EMPIRE DISTRICT ELECTRIC CO Consolidated earnings for the second quarter ended June 30, 2016, were $9.2 million, or $0.21 per share, inclusive of $4.2 million of merger-related costs incurred during the quarter. Absent merger-related costs, earnings for the second quarter, adjusted for taxes, would have been $11.8 million, or $0.27 per share. Earnings for the same quarter 2015 were $6.8 million, or $0.16 per share ($0.15 on a diluted basis).
Consolidated earnings for the twelve months ended June 30, 2016 period, including $8.4 million of merger-related costs, were
$58.4 million, or $1.33 per share. Absent merger-related costs, twelve months ended tax-adjusted earnings would have been
$63.7 million, or $1.45 per share. Earnings for the twelve months ended June 30, 2015 period were $56.4 million, or $1.30 per share ($1.29 diluted).
Earnings for both the second quarter 2016 and twelve month period ended June 30, 2016 were higher than the respective 2015 periods primarily as a result of increased Missouri electric rates that became effective in July 2015. More favorable weather was a positive driver of comparable quarter results, however the positive quarter effect was more than offset in the 2016 twelve-month period by mild winter heating season weather.
As announced on June 21, 2016, the Company filed a Unanimous Stipulation and Agreement with the Missouri Public Service Commission (MPSC) for changes in Missouri customer rates. The agreement, if approved, allows an annual increase in base revenues of about $20.4 million, or 4.46%. Base revenues established by the agreement are lower than the originally requested level of $33.4 million due primarily to lower fuel and purchased power costs than those built into current customer rates. The offsetting effect of reduced revenues and reduced fuel costs results in little impact to gross margin. If approved, new rates are expected to become effective in mid-September 2016.
On June 29, 2016, the Company filed a joint motion with the Arkansas Public Service Commission (APSC) for approval of a Stipulation and Settlement Agreement to approve the Company's previously disclosed merger with Liberty Utilities (Central) Co., an indirect subsidiary of Algonquin Power & Utilities Corp. Approval is pending before the APSC.
-more-According to Brad Beecher, Empire's President and CEO, "Our second quarter results, adjusted for weather and the merger- related costs incurred during the period, continue to meet our expectations. Taking these results into account and considering the preliminary rate case outcome, our earnings guidance communicated on February 26, 2016 remains unchanged." Beecher added, "With FERC and Oklahoma approvals in place and a settlement agreement awaiting approval in Arkansas, we are making steady progress as we work through the remaining state and Federal regulatory processes necessary to close our merger with Algonquin Power and Utilities Corp. We continue to expect closing in the first quarter of 2017."
Second Quarter 2016 ResultsElectric segment gross margin (electric revenue less cost of fuel and purchased power) increased $7.2 million, or 8.2%, during the second quarter 2016 compared to the second quarter 2015. Quarter over quarter electric segment gross margin impacts include:
Increased customer rates of $5.7 million, net of a $1.4 million decrease in Missouri base fuel recovery, increased revenues by an estimated $4.3 million,
Weather and other volumetric factors increased revenues by an estimated $1.8 million, and
Improved customer counts added an estimated $0.8 million to revenues.
Fuel expense changes reflective of the timing of the deferral and recovery of non-Missouri fuel and consumable costs had a negligible impact on electric segment gross margin when compared to the 2015 quarter.
Gas segment gross margin (gas revenues less cost of gas sold and transported) was relatively flat when compared to second quarter 2015 results.
Consolidated second quarter 2016 earnings were favorably impacted by decreased maintenance costs of approximately $2.9 million, while unfavorable impacts included the following:
Depreciation and amortization expense increases of approximately $0.7 million,
Interest expense increases of approximately $0.4 million,
Changes in AFUDC, which decreased earnings by approximately $0.2 million, and
Merger-related costs of approximately $4.2 million.
Consolidated net income increased approximately $2.4 million, or 36.3%, for the second quarter of 2016 compared to the second quarter of 2015. As noted above, absent the aforementioned merger-related costs, adjusted for taxes, consolidated second quarter 2016 earnings would have been approximately $11.8 million, or $0.27 per share.
Twelve Months Ended June 30, 2016 ResultsElectric segment gross margin increased approximately $21.0 million or 5.6% during the twelve month period ended June 30, 2016 compared to the prior year period. Year over year electric segment gross margin impacts include:
Increased customer rates of $22.7 million, net of a decrease in Missouri base fuel recovery of $5.5 million, increased revenues an estimated $17.2 million,
Improved customer counts added an estimated $2.7 million to revenues, and
Weather and other volumetric factors decreased revenues an estimated $12.7 million.
Fuel expense changes reflective of the timing of the deferral and recovery of non-Missouri fuel and consumable costs contributed positively to electric segment gross margin when compared to the 2015 period.
Gas segment gross margin was approximately $2.3 million, or 9.7%, below the twelve month period ended June 30, 2015 as mild weather during the current period winter heating season drove a 15.6% decline in overall sales.
Twelve month ended consolidated earnings were favorably impacted by lower maintenance expenses of approximately $5.4 million. Unfavorable impacts included the following:
Depreciation and amortization expense increases of approximately $4.4 million,
Other taxes increase of approximately $0.6 million,
Interest expense increase of approximately $3.0 million,
Changes in AFUDC, which decreased earnings by approximately $0.5 million, and
Merger-related costs of approximately $8.4 million.
