(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 September 15, 2015, to holders of record as of September 1,
2015. The Company, an operator of regulated electric, gas
and water utilities, announced today the results for the quarter
and twelve months ended June 30, 2015.
The Company reported consolidated earnings for the second
quarter of 2015 of $6.8 million, or $0.16 per share ($0.15 on a
diluted basis), compared to same quarter 2014 earnings of $11.2
million, or $0.26 per share. Earnings for the twelve months ended
June 30, 2015 were $56.4 million, or $1.30 per share ($1.29 on a
diluted basis), compared to earnings of $71.3 million, or $1.66 per
share ($1.65 on a diluted basis), for the twelve months ended June
30, 2014.
Earnings were lower this quarter over the same quarter last
year, primarily due to higher generation maintenance expense and
higher depreciation expense. At our SLCC generating facility,
maintenance expense increased approximately $3.1 million due to a
planned major maintenance outage the effect of which will be offset
by lower planned maintenance throughout our system the remainder of
the year. The new maintenance contract for the Riverton facility
also increased maintenance costs approximately $0.6 million over
the same quarter last year. Electric depreciation expense increased
approximately $1.9 million reflecting depreciation on the Asbury
Air Quality Control System (AQCS) environmental upgrade. Margin was
relatively unchanged for the second quarter of 2015 versus the same
quarter in 2014.
The decrease in earnings for the twelve month period ended June
30, 2015, versus the comparable prior year period, was primarily
driven by lower gross margin resulting from milder weather for the
comparable periods, and increased operations, maintenance and
depreciation expenses.
As announced, on June 24, 2015, the MPSC granted new rates for
Missouri customers (the Order). The rates are effective July 26,
2015. The Order approved an annual increase in base revenues of
about $17.1 million or 3.90%, consistent with the non-unanimous
stipulation and agreement filed April 8, 2015.
Regarding the Company’s second quarter 2015 results, Bradley P.
Beecher, President and CEO, stated the following: “Our second
quarter results were on target with our 2015 earnings guidance. The
implementation of our new Missouri rates on July 26 will enable us
to begin recovering the cost of our Asbury environmental upgrade.
The Order is also reflective of fuel cost savings achieved through
the SPP integrated marketplace. Given the expected earnings build
as a result of these new customer rates, 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.”
Second Quarter 2015 Results
Electric segment gross margin (electric revenue less cost of
fuel and purchased power) increased approximately $0.7 million or
0.8% during the second quarter 2015 compared to the second quarter
2014. Electric segment gross margin was positively impacted by
increased customer counts, which added an estimated $0.6 million to
revenues. Negative impacts to electric segment margin included
milder weather and other volumetric factors, which decreased
revenues an estimated $0.5 million. Lower wholesale customer rates
drove a reduction in revenues of an estimated $1.2 million,
reflecting lower fuel costs.
Changes in net revenues related to the Southwest Power Pool
(SPP) Integrated Marketplace and fuel recovery revenues combined to
reduce revenues by $12.8 million during the second quarter 2015
compared to the second quarter 2014, however this decrease is
offset by a similar decrease in fuel expense, resulting in a
negligible impact on gross margin.
Gas segment gross margin (gas revenues less cost of gas sold and
transported) declined $0.1 million or 1.7% to $4.2 million.
Consolidated quarterly earnings were also negatively impacted
by:
- Maintenance and Repair expense
increases of approximately $4.2 million, as previously
mentioned,
- Depreciation and Amortization expense
increases of approximately $2.0 million,
- Interest expense increases of
approximately $0.7 million, and
- Changes in Allowance For Funds Used
During Construction (AFUDC), which decreased earnings by
approximately $0.4 million.
Consolidated net income decreased approximately $4.4 million in
the second quarter of 2015 compared to the 2014 quarter.
Twelve Months Ended June 2015 Results
Electric segment gross margin decreased approximately $2.2
million during the twelve month period ended June 30, 2015 versus
the comparable prior year period resulting from lower sales. Milder
weather in the twelve month period ended June 30, 2015 versus the
comparable prior year period resulted in a 1.4% decrease in
on-system sales as a decline in residential sales was not fully
offset by increases in commercial and industrial sales.
Electric segment gross margin was negatively impacted by:
- Weather and other volumetric factors,
which decreased revenues an estimated $8.7 million, and
- A previously disclosed $1.4 million
refund to the Company’s FERC wholesale customers in January 2015
reflecting lower fuel costs from the SPP Integrated market.
Positive impacts to electric segment gross margin included:
- Increased customer counts, which added
an estimated $2.0 million to revenues, and
- Increased customer rates, which added
an estimated $1.5 million to revenues.
Gas segment gross margin decreased approximately $1.3 million or
5.3% 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 June
30, 2015 versus the comparable prior year period.
