Log in
Login
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 

4-Traders Homepage  >  Equities  >  Nyse  >  TECO Energy, Inc.    TE

Delayed Quote. Delayed  - 05/06 10:00:39 pm
27.74 USD   -0.07%
05/05 TECO ENERGY : beats 1Q profit forecasts
05/05 TECO ENERGY : Reports First-Quarter Results
05/04 TECO ENERGY : Declares Quarterly Dividend
SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector news 
The feature you requested does not exist. However, we suggest the following feature:

TECO ENERGY : MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS (form 10-Q)

share with twitter share with LinkedIn share with facebook
share via e-mail
0
05/05/2016 | 05:34pm CEST
This Management's Discussion & Analysis contains forward-looking statements,
which are subject to the inherent uncertainties in predicting future results and
conditions. Actual results may differ materially from those forecasted. The
forecasted results are based on the company's current expectations and
assumptions, and the company does not undertake to update that information or
any other information contained in this Managements Discussion & Analysis,
except as may be required by law. Factors that could impact actual results
include: the ability to successfully close the Merger with Emera on the
anticipated schedule, if at all; regulatory actions by federal, state or local
authorities; the ability to successfully implement the integration plans for
NMGC and generate the expected financial results; unexpected capital needs or
unanticipated reductions in cash flow that affect liquidity; the ability to
access the capital and credit markets when required; general economic conditions
affecting customer growth and energy sales at the utility companies; economic
conditions affecting the Florida and New Mexico economies; weather variations
and customer energy usage patterns affecting sales and operating costs at the
utilities and the effect of weather conditions on energy consumption; the effect
of extreme weather conditions or hurricanes; general operating conditions; input
commodity prices affecting cost at all of the operating companies; natural gas
demand at the utilities; and the ability of TECO Energy's subsidiaries to
operate equipment without undue accidents, breakdowns or failures. Additional
information is contained under "Risk Factors" in TECO Energy, Inc.'s Annual
Report on Form 10-K for the period ended Dec. 31, 2015.

Earnings Summary - Unaudited


                                                 Three Months Ended Mar. 

31,

      (millions) Except per-share amounts         2016                2015
      Consolidated revenues                   $       659.5       $      

693.0

      Net income from continuing operations            73.7               

63.8

      Loss on discontinued operations, net              0.1               

(5.8 )

      Net income                                       73.8               

58.0

Average common shares outstanding

      Basic                                           234.0              

232.8

      Diluted                                         235.2              

233.5

Earnings per share - basic

      Continuing operations                   $        0.31       $       

0.27

      Discontinued operations                          0.00              

(0.02 )

      Earnings per share - basic              $        0.31       $       

0.25

Earnings per share - diluted

      Continuing operations                   $        0.31       $       

0.27

      Discontinued operations                          0.00              

(0.02 )

      Earnings per share - diluted            $        0.31       $       
0.25


Operating Results

Three Months Ended Mar. 31, 2016


First-quarter 2016 net income was $73.8 million, or $0.31 per share, compared
with $58.0 million, or $0.25 per share, in the first quarter of 2015. Net income
from continuing operations was $73.7 million, or $0.31 per share, in the 2016
first quarter, compared with $63.8 million, or $0.27 per share, for the same
period in 2015. The first quarter losses in discontinued operations of $5.8
million in 2015 reflected the operating results and charges associated with TECO
Coal, which was sold in 2015 (see Note 15 to the TECO Energy Consolidated
Financial Statements).

Operating Company Results

All amounts included in the operating company discussions below are after tax, unless otherwise noted.


                                       40

--------------------------------------------------------------------------------

Tampa Electric Company - Electric Division


Tampa Electric's net income for the first quarter of 2016 was $50.2 million,
compared with $48.2 million for the same period in 2015. Results for the quarter
reflected a 1.7% higher average number of customers, and higher energy sales
primarily due to the higher number of customers. Results reflected operations
and maintenance expense slightly higher than 2015, and higher depreciation and
interest expenses. First-quarter net income in 2016 included $5.6 million of
AFUDC-equity, which represents allowed equity cost capitalized to construction
costs, compared with $3.8 million in the 2015 quarter.

Total degree days in Tampa Electric's service area in the first quarter of 2016
were 3% above normal, but 4% below the 2015 period, when degree days were 6%
above normal. Total net energy for load increased 1.7% in the first quarter of
2016, compared with the same period in 2015. In the 2016 period, pretax base
revenues were $6.2 million higher than in 2015, driven by customer growth and
higher energy sales. The quarter included more than $1 million of higher pretax
base revenue from higher base rates, as a result of the 2013 rate case
settlement.

