earnings of $1.1 million, compared to earnings of $2.3
million in 2016. During the six months ended June 30, 2017, Energy
Services’ earnings were break-even, compared to earnings of $2.5
million in 2016. The lower results in the quarter and year to date
are primarily due to the expiration of 179D tax deductions and
increased operating costs. Section 179D, which allowed for
federal tax deductions related to achieved energy efficiency
savings, expired on Dec. 31, 2016, and therefore had no impact in
2017. The impact of the tax deductions, net of expenses, reflected
in 2016 results, were $0.7 million in the second quarter and $1.4
million year-to-date. Energy Services has year-to-date
revenues of $120.7 million in 2017, compared to revenues of $115.3
million for the year-to-date period in 2016.
At June 30, 2017, the backlog of signed fixed price
contracts is $181 million compared to $234 million at Dec. 31,
2016, and $187 million at June 30, 2016. The backlog at June 30,
2017 is lower than Dec. 31, 2016, due primarily to fewer contracts
being signed in the first half of 2017. The sales funnel continues
to grow, now at a near record $425 million, which is partially
reflective of the slow contract signing process experienced year to
date, but also reflects strong demand for Energy Services’ work.
The Company's long-term view of the performance contracting and
sustainable infrastructure opportunities remains strong with
continued national focus expected on energy conservation and
sustainability, renewable energy, and security as power prices
across the country rise and customer focus on new, efficient, clean
sources of energy grows.
Vectren Utility Holdings, Inc. (VUHI) and Vectren
Capital Corporation (Vectren Capital) Financing
Transactions
On July 14, 2017, VUHI (holding company for the Utility Group
utilities) entered into a private placement Note Purchase Agreement
pursuant to which institutional investors have agreed to purchase
the following tranches of notes: (i) $100 million of 3.26%
Guaranteed Senior Notes, Series A, due August 28, 2032 and (ii)
$100 million of 3.93% Guaranteed Senior Notes, Series B, due
November 29, 2047. The notes will be jointly and severally
guaranteed by the wholly owned utility subsidiaries of VUHI.
Subject to the satisfaction of customary conditions precedent,
the Series A note proceeds will be received on Aug. 28, 2017, and
the Series B proceeds will be received on Nov. 29, 2017.
Also on July 14, 2017, VUHI closed on the extension of its
existing revolving credit agreement in the aggregate amount of $400
million with a $10 million swing line sublimit and a $20 million
letter of credit sublimit. The VUHI agreement is jointly and
severally guaranteed by its wholly owned utility
subsidiaries. Additionally, on July 14, 2017, Vectren
Capital, a wholly owned subsidiary of the company and financing
entity for the Nonutility Group, closed on the extension of its
existing revolving credit agreement in the aggregate amount of $200
million with a $40 million swing line sublimit and an $80 million
letter of credit sublimit. The Vectren Capital agreement is
guaranteed by Vectren Corporation.
These credit agreements mature on July 14, 2022, and replace
current bank credit agreements that had an original maturity date
of Oct. 31, 2019. The total $600 million of short-term
borrowing capacity between the two lines remains unchanged;
however, the VUHI agreement commitment was increased by $50 million
as compared to the prior credit agreement, and the Vectren Capital
agreement commitment was decreased by $50 million as compared to
the prior credit agreement.
Please SEE ATTACHED unaudited schedules for additional
financial information
Live Webcast on Aug. 4, 2017Vectren’s financial
analyst call will be at 2:00 p.m. (ET), Aug. 4, 2017, at which time
management will discuss second quarter 2017 financial results and
2017 earnings guidance. To participate in the call, analysts are
asked to dial 1-844-825-9787 10 minutes prior to the start time and
refer to the “Vectren Corporation 2017 Second Quarter Earnings
Call”. All interested parties may listen to the live webcast
accompanied by a slide presentation, which will be available on
Vectren’s Investor Relations homepage, investors.vectren.com. A
replay of the webcast will be made available at the same location
approximately two hours following the conclusion of the analyst
call.
About VectrenVectren Corporation (NYSE: VVC) is
an energy holding company headquartered in Evansville, Ind.
Vectren’s energy delivery subsidiaries provide gas and/or
electricity to more than 1 million customers in adjoining service
territories that cover nearly two-thirds of Indiana and about 20
percent of Ohio, primarily in the west-central area. Vectren’s
nonutility subsidiaries and affiliates currently offer
energy-related products and services to customers throughout the
U.S. through Infrastructure Services and Energy Services. To learn
more about Vectren, visit www.vectren.com.
