OKLAHOMA CITY, Nov. 5, 2015 /PRNewswire/ -- OGE Energy
Corp. (NYSE: OGE), the parent company of Oklahoma Gas and Electric
Company ("OG&E"), and holder of 26.3 percent limited partner
interest and 50 percent general partner interest in Enable
Midstream Partners, LP, today reported earnings of $0.55 per average diluted share for the three
months ended September 30, 2015
compared to $0.94 per average diluted
share for the third quarter of 2014. Earnings for the third quarter
of 2015 include pension settlement and goodwill impairment charges
of approximately $113 million pretax,
or $0.35 per share after tax, at
Enable Midstream. Ongoing earnings, which exclude these non-cash
charges, for the third quarter 2015 were $0.90 per average diluted share compared to
$0.94 per average diluted share for
the same period in 2014. Ongoing earnings and ongoing earnings per
average diluted share are non-GAAP financial measures.
Additional information regarding these measures, including
reconciliations of ongoing earnings and ongoing earnings per
average diluted share, is below.
OG&E, a regulated electric utility, contributed earnings of
$0.82 per share in the third quarter,
compared with earnings of $0.79 per
share in the third quarter last year. OGE Energy's interest in the
natural gas midstream operations contributed a loss to earnings of
$0.25 per share compared with
earnings of $0.14 per share last
year. Distributions received from Enable Midstream have been
$104 million year to date. The
holding company posted a loss of $0.02 per share in the third quarter, compared
with earnings of $0.01 per share in
the third quarter of 2014.
"The low commodity price environment is impacting Enable as
evidenced by the impairment. However, this does not change our
stated utility growth rate or plans for dividend growth through
2019," said OGE Energy Corp. President and CEO Sean Trauschke. "At the utility, I am
particularly proud of the continued success of controlling costs,
executing on our projects and delivering value to our
customers."
Discussion of Third Quarter 2015
OGE
Energy's net income was $111
million in the third quarter, compared to $187 million in the year-ago quarter.
OG&E's net income was $163 million in the third quarter, compared to
$157 million in the comparable
quarter last year. The increase was primarily due to higher
gross margin as a result of growth from new customers and weather
related sales that were better than the same period in 2014,
despite being below normal. Partially offsetting these
increases in gross margin were lower wholesale transmission
revenues and the expiration of a wholesale power contract. In
addition, higher depreciation and amortization expense reduced
utility earnings for the comparable period. Gross margin on
revenues was $460 million in the
third quarter, compared with $449
million for the same period last year.
Natural Gas Midstream Operations contributed a
loss to OGE Energy Corp. of $50
million for the third quarter of 2015 compared to earnings
of $28 million for the same period in
2014. Results for the current quarter include a pretax charge of
approximately $108 million to write
off OGE's portion of Enable's goodwill impairment. Ongoing
earnings, which exclude this goodwill impairment charge as well as
a $5 million pension settlement
charge, were $20 million in the third
quarter compared to $28 million in
2014. The decrease in ongoing earnings reflects lower average
natural gas and natural gas liquids prices.
2015 Outlook
The Company projects 2015 ongoing
consolidated earnings guidance to be at the low end of the earnings
range of $1.76 to $1.89 per average
diluted share. The utility is now projected to be at the low end of
the 1.41 to $1.49 per average diluted
share range primarily due to mild summer weather as compared to
normal and environmental compliance assets placed into service that
have not been included in rates. Distributable cash flow from
Enable is projected to be approximately $140
million for 2015. See the Company's 2014 Form 10-K for
other key factors and assumptions underlying its 2015 earnings
guidance.
Conference Call Webcast
OGE Energy will host a
conference call for discussion of the results and the outlook for
the rest of 2015 on Thursday, November
5, at 8 a.m. CST. The
conference will be available through www.oge.com. OGE
Energy Corp. is the parent company of OG&E, a regulated
electric utility with approximately 822,000 customers in
Oklahoma and western
Arkansas. In addition, OGE holds a 26.3 percent limited
partner interest and a 50 percent general partner interest of
Enable Midstream, created by the merger of OGE's Enogex LLC
midstream subsidiary and the pipeline and field services businesses
of Houston-based CenterPoint
Energy.
