AGR Avangrid Inc

Today AVANGRID, Inc. (NYSE:AGR) reported consolidated net income of $212.3 million, or $0.69 per share, for the first quarter of 2016, compared to $171.6 million, or $0.56 per share, for the same period in 2015 (adjusted to reflect the combination of AVANGRID with UIL Holdings Corporation). Excluding non-recurring items, described below, consolidated net income was $195.0 million, or $0.63 per share, for the first quarter of 2016, compared to $171.6 million, or $0.56 per share, excluding non-recurring items, for the same period in 2015.

Segment details for AVANGRID’s earnings for the quarter ended March 31, 2016, compared to the same period in 2015 are presented in the table below. Net income for the quarter ended March 31, 2016 reflected a net gain in the amount of $17.3 million, primarily from the sale of AVANGRID’s equity interest in the Iroquois Gas Transmission Pipeline, which is a non-recurring item. Net income for the quarter ended March 31, 2015 is adjusted below to reflect the combination of AVANGRID with UIL:

  Net Income (Loss) - $M Quarter ended March 31,    

Adjusted

2016 Adjusted 2015 '16 vs '15   Networks $ 165 $ 154 $ 11 Renewables $ 43 $ 26 $ 17 Other $ 5 $ (8 ) $ 13   Net Income $ 212 $ 172 $ 41 Non-recurring Items $ 17 $ -   $ 17 Adjusted Net Income $ 195 $ 172   $ 23     Earnings (Loss) Per Share Quarter ended March 31,

 

Adjusted

2016 Adjusted 2015 '16 vs '15   Networks $ 0.53 $ 0.50 $ 0.04 Renewables 0.14 0.08 0.05 Other   0.02   (0.03 )   0.04   EPS $ 0.69 $ 0.56 $ 0.13 Non-recurring Items   0.06   -     0.06 Adjusted EPS $ 0.63 $ 0.56   $ 0.07  

Amounts may not add due to rounding

“We had strong financial performance for the first quarter of 2016. Earnings increased approximately 24% through improvements at all of our businesses, and cash generation remains strong,” commented James P. Torgerson, AVANGRID’s chief executive officer.

“It has only been four months since the closing of the transaction combining AVANGRID and UIL. The comprehensive process of merging the former Iberdrola USA companies with the former UIL companies is on track and the first phase of the integration has been completed,” added Torgerson. “We will continue to focus on integration, as well as executing on our strategic growth plan.”

Avangrid Networks

Avangrid Networks earned $164.7 million, or $0.53 per share, in the first quarter 2016, compared to $153.5 million, or $0.50 per share, in the first quarter 2015. The net increase in earnings for the first quarter 2016 was mainly related to lower employee-related costs offset by reduced demand at Southern Connecticut Gas Company and Berkshire Gas Company as a result of the mild winter weather.

Avangrid Renewables

Avangrid Renewables earned $42.8 million, or $0.14 per share, in first quarter 2016, compared to $26.1 million, or $0.08 per share, in the first quarter 2015. The increase in earnings for the first quarter 2016 was mainly due to increased production from our wind generation facilities. The useful lives of certain renewable assets have been extended.

Other

The results from AVANGRID’s gas storage & transportation business and AVANGRID’s corporate costs are included under “Other”. Earnings for the first quarter of 2016 for this segment were $4.8 million, or $0.02 per share, compared to a loss of $8.0 million, or $0.03 per share, in the first quarter 2015. The increase in earnings was primarily due to improved gas storage spreads and the termination of a gas storage contract with negative mark-to-market.

Outlook

AVANGRID is increasing its consolidated earnings outlook for 2016 to $2.10 - $2.20 per share.

   

Outlook - Estimated EPS (1)

  As of February 22, 2016 Updated   Networks $ 1.65 $ 1.62 - $ 1.68 Renewables $ 0.40 $ 0.53 - $ 0.58 Other(2) $ (0.05) $ (0.06) - $ (0.05) 2016 AVANGRID $ 2.00 $ 2.10 - $ 2.20  

Amounts may not add due to rounding; Estimates are not expected to be additive

(1) Assumes approx. 309.5 million shares outstanding

(2) Includes Corporate and Gas Storage & Transportation

Webcast

AVANGRID will webcast an audio-only financial presentation in conjunction with releasing first quarter 2016 earnings, on Tuesday, April 26, 2016 beginning at 10:00 A.M. Eastern time. The webcast will feature presentations from AVANGRID’s CEO, James P. Torgerson and other members of the executive team, and can be accessed through the investor relations section of AVANGRID’s website at http://www.avangrid.com.