Forward-Looking Information
A “safe harbor” for forward-looking statements is provided by
the Private Securities Litigation Reform Act of 1995 (Reform Act of
1995). The Reform Act of 1995 was adopted to encourage such
forward-looking statements without the threat of litigation,
provided those statements are identified as forward-looking and are
accompanied by meaningful cautionary statements identifying
important factors that could cause the actual results to differ
materially from those projected in the statement. Certain
matters described in Management’s Discussion and Analysis of
Results of Operations and Financial Condition are forward-looking
statements. Such statements are based on management’s beliefs,
as well as assumptions made by and information currently available
to management. When used in this filing, the words “believe”,
“anticipate”, “endeavor”, “estimate”, “expect”, “objective”,
“projection”, “forecast”, “goal”, “likely”, and similar expressions
are intended to identify forward-looking statements. In
addition to any assumptions and other factors referred to
specifically in connection with such forward-looking statements,
factors that could cause the company’s actual results to differ
materially from those contemplated in any forward-looking
statements include, among others, the following:
- Factors affecting utility operations such as unfavorable or
unusual weather conditions; catastrophic weather-related damage;
unusual maintenance or repairs; unanticipated changes to coal and
natural gas costs; unanticipated changes to gas transportation and
storage costs, or availability due to higher demand, shortages,
transportation problems or other developments; environmental or
pipeline incidents; transmission or distribution incidents;
unanticipated changes to electric energy supply costs, or
availability due to demand, shortages, transmission problems or
other developments; or electric transmission or gas pipeline system
constraints.
- New legislation, litigation and government regulation or other
actions, such as changes in or additions to tax laws or rates,
pipeline safety regulation and environmental laws, including laws
governing air emissions, carbon, waste water discharges and the
handling and disposal of coal combustion residuals that could
impact the continued operation, and/or cost recovery of generation
plants and related assets. These compliance costs could
substantially change the nature of the company’s generation
fleet.
- Catastrophic events such as fires, earthquakes, explosions,
floods, ice storms, tornadoes, terrorist acts, physical attacks,
cyber attacks, or other similar occurrences could adversely affect
the company's facilities, operations, financial condition, results
of operations, and reputation.
- Increased competition in the energy industry, including the
effects of industry restructuring, unbundling, and other sources of
energy.
- Regulatory factors such as uncertainty surrounding the
composition of state regulatory commissions, adverse regulatory
changes, unanticipated changes in rate-setting policies or
procedures, recovery of investments and costs made under
regulation, interpretation of regulatory-related legislation by the
IURC and/or PUCO and appellate courts that review decisions issued
by the agencies, and the frequency and timing of rate
increases.
- Financial, regulatory or accounting principles or policies
imposed by the Financial Accounting Standards Board; the Securities
and Exchange Commission; the Federal Energy Regulatory Commission;
state public utility commissions; state entities which regulate
electric and natural gas transmission and distribution, natural gas
gathering and processing, electric power supply; and similar
entities with regulatory oversight.
- Economic conditions including the effects of inflation,
commodity prices, and monetary fluctuations.
- Economic conditions surrounding the current economic
uncertainty, including increased potential for lower levels of
economic activity; uncertainty regarding energy prices and the
capital and commodity markets; volatile changes in the demand for
natural gas, electricity, and other nonutility products and
services; economic impacts of changes in business strategy on both
gas and electric large customers; lower residential and commercial
customer counts; variance from normal population growth and changes
in customer mix; higher operating expenses; and reductions in the
value of investments.
- Volatile natural gas and coal commodity prices and the
potential impact on customer consumption, uncollectible accounts
expense, unaccounted for gas and interest expense.
- Volatile oil prices and the potential impact on customer
consumption and price of other fuel commodities.
- Direct or indirect effects on the company’s business, financial
condition, liquidity and results of operations resulting from
changes in credit ratings, changes in interest rates, and/or
changes in market perceptions of the utility industry and other
energy-related industries.
- The performance of projects undertaken by the company’s
nonutility businesses and the success of efforts to realize value
from, invest in and develop new opportunities, including but not
limited to, the company’s Infrastructure Services, Energy Services,
and remaining ProLiance Holdings assets.
