Today AVANGRID, Inc. (NYSE:AGR) reports its financial results
for the second quarter of 2016, including consolidated net income
of $102 million, or $0.33 per share, for the second quarter of
2016, compared to $11 million, or $0.04 per share for the same
period in 2015. For the first six months of 2016, consolidated net
income was $314 million, or $1.01 per share, compared to $117
million, or $0.46 per share, for the first six months of 2015.
AVANGRID’s reported results for the second quarter and first six
months of 2015 do not reflect the combination with UIL Holdings
Corporation (“UIL”).
Adjusted to reflect the combination of AVANGRID with UIL and
excluding the sale of certain equity investments the consolidated
adjusted net income was $100 million, or $0.32 per share, for the
second quarter of 2016, compared to $31 million, or $0.10 per
share, for the same period in 2015. Adjusted to reflect the
combination of AVANGRID with UIL and the impairment of an
investment and excluding the sale of certain equity investments,
the consolidated adjusted net income was $295 million, or $0.95 per
share, for the first six months of 2016, compared to $203 million,
or $0.66 per share, for the first six months of 2015.
Segment details for AVANGRID’s earnings for the second quarter
and first six months of 2016, compared to the same periods in 2015
are presented in the table below. Net income for the second quarter
2016 reflects a net gain in the amount of $2 million from the sale
of an equity investment by Avangrid Renewables. Net income for the
first six months of 2016 reflects a net gain in the amount of $19
million, primarily from the sale of AVANGRID’s equity interest in
the Iroquois Gas Transmission Pipeline and the impairment of an
investment, both recorded in the first quarter 2016 and the gain
from the sale of an equity investment described above. For
additional information, see “Non-GAAP Financial Measures”,
“Reconciliation of Net Income (Loss)” and “Reconciliation of
Earnings (Loss) Per Share (EPS)” below.
Net income for the second quarter and first six months of 2016
and 2015 on a U.S. GAAP basis are set forth below:
Net Income (Loss) - $M Three Months
ended June 30, Six Months ended June 30, $M
2016 2015 '16 vs '15 2016
2015 '16 vs '15 Networks $ 79 $ 27 $ 52
$ 244 $ 118 $ 126 Renewables 41 69 (28) 84 95 (11) Other
(18) (84) 66 (14) (95) 81
Net
Income $ 102 $ 11 $
90 $ 314 $ 117 $
196 Earnings (Loss) Per Share
Three Months ended June 30, Six Months ended June 30,
2016 2015 '16 vs '15 2016 2015
16 vs '15 Networks $ 0.25 $ 0.11 $ 0.15 $ 0.79 $ 0.47
$ 0.32 Renewables 0.13 0.27 (0.14) 0.27 0.37 (0.10) Other
(0.06) (0.33) 0.28 (0.04) (0.38)
0.33
Earnings Per Share $ 0.33 $
0.04 $ 0.29 $ 1.01 $
0.46 $ 0.55 Weighted-avg # of Shares
(M): 309.5 252.2 309.5 252.2
Amounts may not add due to rounding
“We had strong financial performance for the second quarter and
first six months of 2016,” said James P. Torgerson, chief executive
officer of AVANGRID. “Our regulated business reported improved
financial performance for both the quarter and year-to-date led by
improved revenues and increased rate base. Earnings from our
Renewables business benefited from better overall wind production,
offset by the settlement of intercompany transactions in the second
quarter 2015, which had no impact on consolidated results.”
“We continue to make progress integrating our operations as we
transition through 2016 with an emphasis on best practice
identification and implementation. As we look to the remainder of
the year, we will focus on integration, cost management measures to
counteract lower than our average wind production, and execution of
our capital expenditure plan,” added Torgerson. “We are working to
advance many important investments and energy initiatives with the
completion of all of the initial projects in the NY Transco, the
filing of our Distribution System Implementation Plan associated
with the NY Reforming the Energy Vision initiative, and the filing
of our Connect NY solution to address capacity constraints in New
York City. We are also awaiting final bidder selection in the New
England Clean Energy RFP, which is expected before the end of the
month, and have filed an electric distribution rate case in CT. In
addition, all of our Renewables projects under construction remain
on track, and we recently increased our contracted assets position
with the signing of a PPA executed with a global commercial and
industrial customer.”
