(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 June 15, 2016, to holders of record as of June 1, 2016.
The Company, an operator of regulated electric, gas and water
utilities, announced today the results for the quarter and twelve
months ended March 31, 2016.
Highlights:
- The Company reported consolidated
earnings for the first quarter ended March 31, 2016, inclusive of
merger costs related to the previously announced Agreement and Plan
of Merger among the Company, Liberty Utilities (Central) Co. and
Liberty Sub Corp. (the “merger-related costs”) of $14.0 million, or
$0.32 per share compared to same quarter 2015 earnings of $14.6
million, or $0.34 per share. Earnings for the twelve months ended
March 31, 2016, including merger-related costs, were $56.0 million,
or $1.28 per share, compared to earnings of $60.8 million, or $1.40
per share for the same 2015 twelve month period.
- Excluding merger-related costs, which
amounted to $4.2 million and $4.5 million, respectively, or $0.06
per share, for the first quarter 2016 and twelve month period ended
March 31, 2016, consolidated earnings, after adjusting for taxes,
would have been $16.6 million, or $0.38 per share, and $58.8
million or $1.34 per share, for the respective quarter and twelve
month periods.
- Earnings for both the first quarter of
2016 and twelve month period ended March 31, 2016 were lower
primarily as a result of the merger-related costs mentioned above
and due to milder weather, which reduced electric sales 7.5% and
2.7% for the respective periods. These negative impacts were
partially offset by the July 2015 Missouri electric rates
increase.
According to Brad Beecher, Empire’s President and CEO, “February
9, 2016 marked a significant day in the history of The Empire
District Electric Company, as an Agreement and Plan of Merger was
announced with a subsidiary of Algonquin Power and Utilities Corp.
Empire’s management will be working diligently over the next
several months to obtain the necessary shareholder and regulatory
approvals to effectuate closing of the transaction. We have set May
2, 2016 as the record date for determining eligibility to vote on
the Agreement and Plan of Merger and we expect to hold a special
Shareholder’s Meeting on June 16, 2016 for the purpose of voting on
the Agreement and Plan of Merger. In the meantime, all of us at
Empire recognize the need to continue running the business as if
nothing has changed. To that end, I am pleased with our earnings
performance for the first quarter 2016 during which we continued to
experience milder weather than normal. Overall, costs were well
controlled and our results, adjusted for weather and the
merger-related costs incurred during the period, met our
expectations. Importantly, our earnings guidance communicated on
February 26, 2016 remains unchanged.”
First Quarter 2016 Results
Electric segment gross margin (electric revenue less cost of
fuel and purchased power) increased $2.8 million, or 3.1%, during
the first quarter 2016 compared to the first quarter 2015. Quarter
over quarter electric segment gross margin impacts include:
- Increased customer rates of $7.7
million, net of a $1.9 million decrease in Missouri base fuel
recovery, increased revenues by an estimated $5.8 million,
- Improved customer counts added an
estimated $0.7 million to revenues, and
- Weather and other volumetric factors
decreased revenues by an estimated $10.5 million.
Fuel expense decreases reflective of the timing of the deferral
and recovery of non-Missouri fuel and consumable costs also
contributed positively to electric segment gross margin.
Gas segment gross margin (gas revenues less cost of gas sold and
transported) was approximately $0.8, million, or 10.0% lower than
first quarter 2015 results. Gas segment heating degree days in the
first quarter 2016 were 16% lower than in first quarter 2015,
resulting in a sales decline of 12.9% compared to the prior year
period.
Consolidated first quarter 2016 earnings were favorably impacted
by lower operating costs which decreased $0.6 million and Allowance
For Funds Used During Construction (AFUDC) which increased $1.2
million, while unfavorable impacts included the following:
- Depreciation and amortization expense
increases of approximately $0.4 million,
- Interest expense increases of
approximately $0.6 million, and
- Merger-related costs of approximately
$4.2 million.
As noted above, absent the aforementioned merger-related costs,
adjusted for taxes, consolidated first quarter 2016 earnings would
have been approximately $16.6 million, or $0.38 on an earnings per
share basis, an earnings increase of 13.7% over the 2015
quarter.
