- Second quarter 2009 diluted earnings per share (EPS) of $0.26 per
share, compared with $(0.15) per diluted share in second quarter
2008 - Year-to-date diluted EPS of $1.81 per share, compared with
$1.01 per diluted share for the prior-year period - Company
reaffirms 2009 earnings guidance in the range of $2.65 to $2.75 per
diluted share ATLANTA, July 30 /PRNewswire-FirstCall/ -- AGL
Resources Inc. (NYSE:AGL) today reported second quarter net income
of $20 million, or $0.26 per basic (and diluted) share, compared
with a loss of $11 million, or $(0.15) per basic (and diluted)
share for the second quarter of 2008. The company's second quarter
2009 results reflect improved year-over-year contributions from the
distribution operations and wholesale services segments and lower
results from the energy investments segment. For the six months
ended June 30, 2009, net income was $139 million, or $1.81 per
diluted share, compared with net income of $78 million, or $1.01
per diluted share, for the same period in 2008. "Our businesses
have performed well during the first half of the year," said John
W. Somerhalder II, AGL Resources chairman, president and chief
executive officer. "In a challenging economic environment, our
focus continues to be on effectively managing our costs, improving
our operating performance and executing our regulatory strategy."
BUSINESS SEGMENT RESULTS Distribution Operations The distribution
operations segment contributed EBIT (earnings before interest and
taxes) of $63 million, compared with $57 million in the second
quarter of 2008. The improvement over the prior-year quarter was
due primarily to higher charges to marketers in Georgia for the
storage of natural gas inventory and increased pipeline replacement
revenues at Atlanta Gas Light. A revision in estimated unbilled
natural gas volumes at Elizabethtown Gas, recorded in the second
quarter of 2008, also contributed to the favorable year-over-year
variance. Operating expenses of $130 million were $7 million higher
than in the same period in 2008. Expenses were higher as a result
of increases in environmental liabilities, pension costs and
depreciation expense. Year-to-date segment EBIT for distribution
operations was $193 million, compared with $180 million in 2008.
Retail Energy Operations The retail energy operations segment,
consisting of SouthStar Energy Services, reported second-quarter
2009 EBIT of $5 million, compared with $6 million in the second
quarter of 2008. Higher margins resulting from favorable market
conditions and decreasing commodity prices were offset by a decline
in average customer count and a change in the retail pricing mix,
with a higher number of customers on lower-margin retail pricing
plans as compared to last year, reflecting increased competition in
the retail pricing market for natural gas in Georgia. Operating
margins in the Ohio and Florida markets also were down slightly
during the period relative to the prior year. Operating expenses in
the second quarter of 2009 were flat relative to the prior-year
period. Year-to-date segment EBIT for retail energy operations was
$68 million, equal to last year's contribution for the same period.
Wholesale Services The wholesale services segment, consisting
primarily of Sequent Energy Management, recorded an EBIT loss of
$11 million for the second quarter of 2009, compared with an EBIT
loss of $65 million in the second quarter of 2008. The significant
year-over-year variance was driven mainly by $55 million, or $0.45
per diluted share, in pre-tax hedge losses recorded in the
wholesale services segment during the second quarter of 2008,
resulting from a significant increase in forward New York
Mercantile Exchange (NYMEX) natural gas prices and the widening of
transportation basis spreads. The decline in forward NYMEX natural
gas prices and the narrowing of transportation basis spreads during
2009 resulted in $13 million in hedge gains during this year's
second quarter. Commercial activity in the wholesale services
segment was lower year-over-year, reflecting lower market
volatility. Operating expenses were essentially flat as compared to
the prior-year period. Year-to-date segment EBIT for wholesale
services was $27 million, compared with an EBIT loss of $64 million
for the same period last year. Energy Investments The energy
investments segment contributed EBIT of $2 million for the second
quarter of 2009, compared with EBIT of $10 million during the
prior-year period. The decline in year-over-year results reflects
$7 million in operating margin associated with a network expansion
project completed by AGL Networks in the second quarter of 2008.
Interruptible revenues at Jefferson Island Storage & Hub also
were down $1 million in the second quarter of 2009 as compared with
the prior-year period. Operating expenses for the energy
investments segment were flat year-over-year. Year-to-date segment
EBIT was $4 million, compared with $15 million in 2008. This
decline also reflects the previously mentioned $7 million in
operating margin related to a network expansion project completed
by AGL Networks in 2008. INTEREST EXPENSE AND INCOME TAXES Interest
expense for the second quarter of 2009 was $24 million, down $2
million from the second quarter of 2008. The decline in interest
expense resulted from a decrease in short-term interest rates,
partially offset by higher average debt outstanding. Interest
expense for the six months ended June 30, 2009 was $49 million,
down $7 million from the same period last year, for the same
reasons. Income taxes for the second quarter of 2009 were $13
million, compared with an income tax benefit of $7 million in the
second quarter of 2008. For the six months ended June 30, 2009,
income tax expense was $85 million, compared with $47 million for
the same period in 2008. These increases primarily reflect higher
consolidated earnings year-to-date relative to the same period in
2008. DIVIDEND DECLARED The Board of Directors of AGL Resources has
declared a quarterly dividend of $0.43 per share on the company's
common stock. The dividend will be paid September 1, 2009 to
shareholders of record at the close of business on August 14, 2009.