While net energy for load is a calendar measurement of retail energy sales
rather than a billing-cycle measurement, the quarterly energy sales shown on the
following table reflect the energy sales based on billing cycles, which can vary
period to period. Retail energy sales to residential and commercial customers
increased primarily from weather and customer growth. Sales to non-phosphate
industrial customers increased due to the strength of the Tampa area
economy. Sales to lower-margin industrial-phosphate customers decreased as
self-generation by those customers increased.

Operations and maintenance expense, excluding all FPSC-approved cost-recovery
clauses, was slightly higher than in the 2015 quarter, reflecting higher costs
to safely and reliably operate and maintain the generating, transmission and
distribution systems, essentially offset by lower employee-related costs,
primarily due to the lower level of short-term incentive accruals for all
employees in 2016 compared to 2015. Depreciation and amortization expense
increased $2.0 million in 2016, as a result of normal additions to facilities to
reliably serve customers, and interest expense increased $0.7 million due to
higher long-term debt balances.

A summary of Tampa Electric's regulated operating statistics for the three months ended Mar. 31, 2016 and 2015 follows:




(millions, except average
customers)                        Operating Revenues                     Kilowatt-hour sales
Three months ended Mar. 31,   2016       2015     % Change          2016        2015       % Change
By Customer Type
Residential                 $  217.4   $  213.4         1.9         1,914.6     1,839.4          4.1
Commercial                     132.8      133.0        (0.2 )       1,388.0     1,350.1          2.8
Industrial - Phosphate          13.1       13.4        (2.4 )         163.5       167.7         (2.5 )
Industrial - Other              25.5       24.8         2.9           297.2       279.4          6.4
Other sales of electricity      39.5       40.5        (2.5 )         401.3       400.1          0.3
Deferred and other revenues
(1)                            (19.4 )      7.5      (360.2 )

Total energy sales $ 408.9 $ 432.6 (5.5 ) 4,164.6

     4,036.7          3.2
Sales for resale                 1.4        1.9       (25.8 )          50.3 

53.5 (6.0 ) Other operating revenue 14.2 16.1 (11.6 ) Total revenues

              $  424.5   $  450.6        (5.8 )       4,214.9     4,090.2          3.0
Average customers
(thousands)                    726.1      714.0         1.7
Retail net energy for load
(kilowatt hours)                                                    4,317.0 

4,242.3 1.7

(1) Primarily reflects the timing of environmental and fuel clause recoveries.

Tampa Electric Company - Natural Gas Division


PGS reported net income of $13.1 million for the first quarter, compared with
$14.6 million in the 2015 quarter. Average customer growth was 2.4% in the
quarter. Therm sales to residential customers decreased as a result of mild
winter weather that was partially offset by customer growth. Sales to commercial
customers increased due to customer growth from the stronger economy and
increased sales of compressed natural gas to vehicle fleets. Sales to
power-generation customers and off-system sales increased, reflecting higher
levels of operation by gas-fired generation in the state due to lower natural
gas prices. First-quarter results in 2016 reflected non-fuel operations and
maintenance expense $1.0 million higher than in 2015, driven by higher operating
and compliance costs, partially offset by lower employee-related costs,
primarily due to the lower level of short-term incentive accruals for all
employees in 2016 compared to 2015. Depreciation and amortization increased
slightly due to normal additions to facilities to serve customers.

A summary of PGS's regulated operating statistics for the three months ended Mar. 31, 2016 and 2015 follows:

                                       41

--------------------------------------------------------------------------------



(millions, except average
customers)                         Operating Revenues                           Therms

Three months ended Mar. 31, 2016 2015 % Change 2016

    2015      % Change
By Customer Type
Residential                 $   50.5   $   49.3          2.5           32.9       34.4         (4.2 )
Commercial                      42.8       41.6          2.9          141.1      138.2          2.1
Industrial                       3.3        3.2          1.6           83.5       76.1          9.6
Off system sales                12.9        7.8         65.1           53.9       23.4        130.0
Power generation                 2.1        1.9          7.9          190.6      184.6          3.2
Other revenues                  16.6       16.1          3.0
   Total                    $  128.2   $  119.9          6.8          502.0      456.7          9.9
By Sales Type
System supply               $   75.5   $   69.4          8.6           94.1       66.3         42.0
Transportation                  36.1       34.4          5.1          407.9      390.4          4.5
Other revenues                  16.6       16.1          3.0
   Total                    $  128.2   $  119.9          6.8          502.0      456.7          9.9
Average customers
(thousands)                    367.5      359.0          2.4





New Mexico Gas Company

NMGC reported first-quarter net income of $15.2 million, compared with $13.9
million in the 2015 period. Results reflected the benefit of heating degree days
that were almost 3% higher than 2015, but nearly 7% below normal. Growth in the
average number of customers in the 2016 quarter was 0.6%. Operating and
maintenance expense was slightly lower from acquisition synergies and a focus on
cost control. Results included $1.9 million of pretax rate credits to customers
under the Certification of Stipulation approved by the NMPRC in 2014.