- Factors affecting Infrastructure Services, including the level
of success in bidding contracts; fluctuations in volume and mix of
contracted work; mix of projects received under blanket contracts;
unanticipated cost increases in completion of the contracted work;
funding requirements associated with multiemployer pension and
benefit plans; changes in legislation and regulations impacting the
industries in which the customers served operate; the effects of
weather; failure to properly estimate the cost to construct
projects; the ability to attract and retain qualified employees in
a fast growing market where skills are critical; cancellation
and/or reductions in the scope of projects by customers; credit
worthiness of customers; ability to obtain materials and equipment
required to perform services; and changing market conditions,
including changes in the market prices of oil and natural gas that
would affect the demand for infrastructure construction.
- Factors affecting Energy Services, including unanticipated cost
increases in completion of the contracted work; changes in
legislation and regulations impacting the industries in which the
customers served operate; changes in economic influences impacting
customers served; failure to properly estimate the cost to
construct projects; risks associated with projects owned or
operated; failure to appropriately design, construct, or operate
projects; the ability to attract and retain qualified employees;
cancellation and/or reductions in the scope of projects by
customers; changes in the timing of being awarded projects; credit
worthiness of customers; lower energy prices negatively impacting
the economics of performance contracting business; and changing
market conditions.
- Employee or contractor workforce factors including changes in
key executives, collective bargaining agreements with union
employees, aging workforce issues, work stoppages, or pandemic
illness.
- Risks associated with material business transactions such as
acquisitions and divestitures, including, without limitation, legal
and regulatory delays; the related time and costs of implementing
such transactions; integrating operations as part of these
transactions; and possible failures to achieve expected gains,
revenue growth and/or expense savings from such transactions.
- Costs, fines, penalties and other effects of legal and
administrative proceedings, settlements, investigations, claims,
including, but not limited to, such matters involving compliance
with federal and state laws and interpretations of these laws.
The company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of
changes in actual results, changes in assumptions, or other factors
affecting such statements.
VECTREN CORPORATION |
AND SUBSIDIARY COMPANIES |
CONSOLIDATED STATEMENTS OF INCOME |
