Today, UIL Holdings Corporation (NYSE:UIL) reported consolidated
net income of $57.6 million, or $1.01 per diluted share, in the
first quarter 2015, compared to $55.5 million, or $0.97 per diluted
share, in the first quarter 2014.
Consolidated earnings for the first quarter 2015 and first
quarter 2014 reflect certain non-recurring after-tax items, which
are explained below.
- Merger-related expenses associated with
the pending merger of UIL and a subsidiary of Iberdrola USA
recorded in the first quarter 2015
- Acquisition-related expenses recorded
in the first quarter 2014 associated with the now-terminated
proposed acquisition of Philadelphia Gas Works
- Reserves recorded in the first quarter
2015 related to the transmission return on equity (ROE) proceedings
pending at the Federal Energy Regulatory Commission (FERC)
Consolidated earnings, excluding the non-recurring items, for
the quarter ended March 31 were:
Quarter ended March 31,
Net Income (Loss) - $M Earnings (Loss) per
Share - Diluted 2015 2014
'15 vs '14 2015 2014 '15
vs '14 Consolidated Earnings $ 57.6
$ 55.5 $ 2.1 $
1.01 $ 0.97
$ 0.04 Non-recurring items:
Merger/Acquisition-related expenses 4.0 6.9 (2.9 ) $ 0.07 0.12
(0.05 ) FERC ROE reserves 2.2
-
2.2 0.04
- 0.04
Consolidated Earnings, excl. non-recurring items $
63.8 $ 62.4
$ 1.4 $ 1.12 $
1.09 $ 0.03
“Earnings per share, excluding non-recurring items related to
M&A expenses and FERC ROE reserves, were up 2.75%. The increase
in earnings was led by our gas companies as their earnings
increased in the first quarter 2015 by almost 6% when compared to
the same period in 2014,” commented James P. Torgerson, UIL’s
president and chief executive officer. “Although colder weather
played a large role, we saw increased earnings due to customer
growth resulting from our strategic initiative of converting
households and businesses to natural gas heat. We added another
2,002 customers in the first quarter 2015 and are on target to meet
our 2015 goal of 12,000 conversions,” added Torgerson.
“Consistent with our long term strategy, in late February, we
announced an agreement under which UIL will merge with a subsidiary
of Iberdrola USA, with Iberdrola USA becoming a newly listed U.S.
publicly-traded company, subject to regulatory and UIL shareholder
approvals and other customary closing conditions,” added Torgerson.
“The proposed transaction brings together two premier companies to
create a large, diversified power and utility company with seven
highly regarded regulated electric and gas utilities in
complementary geographies. Iberdrola USA is an ideal long-term
partner for our customers, our employees and the communities we
serve. We are excited for what the future holds and expect the
transaction to close by year-end 2015.”
Electric Distribution
The electric distribution business earned $11.3 million, or
$0.20 per diluted share, in the first quarter 2015, compared to
$14.0 million, or $0.25 per diluted share, in the first quarter
2014. The decrease in earnings for the first quarter 2015 was
mainly due to higher employee expenses, outside services and
depreciation and amortization expenses.
Electric Transmission
The electric transmission business earned $6.5 million, or $0.11
per diluted share, in first quarter 2015, compared to $8.6 million,
or $0.15 per diluted share, in the first quarter 2014.
Excluding the non-recurring FERC ROE reserves discussed above,
the electric transmission earnings were:
Quarter ended March 31, Net
Income (Loss) - $M Earnings (Loss) per Share -
Diluted 2015 2014 '15 vs
'14 2015 2014 '15 vs '14
Electric Transmission $ 6.5 $
8.6 $ (2.1 ) $
0.11 $ 0.15
$ (0.04 ) FERC ROE reserves 2.2
-
2.2 0.04
-
0.04 Electric Transmission, excl. non-recurring item $
8.7 $ 8.6
$ 0.1 $ 0.15
$ 0.15 $ -
Gas Distribution
The gas distribution businesses earned $41.2 million, or $0.72
per diluted share, in the first quarter 2015, compared to $39.0
million, or $0.68 per diluted share, in the first quarter 2014. The
increase in earnings for the first quarter 2015 was primarily due
to colder weather and customer growth.