A summary of NMGC's regulated operating statistics for the three months ended Mar. 31, 2016 and 2015 follows:



(millions, except average
customers)                         Operating Revenues                         Therms

Three months ended Mar. 31, 2016 2015 % Change 2016

  2015      % Change
By Customer Type
Residential                 $   77.7   $   87.5        (11.1 )      122.6      121.2          1.1
Commercial                      19.8       23.2        (14.6 )       42.0       41.1          2.3
Industrial                       0.2        0.2        (22.5 )        0.4        0.4          1.9
Off system sales                 0.6        0.3         98.4          3.9        1.2        222.5
On system transportation         6.6        6.1          8.2         95.1       84.7         12.2
Off system transportation        0.2        0.2          3.4         11.1       10.3          8.0
Other revenues                   1.5        1.5         (1.1 )
   Total                    $  106.6   $  119.0        (10.4 )      275.1      258.9          6.2
By Sales Type
System supply               $   98.3   $  111.2        (11.6 )      168.9      163.9          3.0
Transportation                   6.8        6.3          8.0        106.2       95.0         11.7
Other revenues                   1.5        1.5         (1.1 )
   Total                    $  106.6   $  119.0        (10.4 )      275.1      258.9          6.2
Average customers
(thousands)                    519.7      516.8          0.6


Other (net)

The first quarter 2016 cost from continuing operations for Other - net of $4.8
million included $0.1 million of costs associated with the pending Emera
transaction, compared with the cost of $12.9 million in 2015, which included
$0.7 million of NMGC-related integration costs. First-quarter results in 2016
reflected a $5.8 million tax benefit due to an accounting rule change related to
stock-based incentive compensation, and lower interest expense as a result of
refinancing debt maturities.

                                       42
--------------------------------------------------------------------------------


The segment data in Note 11 to the TECO Energy Consolidated Condensed Financial
Statements presents Other and Eliminations as separate segments. The discussion
above nets the two segments.



Discontinued Operations - TECO Coal


The sale of TECO Coal closed in September 2015. The $0.1 million first quarter
gain recorded in discontinued operations reflects a refund of prepaid costs
recorded in the Other - net segment, compared with a $5.8 million loss in the
2015 period, which reflected TECO Coal's operating results prior to its sale.

Income Taxes


The provisions for income taxes from continuing operations for the three month
periods ended Mar. 31, 2016 and 2015 were $35.7 million and $39.9 million,
respectively. The provision for income taxes for the three months ended Mar. 31,
2016 was impacted by higher operating income offset by a tax benefit related to
long-term incentive compensation share vestings (see Note 2 to the TECO Energy
Consolidated Financial Statements).



Pending Acquisition by Emera Status

· On Oct. 19, 2015, TECO Energy and Emera filed for approval of the Merger

with the NMPRC Docket No. 15-00327-UT. On Apr. 11, TECO Energy and Emera

announced that they had filed an unopposed stipulation with the NMPRC

reflecting a settlement reached with intervening parties in the acquisition

case currently pending before the NMPRC for approval of Emera's acquisition

of TECO Energy and the indirect acquisition of NMGC. This stipulation was

subject to a public hearing before the hearing examiner, which was held May

2. A final recommendation by the hearing examiner and final approval by the

NMPRC are required.

· On Dec. 3, 2015, TECO Energy shareholders approved the Merger with Emera.

· On Jan. 20, 2016, the FERC issued an order authorizing the Merger, finding

      that it is consistent with the public interest.


   ·  On Feb. 8 the waiting period under the Hart-Scott-Rodino Antitrust
      Improvements Act of 1976 expired without comment.

· On Mar. 23, Emera announced that the Committee on Foreign Investment in the

United States had completed its review of the acquisition of TECO Energy and

had determined that there are no unresolved national security concerns with

respect to the acquisition.

Liquidity and Capital Resources


The table below sets forth the Mar. 31, 2016 consolidated liquidity and cash
balances, the cash balances at the operating companies and Parent, and amounts
available under the TECO Energy/TECO Finance, TEC and NMGC credit facilities.