The dividend payment will mark the 247th consecutive quarterly
dividend the company has paid since 1948. 2009 EARNINGS OUTLOOK AGL
Resources continues to expect its 2009 earnings to be in the range
of $2.65 to $2.75 per diluted share. This earnings expectation
assumes normal weather and average volatility in natural gas
prices. However, unanticipated changes in these events or other
circumstances could materially impact earnings, and could result in
earnings for 2009 significantly above or below this outlook.
EARNINGS CONFERENCE CALL/WEBCAST AGL Resources will host its
second-quarter 2009 earnings conference call and webcast on
Thursday, July 30, 2009, at 9 a.m. Eastern Time. The webcast can be
accessed via the Investor Relations section of the AGL Resources
Web site at http://www.aglresources.com/, or by dialing
800/591-6923 in the United States or 617/614-4907 outside the
United States. The confirmation code is 28957444. A replay of the
conference call will be available by dialing 888/286-8010 in the
United States or 617/801-6888 outside the United States, with a
confirmation code of 97042045. A replay of the call also will be
available on the Investor Relations section of the company's Web
site for seven days following the call. About AGL Resources AGL
Resources (NYSE:AGL), an Atlanta-based energy services company,
serves approximately 2.3 million customers in six states. The
company also owns Houston-based Sequent Energy Management, an asset
manager serving natural gas wholesale customers throughout North
America. As a 70 percent owner in the SouthStar partnership, AGL
Resources markets natural gas to consumers in Georgia under the
Georgia Natural Gas brand. The company also owns and operates
Jefferson Island Storage & Hub, a high-deliverability natural
gas storage facility near the Henry Hub in Louisiana. For more
information, visit http://www.aglresources.com/. Forward-Looking
Statements Certain expectations and projections regarding our
future performance referenced in this press release are
forward-looking statements. Forward-looking statements involve
matters that are not historical facts and because these statements
involve anticipated events or conditions, forward-looking
statements often include words such as "anticipate," "assume,"
"believe," "can," "could," "estimate," "expect," "forecast,"
"future," "goal," "indicate," "intend," "may," "outlook," "plan,"
"potential," "predict," "project," "seek," "should," "target,"
"would," or similar expressions. Forward-looking statements
contained in this press release include, without limitation, the
information under the heading "2009 Earnings Outlook." Our
expectations are not guarantees and are based on currently
available competitive, financial and economic data along with our
operating plans. While we believe our expectations are reasonable
in view of the currently available information, our expectations
are subject to future events, risks and uncertainties, and there
are several factors - many beyond our control - that could cause
results to differ significantly from our expectations. Such events,
risks and uncertainties include, but are not limited to, changes in
price, supply and demand for natural gas and related products; the
impact of changes in state and federal legislation and regulation
including changes related to climate change; actions taken by
government agencies on rates and other matters; concentration of
credit risk; utility and energy industry consolidation; the impact
on cost and timeliness of construction projects by government and
other approvals, development project delays, adequacy of supply of
diversified vendors, unexpected change in project costs, including
the cost of funds to finance these projects; the impact of
acquisitions and divestitures; direct or indirect effects on our
business, financial condition or liquidity resulting from a change
in our credit ratings or the credit ratings of our counterparties
or competitors; interest rate fluctuations; financial market
conditions, including recent disruptions in the capital markets and
lending environment and the current economic downturn; and general
economic conditions; uncertainties about environmental issues and
the related impact of such issues; the impact of changes in
weather, including climate change, on the temperature-sensitive
portions of our business; the impact of natural disasters such as
hurricanes on the supply and price of natural gas; acts of war or
terrorism; and other factors which are provided in detail in our
filings with the Securities and Exchange Commission, which we
incorporate by reference in this press release. Forward-looking
statements are only as of the date they are made, and we do not
undertake to update these statements to reflect subsequent changes.
Supplemental Information Company management evaluates segment
financial performance based on earnings before interest and taxes
(EBIT), which includes the effects of corporate expense allocations
and on operating margin. EBIT is a non-GAAP (accounting principles
generally accepted in the United States of America) financial
measure that includes operating income, other income and expenses.
Items that are not included in EBIT are financing costs, including
debt and interest expense and income taxes. The company evaluates
each of these items on a consolidated level and believes EBIT is a
useful measurement of our performance because it provides
information that can be used to evaluate the effectiveness of our
businesses from an operational perspective, exclusive of the costs
to finance those activities and exclusive of income taxes, neither
of which is directly relevant to the efficiency of those
operations. Operating margin is a non-GAAP measure calculated as
operating revenues minus cost of gas, excluding operation and
maintenance expense, depreciation and amortization, and taxes other
than income taxes. These items are included in the company's
calculation of operating income. The company believes operating
margin is a better indicator than operating revenues of the
contribution resulting from customer growth, since cost of gas is
generally passed directly through to customers. EBIT and operating
margin should not be considered as alternatives to, or more
meaningful indicators of, the company's operating performance than
operating income or net income attributable to AGL Resources Inc.
as determined in accordance with GAAP. In addition, the company's
EBIT and operating margin may not be comparable to similarly titled
measures of another company. Reconciliation of non-GAAP financial
measures referenced in this press release and otherwise in the
earnings conference call and webcast is attached to this press
release and is available on the company's Web site at
http://www.aglresources.com/ under the Investor Relations section.