The gross margin impacts from weather, normalized usage per
customer and customer growth are presented in the table below:
Impact of Weather, NUPC and Customer Growth (In
Thousands) 1Q '15 vs. 1Q '14
Gross Margin Weather(1) $ 6,665 Normalized usage per customer (881
) Decoupling adjustment (2,317 )
Subtotal $
3,467 Customer Growth 2,032
Total
$ 5,499 (1) Excluding weather insurance
payout of $1.7M, pre-tax, recorded in 1Q '14; including the weather
insurance payout, impact would be $8,365
Corporate
Corporate costs were $1.4 million, after-tax, or $0.02 per
diluted share, in the first quarter 2015, compared to costs of $6.1
million, after-tax, or $0.11 per diluted share, in the first
quarter 2014. Corporate costs for the first quarter 2015 included
after-tax merger-related expenses of $4.0 million, or $0.07 per
diluted share, and Corporate costs for the first quarter 2014
included acquisition-related expenses of $6.9 million, or $0.12 per
diluted share.
Excluding the non-recurring expenses discussed above, Corporate
earnings were:
Quarter ended March 31, Net
Income (Loss) - $M Earnings (Loss) per Share -
Diluted 2015 2014 '15 vs
'14 2015 2014 '15 vs '14
Corporate $ (1.4 ) $
(6.1 ) $ 4.7 $
(0.02 ) $ (0.11 )
$ 0.09 Merger/Acquisition-related expenses
4.0
6.9 (2.9 )
0.07 0.12
(0.05 ) Corporate, excl.
non-recurring item $ 2.6
$ 0.8 $ 1.8
$ 0.05 $
0.01 $ 0.04
The first quarter of each year reflect interim tax benefits
recognized at the UIL corporate level, which will reverse over the
year as each segment reflects its seasonal activity. The increase
in earnings shown above reflect these interim tax benefits and an
increase in earnings primarily due to increased returns on shared
capital assets.
Segment details for UIL Holdings Corporation’s results for the
first quarter 2015, compared to the same period in 2014, are
presented in the table below:
Net Income (Loss) - $M
Quarter ended
March 31, 2015 2014 '15 vs '14
Electric Distribution $ 11.3 $ 14.0 $
(2.7 ) Electric Transmission 8.7 8.6 0.1 Gas Distribution
41.2 39.0 2.2
Operating Companies 61.2 61.6 (0.4 ) Corporate
2.6 0.8 1.8
Subtotal $ 63.8 $
62.4 $ 1.4 Merger and
acquisition-related expenses (4.0 ) (6.9 ) 2.9 FERC ROE reserves
(2.2 ) - (2.2 )
Consolidated Earnings $ 57.6
$ 55.5 $
2.1 Earnings (Loss) Per Share -
Diluted Quarter ended March 31,
2015 2014 '15
vs '14 Electric Distribution $ 0.20 $ 0.25 $ (0.05 )
Electric Transmission 0.15 0.15 - Gas Distribution
0.72 0.68 0.04
Operating Companies 1.07 1.08 (0.01 ) Corporate
0.05 0.01
0.04
Subtotal $ 1.12 $
1.09 $ 0.03 Merger and
acquisition-related expenses (0.07 ) (0.12 ) 0.05 FERC ROE reserves
(0.04 ) - (0.04 )
Consolidated Earnings $ 1.01
$ 0.97 $
0.04 Avg. Shares - diluted (M) 57.2 57.0
Amounts may not add due to rounding
Looking Forward
UIL’s consolidated earnings for 2015 are expected to be in the
range of $126-$137 million, or $2.19-$2.39 per diluted share.
Excluding the non-recurring items, 2015 consolidated earnings are
expected to be in the range of $132-$143 million, or $2.30-$2.50
per diluted share. While consolidated earnings guidance excluding
non-recurring items is unchanged, UIL has updated earnings guidance
for the following business segments:
- Earnings for the electric distribution
business have been revised to $0.80-$0.95 per diluted share,
compared to the previously reported estimate of $0.85-$1.00 per
diluted share. Earnings for total electric have been revised to
$1.40-$1.60 per diluted share, compared to the previously reported
estimate of $1.45-$1.65 per diluted share. The revision is
primarily due to increased depreciation expense resulting from the
timing of when UI distribution capital projects were closed to
plant in service in 2014.
