- Consolidated GAAP earnings per share
up — $2.11 per share vs. $1.63 per share
- Second quarter operating earnings
per share down — $1.78 per share vs. $2.02 per share
- Operating earnings guidance for
fiscal year 2016 — affirming a range of $3.00 per share to $3.20
per share
WGL Holdings, Inc. (NYSE: WGL):
Consolidated Results
WGL Holdings, Inc. (NYSE: WGL), the parent company of Washington
Gas Light Company (Washington Gas) and other energy-related
subsidiaries, today reported net income applicable to common stock
determined in accordance with generally accepted accounting
principles in the United States of America (GAAP) for the quarter
ended March 31, 2016, of $106.3 million, or $2.11 per share,
an improvement of $24.8 million, or $0.48 per share, over net
income applicable to common stock of $81.5 million, or $1.63 per
share, reported for the quarter ended March 31, 2015.
For the six months ended March 31, 2016, net income
applicable to common stock was $174.5 million, or $3.48 per share,
an improvement of $29.2 million, or $0.58 per share, over net
income applicable to common stock of $145.3 million, or $2.90 per
share, for the same period of the prior fiscal year.
On a consolidated basis, WGL uses operating earnings (loss) to
evaluate overall financial performance, and evaluates segment
financial performance based on earnings before interest and taxes,
as adjusted (adjusted EBIT). Both operating earnings (loss) and
adjusted EBIT adjust for the accounting recognition of certain
transactions that are not representative of the ongoing earnings of
the company. Additionally, we believe that adjusted EBIT enhances
the ability to evaluate segment performance because it excludes
interest and income tax expense, which are affected by
corporate-wide strategies such as capital financing and tax sharing
allocations. Operating earnings (loss) and adjusted EBIT are
non-GAAP financial measures, which are not recognized in accordance
with GAAP and should not be viewed as alternatives to GAAP measures
of performance. Refer to “Reconciliation of Non-GAAP Financial
Measures,” attached to this news release, for a more detailed
discussion of management’s use of these measures and for
reconciliations to GAAP financial measures.
For the quarter ended March 31, 2016, operating earnings
were $89.5 million, or $1.78 per share, compared to operating
earnings of $101.0 million, or $2.02 per share, for the same
quarter of the prior fiscal year. For the six months ended
March 31, 2016, operating earnings were $148.7 million, or
$2.96 per share, compared to operating earnings of $159.0 million,
or $3.18 per share, for the same period of the prior fiscal
year.
“I am happy to announce another solid quarter of earnings at WGL
Holdings,” said Terry McCallister, Chairman and Chief Executive
Officer. “Adjusted EBIT improved compared to the second
quarter of 2015 in both the regulated utility and in our commercial
energy systems segments. The utility continues to benefit from
new customers and from rate base growth driven by our accelerated
infrastructure replacement programs, and the systems segment has
seen improved earnings fueled by investments in distributed
generation assets and by growth in our energy efficiency
contracting business. While current market pricing has lowered
results in the quarter compared to the prior year in the midstream
energy services segment, we expect results there to improve in the
second half and to exceed our original plans for this
business. Our retail energy-marketing business also realized
lower results for the quarter, but as we have noted before,
earnings in the segment were unusually high in 2015 driven in part
by weather related portfolio optimization results.”
“While we are disappointed in the recent decision by the New
York State Department of Environmental Conservation to deny
approval for the Constitution pipeline, we remain committed to the
project and to finding a path forward for this needed
infrastructure investment. We are, however, still evaluating
the accounting impacts of this development as well as any potential
impacts to our financial forecasts.”
Second Quarter Results by Business
Segment
Regulated Utility
For the three months ended March 31, 2016, the regulated
utility segment reported adjusted EBIT of $153.9 million, compared
to adjusted EBIT of $152.4 million for the same quarter of the
prior fiscal year. For the six months ended March 31, 2016,
the regulated utility segment reported adjusted EBIT of $240.5
million, compared to adjusted EBIT of $249.0 million for the same
period of the prior fiscal year.
For both the three and six months ended March 31, 2016
comparisons, adjusted EBIT reflects: (i) higher revenues from
customer growth; (ii) higher rate recovery related to our
accelerated pipe replacement programs and (iii) lower expenses
associated with employee incentives. For both period-to-period
comparisons, these favorable variances were partially offset by:
(i) the negative effects of certain natural gas consumption
patterns in the District of Columbia; (ii) lower realized margins
associated with our asset optimization program and (iii) a decrease
in the recovery of carrying costs on lower average storage gas
inventory balances. The comparison for the six months ended
March 31, 2016, also reflects higher labor and support
activity costs, higher depreciation expense related to the growth
in our utility plant and other taxes.