Consolidated twelve month ended earnings were also negatively
impacted by:
- Operating expense increases of
approximately $4.3 million, primarily due to increased transmission
expense,
- Maintenance expense increases of
approximately $7.5 million driven by the previously mentioned
items,
- Depreciation and amortization expense
increases of approximately $5.6 million,
- Property and other tax increases of
approximately $1.2 million, and
- Interest expense increases of
approximately $1.7 million.
Twelve month ended consolidated earnings were positively
impacted by $1.0 million from AFUDC changes.
Consolidated net income decreased approximately $14.8 million in
the 2015 twelve month ended period compared to 2014.
Selected unaudited consolidated financial data for the quarters
and twelve months ended June 30, 2015 and June 30, 2014 is
presented in the table on the following page.
(dollars in millions, except Per
Share data) Three Months Ended Twelve Months
Ended June 30, June 30, 2015 2014 Change * 2015
2014 Change * Electric Revenues $126.3 $140.8 ($14.5
) $567.6 $574.5 ($6.9 ) Electric Fuel and Purchased Power 39.2
54.4 (15.2 ) 193.3 198.0 (4.7 )
Electric Margin 87.1 86.4 0.7 374.3 376.5 (2.2 ) Gas
Revenues 6.2 7.0 (0.8 ) 46.4 53.4 (7.0 ) Cost of Gas Sold and
Transported 2.0 2.7 (0.7 ) 22.8 28.5
(5.7 ) Gas Margin 4.2 4.3 (0.1 ) 23.6 24.9 (1.3 ) Other
Revenues 2.0 2.0 0.0 8.1 8.1 0.0
Gross Margin 93.3 92.7 0.6 406.0
409.5 (3.5 ) Less: Operating and Maintenance Expenses
44.0 39.8 4.2 165.5 153.5 12.0 Depreciation and Amortization 20.1
18.2 1.9 77.2 71.7 5.5 Taxes 13.1 15.3 (2.2 ) 71.5
78.6 (7.1 ) Operating Income 16.1 19.5 (3.4 ) 91.8
105.7 (13.9 ) Interest Expense and Other, net 9.3 8.3
1.0 35.4 34.4 1.0 Net Income $6.8 $11.2
($4.4 ) $56.4 $71.3 ($14.9 ) Earnings Per Share (Basic)
$0.16 $0.26 ($0.10 ) $1.30 $1.66 ($0.36 ) Earnings Per Share
(Diluted) $0.15 $0.26 ($0.11 ) $1.29 $1.65 ($0.36 )
Three Months Ended Twelve Months Ended June 30, June 30, % % 2015
2014 Change * 2015 2014 Change *
Electric On-System kWh Sales (in millions): Residential 347 370
-6.2 % 1,876 1,990 -5.7 % Commercial 394 382 3.2 % 1,585 1,576 0.6
% Industrial 272 262 3.8 % 1,050 1,009 4.1 % Other 110 110
0.1 % 461 469 -1.8 % Total On-System Electric Sales 1,123
1,124 -0.1 % 4,972 5,044 -1.4 %
Retail Gas Sales (billion cubic feet): Residential 0.21 0.26 -19.5
% 2.44 2.87 -15.1 % Commercial/Industrial 0.12 0.14 -12.6 % 1.18
1.43 -17.9 % Other 0.00 0.00 -39.4 % 0.03 0.04 -16.4
% Total Retail Gas Sales 0.33 0.40 -17.2 % 3.65
4.34 -16.0 %
* Slight differences from actual results
may occur due to rounding to millions.
Reconciliation of Earnings Per
Share
QuarterEnded
Twelve
MonthsEnded
Basic Earnings Per Share – June 30, 2014 $
0.26 $ 1.66 Gross Margins
Electric segment 0.01 (0.03 ) Gas segment 0.00 (0.02 ) Other
segment
0.00 0.00
Total Gross Margins 0.01 (0.05 )
Expenses Operating 0.00 (0.06 ) Maintenance and repairs
(0.06 ) (0.11 ) Depreciation and amortization (0.03 ) (0.08 )
Property & Other taxes (0.01 ) (0.02 ) Other income and
deductions 0.00 (0.01 ) Interest charges (0.01 ) (0.03 ) AFUDC 0.00
0.01 Dilutive effect of additional shares issued
0.00 (0.01 )
Basic Earnings Per Share – June 30, 2015
$ 0.16
$ 1.30
Diluted Earnings Per Share – June 30,
2015
$
0.15
$
1.29
The reconciliation of basic earnings per share (EPS) presented
above compares the quarter and year ended June 30, 2015 versus June
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. Given the Missouri rate case order is
reflective of lower fuel costs with little impact on margin, our
guidance range remains unchanged. 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, July 31, 2015, at 1:00 p.m. Eastern Time to discuss
earnings for the second quarter and twelve months ended June 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/20150730006727/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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