- The Company reported consolidated earnings for the first quarter ended March 31, 2016, inclusive of merger costs related to the previously announced Agreement and Plan of Merger among the Company, Liberty Utilities (Central) Co. and Liberty Sub Corp. (the "merger-related costs") of $14.0 million, or $0.32 per share compared to same quarter 2015 earnings of $14.6 million, or $0.34 per share. Earnings for the twelve months ended March 31, 2016, including merger-related costs, were
- $56.0 million, or $1.28 per share, compared to earnings
of $60.8 million, or
$1.40 per share for the same 2015 twelve month period.
- Excluding merger-related costs, which amounted to $4.2 million and $4.5 million, respectively, or $0.06 per share, for the first quarter 2016 and twelve month period ended March 31, 2016, consolidated earnings, after adjusting for taxes, would have been $16.6 million, or $0.38 per share, and $58.8 million or $1.34 per share, for the respective quarter and twelve month periods.
- Earnings for both the first quarter of 2016 and twelve month period ended March 31, 2016 were lower primarily as a result of the merger-related costs mentioned above and due to milder weather, which reduced electric sales 7.5% and 2.7% for the respective periods. These negative impacts were partially offset by the July 2015 Missouri electric rates increase.
- According to Brad Beecher, Empire's President and CEO,
"February 9, 2016
marked a significant day in the history of The Empire District Electric
Company, as an Agreement and Plan of Merger was announced with a
subsidiary of Algonquin Power and Utilities Corp. Empire's management will
be working diligently over the next several months to obtain the necessary
shareholder and regulatory approvals to effectuate closing of the
transaction. We have set May 2, 2016 as the record date for determining
eligibility to vote on the Agreement and Plan of Merger and we expect to
hold a special Shareholder's Meeting on June 16, 2016 for the purpose of
voting on the Agreement and Plan of Merger. In the meantime, all of us at
Empire recognize the need to continue running the business as if nothing
has changed. To that end, I am pleased with our earnings performance for
the first quarter 2016 during which we continued to experience milder
weather than normal. Overall, costs were well controlled and our results,
adjusted for weather and the merger-related costs incurred during the
period, met our expectations. Importantly, our earnings guidance
communicated on February 26, 2016 remains unchanged." -more- THE EMPIRE DISTRICT ELECTRIC COMPANY · 602 S.
JOPLIN
AVENUE · JOPLIN, MISSOURI 64802 · 417-625-5100 · FAX:
417-625-5169 · www.empiredistrict.comFirst Quarter 2016 Results Electric segment gross margin (electric revenue less
cost of fuel and
purchased power) increased $2.8 million, or 3.1%, during the first quarter
2016 compared to the first quarter 2015. Quarter over quarter electric
segment gross margin impacts include:
- Increased customer rates of $7.7 million, net of a $1.9 million decrease in Missouri base fuel recovery, increased revenues by an estimated $5.8 million,
- Improved customer counts added an estimated $0.7 million to revenues, and
- Weather and other volumetric factors decreased revenues by an estimated $10.5 million.
- Fuel expense decreases reflective of the timing of the
deferral and recovery
of non-Missouri fuel and consumable costs also contributed positively to
electric segment gross margin. Gas segment gross margin (gas revenues less cost of
gas sold and
transported) was approximately $0.8, million, or 10.0% lower than first
quarter 2015 results. Gas segment heating degree days in the first
quarter 2016 were 16% lower than in first quarter 2015, resulting in a
sales decline of 12.9% compared to the prior year period. Consolidated first quarter 2016 earnings were favorably
impacted by lower
operating costs which decreased $0.6 million and Allowance For Funds
Used During Construction (AFUDC) which increased $1.2 million, while
unfavorable impacts included the following:
- Depreciation and amortization expense increases of approximately $0.4 million,
- Interest expense increases of approximately $0.6 million, and
- Merger-related costs of approximately $4.2 million.
- As noted above, absent the aforementioned merger-related
costs, adjusted
for taxes, consolidated first quarter 2016 earnings would have been
approximately $16.6 million, or $0.38 on an earnings per share basis, an
earnings increase of 13.7% over the 2015 quarter. Twelve Months Ended March 31, 2016 Results Electric segment gross margin increased approximately
$14.5 million or
3.9% during the twelve month period ended March 31, 2016 compared to
the prior year period. Year over year electric segment gross margin
impacts include:
- Increased customer rates of $17.8 million, net of a decrease in Missouri base fuel recovery of $5.2 million, increased revenues an estimated $12.6 million,
- Improved customer counts added an estimated $2.5 million to revenues, and
- Weather and other volumetric factors decreased revenues an estimated $15.0 million.
- Fuel expense decreases reflective of the timing of the
deferral and recovery
of non-Missouri fuel and consumable costs also contributed positively to
electric segment gross margin. Gas segment gross margin of $21.4 million was approximately
$2.2 million,
or 9.7%, below the twelve month period ended March 31, 2015 due to a
16.8% decline in sales driven by milder weather. Total Gas segment
degree days were 20.8% lower for the twelve months ended March 31,
2016 than the comparable prior year period. Consolidated earnings for the twelve month period ended
March 31, 2016
were negatively impacted by the following:
- Operating and maintenance expense increases of approximately $3.6 million,
- Depreciation and amortization expense increases of approximately $5.6 million,
- Other taxes increase of approximately $1.2 million,
- Interest expense increase of approximately $3.2 million,
- Changes in AFUDC, which decreased earnings by approximately $0.6 million, and
- Merger-related costs of approximately $4.5 million.