- Earnings for the gas distribution
business have been revised to $0.95-$1.05 per diluted share,
compared to the previously reported estimate of $0.90-$1.00 per
diluted share. The revision is primarily due to the earnings impact
related to the increased margin from customer growth and from the
colder weather.
Guidance for all other business segments remains unchanged.
Category
Approximate
NetIncome(1)
EPS - diluted(2) Electric Distribution $46 -
$54 $0.80 - $0.95 Electric Transmission(3) $33 - $38 $0.57 - $0.67
Total Electric $80 - $92 $1.40 - $1.60
Gas Distribution $54 - $60 $0.95 - $1.05
Operating
Companies $135- $146 $2.35 - $2.55 UIL
Corporate ($7) - ($5) ($0.13) - ($0.08)
Total UIL
Holdings, excl. non-recurring items $132 - $143 $2.30
- $2.50 Non-recurring item - Merger-related
expenses(4) ($4) - ($4) ($0.07) - ($0.07)
Non-recurring item - Regulatory reserves ($2) - ($2) ($0.04)
- ($0.04)
Total UIL Holdings(5)
$126 - $137
$2.19 - $2.39 (1) Rounded to the nearest million (2)
Assumes approximately 57.3 million average shares outstanding (3)
Excludes any adjustments that may result from the FERC ROE
complaints (4) Merger-related expenses through March 31, 2015;
projected merger-related expenses excluded (5) Expectations are not
expected to be additive
First quarter 2015 earnings conference
call
UIL Holdings will conduct a webcast conference call with
financial analysts on Friday, May 1, 2015, beginning at 1:00 p.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 UIL Holdings’ 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 (NYSE:UIL) is a diversified energy delivery company
serving a total of approximately 727,000 electric and natural gas
utility customers in 67 communities across two states, with
combined total assets of over $5 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 Connecticut’s 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
1,900 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 net income determined in accordance with
generally accepted accounting principles (GAAP), and then dividing
the results by the average number of diluted 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 presenting earnings excluding certain
non-recurring items, as well as earnings per share (EPS)
information by line of business, including as presented above in
the net income discussion and in the earnings guidance section, are
useful in understanding and evaluating actual and projected
financial performance and contribution of UIL’s businesses. EPS by
business is calculated by taking the pre-tax amounts determined in
accordance with GAAP of each line of business, and applying the
effective statutory federal and state tax rate and then dividing
the results by the average number of diluted shares of UIL common
stock outstanding for the periods presented. Total consolidated EPS
is a GAAP-basis presentation.
Forward-Looking Statements
Certain statements contained in this communication 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 management’s
intentions, plans, beliefs, expectations or forecasts for the
future. Such forward-looking statements are based on our
expectations and involve risks and uncertainties; consequently,
actual results may differ materially from those expressed or
implied in the statements. In addition, risks and uncertainties
related to the proposed merger with a subsidiary of Iberdrola USA
include, but are not limited to, the expected timing and likelihood
of completion of the pending merger, including the timing, receipt
and terms and conditions of any required governmental and
regulatory approvals of the pending merger that could reduce
anticipated benefits or cause the parties to abandon the
transaction, the ability to successfully integrate the businesses,
the occurrence of any event, change or other circumstances that
could give rise to the termination of the merger agreement, the
possibility that UIL’s shareowners may not approve the merger
agreement, the risk that the parties may not be able to satisfy the
conditions to the proposed merger in a timely manner or at all,
risks related to disruption of management time from ongoing
business operations due to the proposed merger, the risk that any
announcements relating to the proposed merger could have adverse
effects on the market price of UIL’s common stock, and the risk
that the proposed transaction and its announcement could have an
adverse effect on the ability of UIL to retain and hire key
personnel and maintain relationships with its suppliers, and on its
operating results and businesses generally.
