- 2009 diluted earnings per share (EPS) of $2.88 versus $2.84 in
2008 - Fourth-quarter 2009 diluted EPS of $0.92 versus $0.97 for
the same period in 2008 2010 earnings guidance established in the
range of $2.95 to $3.05 per diluted share ATLANTA, Feb. 4
/PRNewswire-FirstCall/ -- AGL Resources (NYSE:AGL) today reported
2009 net income of $222 million, or $2.88 per diluted share,
compared with $217 million, or $2.84 per diluted share, for the
same period in 2008. "We delivered the strongest results in our
company's history during 2009," said John W. Somerhalder II,
chairman, president and chief executive officer of AGL Resources.
"Our performance during the year is a direct result of the
commitment of our employees to stay focused on the fundamentals of
our business, even during a period of economic uncertainty. In
2010, we will maintain that same focus to achieve our goals and to
continue delivering results for our shareholders." 2009 RESULTS BY
BUSINESS SEGMENT Distribution Operations The distribution
operations segment reported 2009 segment EBIT (earnings before
interest and taxes) of $326 million, compared with $329 million in
2008. Operating margin increased $18 million, primarily due to $8
million in increased margins from gas storage carrying costs
Atlanta Gas Light charges to marketers and $6 million in higher
revenues from the pipeline replacement program in Georgia. Also
contributing to the increase in operating margin were increased
revenues from the Hampton Roads Crossing project in Virginia and
the Magnolia pipeline project in Georgia. On a consolidated basis,
customer count in the distribution operations segment was down 0.3
percent in 2009 relative to the prior-year period. The lower
customer count reflects the slowdown in the residential housing
markets throughout the company's service areas. Operating expenses
increased $26 million, primarily due to increased payroll, pension
and incentive compensation costs as well as higher depreciation.
These increases were offset partially by lower fleet fuel costs and
marketing expenses relative to the prior year, as well as reduced
bad debt expense. Retail Energy Operations The retail energy
operations segment (SouthStar Energy Services) contributed EBIT of
$105 million in 2009, compared with $77 million in 2008. Operating
margin increased $32 million year-over-year. The increase reflects
an $18 million reduction in required lower-of-cost-or-market
(LOCOM) natural gas inventory valuation adjustments year-over-year.
The remainder of the operating margin increase was driven primarily
by higher retail margins in Georgia; improved margins in the Ohio
market; and an increase in average customer usage and colder
weather as compared to the prior year. These increases were
partially offset by a decline in average customer count
year-over-year, primarily due to the increasingly more competitive
retail market for natural gas in Georgia, and reduced margins
associated with a higher number of customers choosing fixed-price
plans. Operating expenses for 2009 increased $3 million compared
with 2008, due to increased marketing and compensation costs,
partially offset by lower customer care costs and reduced bad debt
expense. Wholesale Services The wholesale services segment,
consisting primarily of Sequent Energy Management, contributed EBIT
of $47 million in 2009, compared with $60 million in 2008.
Operating margin decreased $11 million year-over-year. During the
year, Sequent's gains on transportation capacity increased $36
million as a result of its ability to capture profits on narrowing
basis spreads relative to the prior-year period. A similar amount
of gains were realized on storage hedges in 2008 but were not
repeated in 2009. Reported commercial activity and park and loan
hedges in 2009 also decreased $28 million relative to the prior
year; however, the expected forward value related to physical
inventory positions that will be recognized in a future reporting
period increased from $0 at the end of 2008 to $30 million at the
end of 2009. 2009 results also reflect a decrease of $16 million in
required LOCOM natural gas inventory valuation adjustments.
Operating expenses increased $2 million in 2009 compared with the
prior-year period. The increase resulted from higher incentive
compensation expenses, partially offset by lower depreciation
expense. Energy Investments The energy investments segment
contributed EBIT of $12 million in 2009, compared with $19 million
in 2008. Operating margin decreased $4 million, primarily due to
lower interruptible revenue opportunities at Jefferson Island
Storage & Hub. Revenues at AGL Networks also were lower as a
result of expansion projects completed in 2008 that were not
repeated to the same degree in 2009. Operating expenses increased
$2 million, primarily reflecting higher development expenses at
Pivotal Energy Development, an increase in depreciation and
slightly higher costs at AGL Networks for outside services,
franchise fees, and payroll and benefits. INTEREST EXPENSE AND
INCOME TAXES Interest expense was $101 million for 2009, compared
with $115 million in 2008. The decrease primarily was due to lower
short-term interest rates, partially offset by higher average debt
balances. Income tax expense for 2009 was $135 million, compared
with $132 million for 2008. The increase primarily was due to
higher consolidated earnings. 2010 EARNINGS OUTLOOK AGL Resources
expects its fiscal year 2010 earnings results to be in the range of
$2.95 to $3.05 per diluted share. This expectation assumes normal
weather; no material impact to earnings from the effect of forward
natural gas price movements on storage and transportation hedges in
the wholesale services segment; and no material impact to earnings
from the effect of lower-of-cost-or-market natural gas inventory
valuation adjustments in the retail energy operations and wholesale
services segments. Changes in these factors, as well as other
circumstances or events the company cannot currently anticipate,
could result in earnings for fiscal 2010 that are above or below
this outlook. The factors that could cause such material changes
are described more fully in the "Forward-Looking Statements"
section of this press release and in the company's SEC filings.