Non-GAAP Financial Measures
OG&E has included in
this release the non-GAAP financial measures Ongoing Earnings,
Ongoing Earnings per Average Diluted Share, and Gross Margin. Gross
Margin is defined by OG&E as operating revenues less fuel,
purchased power and certain transmission expenses. Gross
margin is a non-GAAP financial measure because it excludes
depreciation and amortization, and other operation and maintenance
expenses. Expenses for fuel and purchased power are recovered
through fuel adjustment clauses and as a result changes in these
expenses are offset in operating revenues with no impact on net
income. OG&E believes gross margin provides a more
meaningful basis for evaluating its operations across periods than
operating revenues because gross margin excludes the revenue effect
of fluctuations in these expenses. Gross margin is used
internally to measure performance against budget and in reports for
management and the Board of Directors. OG&E's definition of
gross margin may be different from similar terms used by other
companies.
Reconciliation of Gross Margin to Revenue attributable to
OG&E
|
|
|
|
|
Three Months
Ended
September
30,
|
(In
millions)
|
|
2015
|
|
|
2014
|
Operating
revenues
|
$
|
719.8
|
|
$
|
754.7
|
Less:
|
|
|
|
|
|
Cost of
sales
|
|
259.8
|
|
|
305.3
|
Gross Margin
|
$
|
460.0
|
|
$
|
449.4
|
|
|
|
|
|
|
Ongoing Earnings and Ongoing Earnings per Average Diluted Share,
which exclude non-cash charges of approximately $108 million or $0.33 per average diluted share associated with
OGE's share of Enable Midstream's goodwill impairment as well as a
non-cash pension settlement charge of approximately $5 million or $0.02
per average diluted share, are non-GAAP financial measures.
OGE Energy's management believes that ongoing earnings and ongoing
earnings per average diluted share provide a more meaningful
comparison of earnings results and are more representative of OGE
Energy's fundamental core earnings power. Reconciliations of
ongoing earnings and ongoing earnings per average diluted share are
below.
OGE Energy Corp
Reconciliation of
Ongoing Earnings (Loss) to GAAP Earnings (Loss)
(In
millions)
|
3Q 2015
GAAP
Earnings
(Loss)
|
Goodwill and
Pension
Settlement
Charges(1)
|
3Q 2015
Ongoing
Earnings
(Loss)
|
3Q 2014
GAAP and
Ongoing
Earnings
(Loss) (2)
|
OG&E
|
$162.9
|
$0.0
|
$162.9
|
$157.3
|
Natural Gas Midstream
Operations
|
(50.0)
|
69.8
|
19.8
|
28.2
|
Holding
Company
|
(1.7)
|
0.0
|
(1.7)
|
1.8
|
Consolidated
|
$111.2
|
$69.8
|
$181.0
|
$187.3
|
Reconciliation of Ongoing Earnings per Average Diluted Share
to GAAP Earnings per Average Diluted Share
|
3Q 2015
GAAP
Earnings
Per Share
|
Goodwill and
Pension
Settlement
Charges(1)
|
3Q 2015
Ongoing
Earnings per
Share
|
3Q 2014
GAAP and
Ongoing
Earnings Per
Share (2)
|
OG&E
|
$0.82
|
$0.00
|
$0.82
|
$0.79
|
Natural Gas Midstream
Operations
|
(0.25)
|
0.35
|
0.10
|
0.14
|
Holding
Company
|
(0.02)
|
0.00
|
(0.02)
|
0.01
|
Consolidated
|
$0.55
|
$0.35
|
$0.90
|
$0.94
|
|
|
(1) OGE
recognized a non-cash charge of approximately $108 million or $0.33
per average diluted share for its portion of Enable Midstream's
goodwill impairment. Additionally, OGE recognized a non-cash
charge of approximately $5 million or $0.02 per average diluted
share for a pension settlement charge.
|
|
|
(2) There
were no similar charges for the year ended December 31, 2014
therefore, ongoing and GAAP earnings are the same.
