UIL Reports Second Quarter 2012 Results and Affirms 2012 Earnings Guidance
NEW HAVEN, Conn.--(BUSINESS WIRE)-- UIL Holdings Corporation (UIL) today reported consolidated net income of $12.0 million, or $0.23 per diluted share for the second quarter of 2012, compared to $14.2 million or $0.28 per diluted share for the same period in 2011. For the first six months of 2012, UILs consolidated net income was $59.0 million, or $1.16 per diluted share, compared to $66.2 million, or $1.30 per diluted share for the same period in 2011.
We experienced the warmest winter on record and those warm temperatures continued into spring. The warm temperatures significantly impacted the financial results of our gas business, said James P. Torgerson, UILs president and chief executive officer. We have been able to mitigate some of the weathers impact by maintaining our focus on short-term O&M cost controls. We also continue to execute on our growth strategy of converting businesses and households in our service territory to natural gas heat. Year-to-date 2012 conversions are 46% ahead of 2011 levels and we currently are on target to meet our 2012 goal.
Electric distribution, CTA & other
Earnings from the electric distribution business for the second quarter in 2012 were $10.9 million, or $0.21 per diluted share, compared to $11.1 million, or $0.22 per diluted share, for the same period in 2011. The decrease in earnings for the quarter was primarily attributable to a decrease in allowance for funds used during construction (AFUDC), partially offset by increased income from UIs equity investment in GenConn.
For the first six months of 2012, the electric distribution business had total earnings of $25.1 million, or $0.49 per diluted share, compared to $21.8 million, or $0.43 per diluted share, for the same period in 2011. The increase in earnings for the first six months was primarily attributable to increased income from UIs equity investment in GenConn.
Pre-tax earnings from the equity investment in GenConn were $3.9 million, compared to pre-tax earnings of $2.6 million for the same period in 2011. For the first six months of 2012 pre-tax earnings from the equity investment in GenConn were $8.4 million, compared to $4.7 million for the same period in 2011.
Earnings from the electric transmission business for the second quarter in 2012 were $7.8 million, or $0.15 per diluted share, compared to $7.9 million, or $0.15 per diluted share, for the same period in 2011. For the first six months of 2012, total transmission earnings were $15.2 million, or $0.30 per diluted share, compared to $15.6 million, or $0.31 per diluted share for the same period in 2011. The decrease was primarily attributable to a decrease in the AFUDC, partially offset by an increase in rate base.
The gas distribution business incurred a loss of $3.2 million, or $0.06 per diluted share for the second quarter in 2012, compared to a loss of $1.5 million, or $0.03 per diluted share for the same period in 2011, consistent with the seasonal nature of the gas business. The reduction in gas distribution sales, primarily driven by warmer weather and reduced per customer usage, resulted in a $4.1 million decrease in pre-tax gross margin, compared to the second quarter in 2011.
For the first six months of 2012, earnings from the gas distribution business were $25.2 million, or $0.49 per diluted share, compared to $35.9 million, or $0.71 per diluted share for the same period in 2011. Earnings for the second quarter and first six months of 2012 were negatively impacted by lower sales volume primarily due to the impact of warmer weather compared to the same periods in 2011. Heating degree days for the first six months were 20.7% below normal and 21% lower compared to 2011. The warmer temperatures in the first six months of 2012, coupled with reduced per customer usage, resulted in an $18.1 million decrease in pre-tax gross margin, compared to the same period in 2011. The decrease in gross margin for the first six months was partially offset by weather insurance of $3.5 million.
On a positive note, the warmer weather has helped us in our gas conversion efforts and allowed us to get a jump start on gas construction projects, added Torgerson. Year-to-date, we have converted more than 4,600 customers, compared to 3,190 customers in the first six months of 2011 and are on track to meet our 2012 goal.