Retail Energy-Marketing
For the three months ended March 31, 2016, the retail
energy-marketing segment reported adjusted EBIT of $8.4 million,
compared to adjusted EBIT of $27.0 million for the same quarter of
the prior fiscal year. For the six months ended March 31,
2016, the retail energy-marketing segment reported adjusted EBIT of
$13.6 million, compared to adjusted EBIT of $36.0 million for the
same period of the prior fiscal year.
For both the three and six months ended March 31, 2016, the
decline in adjusted EBIT primarily reflects lower natural gas
margins due to a decrease in portfolio optimization activity that
returned to more historical levels during these periods and lower
electric margins due to higher capacity charges from the regional
power grid operator (PJM). Further contributing to these
unfavorable variances were higher operating expenses primarily due
to commercial broker fees.
Commercial Energy Systems
For the three months ended March 31, 2016, the commercial
energy systems segment reported adjusted EBIT of $2.3 million, an
increase of $0.6 million, over adjusted EBIT of $1.7 million for
the same quarter of the prior fiscal year. For the six months ended
March 31, 2016, the commercial energy systems segment reported
adjusted EBIT of $4.5 million, an increase of $1.6 million, over
adjusted EBIT of $2.9 million, for the same period of the prior
fiscal year. The increase in adjusted EBIT reflects: (i) improved
margins from the energy-efficiency contracting business and (ii)
the growth in distributed generation assets in service, including
higher income from state rebate programs and solar renewable energy
credit sales. Additionally, there were improved results in our
investment solar businesses related to changes in the recognition
of earnings for our solar partnership. These improvements were
partially offset by a $3.0 million impairment related to our
investment in thermal solar projects recorded during the three
month period and higher operating and depreciation expenses.
Midstream Energy Services
For the three months ended March 31, 2016, the midstream
energy services segment reported adjusted EBIT of $(8.4) million,
compared to adjusted EBIT of $(3.1) million for the same quarter of
the prior fiscal year. For the six months ended March 31,
2016, the midstream energy services segment reported adjusted EBIT
of $4.8 million, an increase of $5.3 million, over adjusted EBIT of
$(0.5) million for the same period of the prior fiscal year.
For the three months ended March 31, 2016, the decline in
adjusted EBIT when compared to the same period in the prior fiscal
year is primarily related to the recognition of losses associated
with current market pricing. We anticipate these losses will
reverse by fiscal year-end as we realize the value of economic
hedging transactions we executed during the first two quarters and
as certain contractual procedures approach resolution. For the six
months ended March 31, 2016, the increase in adjusted EBIT
primarily reflects favorable spreads when compared to the same
period in the prior fiscal year.
Earnings Outlook
We are affirming our consolidated non-GAAP operating earnings
estimate for fiscal year 2016 in a range of $3.00 per share to
$3.20 per share. This guidance does not include any potential
impacts related to the decision by the New York Department of
Environmental Conservation to deny the section 401 certification
for the Constitution pipeline, other than a reduction in forecasted
AFUDC related to the project. In providing fiscal year 2016
earnings guidance, management is aware that there could be
differences between reported GAAP earnings and estimated operating
earnings due to matters such as, but not limited to, unrealized
mark-to-market positions for our energy-related derivatives. At
this time, WGL management is not able to reasonably estimate the
aggregate impact of these items on reported earnings and therefore
is not able to provide a corresponding GAAP equivalent for its
operating earnings guidance.
We assume no obligation to update this guidance. The absence of
any statement by us in the future should not be presumed to
represent an affirmation of this earnings guidance. For the
assumptions underlying this guidance, please refer to the slides
accompanying our webcast that will be posted to WGL’s website,
www.wglholdings.com.
Other Information
We will hold a conference call at 10:30 a.m., Eastern Time on
May 5, 2016, to discuss our second quarter fiscal year 2016
financial results. The live conference call will be available to
the public via a link located on WGL’s website, www.wglholdings.com. To hear the live
webcast, click on “Investor Relations” then “Events &
Webcasts.” The webcast and related slides will be archived on WGL’s
website through at least June 5, 2016.
