- Consolidated GAAP earnings up —
$2.62 per share vs. $2.05 per share
- Consolidated operating earnings per
share up — $3.16 per share vs. $2.68 per share; Record operating
earnings of $158.2 million
- Operating earnings guidance for
fiscal year 2016 in a range of $3.00 per share to $3.20 per
share
WGL Holdings, Inc. (NYSE: WGL):
Consolidated Results
WGL Holdings, Inc. (NYSE: WGL), the parent company of Washington
Gas Light Company (Washington Gas) and other energy-related
subsidiaries, today reported net income applicable to common stock
determined in accordance with generally accepted accounting
principles in the United States of America (GAAP) for the fiscal
year ended September 30, 2015, of $131.3 million, or $2.62 per
share, compared to net income applicable to common stock of $105.9
million, or $2.05 per share, reported for the fiscal year ended
September 30, 2014.
For the quarter ended September 30, 2015, net income
applicable to common stock was $1.6 million, or $0.03 per share,
compared to net income applicable to common stock of $38.0 million,
or $0.74 per share, for the same period of the prior fiscal
year.
On a consolidated basis, WGL uses operating earnings (loss) to
evaluate overall financial performance, and evaluates segment
financial performance based on earnings before interest and taxes,
as adjusted (adjusted EBIT). Both operating earnings (loss) and
adjusted EBIT adjust for the accounting recognition of certain
transactions that are not representative of the ongoing earnings of
the company. Additionally, we believe that adjusted EBIT enhances
the ability to evaluate segment performance because it excludes
interest and income tax expense, which are affected by
corporate-wide strategies such as capital financing and tax sharing
allocations. Operating earnings (loss) and adjusted EBIT are
non-GAAP financial measures, which are not recognized in accordance
with GAAP and should not be viewed as alternatives to GAAP measures
of performance. Refer to “Reconciliation of Non-GAAP Financial
Measures,” attached to this news release, for a more detailed
discussion of management’s use of these measures and for
reconciliations to GAAP financial measures.
For the fiscal year ended September 30, 2015, operating
earnings were $158.2 million, or $3.16 per share, an improvement of
$19.2 million, or $0.48 per share, over operating earnings of
$139.0 million, or $2.68 per share, for the same period of the
prior fiscal year. For the quarter ended September 30, 2015,
we reported an operating loss of $(11.5) million, or $(0.23) per
share, compared to an operating loss of $(8.8) million, or $(0.17)
per share, for the same quarter of the prior fiscal year.
“I am pleased to announce record non-GAAP operating earnings in
2015 for WGL,” said Terry D. McCallister, Chairman and Chief
Executive Officer. “Non-GAAP per share earnings of $3.16 increased
18% over last year’s $2.68. Our earnings growth was driven by
record results in our Retail Energy-Marketing and Commercial Energy
Systems businesses. The Retail segment has now shown five
consecutive quarters of strong earnings growth, and our Systems
segment is benefiting from our continued investment in clean
distributed generation assets. Our core regulated utility also
showed strong results in 2015 driven in part by record asset
optimization margins.”
“In addition, we are announcing 2016 non-GAAP EPS guidance in a
range of $3.00 to $3.20. While the midpoint of our guidance
reflects lower earnings than our 2015 results, we are solidly
within the range of 7% - 10% growth from 2014 results that we
established as a goal earlier this year during our Analyst
Day.”
Fiscal Year and Fourth Quarter Results
by Business Segment
Regulated Utility
For the three months ended September 30, 2015, the
regulated utility segment reported adjusted EBIT of $(19.8)
million, compared to adjusted EBIT of $(15.2) million for the same
quarter of the prior fiscal year, reflecting the typical seasonal
loss for this segment. For the fiscal year ended September 30,
2015, the regulated utility segment reported adjusted EBIT of
$235.7 million, compared to adjusted EBIT of $244.4 million for the
same period of the prior fiscal year.
For both the three months and fiscal year ended
September 30, 2015, the decline in adjusted EBIT reflects
higher expenses primarily associated with: (i) labor and employee
incentives; (ii) business-development related activities; (iii)
environmental reserve costs and (iv) the depreciation related to
the growth in our utility plant. Partially offsetting these
unfavorable variances were higher revenues from: (i) customer
growth; (ii) favorable effects of changes in natural gas
consumption patterns in the District of Columbia; (iii) rate
recovery related to our accelerated pipe replacement programs and
(iv) realized margins associated with our asset optimization
program. Additionally, for the fiscal year ended September 30,
2015, the regulated utility segment earned higher revenues from new
base rates in Maryland and incurred lower employee benefit
costs.