Avangrid Networks
Avangrid Networks earned $79 million, or $0.25 per share, in the
second quarter of 2016, compared to $27 million, or $0.11 per
share, in the second quarter of 2015. For the six months of 2016,
Avangrid Networks earned $244 million, or $0.79 per share, compared
to $118 million, or $0.47 per share, for the first six months of
2015. The net increase in earnings for the second quarter and first
six months of 2016 was mainly related to improved revenues,
increases in rate base, lower uncollectibles expense and various
cost management measures. The Avangrid Networks results for the
second quarter and the first six months of 2015 do not reflect the
combination with UIL, and, as a result 2015 results are not
directly comparable to 2016 results. Adjusted to reflect the
combination of AVANGRID with UIL, Avangrid Networks earned $43
million, or $0.14 per share, in the second quarter of 2015, and
$197 million, or $0.64 per share, in the first six months in
2015.
Avangrid Renewables
Avangrid Renewables earned $41 million, or $0.13 per share, in
second quarter of 2016, compared to $69 million, or $0.27 per
share, in the second quarter of 2015. Results for the second
quarter and first six months of 2015 include the settlement of
intercompany transactions, which had no impact on consolidated
results. For the first six months of 2016, Avangrid Renewables
earned $84 million, or $0.27 per share, compared to $95 million, or
$0.37 per share, in the first six months of 2015. Absent the
settlement, the increase in earnings for the second quarter and
first six months of 2016 was mainly due to the change in estimated
useful life of assets, improved but below our historical average
wind production, favorable mark-to-market and energy management and
various cost management measures.
Other
The results from AVANGRID’s gas storage & transportation
business and AVANGRID’s corporate costs are included under “Other”.
Other incurred a loss of $18 million, or $0.06 per share, for the
second quarter of 2016, compared to a loss of $84 million, or $0.33
per share, in the second quarter of 2015. For the first six months
of 2016, Other incurred a loss of $14 million, or $0.04 per share,
compared to a loss of $95 million, or $0.38 per share, in the first
six months of 2015. The improved results for the quarter and first
six months of 2016 was primarily due to the absence of a settlement
of intercompany transactions described above. The Other results for
the second quarter and first six months of 2015 do not reflect the
combination with UIL, and, as a result 2015 results are not
directly comparable to 2016 results. Adjusted to reflect the
combination of AVANGRID with UIL, Other incurred a loss of $80
million, or $0.26 per share, in the second quarter of 2015, and $88
million, or $0.29 per share, in the first six months of 2015.
Outlook
AVANGRID is affirming its consolidated earnings outlook for 2016
of $2.10-$2.20 per share. The earnings outlook for both the
Networks and Other segments have been revised due to a non-business
driver. The sale of AVANGRID’s equity interest in the Iroquois Gas
Transmission Pipeline was recorded in the first quarter 2016 in
Other, however, the previous outlook estimate included the sale in
Networks, therefore, earnings for the Networks business have been
revised to $1.56-$1.62 per share, compared to the previously
reported estimate of $1.62-$1.68 per share and earnings for the
Other segment have been revised to $0.00-$0.01 per share, compared
to the previously reported estimate of $(0.06)-$(0.05) per
share.
Outlook -
Estimated EPS (1)
As of April 26, 2016 Revised Networks $
1.62 - $ 1.68 $ 1.56 - $ 1.62 Renewables $ 0.53 - $ 0.58 $ 0.53 - $
0.58 Other(2) $ (0.06) - $ (0.05) $ 0.00 - $ 0.01 2016 AVANGRID $
2.10 - $ 2.20 $ 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 second quarter 2016 earnings, on
Tuesday, July 19, 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 for the year ended December 31, 2015 and our Quarterly Report
on Form 10-Q for the three months ended March 31, 2016, which are
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. You should
consider these factors carefully in evaluating for-ward looking
statements. 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 this presentation 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
To supplement our consolidated financial statements presented in
accordance with U.S. GAAP, AVANGRID considers certain non-GAAP
financial measures that are not prepared in accordance with U.S.
GAAP, including adjusted net income and adjusted EPS. We use these
non-GAAP financial measures, in addition to U.S. GAAP measures, to
establish operating budgets and operational goals to manage and
monitor our business, evaluate our operating and financial
performance and to compare such performance to prior periods and to
the performance of our competitors. The non-GAAP financial measures
we use are specific to AVANGRID and the non-GAAP financial measures
of other companies may not be calculated in the same manner. In
addition, 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 provide adjusted net income, which is adjusted to reflect the
combination of AVANGRID with UIL and the impairment of certain
investments and excludes the sale of certain equity investments,
and reflects a full six month period for UIL, because 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 above described items and with reflecting pro forma information
to reflect a full period of results for merged entities. The most
directly comparable U.S. GAAP measure to adjusted net income is net
income. We also provide adjusted EPS, which is adjusted net income
converted to an earnings per share amount.