AGL Resources Inc. Condensed Consolidated Statements of Income For
the Three and Six Months Ended June 30, 2009 and 2008 Unaudited (In
millions, except per share amounts) Three Months Six Months
------------ ---------- 6/30/2009 6/30/2008 Fav/(Unfav) 6/30/2009
6/30/2008 Fav/(Unfav) --------- --------- ---------- ---------
--------- ---------- Operating Revenues $377 $444 $(67) $1,372
$1,456 $(84) Cost of Gas 152 275 123 741 932 191 Operation and
Maintenance Expenses 119 114 (5) 244 233 (11) Depreciation and
Amortization 39 38 (1) 78 74 (4) Taxes Other Than Income 12 11 (1)
24 23 (1) --- --- --- --- --- --- Total Operating Expenses 322 438
116 1,087 1,262 175 --- --- --- --- --- --- Operating Income 55 6
49 285 194 91 Other Income 3 3 - 5 4 1 --- --- --- --- --- ---
Earnings Before Interest & Taxes 58 9 49 290 198 92 Interest
Expense, Net 24 26 2 49 56 7 --- --- --- --- --- --- Earnings
Before Income Taxes 34 (17) 51 241 142 99 Income Tax Expense
(Benefit) 13 (7) (20) 85 47 (38) --- --- --- --- --- --- Net Income
(Loss) 21 (10) 31 156 95 61 Less Net Income Attributable to
Noncontrolling Interest 1 1 - 17 17 - --- --- --- --- --- --- Net
Income (Loss) Attributable to AGL Resources Inc. $20 $(11) $31 $139
$78 $61 === === === === === === Earnings (Loss) Per Common Share
Basic $0.26 $(0.15) $0.41 $1.81 $1.02 $0.79 Diluted $0.26 $(0.15)
$0.41 $1.81 $1.01 $0.80 Shares Outstanding Basic 76.7 76.2 (0.5)
76.8 76.2 (0.6) Diluted 76.9 76.2 (0.7) 76.9 76.4 (0.5) AGL
Resources Inc. EBIT Schedule For the Three and Six Months Ended
June 30, 2009 and 2008 Unaudited (In millions, except per share
amounts) Three Months Six Months ------------ ---------- 6/30/2009
6/30/2008 Fav/(Unfav) 6/30/2009 6/30/2008 Fav/(Unfav) ---------
--------- ---------- --------- --------- ---------- Distribution
Operations $63 $57 $6 $193 $180 $13 Retail Energy Operations 5 6
(1) 68 68 - Wholesale Services (11) (65) 54 27 (64) 91 Energy
Investments 2 10 (8) 4 15 (11) Corporate (1) 1 (2) (2) (1) (1) ---
--- --- --- --- --- Consolidated EBIT 58 9 49 290 198 92 --- ---
--- --- --- --- Interest Expense, Net 24 26 2 49 56 7 Income Tax
Expense (Benefit) 13 (7) (20) 85 47 (38) --- --- --- --- --- ---
Net Income (Loss) 21 (10) 31 156 95 61 Less Net Income Attributable
to the Noncontrolling Interest 1 1 - 17 17 - --- --- --- --- ---
--- Net Income (Loss) Attributable to AGL Resources Inc. $20 $(11)
$31 $139 $78 $61 === === === === === === Earnings (Loss) per Common
Share Basic $0.26 $(0.15) $0.41 $1.81 $1.02 $0.79 === === === ===
=== === Diluted $0.26 $(0.15) $0.41 $1.81 $1.01 $0.80 === === ===
=== === === AGL Resources Inc. Reconciliation of Operating Margin
to Operating Revenues For the Three and Six Months Ended June 30,
2009 and 2008 Unaudited (In millions) Three Months Six Months
------------ ---------- 6/30/2009 6/30/2008 Fav/(Unfav) 6/30/2009
6/30/2008 Fav/(Unfav) --------- --------- ---------- ---------
--------- ---------- Operating Revenues $377 $444 $(67) $1,372
$1,456 $(84) Cost of Gas 152 275 123 741 932 191 --- --- --- ---
--- --- Operating Margin $225 $169 $56 $631 $524 $107 === === ===
=== === === DATASOURCE: AGL Resources Inc. CONTACT: Financial,
Steve Cave, Office: +1-404-584-3801, Cell: +1-678-642-4258, , or
Media, Tami Gerke, Office: +1-404-584-3873, Cell: +1-404-358-2307,
Web Site: http://www.aglresources.com/
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