Retail Energy-Marketing
For the three months ended September 30, 2015, the retail
energy-marketing segment reported adjusted EBIT of $13.8 million,
an increase of $1.7 million, over adjusted EBIT of $12.1 million
for the same quarter of the prior fiscal year. For the fiscal year
ended September 30, 2015, the retail energy-marketing segment
reported adjusted EBIT of $68.5 million, an increase of $57.8
million, over adjusted EBIT of $10.7 million for the same period of
the prior fiscal year.
For the three months ended September 30, 2015, the increase
in adjusted EBIT resulted primarily from an increase in natural gas
margins reflecting favorable gas supply and pricing opportunities
in the current period compared to the same period of the prior
year.
Improved results for the fiscal year ended September 30,
2015, primarily reflect higher electricity margins due to lower PJM
capacity and ancillary charges. In addition, the comparison
reflects a recovery from the extreme cost levels experienced in the
second quarter of 2014 related to colder than normal weather.
Commercial Energy Systems
For the three months ended September 30, 2015, the
commercial energy systems segment reported adjusted EBIT of $6.1
million, an increase of $1.8 million, over adjusted EBIT of $4.3
million for the same quarter of the prior fiscal year. For the
fiscal year ended September 30, 2015, the commercial energy
systems segment reported adjusted EBIT of $16.8 million, an
increase of $4.5 million, over adjusted EBIT of $12.3 million, for
the same period of the prior fiscal year. The increase in adjusted
EBIT reflects: (i) continued growth in income producing distributed
generation assets in service; (ii) higher income from state rebate
programs for certain distributed generation projects and (iii) for
the year-to-date comparison, higher margins from energy-efficiency
contracting. These favorable variances are partially offset by
additional expenses from increased in-service distributed
generation assets.
Midstream Energy Services
For the three months ended September 30, 2015, the
midstream energy services segment reported adjusted EBIT of $(1.7)
million, an increase of $2.0 million, over adjusted EBIT of $(3.7)
million for the same quarter of the prior fiscal year. The increase
in adjusted EBIT primarily reflects favorable storage and
transportation spreads this quarter compared to the same quarter of
the prior fiscal year.
For the fiscal year ended September 30, 2015, the midstream
energy services segment reported adjusted EBIT of $(3.6) million,
compared to $5.1 million for the same period of the prior fiscal
year. This comparison primarily reflects lower total annual storage
and transportation spreads in the current year, partially offset by
lower investment development expenses and higher income related to
our pipeline investments.
Consolidated Interest
Expense
For the quarter ended September 30, 2015, interest expense
was $11.8 million, compared to interest expense of $9.7 million for
the same period of the prior fiscal year. For the fiscal year ended
September 30, 2015, interest expense was $50.5 million,
compared to interest expense of $37.7 million for the same period
of the prior fiscal year. For both the three months and fiscal year
ended September 30, 2015, the increase reflects increased
long-term borrowings at Washington Gas and WGL.
Earnings Outlook
We are providing a consolidated non-GAAP operating earnings
estimate for fiscal year 2015 in a range of $3.00 per share to
$3.20 per share. This estimate includes projected fiscal year 2016
non-GAAP EBIT from our regulated utility segment with a midpoint of
$229.0 million and projected fiscal year 2016 non-GAAP EBIT from
our non-utility business segments with a midpoint of $80.0 million.
This earnings guidance includes dilution from the planned issuance
of equity in fiscal year 2016. Note that we expect that there will
be differences between reported GAAP earnings and operating
earnings due to such items as, but not limited to, unrealized
mark-to-market positions for our energy-related derivatives. WGL
management is not able to reasonably estimate the aggregate impact
of these items on reported earnings and therefore is not able to
provide a corresponding GAAP equivalent for its operating earnings
guidance.
We assume no obligation to update this guidance. The absence of
any statement by us in the future should not be presumed to
represent an affirmation of this earnings guidance. For the
assumptions underlying this guidance, please refer to the slides
accompanying our webcast that will be posted to WGL’s website,
www.wglholdings.com.