New factors emerge from time to time and it is not possible for
us to predict all such factors, nor can we assess the impact of
each such factor on the business or the extent to which any factor,
or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
These risks, as well as other risks associated with the merger,
will be more fully discussed in the joint proxy
statement/prospectus that will be included in the Registration
Statement on Form S-4 that will be filed with the Securities and
Exchange Commission (SEC) in connection with the merger. Additional
risks and uncertainties are identified and discussed in UIL’s
reports filed with the SEC and available at the SEC’s website at
www.sec.gov. Forward-looking statements included in this release
speak only as of the date of this release. UIL does not undertake
any obligation to update its forward-looking statements to reflect
events or circumstances after the date of this release.
The following are summaries of UIL Holdings’ unaudited
consolidated financial information for the first quarter 2015:
UIL HOLDINGS CORPORATION CONSOLIDATED STATEMENT OF
INCOME (In Thousands except per share amounts)
(Unaudited)
Three Months Ended March 31, 2015 2014
Operating Revenues $ 584,053 $
571,162
Operating Expenses Operation Purchased
power 97,102 53,130 Natural gas purchased 174,520
214,925 Operation and maintenance 101,347 92,877 Transmission
wholesale 19,709 20,911 Depreciation and amortization 43,284 40,318
Taxes - other than income taxes 41,315 39,536
Merger and acquisition-related
expenses
6,702 5,051 Total Operating
Expenses 483,979 466,748
Operating Income 100,074 104,414
Other Income and (Deductions), net
Acquisition-related bridge facility fees - (6,413 ) Other income
and (deductions) 4,368 3,862
Total Other Income and (Deductions), net 4,368 (2,551 )
Interest Charges, net Interest on long-term debt 22,225
22,452 Other interest, net 1,232 175
23,457 22,627 Amortization of debt expense and redemption
premiums 607 607 Total Interest
Charges, net 24,064 23,234
Income from Equity Investments
2,936 3,386
Income Before Income
Taxes 83,314 82,015
Income Taxes
25,705 26,550
Net Income
57,609 55,465
Less: Preferred Stock Dividends of
Subsidiary, Noncontrolling Interests 7
13
Net Income attributable to UIL
Holdings $ 57,602 $ 55,452
Average Number of Common Shares Outstanding - Basic 56,881
56,779
Average Number of Common Shares Outstanding - Diluted
57,184 57,043
Earnings Per Share of Common Stock -
Basic: $ 1.01 $ 0.98
Earnings Per Share of Common Stock - Diluted: $ 1.01
$ 0.97
Cash Dividends Declared per share of
Common Stock $ 0.432 $ 0.432
UIL HOLDINGS CORPORATION CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME (Thousands of Dollars)
(Unaudited) Three Months Ended March
31, 2015 2014 Net Income $ 57,609 $
55,465
Other Comprehensive Income (Loss), net of deferred income
taxes Changes in unrealized gains (losses) related to pension
and other post-retirement benefit plans 273 61 Other
7 12 Total Other Comprehensive Income (Loss),
net of deferred income taxes 280 73
Comprehensive Income
57,889 55,538
Less: Preferred Stock Dividends of Subsidiary,
Noncontrolling Interests 7 13
Comprehensive Income Attributable to UIL Holdings $
57,882 $ 55,525
UIL HOLDINGS CORPORATION CONDENSED CONSOLIDATED BALANCE
SHEET (Unaudited)
March 31, December 31, (thousands of dollars)
2015 2014
ASSETS
Current assets $ 647,714 $ 670,096 Other investments
140,127 139,972 Net property, plant and equipment 3,316,841
3,292,690 Regulatory assets 700,321 687,198 Goodwill 266,205
266,205 Deferred charges and other assets 57,140
55,774 Total Assets $ 5,128,348 $
5,111,935
LIABILITIES AND
CAPITALIZATION Current liabilities $ 444,650 $ 495,558 Deferred
income taxes 604,160 585,335 Regulatory liabilities 491,155 491,896
Other noncurrent liabilities 474,574
459,476 Total Liabilities 2,014,539 2,032,265 Long-term
debt, net of unamortized discount and premium 1,710,168 1,711,349
Preferred stock of subsidiary 119 119 Net common stock equity
1,403,522 1,368,202 Total
Capitalization 3,113,809 3,079,670 Total Liabilities
and Capitalization $ 5,128,348 $ 5,111,935
UIL Holdings CorporationAnalyst Contact:Susan
Allen, 203-499-2409orMedia Contact:Michael
West Jr., 203-499-3858
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