Avangrid, Inc. (NYSE:AGR) is a diversified energy and utility company with more than $30 billion in assets and operations in 25 states. The company operates regulated utilities and electricity generation through two primary lines of business. Avangrid Networks includes eight electric and natural gas utilities, serving approximately 3.1 million customers in New York and New England. Avangrid Renewables operates 6.3 gigawatts of electricity capacity, primarily through wind power, in states across the United States. AVANGRID employs approximately 7,000 people. The company was formed through a merger between Iberdrola USA, Inc. and UIL Holdings Corporation in 2015. Iberdrola S.A. (Madrid: IBE), a worldwide leader in the energy industry, owns 81.5% of AVANGRID. For more information, visit www.avangrid.com.

Forward Looking Statements

Certain statements in this presentation may relate to our future business and financial performance and future events or developments involving us and our subsidiaries that are not purely historical and may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terms such as “may,” “will,” “should,” “can,” “expects,” “believes,” “anticipates,” “intends,” “plans,” “estimates,” “projects,” “assumes,” “guides,” “targets,” “forecasts,” “is confident that” and “seeks” or the negative of such terms or other variations on such terms or comparable terminology. Such forward-looking statements include, but are not limited to, statements about our plans, objectives and intentions, outlooks or expectations for earnings, revenues, expenses or other future financial or business performance, strategies or expectations, or the impact of legal or regulatory matters on our business, results of operations or financial condition. Such statements are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties that could cause actual outcomes and results to differ materially. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, without limitation, the risks and uncertainties set forth under the section entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K, which is on file with the Securities and Exchange Commission (SEC) and available on our investor relations website at www.avangrid.com and on the SEC website at www.sec.gov. Additional information will also be set forth in subsequent filings with the SEC. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of the communication, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Use of Non-GAAP Measures

We supplement the use of U.S. GAAP financial measures in this document with non-GAAP financial measures, including adjusted net income and adjusted EPS. We refer to these measures as “non-GAAP financial measures” given they are not required by, or presented in accordance with U.S. GAAP.

We define adjusted net income as excluding certain non-recurring items and reflecting a full three month period for UIL as we believe it is more useful in understanding and evaluating actual and projected financial performance and contribution of AVANGRID and to more fully compare and explain our results without including the impact of the non-recurring items and with reflecting pro forma information to reflect a full quarter of results for merged entities. . The most directly comparable U.S. GAAP measure to adjusted net income is net income. We also define adjusted EPS as adjusted net income converted to an earnings per share amount.

We present non-GAAP financial measures because we believe that they and other similar measures are widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance. We also use these measures internally to establish budgets and operational goals to manage and monitor our business, as well as to evaluate our underlying historical performance. The non-GAAP financial measures may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under U.S. GAAP.

Non-GAAP financial measures are not primary measurements of our performance under U.S. GAAP and should not be considered as alternatives to operating income, net income or any other performance measures determined in accordance with U.S. GAAP.