WGL, headquartered in Washington, D.C., is a leading source for
clean, efficient and diverse energy solutions. With activities and
assets across the U.S., WGL consists of Washington Gas, WGL Energy,
WGL Midstream and Hampshire Gas. WGL provides natural gas,
electricity, green power and energy services, including generation,
storage, transportation, distribution, supply and efficiency. Our
calling as a company is to make energy surprisingly easy for our
employees, our community and all our customers. Whether you are a
homeowner or renter, small business or multinational corporation,
state and local or federal agency, WGL is here to provide Energy
Answers. Ask Us. For more information, visit us at www.wglholdings.com.
Unless otherwise noted, earnings per share amounts are presented
on a diluted basis, and are based on weighted average common and
common equivalent shares outstanding.
Please see the attached comparative statements for additional
information on our operating results. Also attached to this news
release are reconciliations of non-GAAP financial measures.
Forward-Looking
Statements
This news release and other statements by us include
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 with respect to the
outlook for earnings, revenues, dividends and other future
financial business performance or strategies and expectations.
Forward-looking statements are typically identified by words such
as, but not limited to, “estimates,” “expects,” “anticipates,”
“intends,” “believes,” “plans,” and similar expressions, or future
or conditional verbs such as “will,” “should,” “would,” and
“could.” Although we believe such forward-looking statements are
based on reasonable assumptions, we cannot give assurance that
every objective will be achieved. Forward-looking statements speak
only as of today, and we assume no duty to update them. Factors
that could cause actual results to differ materially from those
expressed or implied include, but are not limited to, general
economic conditions and the factors discussed under the “Risk
Factors” heading in our most recent annual report on Form 10-K and
other documents that we have filed with, or furnished to, the U.S.
Securities and Exchange Commission.
WGL Holdings, Inc. Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands)
March 31, 2016 September
30, 2015
ASSETS Property, Plant and
Equipment At original cost
$ 5,199,734 $
5,003,910 Accumulated depreciation and amortization
(1,367,215 ) (1,331,182 ) Net property, plant
and equipment
3,832,519 3,672,728
Current Assets Cash and cash equivalents
9,874
6,733 Accounts receivable, net
577,622 358,491 Storage gas
133,947 211,443 Derivatives and other
202,765
171,874 Total current assets
924,208 748,541
Deferred Charges and
Other Assets 902,838 840,090
Total Assets $ 5,659,565
$ 5,261,359
CAPITALIZATION AND LIABILITIES
Capitalization Common shareholders’ equity
$
1,395,114 $ 1,243,247 Washington Gas Light Company preferred
stock
28,173 28,173 Long-term debt
1,194,251
944,201 Total capitalization
2,617,538 2,215,621
Current
Liabilities Notes payable and current maturities of long-term
debt
329,307 357,000 Accounts payable and other accrued
liabilities
349,746 325,146 Derivatives and other
306,849 300,768 Total current
liabilities
985,902 982,914
Deferred Credits 2,056,125
2,062,824
Total Capitalization and Liabilities
$ 5,659,565 $ 5,261,359
WGL Holdings, Inc. Condensed Consolidated
Statements of Income
(Unaudited)
Three Months Ended Six Months
Ended March 31, March 31,
(In thousands, except per share data)
2016
2015
2016 2015
OPERATING REVENUES
Utility
$ 442,837 $ 606,505
$
730,990 $ 988,217 Non-utility
392,852
395,228
718,083
762,753
Total Operating Revenues
835,689 1,001,733
1,449,073 1,750,970
OPERATING
EXPENSES Utility cost of gas
121,055 310,138
171,080 439,842 Non-utility cost of energy-related sales
351,720 356,535
634,207 693,103 Operation and
maintenance
103,933 104,287
199,352 196,667
Depreciation and amortization
33,170 30,103
64,582
59,463 General taxes and other assessments
51,400 57,784
87,932
97,167
Total Operating Expenses
661,278 858,847
1,157,153 1,486,242
OPERATING
INCOME 174,411 142,886
291,920 264,728 Equity in
earnings of unconsolidated affiliates
4,768 1,832
6,031 2,976 Other income (expenses) — net
795 338
1,774 (4,017 ) Interest expense
12,999
13,254
25,759
25,564
INCOME BEFORE TAXES 166,975 131,802
273,966 238,123
INCOME TAX EXPENSE
60,357 50,017
98,847
92,120
NET INCOME $