(Unaudited - in millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
OPERATING
REVENUES: |
|
|
|
|
|
|
|
|
Gas
utility |
|
$ |
144.0 |
|
|
$ |
132.0 |
|
$ |
436.8 |
|
|
$ |
413.1 |
|
Electric
utility |
|
|
141.8 |
|
|
|
147.7 |
|
|
273.8 |
|
|
|
289.8 |
|
Nonutility |
|
|
344.9 |
|
|
|
254.0 |
|
|
544.5 |
|
|
|
415.5 |
|
Total
operating revenues |
|
|
630.7 |
|
|
|
533.7 |
|
|
1,255.1 |
|
|
|
1,118.4 |
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
|
Cost of
gas sold |
|
|
37.2 |
|
|
|
34.0 |
|
|
150.1 |
|
|
|
145.5 |
|
Cost of
fuel & purchased power |
|
|
43.6 |
|
|
|
45.2 |
|
|
84.7 |
|
|
|
89.4 |
|
Cost of
nonutility revenues |
|
|
120.4 |
|
|
|
82.9 |
|
|
182.2 |
|
|
|
138.2 |
|
Other
operating |
|
|
274.5 |
|
|
|
229.7 |
|
|
498.8 |
|
|
|
430.7 |
|
Depreciation & amortization |
|
|
68.3 |
|
|
|
64.1 |
|
|
136.1 |
|
|
|
128.0 |
|
Taxes
other than income taxes |
|
|
13.9 |
|
|
|
13.9 |
|
|
29.1 |
|
|
|
31.5 |
|
Total
operating expenses |
|
|
557.9 |
|
|
|
469.8 |
|
|
1,081.0 |
|
|
|
963.3 |
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME |
|
|
72.8 |
|
|
|
63.9 |
|
|
174.1 |
|
|
|
155.1 |
|
|
|
|
|
|
|
|
|
|
OTHER INCOME: |
|
|
|
|
|
|
|
|
Equity in
earnings (losses) of unconsolidated affiliates |
|
|
(0.3 |
) |
|
|
0.1 |
|
|
(0.8 |
) |
|
|
(0.2 |
) |
Other
income - net |
|
|
8.3 |
|
|
|
7.8 |
|
|
16.3 |
|
|
|
14.5 |
|
Total
other income |
|
|
8.0 |
|
|
|
7.9 |
|
|
15.5 |
|
|
|
14.3 |
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
|
21.4 |
|
|
|
21.3 |
|
|
42.7 |
|
|
|
43.3 |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES |
|
|
59.4 |
|
|
|
50.5 |
|
|
146.9 |
|
|
|
126.1 |
|
|
|
|
|
|
|
|
|
|
INCOME TAXES |
|
|
21.8 |
|
|
|
18.2 |
|
|
54.0 |
|
|
|
45.5 |
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
37.6 |
|
|
$ |
32.3 |
|
$ |
92.9 |
|
|
$ |
80.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING |
|
|
82.9 |
|
|
|
82.8 |
|
|
82.9 |
|
|
|
82.8 |
|
DILUTED COMMON SHARES
OUTSTANDING |
|
|
83.0 |
|
|
|
82.8 |
|
|
83.0 |
|
|
|
82.8 |
|
|
|
|
|
|
|
|
|
|
BASIC AND DILUTED
EARNINGS PER SHARE OF COMMON STOCK |
|
$ |
0.45 |
|
|
$ |
0.39 |
|
$ |
1.12 |
|
|
$ |
0.97 |
|
|
|
|
|
|
|
|
|
|
VECTREN UTILITY HOLDINGS |
AND SUBSIDIARY COMPANIES |
CONSOLIDATED STATEMENTS OF INCOME |
(Unaudited - in millions) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
OPERATING
REVENUES: |
|
|
|
|
|
|
|
|
Gas
utility |
|
$ |
144.0 |
|
$ |
132.0 |
|
$ |
436.8 |
|
$ |
413.1 |
Electric
utility |
|
|
141.8 |
|
|
147.7 |
|
|
273.8 |
|
|
289.8 |
Other |
|
|
0.1 |
|
|
0.1 |
|
|
0.1 |
|
|
0.2 |
Total
operating revenues |
|
|
285.9 |
|
|
279.8 |
|
|
710.7 |
|
|
703.1 |
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
|
Cost of
gas sold |
|
|
37.2 |
|
|
34.0 |
|
|
150.1 |
|
|
145.5 |
Cost of
fuel & purchased power |
|
|
43.6 |
|
|
45.2 |
|
|
84.7 |
|
|
89.4 |
Other
operating |
|
|
84.4 |
|
|
81.3 |
|
|
170.0 |
|
|