Other Information
We will hold a conference call at 10:30 a.m., Eastern Time on
November 16, 2015, to discuss our fourth quarter and fiscal year
2015 financial results. The live conference call will be available
to the public via a link located on WGL’s website, www.wglholdings.com. To hear the live
webcast, click on “Investor Relations” then “Events &
Webcasts.” The webcast and related slides will be archived on WGL’s
website through at least Monday December 14, 2015.
WGL, headquartered in Washington, D.C., is a leading source for
clean, efficient and diverse energy solutions. With activities and
assets across the U.S., WGL consists of Washington Gas, WGL Energy,
WGL Midstream and Hampshire Gas. WGL provides natural gas,
electricity, green power and energy services, including generation,
storage, transportation, distribution, supply and efficiency. Our
calling as a company is to make energy surprisingly easy for our
employees, our community and all our customers. Whether you are a
homeowner or renter, small business or multinational corporation,
state and local or federal agency, WGL is here to provide Energy
Answers. Ask Us. For more information, visit us at www.wglholdings.com.
Unless otherwise noted, earnings per share amounts are presented
on a diluted basis, and are based on weighted average common and
common equivalent shares outstanding.
Please see the attached comparative statements for additional
information on our operating results. Also attached to this news
release are reconciliations of non-GAAP financial measures.
Forward-Looking
Statements
This news release and other statements by us include
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 with respect to the
outlook for earnings, revenues and other future financial business
performance or strategies and expectations. Forward-looking
statements are typically identified by words such as, but not
limited to, “estimates,” “expects,” “anticipates,” “intends,”
“believes,” “plans,” and similar expressions, or future or
conditional verbs such as “will,” “should,” “would,” and “could.”
Although we believe such forward-looking statements are based on
reasonable assumptions, we cannot give assurance that every
objective will be achieved. Forward-looking statements speak only
as of today, and we assume no duty to update them. Factors that
could cause actual results to differ materially from those
expressed or implied include, but are not limited to, general
economic conditions and the factors discussed under the “Risk
Factors” heading in our most recent annual report on Form 10-K and
other documents that we have filed with, or furnished to, the U.S.
Securities and Exchange Commission.
WGL Holdings, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands)
September 30, 2015 September 30, 2014
ASSETS
Property, Plant and Equipment At original cost
$
5,003,910 $ 4,582,764 Accumulated depreciation and
amortization
(1,331,182 ) (1,268,319 )
Net property, plant and equipment
3,672,728
3,314,445
Current Assets Cash and cash
equivalents
6,733 8,811 Accounts receivable, net
358,491 298,978 Storage gas
211,443 333,602
Derivatives and other
204,716 194,124
Total current assets
781,383
835,515
Deferred Charges and Other Assets
840,090 706,539
Total Assets
$ 5,294,201 $ 4,856,499
CAPITALIZATION AND LIABILITIES Capitalization Common
shareholders’ equity
$ 1,243,247 $ 1,246,576
Washington Gas Light Company preferred stock
28,173 28,173
Long-term debt
944,201 679,228
Total capitalization
2,215,621
1,953,977
Current Liabilities Notes payable and
current maturities of long-term debt
357,000 473,500
Accounts payable and other accrued liabilities
325,146
313,221 Derivatives and other
300,768
233,564 Total current liabilities
982,914
1,020,285
Deferred Credits
2,095,666 1,882,237
Total
Capitalization and Liabilities $ 5,294,201
$ 4,856,499
WGL Holdings,
Inc. Consolidated Statements of Income
(Unaudited)
Three Months EndedSeptember
30,
Fiscal Year EndedSeptember
30,
(In thousands, except per share data)
2015
2014
2015 2014
OPERATING REVENUES
Utility
$ 129,648 $ 133,254
$
1,303,044 $ 1,416,951 Non-utility
338,039
325,646
1,356,786
1,363,996
Total Operating Revenues 467,687
458,900
2,659,830
2,780,947
OPERATING EXPENSES Utility cost of gas
11,772 (10,131 )
510,900 700,305 Non-utility cost of
energy-related sales
284,420 257,321
1,218,331
1,255,279 Operation and maintenance
100,461 88,068
395,770 365,873 Depreciation and amortization