106,618 $ 81,785
$ 175,119 $ 146,003 Dividends
on Washington Gas Light Company preferred stock
330 330
660
660
NET INCOME APPLICABLE TO COMMON STOCK
$ 106,288 $ 81,455
$
174,459 $ 145,343
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING Basic
50,009 49,720
49,918
49,851 Diluted
50,282 49,983
50,166 50,055
EARNINGS
PER AVERAGE COMMON SHARE Basic
$ 2.13 $ 1.64
$ 3.49 $ 2.92 Diluted
$ 2.11
$ 1.63
$ 3.48 $ 2.90
WGL Holdings, Inc. Consolidated Financial
and Operating Statistics
(Unaudited)
FINANCIAL STATISTICS Twelve Months
Ended March 31, 2016
2015 Closing Market Price — end of period
$72.37
$56.40 52-Week Market Price Range
$74.10 - $51.86
$59.08-$37.77 Price Earnings Ratio
22.5 16.7 Annualized
Dividends Per Share
$1.95 $1.85 Dividend Yield
2.7%
3.3% Return on Average Common Equity
11.9% 13.4% Total
Interest Coverage (times)
5.8 7.1 Book Value Per Share — end
of period
$27.72 $26.22 Common Shares Outstanding — end of
period (thousands)
50,337 49,729
UTILITY GAS STATISTICS
Three Months Ended Six Months Ended
Twelve Months Ended March 31,
March 31, March 31, (In thousands)
2016 2015
2016 2015
2016 2015
Operating Revenues
Gas Sold and Delivered Residential — Firm
$
279,973 $ 411,386
$ 447,661 $ 655,120
$
609,207 $ 827,935 Commercial and Industrial — Firm
59,679 92,036
96,288 148,454
135,772 193,001
Commercial and Industrial — Interruptible
1,087 1,256
1,606 1,974
2,209 2,499 Electric Generation
275 275
550 550
1,100 1,100
341,014 504,953
546,105 806,098
748,288
1,024,535 Gas Delivered for Others Firm
80,492
77,819
142,396 133,940
213,660 199,059 Interruptible
16,831 20,857
28,336 34,593
46,220 53,383
Electric Generation
205
107
381 239
695 508
97,528
98,783
171,113
168,772
260,575
252,950
438,542 603,736
717,218 974,870
1,008,863 1,277,485 Other
4,295 2,769
13,772 13,347
36,954 38,887
Total $ 442,837
$ 606,505
$
730,990 $ 988,217
$ 1,045,817 $
1,316,372
Three Months Ended Six Months
Ended Twelve Months Ended March 31,
March 31, March 31, (In thousands of
therms)
2016 2015
2016
2015
2016 2015
Gas Sales and Deliveries
Gas Sold and Delivered Residential — Firm
321,765 410,701
474,689 627,760
581,803 735,038 Commercial and
Industrial — Firm
79,817 98,729
124,709 157,907
164,345 197,483 Commercial and Industrial — Interruptible
1,332 390
2,051 1,445
2,678 2,177
402,914 509,820
601,449
787,112
748,826
934,698 Gas Delivered for Others Firm
218,692 279,133
351,970 439,139
470,956
565,683 Interruptible
82,999 93,488
145,534 171,147
234,651 269,082 Electric Generation
59,154
28,955
102,380 55,210
226,231 140,484
360,845
401,576
599,884
665,496
931,838
975,249
Total
763,759 911,396
1,201,333 1,452,608
1,680,664
1,909,947
Utility Gas Purchase Expense (excluding
asset optimization) 34.12 ¢
56.88 ¢
34.83 ¢
56.63 ¢
37.81 ¢
57.26 ¢
HEATING DEGREE DAYS Actual
1,996 2,471
2,952 3,726
3,155 4,003 Normal
2,098 2,107
3,429 3,450
3,737 3,758 Percent
Colder (Warmer) than Normal
(4.9
)
%
17.3 %
(13.9
)
%
8.0 %
(15.6
)
%
6.5 %
Average Active Customer Meters
1,144,147 1,132,836
1,139,798
1,127,843
1,136,067
1,123,632
WGL ENERGY SERVICES
Natural Gas Sales Therm Sales (thousands of therms)
315,900 314,500
505,500 515,600
702,900
714,100 Number of Customers (end of period)
139,400
150,000
139,400 150,000
139,400 150,000
Electricity Sales Electricity Sales (thousands of
kWhs)
3,192,700 2,988,200
6,119,200 5,656,700
12,519,400 11,468,500 Number of Accounts (end of period)
134,400 150,100
134,400 150,100
134,400
150,100
WGL ENERGY SYSTEMS Megawatts in
service
134 87
134 87
134 87 Megawatt hours
generated
43,691 27,902
77,306
52,771
171,598
112,006
WGL Holdings, Inc.Reconciliation of
Non-GAAP Financial Measures(Unaudited)
The tables below reconcile adjusted EBIT on a segment basis to
GAAP income (loss) before income taxes and reconcile operating
earnings (loss) on a consolidated basis to GAAP net income (loss)
applicable to common stock. Management believes that adjusted EBIT
and operating earnings (loss) provide a more meaningful
representation of our earnings from ongoing operations on a segment
and consolidated basis, respectively. These measures facilitate
analysis by providing consistent and comparable measures to help
management, investors and analysts better understand and evaluate
our operating results and performance trends, and assist in
analyzing period-to-period comparisons. Additionally, we use these
non-GAAP measures to report to the board of directors and to
evaluate management’s performance.
