OGE ENERGY CORP. OKLAHOMA CITY, May 5, 2016 /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 $0.13 per diluted share for the three months ended March 31, 2016 compared to $0.22 per diluted share for the first quarter of 2015.
OG&E, a regulated electric utility, contributed earnings of $0.03 per share in the first quarter, compared with earnings of $0.09 per share in the first quarter last year. OGE Energy's interest in the natural gas midstream operations contributed earnings of $0.09 per share compared with earnings of $0.11 per share in the year-ago quarter. The holding company posted earnings of $0.01 per share compared with earnings of $0.02 per share in 2015.
"Through the first quarter of 2016, both of our businesses are on plan," said OGE Energy Corp. Chairman, President and CEO Sean Trauschke. "I'm very pleased with our operational performance, including record production for some of our generating plants, on-time and on-budget project management, controlling our operational expenses - all while achieving first- quartile safety performance."
Discussion of First Quarter 2016
OGE Energy's net income was $25 million in the first quarter, compared to $43 million in the year-ago quarter.
OG&E's net income declined to $6 million, compared to $17 million in the year-ago quarter. A primary driver of the lower net income was a decline in gross margin on revenues from $255 million compared to $269 million in the comparable quarter last year. The decrease in gross margin was primarily due to the pending regulatory recovery of assets placed into service and mild weather. In addition to lower gross margin, earnings were impacted by higher depreciation expense associated with additional assets placed into service.
Natural Gas Midstream Operations contributed net income to OGE Energy Corp. of $18 million for the first quarter of 2016 compared to $23 million for the same period in 2015. The decrease reflects lower commodity prices in addition to higher depreciation and interest expense partially offset by lower operations and maintenance expense. In addition, Enable Midstream issued cash distributions to OGE of approximately $35 million compared with $34 million in the first quarter of 2015.
2016 Earnings Outlook
The 2016 outlook is unchanged with OG&E projected to earn $1.44 to $1.50 per average diluted share. OGE Energy consolidated earnings guidance for 2016 is $1.72 to $1.83 per average diluted share. More information regarding the Company's 2016 earnings guidance is contained in the Company's 2015 Form 10-K and Form 10Q for the quarter ended March 31, 2016 as filed with the Securities and Exchange Commission.
Conference Call Webcast
OGE Energy will host a conference call for discussion of the results on Thursday, May 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 828,000 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 measure 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
March 31,
---------
(In millions) 2016 2015
------------ ---- ----
Operating revenues $433.1 $480.1
Less:
Cost of sales 177.9 211.6
Gross Margin $255.2 $268.5
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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, 2015.
Note: Consolidated Statements of Income, Financial and Statistical Data attached.
OGE Energy Corp.
Consolidated Statements of Income
(Unaudited)
Three Months Ended
March 31,
---------
(In millions, except per share data) 2016 2015
----------------------------------- ---- ----
OPERATING REVENUES $433.1 $480.1
COST OF SALES 177.9 211.6
OPERATING EXPENSES
Other operation and maintenance 113.9 111.7
Depreciation and amortization 78.5 75.9
Impairment of assets - -
Gain on insurance proceeds - -
Taxes other than income 24.9 24.5
----------------------- ---- ----
Total operating expenses 217.3 212.1
------------------------ ----- -----
OPERATING INCOME 37.9 56.4
---------------- ---- ----
OTHER INCOME (EXPENSE)
Equity in earnings of unconsolidated affiliates 28.3 31.7
Allowance for equity funds used during construction 1.6 1.5
Other income 5.6 4.9
Other expense (1.7) (1.0)
------------- ---- ----
Net other income 33.8 37.1
---------------- ---- ----
INTEREST EXPENSE
Interest on long-term debt 35.8 36.9
Allowance for borrowed funds used during construction (0.9) (0.8)
Interest on short-term debt and other interest charges 1.4 1.3
------------------------------------------------------ --- ---
Interest expense 36.3 37.4
---------------- ---- ----
INCOME BEFORE TAXES 35.4 56.1
INCOME TAX EXPENSE 10.2 12.9
------------------ ---- ----
NET INCOME 25.2 43.2
Less: Net income attributable to noncontrolling interests - -
--------------------------------------------------------- --- ---
NET INCOME ATTRIBUTABLE TO OGE ENERGY $25.2 $43.2
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BASIC AVERAGE COMMON SHARES OUTSTANDING 199.7 199.5
DILUTED AVERAGE COMMON SHARES OUTSTANDING 199.7 199.5
BASIC EARNINGS PER AVERAGE COMMON SHARE $0.13 $0.22
DILUTED EARNINGS PER AVERAGE COMMON SHARE $0.13 $0.22
DIVIDENDS DECLARED PER COMMON SHARE $0.27500 $0.25000
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Oklahoma Gas and Electric Company
Financial and Statistical Data
(Unaudited)
Three Months Ended
March 31,
---------
(Dollars in millions) 2016 2015
-------------------- ---- ----
Operating revenues by classification
Residential $178.5 $194.6
Commercial 102.7 105.9
Industrial 38.2 41.7
Oilfield 32.3 37.0
Public authorities and street
light 36.1 39.4
Sales for resale 0.1 11.8
----------------
System sales revenues 387.9 430.4
Off-system sales revenues 9.1 10.3
Other 36.1 39.4
----- ---- ----
Total operating revenues $433.1 $480.1
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MWH sales by classification (In millions)
Residential 2.1 2.3
Commercial 1.6 1.6
Industrial 0.9 0.9
Oilfield 0.8 0.9
Public authorities and street
light 0.7 0.7
Sales for resale - 0.3
---------------- --- ---
System sales 6.1 6.7
Off-system sales 0.4 0.2
---------------- --- ---
Total sales 6.5 6.9
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Number of customers 827,685 817,781
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Weighted-average cost of energy per kilowatt-hour - cents
Natural gas 2.038 2.629
Coal 2.288 2.115
Total fuel 1.945 2.200
Total fuel and purchased power 2.611 2.901
------------------------------ ----- -----
Degree days (A)
Heating - Actual 1,552 1,841
Heating - Normal 1,798 1,798
Cooling - Actual 12 11
Cooling - Normal 13 13
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SOURCE OGE Energy Corp.