31,733
29,256
121,892 110,772 General taxes and other assessments
25,689 24,820
152,164 151,196
Total Operating
Expenses 454,075 389,334
2,399,057 2,583,425
OPERATING
INCOME 13,612 69,566
260,773 197,522 Equity in
earnings of unconsolidated affiliates
1,230 1,343
5,468 3,194 Other income—net
2,341 1,279
653
1,536 Interest expense
11,807 9,718
50,511 37,738
INCOME BEFORE
TAXES 5,376 62,470
216,383 164,514
INCOME TAX
EXPENSE 3,440 24,102
83,804 57,254
NET INCOME $
1,936 $ 38,368
$ 132,579 $ 107,260 Dividends
on Washington Gas Light Company preferred stock
330
330
1,320 1,320
NET INCOME APPLICABLE TO COMMON STOCK $
1,606 $ 38,038
$
131,259 $ 105,940
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING Basic
49,729 51,524
49,794
51,759 Diluted
50,069 51,527
50,060 51,770
EARNINGS PER AVERAGE
COMMON SHARE Basic
$ 0.03 $ 0.74
$
2.64 $ 2.05 Diluted
$ 0.03
$ 0.74
$ 2.62 $
2.05
WGL Holdings, Inc. Consolidated Financial and
Operating Statistics
(Unaudited)
FINANCIAL STATISTICS
Fiscal Year Ended September 30,
2015 2014 Closing Market Price — end of period
$57.67 $42.12 52-Week Market Price Range
$59.08 -
$42.04 $45.40-$35.88 Price Earnings Ratio
21.8 20.5
Annualized Dividends Per Share
$1.85 $1.76 Dividend Yield
3.2% 4.2% Return on Average Common Equity
10.5% 8.4%
Total Interest Coverage (times)
5.2 5.2 Book Value Per Share
— end of period
$25.00 $24.61 Common Shares Outstanding —
end of period (thousands)
49,729 50,657
UTILITY GAS STATISTICS
Three Months EndedSeptember
30,
Fiscal Year EndedSeptember
30,
(In thousands)
2015 2014
2015 2014
Operating
Revenues Gas Sold and Delivered
Residential — Firm
$ 61,641 $ 66,900
$
816,666 $ 891,079 Commercial and Industrial — Firm
15,761 17,263
187,938 213,787 Commercial and
Industrial — Interruptible
216 197
2,577 2,267
Electric Generation
275
275
1,100 1,100
Total Sold and Delivered
77,893
84,635
1,008,281
1,108,233 Gas Delivered for
Others Firm
28,702 26,422
205,204 199,079
Interruptible
8,268 8,192
52,477 59,329 Electric
Generation
189 151
553 516
Total Delivered for Others
37,159
34,765
258,234
258,924
115,052 119,400
1,266,515 1,367,157 Other
14,596
13,854
36,529
49,794
Total $
129,648 $ 133,254
$ 1,303,044 $ 1,416,951
Three Months EndedSeptember
30,
Fiscal Year EndedSeptember
30,
(In thousands of therms)
2015
2014
2015 2014
Gas Sales and Deliveries Gas Sold and Delivered Residential
— Firm
32,660 36,406
734,874 738,963 Commercial and
Industrial — Firm
15,926 17,235
197,543 200,153
Commercial and Industrial — Interruptible
286
428
2,072 2,193
Total Sold and Delivered
48,872
54,069
934,489 941,309
Gas Delivered for Others Firm
51,932 50,178
558,125 535,503 Interruptible
42,452 45,231
260,264 267,705 Electric Generation
65,989
51,368
179,061
144,403 Total Delivered for Others
160,373 146,777
997,450
947,611
Total
209,245 200,846
1,931,939
1,888,920
Utility Gas Purchased
Expense (excluding asset optimization) 44.21
¢ 51.80 ¢
55.58 ¢
67.66 ¢
Heating Degree Days Actual
— —
3,929
4,111 Normal
12 13
3,758 3,751 Percent Colder
(Warmer) than Normal
(100.0 )%
(100.0 )%
4.6 %
9.6 %
Average Active Customer Meters
1,129,784 1,116,837
1,129,240 1,116,527
WGL
ENERGY SERVICES Natural Gas Sales Therm Sales (thousands
of therms)
85,000 82,310
713,000 718,090
Number of Customers (end of period)
143,800
156,600
143,800
156,600
Electricity Sales Electricity Sales
(thousands of kWhs)
3,507,100 3,021,468
12,057,000
11,692,366 Number of Accounts (end of period)
138,000
162,100
138,000
162,100
WGL ENERGY SYSTEMS Megawatts in
service
108 63
108 63 Megawatt hours generated
41,520 26,298
147,451
85,141
WGL Holdings, Inc.Reconciliation of
Non-GAAP Financial Measures(Unaudited)
The tables below reconcile adjusted EBIT on a segment basis to
GAAP income (loss) before income taxes and reconcile operating
earnings (loss) on a consolidated basis to GAAP net income (loss)
applicable to common stock. Management believes that adjusted EBIT
and operating earnings (loss) provide a more meaningful
representation of our earnings from ongoing operations on a segment
and consolidated basis, respectively. These measures facilitate
analysis by providing consistent and comparable measures to help
management, investors and analysts better understand and evaluate
our operating results and performance trends, and assist in
analyzing period-to-period comparisons. Additionally, we use these
non-GAAP measures to report to our board of directors and to
evaluate management’s performance.