UIL Holdings retains certain costs, primarily interest expense, at the holding company, or corporate level, which are not allocated to the various subsidiaries. UIL Corporate incurred net after-tax costs of $3.5 million, or $0.07 per diluted share, in the second quarter of 2012, compared to net after-tax costs of $3.3 million, or $0.06 per diluted share, in the same period of 2011. For the first six months of 2012, UIL Corporate incurred net after-tax costs of $6.5 million, or $0.12 per diluted share, compared to $7.1 million, or $0.15 per diluted share for the first six months of 2011. The reduction in costs for the first six months was primarily attributable to decreased interest expense resulting from lower short-term borrowings.
UIL affirms the earnings guidance reported on May 4, 2012, as shown below.
|EPS - diluted(3)|
|Electric distribution, CTA & other||$46 - $51||$0.90 - $1.00|
|Electric transmission||$28 - $33||$0.55 - $0.65|
|Total Electric (1)||$76 - $84||$1.50 - $1.65|
|Gas distribution||$36 - $41||$0.70 - $0.80|
|UIL Corporate||($14) - ($13)||($0.27) - ($0.25)|
|Total UIL(1)||$102 - $109||$2.00 - $2.15|
|(1) Expectations are not expected to be additive|
|(2) Rounded to the nearest million|
|(3) Assumes approximately 51.1 million average shares outstanding|
Second Quarter 2012 Earnings Conference Call
In conjunction with this earnings release, UIL Holdings will conduct a webcast conference call with financial analysts on Monday, August 6, 2012, beginning at 10:00 a.m. eastern time. UIL Holdings executive management will present an overview of the financial results followed by a question and answer session. Interested parties, including analysts, investors and the media, may listen live via the internet by logging onto the Investors section of UILs website at http://www.uil.com. Institutional investors can access the call via Thomson Street Events (www.streetevents.com), a password-protected event management site.
Headquartered in New Haven, Connecticut, UIL Holdings Corporation is a diversified energy delivery company serving a total of approximately 700,000 electric and natural gas utility customers in 66 communities across two states, with combined total assets of over $4 billion.
UIL Holdings is the parent company for The United Illuminating Company (UI), Connecticut Natural Gas Corporation (CNG), The Southern Connecticut Gas Company (SCG), and The Berkshire Gas Company (Berkshire), each more than 100 years old. UI provides for the transmission and delivery of electricity and other energy related services for Connecticuts Greater New Haven and Bridgeport areas. SCG and CNG are natural gas distribution companies that serve customers in Connecticut, while Berkshire serves natural gas customers in western Massachusetts. UIL Holdings employs more than 1,800 people in the New England region. For more information on UIL Holdings, visit http://www.uil.com.
Use of Non-GAAP Measures
UIL Holdings believes that a breakdown, presented on a net income and per share basis is useful in understanding the change in the consolidated results of operations for UIL Holdings from one reporting period to another. UIL Holdings presents such per share amounts by taking the pretax amounts determined in accordance with generally accepted accounting principles (GAAP), and applying UIL Holdings' combined effective statutory federal and state tax rate and then dividing the results by the average number of shares of UIL Holdings common stock outstanding for the periods presented. Any such amounts provided are provided for informational purposes only and are not intended to be used to calculate "Pro-forma" amounts.
UIL Holdings also believes earnings per share (EPS) information as presented in its earnings guidance is useful in understanding the earnings expectations for the business as a whole. The amounts presented in the earnings guidance show the EPS for each of UIL Holdings lines of business. EPS is calculated by dividing the 2012 net income for each line of business by the average number of shares of UIL Holdings common stock outstanding for 2012. Total consolidated EPS is a GAAP-basis presentation.