Consolidated net income decreased approximately $4.8 million, or 8.0%, for the twelve month period ended March 31, 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 March 31, 2016 would have been approximately $58.8 million, or $1.34 on an earnings per share basis, a decrease of 3.3% from the 2015 period.
Selected unaudited consolidated financial data for the quarters and twelve months ended March 31, 2016 and March 31, 2015 is presented in the following table.
(dollars in millions, except Per Share data)
Three
Months Ended March 31, | Twelve
Months Ended March 31, | ||||||
2016 | 2015 | Change* | 2016 | 2015 | Change* | ||
Electric Margin | $96.5 | $93.7 | $2.8 | $388.1 | $373.6 | $14.5 | |
Gas Margin | 7.6 | 8.4 | (0.8) | 21.4 | 23.6 | (2.2) | |
Other Revenues | 1.8 | 2.0 | (0.2) | 8.5 | 8.1 | 0.4 | |
Gross Margin | 105.9 | 104.1 | 1.8 | 418.0 | 405.3 | 12.7 | |
Less: | |||||||
Operating and
Maintenance
Expenses | 39.1 | 39.6 | (0.5) | 164.8 | 161.2 | 3.6 | |
Merger-related
costs | 4.2 | 0.0 | 4.2 | 4.5 | 0.0 | 4.5 | |
Depreciation and
Amortization | 20.4 | 20.0 | 0.4 | 80.9 | 75.3 | 5.6 | |
Taxes | 19.0 | 19.8 | (0.8) | 73.2 | 73.6 | (0.4) | |
Operating Income | 23.2 | 24.7 | (1.5) | 94.6 | 95.2 | (0.6) | |
Interest Expense
and Other, net | 9.2 | 10.1 | (0.9) | 38.6 | 34.4 | 4.2 | |
Net Income | $14.0 | $14.6 | ($0.6) | $56.0 | $60.8 | ($4.8) | |
Earnings Per
Share (Basic) | $0.32 | $0.34 | ($0.02) | $1.28 | $1.40 | ($0.12) |
Reconciliation of Net Income/Earnings Per Share
Net Income (GAAP) | $14.0 | $14.6 | ($0.6) | $56.0 | $60.8 | ($4.8) |
Merger-related costs
(adjusted for taxes) | 2.6 | 0.0 | 2.6 | 2.8 | 0.0 | 2.8 |
Net Income (excl.
merger-related costs) | $16.6 | $14.6 | $2.0 | $58.8 | $60.8 | ($2.0) |
Earnings Per Share
(Basic) | $0.38 | $0.34 | $0.04 | $1.34 | $1.40 | ($0.06) |
* Slight differences from actual results may occur due to rounding to millions.
Three
Months Ended March 31, | Twelve
Months Ended March 31, | ||||||
2016 | 2015 | % Change* | 2016 | 2015 | % Change* | ||
Electric On-System kWh Sales (in millions): | |||||||
Residential | 508 | 590 | -13.9% | 1,754 | 1,899 | -7.6% | |
Commercial | 360 | 377 | -4.6% | 1,560 | 1,573 | -0.8% | |
Industrial | 248 | 246 | 0.8% | 1,067 | 1,040 | 2.5% | |
Other | 113 | 116 | -2.6% | 459 | 461 | -0.5% | |
Total On-System
Electric Sales | 1,229 | 1,329 | -7.5% | 4,840 | 4,973 | -2.7% | |
Retail Gas Sales (billion cubic feet): | |||||||
Residential | 1.11 | 1.27 | -13.0% | 2.05 | 2.49 | -17.6% | |
Commercial/Industrial | 0.48 | 0.56 | -13.1% | 1.01 | 1.20 | -15.3% | |
Other | 0.02 | 0.02 | 2.3% | 0.03 | 0.03 | -7.5% | |
Total Retail Gas
Sales | 1.61 | 1.85 | -12.9% | 3.09 | 3.72 | -16.8% |
Reconciliation of Earnings Per Share
Quarter Ended | Twelve Months Ended | |
Basic Earnings Per Share - March 31,
2015 | $ 0.34 | $ 1.40 |
Gross Margins | ||
Electric segment | 0.04 | 0.21 |
Gas segment | (0.01) | (0.04) |
Other segment | 0.00 | 0.01 |
Total Gross Margin | 0.03 | 0.18 |
Expenses | ||
Operating | 0.01 | (0.03) |
Maintenance and repairs | 0.00 | (0.02) |
Depreciation and amortization | (0.01) | (0.08) |
Merger-related costs | (0.06) | (0.06) |
Other taxes | 0.00 | (0.02) |
Change in effective income tax rates | 0.00 | (0.01) |
Other income and deductions | 0.00 | (0.01) |
Interest charges | (0.01) | (0.05) |
AFUDC | 0.02 | (0.01) |
Dilutive effect of additional shares issued | 0.00 | (0.01) |
Basic Earnings Per Share - March 31,
2016 | $ 0.32 | $ 1.28 |
The reconciliation of basic earnings per share (EPS) presented above compares the quarter and twelve months ended March 31, 2016 versus March 31, 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
The Empire District Electric Company issued this content on 28 April 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 28 April 2016 18:59:23 UTC