  Avangrid, Inc. Consolidated Statements of Operations (In Millions except per share amounts) (Unaudited)       Three Months Ended March 31, 2016 $M Operating Revenues $ 1,670   Operating Expenses Purchased power, natural gas and fuel used 428 Operations and maintenance 551 Impairment of non-current assets - Depreciation and amortization 205 Taxes other than income taxes   137   Total Operating Expenses   1,321   Operating Income   349   Other Income and (Expense) Other income and (expense) 49 Earnings (losses) from equity method investments 2 Interest expense, net of capitalization   (84 ) Income (Loss) Before Income Tax   316   Income tax expense   (104 ) Net Income (Loss) $ 212     Earnings (Loss) per Common Share, Basic: $ 0.69   Earnings (Loss) per Common Share, Diluted: $ 0.69   Weighted-average Number of Common Shares Outstanding: Basic 309,538,215 Diluted 309,808,006     Avangrid, Inc. Condensed Consolidated Balance Sheet (Unaudited)     March 31, ($M)   2016 ASSETS Current assets $ 2,323 Net property, plant and equipment in service 19,372 Total property, plant & equipment 20,698 Regulatory assets 3,306 Goodwill 3,113 Other assets   1,099   Total Assets   30,539   LIABILITIES AND EQUITY Current liabilities 1,821 Regulatory liabilities 1,807 Deferred income taxes regulatory 551 Other noncurrent liabilities 6,717 Non-current debt   4,519   Total Liabilities   15,415   EQUITY Common stock 3 Additional paid-in-capital 13,653 Retained earnings 1,527 Accumulated other comprehensive loss   (72 ) Total Stockholder's Equity 15,111 Noncontrolling interests   13   Total Equity   15,124   Total Liabilities & Equity $ 30,539    

Amounts may not add due to rounding

  Avangrid, Inc. Consolidated Cash Flow (Unaudited)       Three Months Ended $M March 31, 2016 Cash Flows From Operating Activities Net income $ 212 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 205 Accretion expenses 3 Regulatory assets/liabilities amortization 41 Regulatory assets/liabilities carrying cost 10 Pension cost 33 Earnings from equity method investments (2 ) Amortization of debt cost (premium) (7 ) Gain on sale of equity method investment (31 ) Unrealized losses (gains) on marked to market derivative contracts 29 Deferred taxes 106 Changes in: Accounts receivable and unbilled revenues, net 16 Inventories 75 Other assets, net (76 ) Accounts payable (108 ) Other liabilities (51 ) Taxes accrued 9 Regulatory assets/liabilities   (67 ) Net Cash provided by Operating Activities   397   Cash Flows from Investing Activities Capital expenditures (276 ) Contribution in aid of construction 8 Government grants 1 Proceeds from sale of business, net of cash 54 (Payments to) Receipts from affiliates 6 Other investments and equity method investments   6   Net Cash used in Investing Activities   (201 ) Cash Flows from Financing Activities Non-current note issuance - Repayments of non-current debt (42 ) Proceeds (repayments) of other short-term debt, net (160 ) Repayments of capital leases (1 ) Payment of dividend - Payments on tax equity financing arrangements   (17 ) Net Cash used in Financing Activities   (220 ) Cash & cash equivalents, net   (24 ) Cash and cash equivalents, beginning of period   427   Cash and cash equivalents, end of period $ 403           Avangrid, Inc. Reconciliation of Net Income (Unaudited)   Adjusted Adjusted $M 2016 2015 '16 vs '15   Networks $ 165 $ 91 $ 74 Renewables 43 26 17 Other 5 (11 ) 16 Net Income $ 212   $ 106   $ 107   Adjustments: Net income representing a full quarter for UIL - 58 (58 ) Merger Costs - 8 (8 ) Sale of equity method investment (19 ) - (19 ) Impairment of investment   1     -     1   Adjusted Net Income $ 195   $ 172   $ 23     Avangrid, Inc. Reconciliation of Earnings Per Share (EPS) (Unaudited) Adjusted Adjusted 2016 2015 '16 vs '15   Networks $ 0.53 $ 0.36 $ 0.17 Renewables 0.14 0.10 $ 0.03 Other   0.02     (0.04 ) $ 0.06   Earnings Per Share $ 0.69 $ 0.42 $ 0.27 Adjustments: Reduction for acquisition of UIL shares - (0.08 ) 0.08 Net income representing a full quarter for UIL - 0.19 (0.19 ) Merger Costs - 0.03 (0.03 ) Sale of equity method investment (0.06 ) - (0.06 ) Impairment of investment   0.00     -     0.00   Adjusted Earnings Per Share $ 0.63   $ 0.56   $ 0.07  

 

Amounts may not add due to rounding

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AVANGRID, Inc.Analysts:Patricia Cosgel, 203-499-2624orMedia:Michael West Jr., 203-499-3858