To derive our non-GAAP measures, we adjust for the financial
recognition of certain transactions (non-GAAP adjustments) based on
at least one of the following criteria:
- To better match the financial
recognition of transactions with their economics;
- To better align with regulatory
view/recognition;
- To eliminate the effects of:i.
Significant out of period adjustments;ii. Other significant items
that may obscure historical earnings comparisons and are not
indicative of performance trends; andiii. For adjusted EBIT, other
items that may obscure segment comparisons.
There are limits in using adjusted EBIT and operating earnings
(loss) to analyze our segment and consolidated results,
respectively, as they are not prepared in accordance with GAAP and
may be different from non-GAAP financial measures used by other
companies. In addition, using adjusted EBIT and operating earnings
(loss) to analyze our results may have limited value as they
exclude certain items that may have a material impact on our
reported financial results. We compensate for these limitations by
providing investors with the attached reconciliations to the most
directly comparable GAAP financial measures.
The following table summarizes the reconciliations of adjusted
EBIT by segment to income before income taxes:
Three Months Ended
Fiscal Year Ended September 30,
September 30, (In thousands)
2015
2014
2015 2014 Adjusted EBIT:
Regulated utility
$ (19,787 ) $ (15,198
)
$ 235,713 $ 244,359 Retail energy-marketing
13,818 12,114
68,459 10,653 Commercial energy systems
6,140 4,308
16,803 12,258 Midstream energy services
(1,676 ) (3,664 )
(3,571 ) 5,144 Other
activities(*)
(752 ) (1,294 )
(4,042 )
(7,951 ) Eliminations
(421 ) (277 )
(1,013 ) (167 ) Total
$
(2,678 ) $ (4,011 )
$
312,349 $ 264,296 Non-GAAP
adjustments(1)
19,861 76,199
(45,455 ) (62,044
) Interest expense
11,807 9,718
50,511 37,738 Income before
income taxes
$ 5,376 $ 62,470
$ 216,383 $ 164,514
Income tax expense
3,440 24,102
83,804 57,254
Dividends on Washington Gas preferred stock
330
330
1,320 1,320
Net income applicable to common stock
$
1,606 $ 38,038
$
131,259 $ 105,940 (*) Activities and
transactions that are not significant enough on a stand-alone basis
to warrant treatment as an operating segment and that do not fit
into one of our four operating segments.