EARNINGS CONFERENCE CALL/WEBCAST AGL Resources will host its
fourth-quarter/year-end 2009 earnings conference call and webcast
on Thursday, Feb. 4, 2010, at 9 a.m. Eastern Time. The conference
call will be webcast, and can be accessed via the Investor
Relations section of the company's Web site
(http://www.aglresources.com/), or by dialing 866-804-6923 in the
United States or 857-350-1669 outside the United States. The
confirmation code is 49844799. A replay of the conference call will
be available by dialing 888-286-8010 in the United States or
617-801-6888 outside the United States, with a confirmation code of
28068704. A replay of the call also will be available on the
Investor Relations section of the company's Web site for seven days
following the call. About AGL Resources AGL Resources (NYSE:AGL),
an Atlanta-based energy services company, serves approximately 2.3
million customers in six states. The company also owns
Houston-based Sequent Energy Management, an asset manager serving
natural gas wholesale customers throughout North America. As an
85-percent owner in the SouthStar partnership, AGL Resources
markets natural gas to consumers in Georgia under the Georgia
Natural Gas brand. The company also owns and operates Jefferson
Island Storage & Hub, a high-deliverability natural gas storage
facility near the Henry Hub in Louisiana. For more information,
visit http://www.aglresources.com/. Forward-Looking Statements
Certain expectations and projections regarding our future
performance referenced in this press release, in other reports or
statements we file with the SEC or otherwise release to the public,
and on our website, are forward-looking statements. Senior officers
and other employees may also make verbal statements to analysts,
investors, regulators, the media and others that are
forward-looking. Forward-looking statements involve matters that
are not historical facts, such as statements regarding our future
operations, prospects, strategies, financial condition, economic
performance (including growth and earnings), industry conditions
and demand for our products and services. Because these statements
involve anticipated events or conditions, forward-looking
statements often include words such as "anticipate," "assume,"
"believe," "can," "could," "estimate," "expect," "forecast,"
"future," "goal," "indicate," "intend," "may," "outlook," "plan,"
"potential," "predict," "project," "seek," "should," "target,"
"would," or similar expressions. Forward-looking statements
contained in this press release include, without limitation, the
information under the heading "Wholesale Services" and "2010
Earnings Outlook." Our expectations are not guarantees and are
based on currently available competitive, financial and economic
data along with our operating plans. While we believe our
expectations are reasonable in view of the currently available
information, our expectations are subject to future events, risks
and uncertainties, and there are several factors - many beyond our
control - that could cause results to differ significantly from our
expectations. Such events, risks and uncertainties include, but are
not limited to, changes in price, supply and demand for natural gas
and related products; the impact of changes in state and federal
legislation and regulation including changes related to climate
change; actions taken by government agencies on rates and other
matters; concentration of credit risk; utility and energy industry
consolidation; the impact on cost and timeliness of construction
projects by government and other approvals, development project
delays, adequacy of supply of diversified vendors, unexpected
change in project costs, including the cost of funds to finance
these projects; the impact of acquisitions and divestitures; direct
or indirect effects on our business, financial condition or
liquidity resulting from a change in our credit ratings or the
credit ratings of our counterparties or competitors; interest rate
fluctuations; financial market conditions, including recent
disruptions in the capital markets and lending environment and the
current economic downturn; general economic conditions;
uncertainties about environmental issues and the related impact of
such issues; the impact of changes in weather, including climate
change, on the temperature-sensitive portions of our business; the
impact of natural disasters such as hurricanes on the supply and
price of natural gas; acts of war or terrorism; and other factors
which are provided in detail in our filings with the Securities and
Exchange Commission, which we incorporate by reference in this
press release. Forward-looking statements are only as of the date
they are made, and we do not undertake to update these statements
to reflect subsequent changes. Supplemental Information Company
management evaluates segment financial performance based on
earnings before interest and taxes (EBIT), which includes the
effects of corporate expense allocations and on operating margin.
EBIT is a non-GAAP (accounting principles generally accepted in the
United States of America) financial measure that includes operating
income, other income and expenses. Items that are not included in
EBIT are financing costs, including debt and interest expense and
income taxes. The company evaluates each of these items on a
consolidated level and believes EBIT is a useful measurement of our
performance because it provides information that can be used to
evaluate the effectiveness of our businesses from an operational
perspective, exclusive of the costs to finance those activities and
exclusive of income taxes, neither of which is directly relevant to
the efficiency of those operations. Operating margin is a non-GAAP
measure calculated as operating revenues minus cost of gas,
excluding operation and maintenance expense, depreciation and
amortization, and taxes other than income taxes. These items are
included in the company's calculation of operating income. The
company believes operating margin is a better indicator than
operating revenues of the contribution resulting from customer
growth, since cost of gas is generally passed directly through to
customers. EBIT and operating margin should not be considered as
alternatives to, or more meaningful indicators of, the company's
operating performance than operating income or net income
attributable to AGL Resources Inc. as determined in accordance with
GAAP. In addition, the company's EBIT and operating margin may not
be comparable to similarly titled measures of another company.