The use of non-GAAP financial measures is not intended to be
considered in isolation or as a substitute for, or superior to,
AVANGRID’s U.S. GAAP financial information, and investors are
cautioned that the non-GAAP financial measures are limited in their
usefulness, may be unique to AVANGRID, should be considered only as
a supplement to AVANGRID’s U.S. GAAP financial measures. The
non-GAAP financial measures may not be comparable to other
similarly titled measures of other companies and have limitations
as analytical tools. 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. Condensed Consolidated Statements
of Income (In Millions except per share amounts)
(Unaudited) Three
Months ended Six Months ended June 30, June
30, 2016 2015 2016 2015
Operating Revenues $ 1,439 $ 939
$ 3,109 $ 2,166 Operating
Expenses Purchased power, natural gas and fuel used 221 151 649
543 Operations and maintenance 558 434 1,109 814 Impairment of
non-current assets - 7 - 7 Depreciation and amortization 213 187
418 362 Taxes other than income taxes 125 87
262 171
Total Operating Expenses 1,117
866 2,438 1,897
Operating Income 322 73
671 269 Other Income and (Expense)
Other income and (expense) 20 10 69 22 Earnings (losses) from
equity method investments - (1) 2 - Interest expense, net of
capitalization (68) (66) (152) (127)
Income (Loss) Before Income Tax 274
16 590 164 Income tax expense
172 5 276 47
Net Income (Loss)
$ 102 $ 11 $ 314 $
117 Earnings (Loss) per
Common Share, Basic: $ 0.33 $ 0.04
$ 1.01 $ 0.46 Earnings (Loss) per
Common Share, Diluted: $ 0.33 $
0.04 $ 1.01 $ 0.46
Weighted-average Number of Common Shares Outstanding: Basic
309,527,868 252,235,232 309,533,042 252,235,232 Diluted 309,683,965
252,235,232 309,689,138 252,235,232
Amounts may not add due to rounding
Avangrid, Inc. Condensed Consolidated
Balance Sheets (Unaudited) June 30,
December 31, ($M) 2016 2015
ASSETS Current assets $ 2,234 $ 2,474 Net property, plant
& equipment in service 19,465 19,373 Total property, plant
& equipment 20,830 20,711 Regulatory assets 3,141 3,314
Goodwill 3,113 3,115 Other assets 1,092 1,129
Total Assets $ 30,411 $ 30,743
LIABILITIES AND EQUITY Current liabilities 1,924 2,035
Regulatory liabilities 2,244 2,360 Other non-current liabilities
6,671 6,752 Non-current debt 4,507 4,530
Total
Liabilities 15,346 15,677
EQUITY Common stock 3 3 Additional paid-in-capital 13,651
13,653 Treasury stock (4) - Retained earnings 1,496 1,449
Accumulated other comprehensive loss (94) (52)
Total Stockholders' Equity 15,052
15,053 Noncontrolling interests 13 13
Total Equity
15,065 15,066 Total Liabilities
& Equity $ 30,411 $ 30,743
Amounts may not add due to rounding
Avangrid, Inc. Condensed Consolidated
Statement of Cash Flows (Unaudited) Six Months
Ended June 30, $M 2016 2015 Cash
Flow from Operating Activities: Net income $
314 $ 117 Adjustments to reconcile net income
to net cash provided by operating activities: Depreciation and
amortization 418 362 Impairment of non-current assets — 7 Accretion
expenses 4 7 Regulatory assets/liabilities amortization 83 47
Regulatory assets/liabilities carrying cost 13 20 Pension cost 66
54 Earnings from equity method investments (2) — Amortization of
debt cost (premium) (15) 2 Gain on sale of equity method investment
(34) — Unrealized losses on marked to market derivative contracts
23 50 Deferred taxes 244 (35) Other non-cash items (2) — Changes in
current operating assets and liabilities: Decrease in accounts
receivable and unbilled revenues 85 91 Decrease in inventories 65
73 (Increase) decrease in other assets/liabilities (100) 2 Decrease
in accounts payable and accrued liabilities (12) (131) (Decrease)
increase in taxes accrued (7) 21 (Increase) decrease in regulatory