WGL Holdings, Inc. (Consolidated by
Quarter)Reconciliation of Non-GAAP Financial
Measures(Unaudited)
The following tables represent the reconciliation of operating
earnings to net income (loss) applicable to common stock
(consolidated by quarter):
Fiscal Year 2015 Quarterly Period Ended(**)
(In thousands, except per share data) Dec. 31 Mar. 31
Jun. 30 Sept. 30 Fiscal Year Operating
earnings (loss)
$ 58,004 $
101,034 $ 10,734 $
(11,525 ) $ 158,247 Non-GAAP
adjustments(1)
10,892 (32,126 ) (44,082
) 19,861 (45,455 ) Income tax expense
(benefit) on non-GAAP adjustments
(5,008 )
12,547 17,658
(6,730 ) 18,467 Net income
(loss) applicable to common stock
$ 63,888
$ 81,455 $
(15,690 ) $ 1,606
$ 131,259 Diluted average common shares
outstanding
50,091 49,983
49,729 50,069
50,060 Operating earnings (loss) per share
$
1.16 $ 2.02 $ 0.22 $
(0.23 ) $ 3.16 Per share effect of
non-GAAP adjustments
0.12 (0.39
) (0.54 ) 0.26
(0.54 ) Diluted earnings (loss) per average
common share
$ 1.28 $
1.63 $ (0.32 )
$ 0.03 $ 2.62
Fiscal Year 2014 Quarterly Period Ended(**) (In
thousands, except per share data) Dec. 31 Mar. 31
Jun. 30 Sept. 30 Fiscal Year Operating
earnings (loss) $ 51,398 $ 95,526 $ 827 $ (8,799 ) $ 138,952
Non-GAAP adjustments(1) (58,843 ) (58,179 ) (21,221 ) 76,199
(62,044 ) Income tax expense (benefit) on non-GAAP adjustments
22,453 23,866 8,454 (29,362 ) 25,411 Regulatory asset - tax effect
Medicare Part D (***) 3,621 — —
— 3,621 Net income (loss)
applicable to common stock $ 18,629 $ 61,213
$ (11,940 ) $ 38,038 $ 105,940
Diluted average common shares outstanding 51,827
51,899 51,921 51,527
51,770 Operating earnings (loss) per share $
0.99 $ 1.84 $ 0.02 $ (0.17 ) $ 2.68 Per share effect of non-GAAP
adjustments (0.63 ) (0.66 ) (0.25 )
0.91 (0.63 ) Diluted earnings (loss) per average
common share $ 0.36 $ 1.18 $
(0.23 ) $ 0.74 $ 2.05 (**) Quarterly
earnings per share may not sum to year-to-date or annual earnings
per share as quarterly calculations are based on weighted average
common and common equivalent shares outstanding, which may vary for
each of those periods. (***) In March 2010, the Patient Protection
and Affordable Care Act (PPACA) eliminated future Medicare Part D
(Med D) tax benefits for Washington Gas’ tax years beginning after
September 30, 2013. On March 30, 2012, based on positions taken by
the Public Service Commission of Maryland (PSC of MD) in Washington
Gas’ rate case, Washington Gas determined that it is not probable
that the PSC of MD would permit recovery of this asset. Therefore,
the Maryland portion of the regulatory asset related to the Med D
benefit was charged to tax expense. In November of 2013, the PSC of
MD issued an order authorizing Washington Gas to establish a
regulatory asset and amortize the costs related to the change in
tax treatment of Med D.
WGL Holdings, Inc.Reconciliation of
Non-GAAP Financial Measures(Unaudited)
(1) The following tables summarize non-GAAP adjustments, by
operating segment and present a reconciliation of adjusted EBIT to
EBIT. EBIT is defined as earnings before interest and taxes from
continuing operations. Items we do not include in EBIT are interest
expense, inter-company financing activity, dividends on Washington
Gas preferred stock, and income taxes.
Three Months Ended September 30, 2015 (In thousands)
Regulated
Utility
Retail-Energy
Marketing
Commercial
Energy
Systems
Midstream
Energy
Services
Other
Activities
Intersegment
Eliminations
Total Adjusted EBIT
$ (19,787 )
$ 13,818 $ 6,140
$ (1,676 ) $
(752 ) $ (421 )
$ (2,678 ) Non-GAAP adjustments:
Unrealized mark-to-market
valuations on energy-related derivatives(a)
7,006
(5,271 ) — 15,182 — —
16,917 Storage optimization program(b)
(461 )
— — — — — (461 )
DC weather impact(c)
(95 ) — — —
— — (95 ) Distributed generation asset
related investment tax credits(d)
— — (1,183
) — — — (1,183 ) Change
in measured value of inventory(e)
— — —
7,117 — — 7,117 Competitive service
provider imbalance cash settlement(f)