To derive our non-GAAP measures, we adjust for the accounting
recognition of certain transactions (non-GAAP adjustments) based on
at least one of the following criteria:
- To better match the accounting
recognition of transactions with their economics;
- To better align with regulatory
view/recognition;
- To eliminate the effects of:i.
Significant out of period adjustments;ii. Other significant items
that may obscure historical earnings comparisons and are not
indicative of performance trends; andiii. For adjusted EBIT, other
items which may obscure segment comparisons.
There are limits in using adjusted EBIT and operating earnings
(loss) to analyze our segment and consolidated results,
respectively, as they are not prepared in accordance with GAAP and
may be different than non-GAAP financial measures used by other
companies. In addition, using adjusted EBIT and operating earnings
(loss) to analyze our results may have limited value as they
exclude certain items that may have a material impact on our
reported financial results. We compensate for these limitations by
providing investors with the attached reconciliations to the most
directly comparable GAAP financial measures.
The following table summarizes the reconciliations of adjusted
EBIT by segment to income before income taxes:
Three Months
Ended March 31, Six Months Ended March 31, (In
thousands)
2016 2015
2016
2015 Adjusted EBIT: Regulated utility
$ 153,915 $ 152,395
$ 240,538 $ 248,951
Retail energy-marketing
8,376 27,031
13,621 35,986
Commercial energy systems
2,338 1,683
4,533 2,851
Midstream energy services
(8,373 ) (3,062 )
4,756 (496 ) Other activities(*)
(1,476 ) (846
)
(2,256 ) (2,320 ) Eliminations
(621
) (19 )
(594 ) (51 )
Total
$ 154,159 $ 177,182
$ 260,598 $ 284,921
Non-GAAP adjustments(1)
25,815 (32,126 )
39,127
(21,234 ) Interest expense
12,999
13,254
25,759 25,564
Income before income taxes
$ 166,975
$ 131,802
$ 273,966
$ 238,123 Income tax expense
60,357 50,017
98,847 92,120 Dividends on Washington Gas preferred stock
330 330
660
660 Net income applicable to common stock
$ 106,288 $ 81,455
$ 174,459 $ 145,343 (*)
Activities and transactions that are not significant enough
on a stand-alone basis to warrant treatment as an operating segment
and that do not fit into one of our four operating segments.
