At the Board of Directors meeting of The Empire District
Electric Company (the “Company”) (NYSE:EDE) held today, the
Directors declared a quarterly dividend of $0.26 per share.
The dividend is payable September 15, 2016, to holders of record
as of September 1, 2016. The Company, an operator of
regulated electric, gas and water utilities, announced today the
results for the quarter and twelve months ended June 30,
2016.
Highlights:
- 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.
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 Results
Electric 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 Results
Electric 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 EndedJune
30,
Twelve Months EndedJune
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
Reconciliation of Net Income/Earnings
Per Share
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 EndedJune
30,
Twelve Months EndedJune
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%
* Slight differences from actual
results may occur due to rounding to millions.
Reconciliation of Earnings Per
Share
QuarterEnded
Twelve
MonthsEnded
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 reconciliation of basic earnings per share (EPS) presented
above compares the quarter and twelve months ended June 30, 2016
versus June 30, 2015 and is a non-GAAP presentation. The economic
substance behind this non-GAAP EPS measure is to present the after
tax impact of significant items and components of the statement of
income on a per share basis before the impact of additional stock
issuances. The Company believes this presentation is useful to
investors because the statement of income does not readily show the
EPS impact of the various components, including the effect of new
stock issuances. This could limit the readers’ understanding of the
reasons for the EPS change from previous years. This information is
useful to management, and the Company believes useful to investors,
to better understand the reasons for the fluctuation in EPS between
the prior and current years on a per share basis. The presentation
of net income and EPS excluding merger-related costs throughout
this press release is also a non-GAAP presentation. The Company
believes this presentation is useful to investors because
merger-related costs are not reflective of the underlying ongoing
operations of the Company and has included the analysis as a
complement to the financial information provided in accordance with
GAAP.
In addition, although a non-GAAP presentation, the Company
believes the presentation of gross margin (reflected in the table
above and elsewhere in this press release) is useful to investors
and others in understanding and analyzing changes in operating
performance from one period to the next, and has included the
analysis as a complement to the financial information provided in
accordance with GAAP.
This reconciliation and margin information may not be comparable
to other companies or more useful than the GAAP presentation
included in the statements of income. The presentation does not
purport to be an alternative to EPS determined in accordance with
GAAP as a measure of operating performance or any other measure of
financial performance presented in accordance with GAAP. Management
compensates for the limitations of using non-GAAP financial
measures by using them to supplement GAAP results to provide a more
complete understanding of the factors and trends affecting the
business than GAAP results alone. The dilutive effect of additional
shares issued in this table reflects the impact of all shares
issued in the respective periods presented.
Earnings Guidance
Our revised 2016 guidance range of $1.26 to $1.44 per share
communicated on February 26, 2016 assumes approximately 50% of the
expected merger-related costs of $15 to $17 million will be payable
in 2016, assuming a 2017 closing date. It also assumes 30-year
average weather, overall system energy growth of less than 1% and
increased operating costs driven by costs related to our Riverton
combined cycle project. Given the Unanimous Stipulation and
Agreement filed with the MPSC regarding electric rate Case No.
ER-2016-0023, although still unapproved, is reflective of lower
fuel costs with little impact on margin, our revised guidance range
remains unchanged.
Other factors that may impact earnings include variations in
customer growth and usage projections, unanticipated or unplanned
events that may impact operating and maintenance costs and the
impact of actual rate case results differing from our assumptions.
The effects of assumptions and other factors evaluated for the
purpose of providing guidance are not necessarily independent of
one another, and the combination of effects can cause individual
impacts smaller or larger than the indicated guidance range.
Based in Joplin, Missouri, The Empire District Electric Company
(NYSE:EDE) is an investor-owned, regulated utility providing
electric, natural gas (through its wholly owned subsidiary, The
Empire District Gas Company) and water service, with approximately
218,000 customers in Missouri, Kansas, Oklahoma, and Arkansas. A
subsidiary of the Company also provides fiber optic services.
Certain matters discussed in this press release are
“forward-looking statements” intended to qualify for the safe
harbor from liability established by the Private Securities
Litigation Reform Act of 1995. Such statements address or may
address future plans, objectives, expectations and events or
conditions concerning various matters such as the pending
acquisition of Empire by Liberty Utilities (Central) Co. (Liberty
Central), a subsidiary of Algonquin Power & Utilities Corp.
(APUC) (the Merger), capital expenditures, earnings, pension and
other costs, competition, litigation, our construction program, our
generation plans, our financing plans, potential acquisitions, rate
and other regulatory matters, liquidity and capital resources and
accounting matters. Actual results in each case could differ
materially from those currently anticipated in such statements, by
reason of the factors noted in the Company’s filings with the SEC,
including the most recent Form 10-K and 10-Q.
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version on businesswire.com: http://www.businesswire.com/news/home/20160728006646/en/
The Empire District Electric
CompanyContacts:Investor
RelationsDale Harrington, 417-625-4222Director of
Investor Relationsdharrington@empiredistrict.comorMedia
CommunicationsJulie Maus, 417-625-5101Director of
Corporate Communicationsjmaus@empiredistrict.com
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