Twelve Months Ended March 31, 2016 Results
Electric segment gross margin increased approximately $14.5
million or 3.9% during the twelve month period ended March 31, 2016
compared to the prior year period. Year over year electric segment
gross margin impacts include:
- Increased customer rates of $17.8
million, net of a decrease in Missouri base fuel recovery of $5.2
million, increased revenues an estimated $12.6 million,
- Improved customer counts added an
estimated $2.5 million to revenues, and
- Weather and other volumetric factors
decreased revenues an estimated $15.0 million.
Fuel expense decreases reflective of the timing of the deferral
and recovery of non-Missouri fuel and consumable costs also
contributed positively to electric segment gross margin.
Gas segment gross margin of $21.4 million was approximately $2.2
million, or 9.7%, below the twelve month period ended March 31,
2015 due to a 16.8% decline in sales driven by milder weather.
Total Gas segment degree days were 20.8% lower for the twelve
months ended March 31, 2016 than the comparable prior year
period.
Consolidated earnings for the twelve month period ended March
31, 2016 were negatively impacted by the following:
- Operating and maintenance expense
increases of approximately $3.6 million,
- Depreciation and amortization expense
increases of approximately $5.6 million,
- Other taxes increase of approximately
$1.2 million,
- Interest expense increase of
approximately $3.2 million,
- Changes in AFUDC, which decreased
earnings by approximately $0.6 million, and
- Merger-related costs of approximately
$4.5 million.
Consolidated net income decreased approximately $4.8 million, or
8.0%, for the twelve month period ended March 31, 2016 compared to
the prior year period. As noted above, absent the aforementioned
merger-related costs, adjusted for taxes, consolidated earnings for
the twelve month period ended March 31, 2016 would have been
approximately $58.8 million, or $1.34 on an earnings per share
basis, a decrease of 3.3% from the 2015 period.
Selected unaudited consolidated financial data for the quarters
and twelve months ended March 31, 2016 and March 31, 2015 is
presented in the following table.
(dollars in millions, except Per Share
data)
Three Months Ended
March 31,
Twelve Months Ended
March 31,
2016 2015 Change*
2016 2015 Change*
Electric Margin $ 96.5 $
93.7 $ 2.8 $ 388.1
$ 373.6 $ 14.5 Gas Margin
7.6 8.4 (0.8 ) 21.4 23.6
(2.2 ) Other Revenues 1.8
2.0 (0.2 )
8.5 8.1 0.4
Gross Margin 105.9 104.1
1.8 418.0
405.3 12.7 Less:
Operating and Maintenance Expenses 39.1 39.6
(0.5 ) 164.8 161.2 3.6
Merger-related costs 4.2 0.0 4.2
4.5 0.0 4.5 Depreciation and
Amortization 20.4 20.0 0.4 80.9
75.3 5.6 Taxes 19.0
19.8 (0.8 )
73.2 73.6 (0.4
) Operating Income 23.2 24.7
(1.5 ) 94.6 95.2 (0.6 )
Interest Expense and Other, net 9.2
10.1 (0.9 )
38.6 34.4 4.2
Net Income $ 14.0 $
14.6 ($0.6 ) $
56.0 $ 60.8 ($4.8
) Earnings Per Share (Basic) $
0.32 $ 0.34 ($0.02 ) $
1.28 $ 1.40 ($0.12 )
Reconciliation of Net Income/Earnings Per Share
Net Income (GAAP) $ 14.0 $ 14.6
($0.6 ) $ 56.0 $ 60.8
($4.8 ) Merger-related costs (adjusted for
taxes) 2.6 0.0
2.6 2.8 0.0
2.8 Net Income (excl. merger-related
costs) $ 16.6 $ 14.6
$ 2.0 $ 58.8 $
60.8 ($2.0 ) Earnings
Per Share (Basic) $ 0.38 $ 0.34
$ 0.04 $ 1.34 $ 1.40
($0.06 )
* Slight differences from actual
results may occur due to rounding to millions.