|
Some of the matters discussed in this news release may contain
forward-looking statements that are subject to certain risks,
uncertainties and assumptions. Such forward-looking
statements are intended to be identified in this document by the
words "anticipate", "believe", "estimate", "expect", "intend",
"objective", "plan", "possible", "potential", "project" and similar
expressions. Actual results may vary materially. Factors
that could cause actual results to differ materially include, but
are not limited to: general economic conditions, including the
availability of credit, access to existing lines of credit, access
to the commercial paper markets, actions of rating agencies and
their impact on capital expenditures; the ability of the Company
and its subsidiaries to access the capital markets and obtain
financing on favorable terms as well as inflation rates and
monetary fluctuations; prices and availability of electricity,
coal, natural gas and natural gas liquids; the timing and extent of
changes in commodity prices, particularly natural gas and natural
gas liquids, the competitive effects of the available pipeline
capacity in the regions Enable Midstream Partners serves, and the
effects of geographic and seasonal commodity price differentials,
including the effects of these circumstances on re-contracting
available capacity on Enable Midstream Partners' interstate
pipelines; the timing and extent of changes in the supply of
natural gas, particularly supplies available for gathering by
Enable Midstream Partners' gathering and processing business and
transporting by Enable Midstream Partners' interstate pipelines,
including the impact of natural gas and natural gas liquids prices
on the level of drilling and production activities in the regions
Enable Midstream Partners serves; business conditions in the energy
and natural gas midstream industries including the demand for
natural gas, natural gas liquids, crude oil and midstream services;
competitive factors including the extent and timing of the entry of
additional competition in the markets served by the Company;
unusual weather; availability and prices of raw materials for
current and future construction projects; Federal or state
legislation and regulatory decisions and initiatives that affect
cost and investment recovery, have an impact on rate structures or
affect the speed and degree to which competition enters the
Company's markets; environmental laws and regulations that may
impact the Company's operations; changes in accounting standards,
rules or guidelines; the discontinuance of accounting principles
for certain types of rate-regulated activities; the cost of
protecting assets against, or damage due to, terrorism or
cyber-attacks and other catastrophic events; advances in
technology; creditworthiness of suppliers, customers and other
contractual parties; difficulty in making accurate assumptions and
projections regarding future revenues and costs associated with the
Company's equity investment in Enable Midstream Partners that the
Company does not control; and other risk factors listed in the
reports filed by the Company with the Securities and Exchange
Commission including those listed in Risk Factors and Exhibit 99.01
to the Company's Form 10-K for the year ended December 31,
2014.
Note: Consolidated Statements of Income, Financial and
Statistical Data attached.
OGE ENERGY
CORP. CONSOLIDATED STATEMENTS OF
INCOME (Unaudited)
|
|
|
|
|
Three Months
Ended
September 30,
|
Nine Months
Ended
September 30,
|
(In millions
except per share data)
|
2015
|
2014
|
2015
|
2014
|
OPERATING REVENUES
|
$
|
719.8
|
|
$
|
754.7
|
|
$
|
1,749.8
|
|
$
|
1,926.9
|
|
COST OF
SALES
|
259.8
|
|
305.3
|
|
682.3
|
|
869.6
|
|
OPERATING
EXPENSES
|
|
|
|
|
Other operation and maintenance
|