WGL Holdings, Inc. (Consolidated by
Quarter)Reconciliation of Non-GAAP Financial
Measures(Unaudited)
The following tables represent the reconciliation of operating
earnings to net income applicable to common stock (consolidated by
quarter):
Fiscal Year 2016 Quarterly Period
Ended* (In thousands, except per share data) Dec. 31
Mar. 31 Jun. 30 Sept. 30 Fiscal Year Operating
earnings
$ 59,205 $
89,490 $ 148,695 Non-GAAP
adjustments(1)
13,312 25,815 39,127 Income tax
effect of non-GAAP adjustments
(4,346 )
(9,017 )
(13,363 ) Net income applicable to common stock
$ 68,171 $ 106,288
$ 174,459
Diluted average common shares outstanding
50,030 50,282
50,166 Operating earnings per
share
$ 1.18 $ 1.78 $
2.96 Per share effect of non-GAAP adjustments
0.18 0.33
0.52 Diluted earnings per average
common share
$ 1.36 $
2.11 $
3.48 Fiscal Year 2015 Quarterly Period
Ended* (In thousands, except per share data) Dec. 31
Mar. 31 Jun. 30 Sept. 30 Fiscal Year Operating
earnings $ 58,004 $ 101,034 $ 159,038 Non-GAAP adjustments(1)
10,892 (32,126 ) (21,234 ) Income tax effect of non-GAAP
adjustments (5,008 ) 12,547
7,539 Net income applicable to common
stock $ 63,888 $ 81,455
$ 145,343 Diluted average common shares
outstanding 50,091 49,983
50,055 Operating earnings per share $
1.16 $ 2.02 $ 3.18 Per share effect of non-GAAP adjustments
0.12 (0.39 ) (0.28
) Diluted earnings per average common share $ 1.28
$ 1.63 $ 2.90
* Quarterly earnings per share may not sum
to year-to-date or annual earnings per share as quarterly
calculations are based on weighted average common and common
equivalent shares outstanding, which may vary for each of those
periods.
WGL Holdings, Inc.
Reconciliation of Non-GAAP Financial
Measures
(Unaudited)
(1) The following tables summarize non-GAAP adjustments, by
operating segment and present a reconciliation of adjusted EBIT to
EBIT. EBIT is defined as earnings before interest and taxes from
continuing operations. Items we do not include in EBIT are interest
expense, inter-company financing activity, dividends on Washington
Gas preferred stock, and income taxes.
Three Months Ended
March 31, 2016 Retail Commercial
Midstream Regulated Energy- Energy Energy
Other (In thousands) Utility Marketing Systems
Services Activities Eliminations Total
Adjusted EBIT
$ 153,915 $
8,376 $ 2,338
$ (8,373 ) $ (1,476
) $ (621 ) $
154,159 Non-GAAP adjustments: Unrealized
mark-to-market valuations on energy-related derivatives(a)
13,693 (5,298 ) — 11,486
— — 19,881 Storage optimization program(b)
(826 ) — — — — —
(826 ) DC weather impact(c)
(2,511 )
— — — — — (2,511 )
Distributed generation asset related investment tax credits(d)
— — (1,316 ) — — —
(1,316 ) Change in measured value of inventory(e)
— — —
10,587 —
— 10,587 Total non-GAAP
adjustments
$ 10,356 $
(5,298 ) $ (1,316 )
$ 22,073 $ —
$ — $
25,815 EBIT
$ 164,271
$ 3,078 $ 1,022
$ 13,700 $
(1,476 ) $ (621 )
$ 179,974
Three Months Ended March 31, 2015 Retail Commercial
Midstream Regulated Energy- Energy Energy Other (In thousands)
Utility Marketing Systems Services
Activities Eliminations Total Adjusted EBIT
$ 152,395 $ 27,031 $ 1,683
$ (3,062 ) $ (846 ) $ (19 ) $
177,182 Non-GAAP adjustments: Unrealized mark-to-market
valuations on energy-related derivatives(a) (27,979 ) 11,395 —
(7,478 ) — — (24,062 ) Storage optimization program (b) 1,581 — — —
— — 1,581 DC weather impact(c) 4,283 — — — — — 4,283 Distributed
generation asset related investment tax credits(d) — — (961 ) — — —
(961 ) Change in measured value of inventory(e) —
— — (12,967 ) —
— (12,967 ) Total non-GAAP adjustments
$ (22,115 ) $ 11,395 $ (961 ) $ (20,445
) $ — $ — $ (32,126 ) EBIT
$ 130,280 $ 38,426 $ 722
$ (23,507 ) $ (846 ) $ (19 ) $ 145,056
WGL Holdings, Inc. Reconciliation of
Non-GAAP Financial Measures
(Unaudited)
Six Months Ended March 31, 2016 Retail
Commercial Midstream Regulated
Energy- Energy Energy Other (In thousands) Utility
Marketing Systems Services Activities
Eliminations Total Adjusted EBIT
$
240,538 $ 13,621
$ 4,533 $ 4,756
$ (2,256 ) $ (594
) $ 260,598 Non-GAAP
adjustments: Unrealized mark-to-market valuations on energy-related
derivatives(a)
33,116 (11,110 ) —
22,322 — — 44,328 Storage optimization
program(b)
(351 ) — — — —
— (351 ) DC weather impact(c)
(9,743
) — — — — — (9,743
) Distributed generation asset related investment tax