171.4 |
Depreciation & amortization |
|
|
57.9 |
|
|
54.0 |
|
|
115.3 |
|
|
107.6 |
Taxes
other than income taxes |
|
|
13.1 |
|
|
13.1 |
|
|
27.5 |
|
|
30.2 |
Total
operating expenses |
|
|
236.2 |
|
|
227.6 |
|
|
547.6 |
|
|
544.1 |
|
|
|
|
|
|
|
|
|
OPERATING INCOME |
|
|
49.7 |
|
|
52.2 |
|
|
163.1 |
|
|
159.0 |
|
|
|
|
|
|
|
|
|
OTHER INCOME - NET |
|
|
7.8 |
|
|
7.0 |
|
|
14.9 |
|
|
13.3 |
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
|
17.6 |
|
|
17.5 |
|
|
35.2 |
|
|
35.0 |
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES |
|
|
39.9 |
|
|
41.7 |
|
|
142.8 |
|
|
137.3 |
|
|
|
|
|
|
|
|
|
INCOME TAXES |
|
|
14.4 |
|
|
15.4 |
|
|
51.4 |
|
|
49.9 |
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
25.5 |
|
$ |
26.3 |
|
$ |
91.4 |
|
$ |
87.4 |
|
|
|
|
|
|
|
|
|
VECTREN CORPORATION |
AND SUBSIDIARY COMPANIES |
CONSOLIDATED BALANCE SHEETS |
(Unaudited - in millions) |
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2017 |
|
2016 |
|
|
|
|
|
ASSETS |
|
|
|
|
Current Assets |
|
|
|
|
Cash
& cash equivalents |
|
$ |
11.0 |
|
|
$ |
68.6 |
|
Accounts
receivable - less reserves of $6.0 & |
|
|
|
|
$6.0,
respectively |
|
|
225.3 |
|
|
|
225.3 |
|
Accrued
unbilled revenues |
|
|
115.4 |
|
|
|
172.4 |
|
Inventories |
|
|
118.6 |
|
|
|
129.9 |
|
Recoverable fuel & natural gas costs |
|
|
32.1 |
|
|
|
29.9 |
|
Prepayments & other current assets |
|
|
57.2 |
|
|
|
52.7 |
|
Total
current assets |
|
|
559.6 |
|
|
|
678.8 |
|
|
|
|
|
|
Utility Plant |
|
|
|
|
Original
cost |
|
|
6,757.5 |
|
|
|
6,545.4 |
|
Less: accumulated depreciation & amortization |
|
|
2,654.9 |
|
|
|
2,562.5 |
|
Net
utility plant |
|
|
4,102.6 |
|
|
|
3,982.9 |
|
|
|
|
|
|
Investments in
unconsolidated affiliates |
|
|
20.1 |
|
|
|
20.4 |
|
Other utility &
corporate investments |
|
|
41.5 |
|
|
|
34.1 |
|
Other nonutility
investments |
|
|
15.4 |
|
|
|
16.1 |
|
Nonutility plant -
net |
|
|
454.4 |
|
|
|
423.9 |
|
Goodwill |
|
|
293.5 |
|
|
|
293.5 |
|
Regulatory assets |
|
|
345.8 |
|
|
|
308.8 |
|
Other assets |
|
|
38.6 |
|
|
|
42.2 |
|
TOTAL
ASSETS |
|
$ |
5,871.5 |
|
|
$ |
5,800.7 |
|
|
|
|
|
|
LIABILITIES &
SHAREHOLDERS' EQUITY |
|
|
|
|
Current
Liabilities |
|
|
|
|
Accounts
payable |
|
$ |
233.2 |
|
|
$ |
302.2 |
|
Accrued
liabilities |
|
|
200.9 |
|
|
|
207.7 |
|
Short-term borrowings |
|
|
246.2 |
|
|
|
194.4 |
|
Current
maturities of long-term debt |
|
|
124.1 |
|
|
|
124.1 |
|
Total
current liabilities |
|
|
804.4 |
|
|
|
828.4 |
|
|
|
|
|
|
Long-term Debt - Net of
Current Maturities |
|
|
1,590.4 |
|
|
|
1,589.9 |
|
|
|
|
|
|
Deferred Credits &
Other Liabilities |
|
|
|
|
Deferred
income taxes |
|
|
961.5 |
|
|
|
905.7 |
|
Regulatory liabilities |
|
|
469.4 |
|
|
|
453.7 |
|
Deferred
credits & other liabilities |
|
|
251.0 |
|
|
|
254.9 |
|
Total
deferred credits & other liabilities |
|
|
1,681.9 |
|
|
|
1,614.3 |