Certain statements contained herein, regarding matters that are not historical facts, are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). These include statements regarding managements intentions, plans, beliefs, expectations or forecasts for the future. Such forward-looking statements are based on UIL Holdings expectations and involve risks and uncertainties; consequently, actual results may differ materially from those expressed or implied in the statements. Such risks and uncertainties include, but are not limited to, general economic conditions, legislative and regulatory changes, changes in demand for electricity, gas and other products and services, unanticipated weather conditions, changes in accounting principles, policies or guidelines, and other economic, competitive, governmental, and technological factors affecting the operations, markets, products and services of UIL Holdings subsidiaries, The United Illuminating Company, The Southern Connecticut Gas Company, Connecticut Natural Gas Corporation and The Berkshire Gas Company. The foregoing and other factors are discussed and should be reviewed in UIL Holdings most recent Annual Report on Form 10-K and other subsequent periodic filings with the Securities and Exchange Commission. Forward-looking statements included herein speak only as of the date hereof and UIL Holdings undertakes no obligation to revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances.
The following are summaries of UIL Holdings unaudited consolidated financial information for the second quarter and first six months of 2012 and 2011:
|UIL HOLDINGS CORPORATION|
|CONSOLIDATED STATEMENT OF INCOME|
|(In Thousands except per share amounts)|
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|Natural gas purchased||39,953||63,537||190,758||292,880|
|Operation and maintenance||88,586||90,393||174,793||175,525|
|Depreciation and amortization||43,048||39,077||89,607||84,048|
|Taxes - other than income taxes||23,822||25,900||54,422||61,407|
|Total Operating Expenses||247,001||273,825||617,878||735,063|
|Other Income and (Deductions), net||4,872||5,604||13,789||10,269|
|Interest Charges, net|
|Interest on long-term debt||21,825||22,670||42,927||44,007|
|Other interest, net||1,312||422||2,847||1,729|
|Amortization of debt expense and redemption premiums||599||505||1,208||1,335|
|Total Interest Charges, net||23,736||23,597||46,982||47,071|
|Income Before Income Taxes, Equity Earnings||17,643||22,231||90,775||103,237|
|Income Before Equity Earnings||8,097||11,523||50,686||61,519|
|Income from Equity Investments||3,915||2,647||8,402||4,709|
|Preferred Stock Dividends of|
|Subsidiary, Noncontrolling Interests||13||14||39||28|
|Net Income attributable to UIL Holdings||$||11,999||$||14,156||$||59,049||$||66,200|
|Average Number of Common Shares Outstanding - Basic||50,793||50,628||50,740||50,574|
|Average Number of Common Shares Outstanding - Diluted||51,041||50,872||51,002||50,824|
|Earnings Per Share of Common Stock - Basic:||$||0.24||$||0.28||$||1.16||$||1.31|
|Earnings Per Share of Common Stock - Diluted:||$||0.23||$||0.28||$||1.16||$||1.30|
|Cash Dividends Declared per share of Common Stock||$||0.432||$||0.432||$||0.864||$||0.864|
UIL HOLDINGS CORPORATION
|CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME|
|For the Three and Six Months Ended June 30, 2012 and 2011|
|(Thousands of Dollars)|
|Other Comprehensive Income, net||(154)||(26)||201||146|
|Preferred Stock Dividends of|
|Subsidiary, Noncontrolling Interests||13||14||39||28|
|Comprehensive Income attributable to UIL Holdings||$||11,845||$||14,130||$||59,250||$||66,346|
|UIL HOLDINGS CORPORATION|
|CONDENSED CONSOLIDATED BALANCE SHEET|
|June 30,||December 31,|
|(thousands of dollars)||2012||2011|
|Net property, plant and equipment||2,651,170||2,570,355|
|Deferred charges and other assets||103,819||103,354|
|LIABILITIES AND CAPITALIZATION|
|Deferred income taxes||413,436||388,553|
|Long-term debt, net of unamortized discount and premium||1,645,139||1,548,347|
|Preferred stock of subsidiary||750||750|
|Net common stock equity||1,114,793||1,094,361|
|Total Liabilities and Capitalization||$||4,644,217||$||4,744,609|
UIL Holdings Corporation
Susan Allen, 203-499-2409
Michael West Jr., 203-499-3858
Source: UIL Holdings CorporationCopyright Business Wire 2012