credits(d)
— — (2,568 ) —
— — (2,568 ) Change in measured value
of inventory(e)
— —
— 7,461 —
— 7,461 Total
non-GAAP adjustments
$ 23,022
$ (11,110 ) $ (2,568
) $ 29,783 $
— $ — $
39,127 EBIT
$ 263,560
$ 2,511 $ 1,965
$ 34,539 $
(2,256 ) $ (594 )
$ 299,725
Six Months Ended March 31, 2015 Retail Commercial Midstream
Regulated Energy- Energy Energy Other (In thousands) Utility
Marketing Systems Services Activities
Eliminations Total Adjusted EBIT $ 248,951
$ 35,986 $ 2,851 $ (496 )
$ (2,320 ) $ (51 ) $ 284,921 Non-GAAP
adjustments: Unrealized mark-to-market valuations on energy-related
derivatives(a) (2,902 ) (13,455 ) — 851 — — (15,506 ) Storage
optimization program (b) (2,599 ) — — — — — (2,599 ) DC weather
impact(c) 1,457 — — — — — 1,457 Distributed generation asset
related investment tax credits(d) — — (1,870 ) — — — (1,870 )
Change in measured value of inventory(e) — — — 2,909 — — 2,909
Investment impairment(f) — — —
— (5,625 ) —
(5,625 ) Total non-GAAP adjustments $ (4,044 ) $
(13,455 ) $ (1,870 ) $ 3,760 $ (5,625 )
$ — $ (21,234 ) EBIT $ 244,907
$ 22,531 $ 981 $ 3,264
$ (7,945 ) $ (51 ) $ 263,687
Footnotes:
(a)
Adjustments to eliminate unrealized
mark-to-market gains (losses) for our energy-related derivatives
for our regulated utility and retail energy-marketing operations as
well as certain derivatives related to the optimization of
transportation capacity for the midstream energy services segment.
With the exception of certain transactions related to the
optimization of system capacity assets as discussed in footnote (b)
below, when these derivatives settle, the realized economic impact
is reflected in our non-GAAP results, as we are only removing
interim unrealized mark-to-market amounts.
(b)
Adjustments to shift the timing of storage
optimization margins for the regulated utility segment from the
periods recognized for GAAP purposes to the periods in which such
margins are recognized for regulatory sharing purposes. In
addition, lower-of-cost or market adjustments related to system and
non-system storage optimization are eliminated for non-GAAP
reporting, since the margins will be recognized for regulatory
purposes when the withdrawals are made at the unadjusted historical
cost of storage inventory.
(c)
Eliminates the estimated financial effects
of warm or cold weather in the District of Columbia, as measured
consistent with our regulatory tariff. Washington Gas has
regulatory weather protection mechanisms in Maryland and Virginia
designed to neutralize the estimated financial effects of weather.
Utilization of normal weather is an industry standard, and it is
our practice to evaluate our rate-regulated revenues by utilizing
normal weather and to provide estimates and guidance on the basis
of normal weather.
(d)
To reclassify the amortization of deferred
investment tax credits from income taxes to operating income for
the commercial energy systems segment. These credits are a key
component of the operating success of this segment and therefore
are included within adjusted EBIT to help management and investors
better assess the segment's performance.
(e)
For our midstream energy services segment,
adjustments to reflect storage inventory at market or at a value
based on the price used to value the physical forward sales
contract that is economically hedging the storage inventory. This
adjustment also includes the estimated effects of certain sharing
mechanisms on all of our non-GAAP unrealized gains and losses.
Adjusting our storage optimization inventory in this fashion better
aligns the settlement of both our physical and financial
transactions and allows investors and management to better analyze
the results of our non-utility asset optimization strategies.
(f)
Represents an impairment of an equity
investment in a solar holding company, accounted for at cost, which
occurred in the first quarter of fiscal year 2015. We did not
believe this impairment charge was indicative of our historical or
future performance trends.
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version on businesswire.com: http://www.businesswire.com/news/home/20160504006908/en/
WGL Holdings, Inc.News
MediaJim Monroe,
202-624-6620orFinancial
CommunityDouglas Bonawitz, 202-624-6129
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