                                                                                           TECO Finance
(millions)                                  Consolidated         TEC          NMGC         Parent/other
Credit facilities (1)                      $      1,300.0     $   475.0     $   125.0     $         700.0
Drawn amounts/letters of credit (1)                 515.2           0.5           1.7               513.0
Available credit facilities                         784.8         474.5         123.3               187.0
Cash and short-term investments                      46.1          28.2           3.1                14.8
Total liquidity                            $        830.9     $   502.7     $   126.4     $         201.8



(1) Includes amounts under the TECO Energy/TECO Finance $400 million one-year

term loan facility that was fully funded on Mar. 14, 2016.

Covenants in Financing Agreements


In order to utilize their respective bank credit facilities, TECO Energy and its
subsidiaries must meet certain financial tests as defined in the applicable
agreements. In addition, TECO Energy and its subsidiaries have certain
restrictive covenants in specific agreements and debt instruments. At Mar. 31,
2016, TECO Energy and its subsidiaries were in compliance with all required
financial covenants. The table that follows lists the significant financial
covenants and the performance relative to them at Mar. 31, 2016. Reference is
made to the specific agreements and instruments for more details.



                                       43

--------------------------------------------------------------------------------

Significant Financial Covenants

(millions, unless otherwise indicated)

                                                                                             Calculation
Instrument                                  Financial Covenant
                                                   (1)           Requirement/Restriction    Mar. 31, 2016
TEC
Credit facility (2)                         Debt/capital            Cannot exceed 65%              45.9%
Accounts receivable credit facility (2)     Debt/capital            Cannot exceed 65%              45.9%
6.25% senior notes                          Debt/capital            Cannot exceed 60%           45.9%
                                            Limit on liens (3)     Cannot exceed $700          $0 liens
                                                                                             outstanding
NMGC
Credit facility (2)                         Debt/capital            Cannot exceed 65%              28.7%
3.54% and 4.87% senior unsecured notes      Debt/capital            Cannot exceed 65%              28.7%

NMGI

2.71% and 3.64% senior unsecured notes      Debt/capital            Cannot exceed 65%              45.9%
TECO Energy/TECO Finance
Credit facility - 2013 $300 million (2)     Debt/capital            Cannot exceed 65%              61.6%
Credit facility - 2016 $400 million (2)     Debt/capital            Cannot exceed 65%              61.6%



(1) As defined in each applicable instrument.

(2) See Note 6 to the TECO Energy Consolidated Condensed Financial Statements for

a description of the credit facilities.

(3) If the limitation on liens is exceeded, the company is required to provide

    ratable security to the holders of these notes.



Credit Ratings of Senior Unsecured Debt at Mar. 31, 2016

                                          Standard &
                                         Poor's (S&P)   Moody's   Fitch
              Tampa Electric Company         BBB+         A2       A-
              New Mexico Gas Company         BBB+          -        -
              TECO Energy/TECO Finance       BBB         Baa1      BBB




On Sept. 8, 2015, S&P affirmed the issuer credit rating of TECO Energy and the
senior unsecured debt rating of its subsidiaries, TECO Finance, TEC and NMGC and
revised the outlook to negative from developing, following the announcement of
the pending Merger with Emera.



On Sept. 8, 2015, Moody's Investors Service, Inc. announced that the pending
Merger with Emera had no immediate impact on the senior unsecured debt ratings
of TECO Energy and subsidiaries.



On Sept. 8, 2015, Fitch Ratings affirmed the issuer default ratings of TECO
Energy and the senior unsecured debt rating of its subsidiaries, TECO Finance
and TEC, following the announcement of the pending Merger with Emera. On Oct. 9,
2015, Fitch Ratings affirmed the issuer default ratings of TECO Energy at BBB
and TEC at BBB+ and affirmed the senior unsecured debt rating of its
subsidiaries, TECO Finance and TEC. Fitch Ratings also described the ratings
outlook as "Stable".

S&P, Moody's and Fitch describe credit ratings in the BBB or Baa category as
representing adequate capacity for payment of financial obligations. The lowest
investment grade credit ratings for S&P is BBB-, for Moody's is Baa3 and for
Fitch is BBB-; thus, the credit rating agencies assign TECO Energy, TECO
Finance, TEC and NMGC's senior unsecured debt investment-grade credit ratings.