(1,331 )
(1,103 ) —
— — —
(2,434 ) Total non-GAAP adjustments
$ 5,119 $ (6,374 )
$ (1,183 ) $
22,299 $ —
$ — $ 19,861 EBIT
$ (14,668 ) $
7,444 $ 4,957
$ 20,623 $ (752 )
$ (421 ) $ 17,183
Three Months Ended
September 30, 2014 (In thousands) Regulated
Utility
Retail-Energy
Marketing
Commercial
Energy
Systems
Midstream
Energy
Services
Other
Activities
Intersegment
Eliminations
Total Adjusted EBIT $ (15,198 ) $ 12,114
$ 4,308 $ (3,664 ) $ (1,294 )
$ (277 ) $ (4,011 ) Non-GAAP adjustments: Unrealized
mark-to-market valuations on energy-related derivatives(a) 39,060
(3,285 ) — 39,594 — — 75,369 Storage optimization program (b) 866 —
— — — — 866 DC weather impact(c) (77 ) — — — — — (77 ) Distributed
generation asset related investment tax credits(d) — — (806 ) — — —
(806 ) Change in measured value of inventory(e) — — — 1,892 — —
1,892 Incremental professional service fees (k) — — — — (18 ) — (18
) Regulatory implementation true-up (m) 1,573 — — — — — 1,573 Legal
related cost accrual(n) — —
(2,600 ) — —
—
(2,600 ) Total non-GAAP adjustments $ 41,422
$ (3,285 ) $ (3,406 ) $ 41,486 $
(18 ) $ — $ 76,199 EBIT $ 26,224
$ 8,829 $ 902 $ 37,822
$ (1,312 ) $ (277 ) $ 72,188
WGL Holdings, Inc. Reconciliation of Non-GAAP
Financial Measures
(Unaudited)
Fiscal Year Ended
September 30, 2015 (In thousands) Regulated
Utility
Retail-Energy
Marketing
Commercial
Energy
Systems
Midstream
Energy
Services
Other
Activities
Intersegment
Eliminations
Total Adjusted EBIT
$ 235,713
$ 68,459 $ 16,803
$ (3,571 ) $
(4,042 ) $ (1,013 )
$ 312,349 Non-GAAP adjustments:
Unrealized mark-to-market
valuations on energy-related derivatives(a)
(6,322 )
(20,727 ) — (5,807 ) —
— (32,856 ) Storage optimization program(b)
(3,704 ) — — — — —
(3,704 ) DC weather impact(c)
86 —
— — — — 86 Distributed
generation asset related investment tax credits(d)
—
— (4,134 ) — — —
(4,134 ) Change in measured value of inventory(e)
— — — 6,658 — —
6,658 Competitive service provider imbalance cash
settlement(f)
(1,331 ) (1,103 )
— — — — (2,434 )
Investment impairment(g)
— — — —
(5,625 ) — (5,625 ) Impairment
loss on Springfield Operations Center(h)
(465 )
— — — — — (465 )
Unrecovered government contracting costs(i)
—
— (2,981 )
— — —
(2,981 ) Total non-GAAP adjustments
$ (11,736 ) $ (21,830
) $ (7,115 ) $
851 $ (5,625 )
$ — $ (45,455 )
EBIT
$ 223,977 $
46,629 $ 9,688
$ (2,720 ) $ (9,667
) $ (1,013 ) $
266,894
Fiscal Year Ended September 30, 2014 (In thousands)
Regulated
Utility
Retail-Energy
Marketing
Commercial
Energy
Systems
Midstream
Energy
Services
Other
Activities
Intersegment
Eliminations
Total Adjusted EBIT $ 244,359 $ 10,653
$ 12,258 $ 5,144 $ (7,951
) $ (167 ) $ 264,296 Non-GAAP adjustments:
Unrealized mark-to-market valuations on energy-related
derivatives(a) (66,220 ) 3,362 — 1,464 — — (61,394 ) Storage
optimization program(b) 4,972 — — — — — 4,972 DC weather impact(c)
2,135 — — — — — 2,135 Distributed generation asset related
investment tax credits(d) — — (2,795 ) — — — (2,795 ) Change in
measured value of inventory(e) — — — 1,804 — — 1,804 Impairment
loss on Springfield Operations Center(h) (770 ) — — — — — (770 )
Competitive service provider imbalance cash settlement(j) 488 — — —
— — 488 Incremental professional services fees(k) — — — — (3,588 )
— (3,588 ) Impairment loss on proposed Chillum liquefied natural
gas facility(l) (1,869 ) — — — — — (1,869 ) Regulatory
implementation true up (m) 1,573 — — — — — 1,573 Legal related cost
accrual (n) — — (2,600 )
— — — (2,600 ) Total
non-GAAP adjustments $ (59,691 ) $ 3,362
$ (5,395 ) $ 3,268 $ (3,588 ) $
— $ (62,044 ) EBIT $ 184,668 $
14,015 $ 6,863 $ 8,412 $
(11,539 ) $ (167 ) $ 202,252
Footnotes:
(a)
Adjustments to eliminate unrealized
mark-to-market gains (losses) for our energy-related derivatives
for our regulated utility and retail energy-marketing operations as
well as certain derivatives related to the optimization of
transportation capacity for the midstream energy services segment.