assets/liabilities (235) 95
Net Cash Provided by
Operating Activities 908 782
Cash Flow from Investing Activities: Capital expenditures
(674) (530) Contributions in aid of construction 41 10 Government
grants — 13 Proceeds from sale of equity method and other
investment 57 3 Proceeds from asset transfer 43 — Receipts from
(payments to) affiliates 2 (5) Other investments and equity method
investments, net (6) 17
Net Cash Used in Investing
Activities (537) (492) Cash Flow
from Financing Activities: Non-current note issuance — 350
Repayments of non-current debt (45) (69) Repayments of other
short-term debt, net (160) — Payments on tax equity financing
arrangements (53) (54) Repayments of capital leases (4) (14)
Repurchase of common stock (4) — Issuance of common stock (2) —
Dividends paid (134) —
Net Cash (Used in) Provided
by Financing Activities (402) 213
Cash & cash equivalents, net (31)
503 Cash & cash equivalents, beginning of period
427 482 Cash & cash equivalents,
end of period $ 396 $ 985
Amounts may not add due to rounding
Avangrid, Inc. Reconciliation of Adjusted Net
Income (Loss) (Unaudited)
Three Months ended June 30, Six
Months ended June 30, $M 2016 Adjusted
2015
Adjusted '16 vs '15
2016 Adjusted 2015
Adjusted '16 vs '15
Networks $ 79 $ 27 $ 52 $ 244 $ 118 $ 126 Renewables 41 69 (28) 84
95 (11) Other (18) (84) 66 (14)
(95) 81
Net Income $ 102 $
11 $ 90 $ 314 $
117 $ 196 Adjustments: Net income representing
full six months for UIL - 15 (15) - 73 (73) Merger Costs - 9 (9) -
23 (23) Sale of equity method and other investment (3) - (3) (36) -
(36) Impairment of investment - - - 3 - 3 Income tax impact of
adjustments* 1 (4) 5 14 (10)
24
Adjusted Net Income $ 100 $
31 $ 68 $ 295 $
203 $ 92
* 2016: Income tax impact of adjustments: $14M from sale of
equity method investment, $1M from sale of other investment and
$(1)M on impairment of investment.
Avangrid, Inc. Reconciliation of Adjusted Earnings
(Loss) Per Share (EPS) (Unaudited)
Three Months ended June 30, Six
Months ended June 30, 2016 Adjusted 2015
Adjusted '16 vs '15
2016 Adjusted 2015
Adjusted '16 vs '15
Networks $ 0.25 $ 0.11 $ 0.15 $ 0.79 $ 0.47 $ 0.32 Renewables 0.13
0.27 (0.14) 0.27 0.37 (0.10) Other (0.06) (0.33)
0.28 (0.04) (0.38) 0.33
Earnings Per
Share* $ 0.33 $ 0.04 $
0.29 $ 1.01 $ 0.46 $
0.55 Adjustments: Reduction for acquisition of UIL shares -
(0.01) 0.01 - (0.08) 0.08 Net income representing full six months
for UIL - 0.05 (0.05) - 0.24 (0.24) Merger Costs - 0.03 (0.03) -
0.07 (0.07) Sale of equity method and other investment (0.01) -
(0.01) (0.12) - (0.12) Impairment of investment - - - 0.01 - 0.01
Income tax impact of adjustments 0.00 (0.01)
0.02 0.05 (0.03) 0.08
Adjusted Earnings Per
Share $ 0.32 $ 0.10 $
0.22 $ 0.95 $ 0.66 $
0.29 * Pre-merger '15 EPS - based on 252.2 M shares
Weighted-avg # of Shares (M): 309.5 308.9 309.5 308.9
Amounts may not add due to rounding
Earnings for the second quarter and first six months of 2015 are
adjusted below to reflect the combination of AVANGRID with UIL:
Adjusted Net Income (Loss) - $M Three Months ended
June 30, Six Months ended June 30,
Adjusted 2015 Adjusted 2015 Networks $ 43 $
197 Renewables 69 95 Other (80) (88)
Adjusted Net
Income $ 31 $ 203
Adjusted Earnings (Loss) Per Share Three Months ended
June 30, Six Months ended June 30, Adjusted 2015
Adjusted 2015 Networks $ 0.14 $ 0.64 Renewables 0.22 0.31
Other (0.26) (0.29)
Adjusted EPS $
0.10 $ 0.66 Weighted-avg # of Shares
(M): 308.9 308.9
Amounts may not add due to rounding
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160718006395/en/
Avangrid, Inc.Analysts:Patricia Cosgel,
203-499-2624orMedia:Michael West Jr., 203-499-3858
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