A credit rating agency rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time by the
assigning rating agency. Our access to capital markets and cost of financing,
including the applicability of restrictive financial covenants, are influenced
by the ratings of our securities. In addition, certain of TEC's derivative
instruments contain provisions that require TEC's debt to maintain investment
grade credit ratings (see Note 12 to the TECO Energy Consolidated Financial
Statements). The credit ratings listed above are included in this report in
order to provide information that may be relevant to these matters and because
downgrades, if any, in credit ratings may affect our ability to borrow and may
increase financing costs, which may decrease earnings (see the Risk Factors in
Item 1A of TECO Energy's Annual Report on Form 10-K for the year ended Dec. 31,
2015). These credit ratings are not necessarily applicable to any particular
security that we may offer and therefore should not be relied upon for making a
decision to buy, sell or hold any of our securities.

Fair Value Measurements


All natural gas derivatives were entered into by the regulated utilities to
manage the impact of natural gas prices on customers. As a result of applying
accounting standards for regulated operations, the changes in value of natural
gas derivatives of Tampa

                                       44
--------------------------------------------------------------------------------


Electric, PGS and NMGC are recorded as regulatory assets or liabilities to
reflect the impact of the risks of hedging activities in the fuel recovery
clause. Because the amounts are deferred and ultimately collected through the
fuel clause, the unrealized gains and losses associated with the valuation of
these assets and liabilities do not impact our results of operations.

The valuation methods used to determine fair value are described in Notes 7 and
13 to the TECO Energy Consolidated Condensed Financial Statements. In addition,
the company considered the impact of nonperformance risk in determining the fair
value of derivatives. The company considered the net position with each
counterparty, past performance of both parties and the intent of the parties,
indications of credit deterioration and whether the markets in which the company
transacts have experienced dislocation. At Mar. 31, 2016, the fair value of
derivatives was not materially affected by nonperformance risk.

Critical Accounting Policies and Estimates


The company's critical accounting policies relate to deferred income taxes,
employee postretirement benefits, long-lived assets, goodwill and regulatory
accounting. For further discussion of critical accounting policies, see TECO
Energy's Annual Report on Form 10-K for the year ended Dec. 31, 2015.

Regulatory

PGS Compliance Activities


In 2013, the FPSC audit staff cited PGS for not fully complying with FPSC rules
mostly focused on record keeping for maintenance and record keeping in two of
its divisions. PGS took immediate and significant corrective actions, including
organizational, operational and system changes over the course of multiple
years.

In 2015, the FPSC staff met with PGS officials to discuss perceived continuing
issues associated with the PGS pipeline safety program. PGS was presented with a
summary of safety rule violations, many of which were identified during PGS'
implementation of its action plan as a result of the 2013 audit findings.
Through ongoing discussions with the audit staff, PGS was made aware of concerns
regarding falsification of documentation in one division. PGS determined that
leak-inspection reports in 2014 were falsified. PGS took immediate actions to
correct the findings, including reinspecting all pipes due for inspection in
that division in 2014 and repaired deficiencies as appropriate.

The FPSC audit staff published a follow-up audit report that acknowledged the
progress that had been made and found that further improvements were needed. As
a result of this report, the OPC filed a petition with the FPSC pointing to the
violations of rules for safety inspections seeking fines or possible refunds to
customers by PGS. On Feb. 25, 2016, the FPSC staff issued a notice informing PGS
that the staff would be making a recommendation to the FPSC to initiate a show
cause proceeding against PGS for alleged safety rule violations, with total
potential penalties of up to $3.9 million. On Apr. 18, 2016, PGS reached a
settlement regarding this matter with the OPC and FPSC staff and agreed to pay a
$1.0 million civil penalty and make refunds to customers of $2.0 million. The
FPSC approved the settlement agreement on May 5, 2016 (see Note 10 to the TECO
Energy Consolidated Financial Statements).






                                       45

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses

share with twitter share with LinkedIn share with facebook
share via e-mail
0
React to this article
Latest news on TECO ENERGY, INC.
05/05 TECO ENERGY : MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULT..
05/05 TECO ENERGY : beats 1Q profit forecasts
05/05 TECO ENERGY INC : Results of Operations and Financial Condition, Financial State..
05/05 TECO ENERGY : Reports First-Quarter Results
05/04 TECO ENERGY : Declares Quarterly Dividend
04/28 EMERA : Acquisition of TECO Energy Hearing Moved Earlier
04/26 EMERA : Acquisition of TECO Energy Hearing Moved Earlier
04/21 TECO ENERGY INC : Other Events, Financial Statements and Exhibits (form 8-K)
04/15 TECO ENERGY : to Release First-Quarter Results May 5
04/12 TECO ENERGY : Other Events, Financial Statements and Exhibits (form 8-K)
Advertisement
News chart
Full-screen chart
Income Statement Evolution
More Financials