With the exception of certain transactions related to the
optimization of system capacity assets as discussed in footnote (b)
below, when these derivatives settle, the realized economic impact
is reflected in our non-GAAP results, as we are only removing
interim unrealized mark-to-market amounts.
(b)
Adjustments to shift the timing of storage
optimization margins for the regulated utility segment from the
periods recognized for GAAP purposes to the periods in which such
margins are recognized for regulatory sharing purposes. In
addition, lower-of-cost or market adjustments related to system and
non-system storage optimization are eliminated for non-GAAP
reporting, since the margins will be recognized for regulatory
purposes when the withdrawals are made at the unadjusted historical
cost of storage inventory.
(c)
Eliminates the estimated financial effects
of warm or cold weather in the District of Columbia, as measured
consistent with our regulatory tariff. For fiscal year 2015,
Washington Gas did not enter into weather protection products due
to the pricing environment. Washington Gas has regulatory weather
protection mechanisms in Maryland and Virginia designed to
neutralize the estimated financial effects of weather. Utilization
of normal weather is an industry standard, and it is our practice
to evaluate our rate-regulated revenues by utilizing normal weather
and to provide estimates and guidance on the basis of normal
weather.
(d)
To reclassify the amortization of deferred
investment tax credits from income taxes to operating income for
the commercial energy systems segment. These credits are a key
component of the operating success of this segment and therefore
are included within adjusted EBIT to help management and investors
better assess its performance.
(e)
For our midstream energy services segment,
adjustments to reflect storage inventory at market or at a value
based on the price used to value the physical forward sales
contract that is economically hedging the storage inventory. This
adjustment also includes the estimated effects of certain sharing
mechanisms on all of our non-GAAP unrealized gains and losses.
Adjusting our storage optimization inventory in this fashion better
aligns the settlement of both our physical and financial
transactions and allows investors and management to better analyze
the results of our non-utility asset optimization strategies.
(f)
Eliminates the financial effects of a
potential refund to customers related to an order of the DC Public
Service Commission (PSC of DC) in October 2015 associated with a
cash settlement of competitive service provider gas imbalances
built during the 2008-2009 winter season.
(g)
Represents an impairment of an equity
investment in a solar holding company, accounted for at cost, which
occurred in the first quarter of fiscal year 2015. We do not
believe this impairment charge is indicative of our historical or
future performance trends.
(h)
Represents impairment charges and accrued
selling expenses related to Washington Gas' Springfield Operations
Center.
(i)
Represents unrecovered government
contracting costs under the Small Business Administration's
Business Development 8(a) Program. We do not anticipate any further
unrecovered costs as the company exits its participation in this
program.
(j)
Represents amounts collected by the
regulated utility segment in relation to the refund to customers
ordered by the PSC of MD in September 2011 associated with a cash
settlement of gas imbalances with competitive service
providers.
(k)
These costs include incremental legal and
consulting costs in connection with business development
activities. These costs are unpredictable and may vary greatly with
each opportunity. Management believes that excluding these costs
allows management and investors to better compare, analyze and
forecast the performance of our revenue generating
opportunities.
(l)
On July 7, 2014, the Virginia State
Corporation Commission (SCC of VA) disallowed full recovery of
certain costs related to a proposed Chillum liquefied natural gas
facility, therefore a portion of the associated regulatory asset
was impaired.
(m)
Adjustment reflects a retroactive true-up
to reflect the effects of a regulatory decision.
(n)
Legal related cost accrual associated with
subcontracting under the Small Business Administration's Business
Development 8(a) Program.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151113005897/en/
WGL Holdings, Inc.News MediaJim
Monroe, 202-624-6620orFinancial
CommunityDouglas Bonawitz, 202-624-6129
Wgl (NYSE:WGL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Wgl (NYSE:WGL)
Historical Stock Chart
From Apr 2023 to Apr 2024