|
|
|
|
|
|
Common Shareholders'
Equity |
|
|
|
|
Common
stock (no par value) – issued & outstanding |
|
|
|
|
83.0
& 82.9, respectively |
|
|
733.2 |
|
|
|
729.8 |
|
Retained
earnings |
|
|
1,062.9 |
|
|
|
1,039.6 |
|
Accumulated other comprehensive (loss) |
|
|
(1.3 |
) |
|
|
(1.3 |
) |
Total
common shareholders' equity |
|
|
1,794.8 |
|
|
|
1,768.1 |
|
TOTAL
LIABILITIES & SHAREHOLDERS' EQUITY |
|
$ |
5,871.5 |
|
|
$ |
5,800.7 |
|
|
|
|
|
|
VECTREN CORPORATION |
AND SUBSIDIARY COMPANIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Millions - Unaudited) |
|
|
|
|
|
|
|
Six Months Ended |
|
|
June 30, |
|
|
2017 |
|
2016 |
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
Net
income |
|
$ |
92.9 |
|
|
$ |
80.6 |
|
Adjustments to reconcile net income to cash from operating
activities: |
|
|
|
|
Depreciation & amortization |
|
|
136.1 |
|
|
|
128.0 |
|
Deferred
income taxes & investment tax credits |
|
|
53.4 |
|
|
|
48.9 |
|
Provision
for uncollectible accounts |
|
|
3.1 |
|
|
|
4.1 |
|
Expense
portion of pension & postretirement benefit cost |
|
|
3.4 |
|
|
|
1.9 |
|
Other
non-cash items - net |
|
|
5.5 |
|
|
|
4.0 |
|
Changes
in working capital accounts: |
|
|
|
|
Accounts
receivable & accrued unbilled revenues |
|
|
53.9 |
|
|
|
93.4 |
|
Inventories |
|
|
11.3 |
|
|
|
5.9 |
|
Recoverable/refundable fuel & natural gas costs |
|
|
(2.2 |
) |
|
|
(26.3 |
) |
Prepayments & other current assets |
|
|
(3.8 |
) |
|
|
18.8 |
|
Accounts
payable, including to affiliated companies |
|
|
(69.9 |
) |
|
|
(23.6 |
) |
Accrued
liabilities |
|
|
(6.4 |
) |
|
|
(13.1 |
) |
Employer
contributions to pension & postretirement plans |
|
|
(2.2 |
) |
|
|
(17.1 |
) |
Changes
in noncurrent assets |
|
|
(13.5 |
) |
|
|
(17.5 |
) |
Changes
in noncurrent liabilities |
|
|
(9.8 |
) |
|
|
5.3 |
|
Net cash
provided by operating activities |
|
|
251.8 |
|
|
|
293.3 |
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
Proceeds
from dividend reinvestment plan & other common stock
issuances |
|
|
3.1 |
|
|
|
3.0 |
|
Requirements for: |
|
|
|
|
Dividends
on common stock |
|
|
(69.6 |
) |
|
|
(66.3 |
) |
Retirement of long-term debt |
|
|
— |
|
|
|
(73.0 |
) |
Net
change in short-term borrowings |
|
|
51.8 |
|
|
|
30.7 |
|
Net cash
used in financing activities |
|
|
(14.7 |
) |
|
|
(105.6 |
) |
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
Proceeds
from sale of assets |
|
|
1.3 |
|
|
|
1.4 |
|
Requirements for: |
|
|
|
|
Capital
expenditures, excluding AFUDC equity |
|
|
(293.5 |
) |
|
|
(248.0 |
) |
Other
costs |
|
|
(3.4 |
) |
|
|
— |
|
Changes
in restricted cash |
|
|
0.9 |
|
|
|
0.1 |
|
Net cash
used in investing activities |
|
|
(294.7 |
) |
|
|
(246.5 |
) |
|
|
|
|
|
Net change in cash
& cash equivalents |
|
|
(57.6 |
) |
|
|
(58.8 |
) |
Cash & cash
equivalents at beginning of period |
|
|
68.6 |
|
|
|
74.7 |
|