Reconciliation of non-GAAP financial measures referenced in this
press release and otherwise in the earnings conference call and
webcast is attached to this press release and is available on the
company's Web site at http://www.aglresources.com/ under the
Investor Relations section. AGL Resources Inc. Condensed
Consolidated Statements of Income For the Three and Twelve Months
Ended December 31, 2009 and 2008 Unaudited (In millions, except per
share amounts) Three Months Twelve Months ------------
------------- Fav/ Fav/ 12/31/2009 12/31/2008 (Unfav) 12/31/2009
12/31/2008 (Unfav) ---------- ---------- ----- ----------
---------- ----- Operating Revenues $638 $805 $(167) $2,317 $2,800
$(483) Cost of Gas 302 461 159 1,142 1,654 512 Operation and
Maintenance Expenses 138 135 (3) 497 472 (25) Depreciation and
Amortization 40 40 - 158 152 (6) Taxes Other Than Income Taxes 10
11 1 44 44 - Total Operating Expenses 490 647 157 1,841 2,322 481
Operating Income 148 158 (10) 476 478 (2) Other Income 2 - 2 9 6 3
Earnings Before Interest & Taxes 150 158 (8) 485 484 1 Interest
Expense, Net 26 30 4 101 115 14 Earnings Before Income Taxes 124
128 (4) 384 369 15 Income Tax Expense 43 46 3 135 132 (3) Net
Income 81 82 (1) 249 237 12 Less Net Income Attributable to
Noncontrolling Interest 10 8 (2) 27 20 (7) --- --- --- --- --- ---
Net Income Attributable to AGL Resources Inc. $71 $74 $(3) $222
$217 $5 === === === ==== ==== === Earnings Per Common Share Basic
$0.92 $0.97 $(0.05) $2.89 $2.85 $0.04 Diluted $0.92 $0.97 $(0.05)
$2.88 $2.84 $0.04 Weighted Average Shares Outstanding Basic 77.0
76.5 (0.5) 76.8 76.3 (0.5) Diluted 77.4 76.7 (0.7) 77.1 76.6 (0.5)
AGL Resources Inc. EBIT Schedule For the Three and Twelve Months
Ended December 31, 2009 and 2008 Unaudited (In millions, except per
share amounts) Three Months Twelve Months ------------
------------- Fav/ Fav/ 12/31/2009 12/31/2008 (Unfav) 12/31/2009
12/31/2008 (Unfav) ---------- ---------- ----- ----------
---------- ----- Distribution Operations $85 $90 $(5) $326 $329
$(3) Retail Energy Operations 39 30 9 105 77 28 Wholesale Services
22 38 (16) 47 60 (13) Energy Investments 5 1 4 12 19 (7) Corporate
(1) (1) - (5) (1) (4) --- --- --- --- --- --- Consolidated EBIT 150
158 (8) 485 484 1 --- --- --- --- --- --- Interest Expense, Net 26
30 4 101 115 14 Income Tax Expense 43 46 3 135 132 (3) --- --- ---
--- --- --- Net Income 81 82 (1) 249 237 12 Less Net Income
Attributable to the Noncontrolling Interest 10 8 (2) 27 20 (7) ---
--- --- --- --- --- Net Income Attributable to AGL Resources Inc.
$71 $74 $(3) $222 $217 $5 === === === ==== ==== === Earnings per
Common Share Basic $0.92 $0.97 $(0.05) $2.89 $2.85 $0.04 =====
===== ====== ===== ===== ===== Diluted $0.92 $0.97 $(0.05) $2.88
$2.84 $0.04 ===== ===== ====== ===== ===== ===== AGL Resources Inc.
Reconciliation of Operating Margin to Operating Revenues For the
Three and Twelve Months Ended December 31, 2009 and 2008 Unaudited
(In millions) Three Months Twelve Months ------------ -------------
Fav/ Fav/ 12/31/2009 12/31/2008 (Unfav) 12/31/2009
12/31/2008(Unfav) ---------- ---------- ----- ---------- ----------
----- Operating Revenues $638 $805 $(167) $2,317 $2,800 $(483) Cost
of Gas 302 461 159 1,142 1,654 512 --- --- --- ----- ----- ---
Operating Margin $336 $344 $(8) $1,175 $1,146 $29 ==== ==== ===
====== ====== === DATASOURCE: AGL Resources CONTACT: Steve Cave,
Vice President - Finance, +1-404-584-3801, cell, +1-404-333-4721, ;
Alan Chapple, +1-404-584-4095, +1-404-783-3011, , both of AGL
Resources Web Site: http://www.aglresources.com/
Copyright