109.4
|
|
108.1
|
|
334.3
|
|
331.9
|
|
Depreciation and amortization
|
77.9
|
|
71.7
|
|
230.0
|
|
207.2
|
|
Taxes other than income
|
21.9
|
|
21.5
|
|
68.8
|
|
66.5
|
|
Total operating
expenses
|
209.2
|
|
201.3
|
|
633.1
|
|
605.6
|
|
OPERATING INCOME
|
250.8
|
|
248.1
|
|
434.4
|
|
451.7
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
Equity in earnings of
unconsolidated affiliates
|
(71.9)
|
|
44.7
|
|
(12.0)
|
|
131.9
|
|
Allowance for equity funds used during
construction
|
2.2
|
|
1.1
|
|
5.4
|
|
3.0
|
|
Other income
|
8.9
|
|
7.2
|
|
19.4
|
|
11.7
|
|
Other expense
|
(5.3)
|
|
(5.8)
|
|
(8.5)
|
|
(11.2)
|
|
Net other income
|
(66.1)
|
|
47.2
|
|
4.3
|
|
135.4
|
|
INTEREST EXPENSE
|
|
|
|
|
Interest on long-term debt
|
37.0
|
|
36.3
|
|
110.9
|
|
109.2
|
|
Allowance for borrowed funds used during
construction
|
(1.1)
|
|
(0.6)
|
|
(2.7)
|
|
(1.7)
|
|
Interest on short-term debt and other interest charges
|
1.1
|
|
1.5
|
|
4.2
|
|
5.0
|
|
Interest expense
|
37.0
|
|
37.2
|
|
112.4
|
|
112.5
|
|
INCOME BEFORE TAXES
|
147.7
|
|
258.1
|
|
326.3
|
|
474.6
|
|
INCOME TAX EXPENSE
|
36.5
|
|
70.8
|
|
84.4
|
|
137.2
|
|
NET INCOME
|
$
|
111.2
|
|
$
|
187.3
|
|
$
|
241.9
|
|
$
|
337.4
|
|
BASIC AVERAGE COMMON SHARES
OUTSTANDING
|
199.7
|
|
199.3
|
|
199.6
|
|
199.1
|
|
DILUTED AVERAGE COMMON SHARES
OUTSTANDING
|
199.7
|
|
200.2
|
|
199.6
|
|
199.9
|
|
BASIC EARNINGS PER AVERAGE COMMON SHARE
|
$
|
0.55
|
|
$
|
0.94
|
|
$
|
1.21
|
|
$
|
1.69
|
|
DILUTED EARNINGS PER
AVERAGE COMMON SHARE
|
$
|
0.55
|
|
$
|
0.94
|
|
$
|
1.21
|
|
$
|
1.69
|
|
DIVIDENDS DECLARED PER COMMON
SHARE
|
$
|
0.27500
|
|
$
|
0.25000
|
|
$
|
0.77500
|
|
$
|
0.70000
|
|
Oklahoma Gas and
Electric Company FINANCIAL AND STATISTICAL DATA
(Unaudited)
|
|
|
|
|
Three Months
Ended
|
Nine Months
Ended
|
|
September
30,
|
September
30,
|
(Dollars in
millions)
|
2015
|
2014
|
2015
|
2014
|
Operating revenues by
classification
|
|
|
|
|
Residential
|
$
|
318.1
|
|
$
|
300.9
|
|
$
|
726.7
|
|
$
|
738.6
|
|
Commercial
|
176.5
|
|
181.1
|
|
423.0
|
|
454.2
|
|
Industrial
|
59.2
|
|
67.7
|
|
150.2
|
|
174.5
|
|
Oilfield
|
49.1
|
|
54.6
|
|
128.2
|
|
146.4
|
|
Public authorities
and street light
|
63.4
|
|
68.3
|
|
154.1
|
|
172.3
|
|
Sales for
resale
|
0.9
|
|
13.3
|
|
21.7
|
|
41.3
|
|
System
sales revenues
|
667.2
|
|
685.9
|
|
1,603.9
|
|
1,727.3
|
|
Off-system sales
revenues
|
13.5
|
|
25.8
|
|
34.8
|
|
78.0
|
|
Other
|
39.1
|
|
43.0
|
|
111.1
|
|
121.6
|
|
Total
operating revenues
|
$
|
719.8
|
|
$
|
754.7
|
|
$
|
1,749.8
|
|
$
|
1,926.9
|
|
Megawatt-hour sales
by classification (In millions)
|
|
|
|
|
Residential
|
3.1
|
|
2.8
|
|
7.4
|
|
7.3
|
|
Commercial
|
2.1
|
|
2.0
|
|
5.7
|
|
5.5
|
|
Industrial
|
1.0
|
|
1.1
|
|
2.8
|
|
2.9
|
|
Oilfield
|
0.8
|
|
0.9
|
|
2.5
|
|
2.6
|
|
Public authorities
and street light
|
0.9
|
|
0.8
|
|
2.4
|
|
2.4
|
|
Sales for
resale
|
—
|
|
0.3
|
|
0.5
|
|
0.8
|
|
System
sales
|
7.9
|
|
7.9
|
|
21.3
|
|
21.5
|
|
Off-system
sales
|
0.4
|
|
0.7
|
|
1.1
|
|
1.9
|
|
Total
sales
|
8.3
|
|
8.6
|
|
22.4
|
|
23.4
|
|
Number of
customers
|
821,596
|
|
812,546
|
|
821,596
|
|
812,546
|
|
Weighted-average cost
of energy per kilowatt-hour - cents
|
|
|
|
|
Natural
gas
|
2.668
|
|
3.858
|
|
2.666
|
|
4.718
|
|
Coal
|
2.209
|
|
2.159
|
|
2.170
|
|
2.148
|
|
Total fuel
|
2.300
|
|
2.592
|
|
2.245
|
|
2.818
|
|
Total fuel and
purchased power
|
2.973
|
|
3.429
|
|
2.925
|
|
3.546
|
|
Degree days
(A)
|
|
|
|
|
Heating -
Actual
|
—
|
|
10
|
|
1,984
|
|
2,280
|
|
Heating -
Normal
|
19
|
|
19
|
|
2,020
|
|
2,020
|
|
Cooling -
Actual
|
1,372
|
|
1,293
|
|
1,993
|
|
1,985
|
|
Cooling -
Normal
|
1,380
|
|
1,380
|
|
2,018
|
|
2,018
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/oge-energy-corp-reports-third-quarter-results-300172976.html
SOURCE OGE Energy Corp.