Cash & cash
equivalents at end of period |
|
$ |
11.0 |
|
|
$ |
15.9 |
|
|
VECTREN CORPORATION |
AND SUBSIDIARY COMPANIES |
HIGHLIGHTS |
(Unaudited - in millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
REPORTED EARNINGS: |
|
|
|
|
|
|
|
|
Utility Group |
|
|
|
|
|
|
|
|
Gas
Utility Services |
|
$ |
7.0 |
|
|
$ |
4.7 |
|
|
$ |
54.9 |
|
|
$ |
45.1 |
|
Electric
Utility Services |
|
|
15.9 |
|
|
|
19.2 |
|
|
|
29.6 |
|
|
|
35.8 |
|
Other
Operations |
|
|
2.6 |
|
|
|
2.4 |
|
|
|
6.9 |
|
|
|
6.5 |
|
Total Utility
Group |
|
|
25.5 |
|
|
|
26.3 |
|
|
|
91.4 |
|
|
|
87.4 |
|
|
|
|
|
|
|
|
|
|
Nonutility Group |
|
|
|
|
|
|
|
|
Infrastructure Services |
|
|
11.4 |
|
|
|
4.2 |
|
|
|
2.1 |
|
|
|
(8.4 |
) |
Energy
Services |
|
|
1.1 |
|
|
|
2.3 |
|
|
|
— |
|
|
|
2.5 |
|
Other
Businesses |
|
|
(0.3 |
) |
|
|
— |
|
|
|
(0.4 |
) |
|
|
(0.3 |
) |
Nonutility Group |
|
|
12.2 |
|
|
|
6.5 |
|
|
|
1.7 |
|
|
|
(6.2 |
) |
|
|
|
|
|
|
|
|
|
Corporate and
Other |
|
|
(0.1 |
) |
|
|
(0.5 |
) |
|
|
(0.2 |
) |
|
|
(0.6 |
) |
|
|
|
|
|
|
|
|
|
Vectren
Consolidated |
|
$ |
37.6 |
|
|
$ |
32.3 |
|
|
$ |
92.9 |
|
|
$ |
80.6 |
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE:
(*) |
|
|
|
|
|
|
|
|
Utility Group |
|
$ |
0.31 |
|
|
$ |
0.32 |
|
|
$ |
1.10 |
|
|
$ |
1.06 |
|
Nonutility Group |
|
|
0.15 |
|
|
|
0.08 |
|
|
|
0.02 |
|
|
|
(0.08 |
) |
Corporate and
Other |
|
|
— |
|
|
|
(0.01 |
) |
|
|
— |
|
|
|
(0.01 |
) |
|
|
|
|
|
|
|
|
|
Reported EPS |
|
$ |
0.45 |
|
|
$ |
0.39 |
|
|
$ |
1.12 |
|
|
$ |
0.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) EPS calculated at segment and Consolidated level; segments
do not foot in the quarter. |
|
VECTREN CORPORATION |
AND SUBSIDIARY COMPANIES |
SELECTED GAS DISTRIBUTION |
OPERATING STATISTICS |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
GAS UTILITY
(Millions): |
|
|
|
|
|
|
|
|
Residential Margin |
|
$ |
65.9 |
|
|
$ |
61.0 |
|
|
$ |
171.8 |
|
|
$ |
160.0 |
|
Commercial Margin |
|
|
15.4 |
|
|
|
14.3 |
|
|
|
48.8 |
|
|
|
45.2 |
|
Industrial Margin |
|
|
16.1 |
|
|
|
14.1 |
|
|
|
37.2 |
|
|
|
33.1 |
|
Other
Margin |
|
|
2.2 |
|
|
|
1.5 |
|
|
|
5.0 |
|
|
|
4.3 |
|
Regulatory Expense Recovery Mechanisms |
|
|
7.2 |
|
|
|
7.1 |
|
|
|
23.9 |
|
|
|
25.0 |
|
Total Gas Utility
Margin |
|
|
106.8 |
|
|
|
98.0 |
|
|
|
286.7 |
|
|
|
267.6 |
|
Cost of
Gas Sold |
|
|
37.2 |
|
|
|
34.0 |
|
|
|
150.1 |
|
|
|
145.5 |
|
Total Gas Utility
Revenue |
|
$ |
144.0 |
|
|
$ |
132.0 |
|
|
$ |
436.8 |
|
|
$ |
413.1 |
|
|
|
|
|
|
|
|
|
|
GAS SOLD &
TRANSPORTED (MMDth): |
|
|
|
|
|
|
|
|
Residential |
|
|
7.0 |
|
|
|
8.5 |
|
|
|
36.8 |
|
|
|
41.2 |
|
Commercial |
|
|
3.5 |
|
|
|
3.9 |
|
|
|
16.5 |
|
|
|
18.1 |
|
Industrial |
|
|
26.9 |
|
|
|
29.9 |
|
|
|
61.8 |
|
|
|
65.8 |
|
|
|
|
37.4 |
|
|
|
42.3 |
|
|
|
115.1 |
|
|
|
125.1 |
|
|
|
|
|
|
|
|
|
|
AVERAGE GAS
CUSTOMERS |
|
|
|
|
|
|
|
|