Consolidated net income increased approximately $2.0 million, or 3.6%, for the twelve month period ended June 30, 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 June 30, 2016 would have been approximately $63.7 million, or $1.45 per share, a 12.9% increase over the 2015 period.
Selected unaudited consolidated financial data for the quarters and twelve months ended June 30, 2016 and June 30, 2015 is presented in the following table.
(dollars in millions, except Per Share data)
Three Months Ended June 30, | Twelve Months Ended June 30, | ||||||
2016 | 2015 | Change* | 2016 | 2015 | Change* | ||
Electric Margin | $94.3 | $87.1 | $7.2 | $395.3 | $374.3 | $21.0 | |
Gas Margin | 4.2 | 4.2 | (0.1) | 21.3 | 23.6 | (2.3) | |
Other Revenues | 1.9 | 2.0 | (0.1) | 8.4 | 8.1 | 0.3 | |
Gross Margin | 100.3 | 93.3 | 7.0 | 425.0 | 406.0 | 19.0 | |
Less: | |||||||
Operating and Maintenance Expenses | 41.0 | 44.0 | (3.0) | 161.8 | 165.5 | (3.7) | |
Merger-related costs | 4.2 | 0.0 | 4.2 | 8.4 | 0.0 | 8.4 | |
Depreciation and Amortization | 20.8 | 20.1 | 0.7 | 81.6 | 77.2 | 4.4 | |
Taxes | 14.9 | 13.1 | 1.8 | 75.0 | 71.5 | 3.5 | |
Operating Income | 19.4 | 16.1 | 3.3 | 98.2 | 91.8 | 6.4 | |
Interest Expense and Other, net | 10.2 | 9.3 | 0.9 | 39.8 | 35.4 | 4.4 | |
Net Income | $9.2 | $6.8 | $2.4 | $58.4 | $56.4 | $2.0 | |
Earnings Per Share (Basic) | $0.21 | $0.16 | $0.05 | $1.33 | $1.30 | $0.04 | |
Earnings Per Share (Diluted) | $0.21 | $0.15 | $0.05 | $1.33 | $1.29 | $0.04 | |
Net Income (GAAP) | $9.2 | $6.8 | $2.4 | $58.4 | $56.4 | $2.0 |
Merger-related costs (adjusted for taxes) | 2.6 | 0.0 | 2.6 | 5.3 | 0.0 | 5.3 |
Net Income (excl. merger-related costs) | $11.8 | $6.8 | $5.0 | $63.7 | $56.4 | $7.3 |
Earnings Per Share (Basic) | $0.27 | $0.16 | $0.11 | $1.45 | $1.30 | $0.15 |
Earnings Per Share (Diluted) | $0.27 | $0.15 | $0.12 | $1.45 | $1.29 | $0.16 |
Three Months Ended June 30, | Twelve Months Ended June 30, | ||||||
2016 | 2015 | % Change* | 2016 | 2015 | % Change* | ||
Electric On-System kWh Sales (in millions): | |||||||
Residential | 364 | 347 | 5.2% | 1,772 | 1,876 | -5.5% | |
Commercial | 394 | 394 | -0.1% | 1,560 | 1,585 | -1.6% | |
Industrial | 278 | 272 | 2.2% | 1,073 | 1,050 | 2.1% | |
Other | 111 | 110 | 0.5% | 459 | 461 | -0.4% | |
Total On-System Electric Sales | 1,147 | 1,123 | 2.2% | 4,864 | 4,972 | -2.2% | |
Retail Gas Sales (billion cubic feet): | |||||||
Residential | 0.20 | 0.21 | -2.6% | 2.05 | 2.44 | -16.2% | |
Commercial/Industrial | 0.12 | 0.12 | -8.3% | 1.00 | 1.18 | -14.9% | |
Other | 0.00 | 0.00 | 35.4% | 0.03 | 0.03 | -2.3% | |
Total Retail Gas Sales | 0.32 | 0.33 | -4.5% | 3.08 | 3.65 | -15.6% | |
Quarter Ended | Twelve Months Ended | |
Basic Earnings Per Share - June 30, 2015 | $ 0.16 | $ 1.30 |
Gross Margins | ||
Electric segment | 0.10 | 0.30 |
Gas segment | 0.00 | (0.03) |
Other segment | 0.00 | 0.00 |
Total Gross Margin | 0.10 | 0.27 |
Expenses | ||
Operating | 0.00 | (0.03) |
Maintenance and repairs | 0.04 | 0.08 |
Depreciation and amortization | (0.01) | (0.06) |
Merger-related costs | (0.06) | (0.12) |
Other taxes | 0.00 | (0.01) |
Change in effective income tax rates | 0.00 | (0.01) |
Other income and deductions | (0.01) | (0.03) |
Interest charges | (0.01) | (0.04) |
AFUDC | 0.00 | (0.01) |
Dilutive effect of additional shares issued | 0.00 | (0.01) |
Basic Earnings Per Share - June 30, 2016 | $ 0.21 | $ 1.33 |
The Empire District Electric Company published this content on 28 July 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 28 July 2016 23:06:03 UTC.
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