Three Months Ended
March 31,
Twelve Months Ended
March 31,
2016
2015
% Change*
2016
2015
% Change* Electric On-System kWh Sales (in
millions): Residential
508 590 -13.9 % 1,754
1,899 -7.6 % Commercial 360
377 -4.6 % 1,560 1,573
-0.8 % Industrial 248 246
0.8 % 1,067 1,040 2.5 %
Other 113 116 -2.6 %
459 461 -0.5 % Total
On-System Electric Sales 1,229 1,329
-7.5 % 4,840 4,973
-2.7 % Retail Gas Sales (billion cubic
feet): Residential 1.11 1.27 -13.0
% 2.05 2.49 -17.6 %
Commercial/Industrial 0.48 0.56 -13.1
% 1.01 1.20 -15.3 % Other
0.02 0.02 2.3 % 0.03
0.03 -7.5 % Total Retail Gas
Sales 1.61 1.85 -12.9
% 3.09 3.72 -16.8
%
Reconciliation of Earnings Per
Share
QuarterEnded
Twelve
MonthsEnded
Basic Earnings Per Share – March 31, 2015 $
0.34 $ 1.40 Gross Margins Electric
segment 0.04 0.21 Gas segment (0.01 ) (0.04 ) Other segment
0.00 0.01 Total
Gross Margin 0.03 0.18
Expenses Operating 0.01
(0.03 ) Maintenance and repairs 0.00 (0.02 ) Depreciation and
amortization (0.01 ) (0.08 ) Merger-related costs (0.06 ) (0.06 )
Other taxes 0.00 (0.02 ) Change in effective income tax rates 0.00
(0.01 ) Other income and deductions 0.00 (0.01 ) Interest charges
(0.01 ) (0.05 ) AFUDC 0.02 (0.01 ) Dilutive effect of additional
shares issued
0.00
(0.01 ) Basic Earnings Per
Share – March 31, 2016 $
0.32 $
1.28
The reconciliation of basic earnings per share (EPS) presented
above compares the quarter and twelve months ended March 31, 2016
versus March 31, 2015 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. The presentation
of net income and EPS excluding merger-related costs throughout
this press release is also a non-GAAP presentation. The Company
believes this presentation is useful to investors because
merger-related costs are not reflective of the underlying ongoing
operations of the Company and has included the analysis as a
complement to the financial information provided in accordance with
GAAP.
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 has 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 revised guidance range of $1.26 to $1.44 per share
communicated on February 26, 2016 remains unchanged. This 2016
guidance range reflects approximately 50% of the expected
merger-related costs of $15 to $17 million will be payable in 2016,
assuming a 2017 closing date. It also assumes 30-year average
weather, overall system energy growth of less than 1%, an October
1, 2016 effective date for our pending Missouri rate case at the
filed amount of $33.4 million, and increased operating costs,
driven by costs related to our Riverton combined cycle project.
Other factors that may impact earnings include variations in
customer growth and usage projections, unanticipated or unplanned
events that may impact operating and maintenance costs and the
impact of actual rate case results differing from our assumptions.
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, April 29, 2016, at 1:00 p.m. Eastern Time to discuss
earnings for the first quarter and twelve months ended March 31,
2016. To phone in to the conference call, parties in the United
States should dial 1-855-209-8213, or in Canada, 1-855-669-9657,
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.
Additional Information and Where to Find It
The proposed merger transaction will be submitted to
shareholders of Empire for their consideration. In connection with
the transaction, Empire will file a proxy statement and other
materials with the U.S. Securities and Exchange Commission (the
SEC). This communication is not a substitute for the proxy
statement or any other document that Empire may send to its
shareholders in connection with the proposed transaction. EMPIRE
SHAREHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT FOR THE
PROPOSED TRANSACTION WHEN IT IS FILED, AND ANY AMENDMENT OR
SUPPLEMENT THERETO THAT MAY BE FILED, WITH THE SEC BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT EMPIRE AND THE
TRANSACTION. All such documents, when filed, are available free of
charge at the SEC’s website at www.sec.gov, at Empire’s website at
www.empiredistrict.com or by sending a written request to Corporate
Secretary, The Empire District Electric Company, 602 S. Joplin
Avenue, Joplin, Missouri 64801.
Participants in the Solicitation
Empire and its directors and executive officers are deemed to be
participants in any solicitation of Empire shareholders in
connection with the proposed transaction. Information about Empire
directors and executive officers is available in Empire’s
definitive proxy statement, filed on March 16, 2016, in
connection with its 2016 annual meeting of shareholders, and in
Empire’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2015.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160428005312/en/
The Empire District Electric CompanyINVESTOR RELATIONSDale Harrington,
417-625-4222Director of Investor
Relationsdharrington@empiredistrict.comorMEDIA COMMUNICATIONSJulie Maus,
417-625-5101Director of Corporate
Communicationsjmaus@empiredistrict.com
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