Residential |
|
|
934,827 |
|
|
|
927,508 |
|
|
|
938,080 |
|
|
|
930,094 |
|
Commercial |
|
|
85,445 |
|
|
|
85,271 |
|
|
|
85,834 |
|
|
|
85,585 |
|
Industrial |
|
|
1,744 |
|
|
|
1,726 |
|
|
|
1,741 |
|
|
|
1,726 |
|
|
|
|
1,022,016 |
|
|
|
1,014,505 |
|
|
|
1,025,655 |
|
|
|
1,017,405 |
|
|
|
|
|
|
|
|
|
|
WEATHER AS A
PERCENT OF NORMAL (ANNUALIZED): |
|
|
|
|
|
|
|
|
Heating
Degree Days (Ohio) |
|
|
|
|
|
|
89 |
% |
|
|
98 |
% |
Heating
Degree Days (Indiana) |
|
|
|
|
|
|
81 |
% |
|
|
91 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VECTREN CORPORATION |
AND SUBSIDIARY COMPANIES |
SELECTED ELECTRIC |
OPERATING STATISTICS |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
ELECTRIC UTILITY
(Millions): |
|
|
|
|
|
|
|
|
Residential Margin |
|
$ |
36.2 |
|
|
$ |
36.2 |
|
|
$ |
69.5 |
|
|
$ |
71.4 |
|
Commercial Margin |
|
|
26.8 |
|
|
|
27.4 |
|
|
|
51.1 |
|
|
|
52.1 |
|
Industrial Margin |
|
|
23.8 |
|
|
|
28.2 |
|
|
|
46.8 |
|
|
|
54.2 |
|
Other
Margin |
|
|
0.9 |
|
|
|
0.8 |
|
|
|
1.9 |
|
|
|
2.1 |
|
Regulatory Expense Recovery Mechanisms |
|
|
2.5 |
|
|
|
3.0 |
|
|
|
4.8 |
|
|
|
7.1 |
|
Wholesale
and Transmission |
|
|
8.0 |
|
|
|
6.9 |
|
|
|
15.0 |
|
|
|
13.5 |
|
Total Electric Utility
Margin |
|
|
98.2 |
|
|
|
102.5 |
|
|
|
189.1 |
|
|
|
200.4 |
|
Cost of
Fuel & Purchased Power |
|
|
43.6 |
|
|
|
45.2 |
|
|
|
84.7 |
|
|
|
89.4 |
|
Total Electric Utility
Revenue |
|
$ |
141.8 |
|
|
$ |
147.7 |
|
|
$ |
273.8 |
|
|
$ |
289.8 |
|
|
|
|
|
|
|
|
|
|
ELECTRICITY SOLD
(GWh): |
|
|
|
|
|
|
|
|
Residential |
|
|
321.1 |
|
|
|
319.7 |
|
|
|
637.3 |
|
|
|
664.5 |
|
Commercial |
|
|
324.2 |
|
|
|
333.2 |
|
|
|
609.0 |
|
|
|
628.1 |
|
Industrial |
|
|
521.4 |
|
|
|
700.2 |
|
|
|
1,012.9 |
|
|
|
1,354.4 |
|
Other
Sales - Street Lighting |
|
|
4.9 |
|
|
|
5.3 |
|
|
|
10.9 |
|
|
|
11.4 |
|
Total
Retail |
|
|
1,171.6 |
|
|
|
1,358.4 |
|
|
|
2,270.1 |
|
|
|
2,658.4 |
|
Wholesale |
|
|
160.4 |
|
|
|
26.8 |
|
|
|
239.2 |
|
|
|
36.3 |
|
|
|
|
1,332.0 |
|
|
|
1,385.2 |
|
|
|
2,509.3 |
|
|
|
2,694.7 |
|
|
|
|
|
|
|
|
|
|
AVERAGE ELECTRIC
CUSTOMERS |
|
|
|
|
|
|
|
|
Residential |
|
|
126,302 |
|
|
|
125,501 |
|
|
|
126,274 |
|
|
|
125,533 |
|
Commercial |
|
|
18,637 |
|
|
|
18,530 |
|
|
|
18,618 |
|
|
|
18,514 |
|
Industrial |
|
|
113 |
|
|
|
112 |
|
|
|
113 |
|
|
|
113 |
|
Other |
|
|
40 |
|
|
|
39 |
|
|
|
40 |
|
|
|
39 |
|
|
|
|
145,092 |
|
|
|
144,182 |
|
|
|
145,045 |
|
|
|
144,199 |
|
|
|
|
|
|
|
|
|
|
WEATHER AS A
PERCENT OF NORMAL (ANNUALIZED): |
|
|
|
|
|
|
|
|
Cooling
Degree Days (Indiana) |
|
|
108 |
% |
|
|
104 |
% |
|
|
108 |
% |
|
|
104 |
% |
Heating
Degree Days (Indiana) |
|
|
|
|
|
|
81 |
% |
|
|
91 |
% |
|
|
|
|
|
|
|
|
|
Investor Contact
Dave Parker
(812) 491-4135
d.parker@vectren.com
Media Contact
Chase Kelley
(812) 491-4128
kckelley@vectren.com
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