Avista Corp. Reports Financial Results for Second Quarter and Year-To-Date 2014, Raises 2014 Earnings Guidance
"We've had an eventful 2014 thus far, with the completion of our sale of Ecova on
"We are excited about AERC becoming a part of our company. This transaction allows us to immediately expand our energy customer base, as well as look at other market opportunities in
"Utility earnings were higher than expected for the second quarter due to lower operating expenses, but this was partially offset by mild weather. Year-to-date utility earnings were above our expectations as a result of lower operating expenses throughout the year. We also had colder than normal weather in the first quarter, which was partially offset by milder weather in the second quarter. Our quarterly and year-to-date results also benefited from stronger hydroelectric generation. As compared to the prior year, our results improved as the result of general rate increases in each of our jurisdictions.
"On the sale of Ecova, we recognized a net gain of about
"At our other businesses, the settlement in the
Summary Results:
($ in thousands, except per-share data) | Q2 2014 | Q2 2013 | YTD 2014 | YTD 2013 | ||||||||||
Operating Revenues (continuing operations) | $ | 312,580 | $ | 307,488 | $ | 759,158 | $ | 747,987 | ||||||
Income from Operations (continuing operations) | $ | 62,731 | $ | 54,970 | $ | 153,073 | $ | 137,108 | ||||||
Net Income from continuing operations attributable to Avista Corp. Shareholders | $ | 31,254 | $ | 24,212 | $ | 78,730 | $ | 65,432 | ||||||
Net Income from discontinued operations attributable to Avista Corp. Shareholders | $ | 69,617 | $ | 1,445 | $ | 70,640 | $ | 2,566 | ||||||
Total net income attributable to Avista Corp. shareholders | $ | 100,871 | $ | 25,657 | $ | 149,370 | $ | 67,998 | ||||||
Net Income (Loss) attributable to Avista Corp. Shareholders by Business Segment: | ||||||||||||||
Avista Utilities | $ | 26,685 | $ | 24,568 | $ | 74,681 | $ | 66,818 | ||||||
Ecova (Discontinued Operations) | $ | 69,696 | $ | 1,521 | $ | 70,807 | $ | 2,719 | ||||||
Other | $ | 4,490 | $ | (432 | ) | $ | 3,882 | $ | (1,539 | ) | ||||
Earnings (Loss) per diluted share by Business Segment attributable to Avista Corp. Shareholders: | ||||||||||||||
Avista Utilities | $ | 0.44 | $ | 0.41 | $ | 1.24 | $ | 1.11 | ||||||
Ecova (Discontinued Operations) | $ | 1.15 | $ | 0.03 | $ | 1.17 | $ | 0.05 | ||||||
Other | $ | 0.08 | $ | (0.01 | ) | $ | 0.07 | $ | (0.03 | ) | ||||
Total earnings per diluted share attributable to Avista Corp. Shareholders | $ | 1.67 | $ | 0.43 | $ | 2.48 | $ | 1.13 | ||||||
Earnings per diluted share from Continuing Operations | $ | 0.52 | $ | 0.40 | $ | 1.31 | $ | 1.09 | ||||||
Earnings per diluted share from Discontinued Operations | $ | 1.15 | $ | 0.03 | $ | 1.17 | $ | 0.04 | ||||||
Total earnings per diluted share attributable to Avista Corp. Shareholders | $ | 1.67 | $ | 0.43 | $ | 2.48 | $ | 1.13 | ||||||
Earnings at
Earnings at Ecova increased for the quarter and year-to-date due to our sale of Ecova. We included the net gain from the sale of
Earnings at our other businesses increased for the quarter and year-to-date as a result of the settlement of the
Utility Gross Margin -- 2014 compared to 2013
On a quarterly basis, operating revenues (exclusive of intra-company revenues between electric and natural gas of
On a year-to-date basis, operating revenues (exclusive of intra-company revenues between electric and natural gas of
Electric Revenues -- 2014 compared to 2013
Electric revenues decreased
Retail electric revenues increased
The increase in total MWhs sold to residential customers was primarily the result of colder weather in the first quarter of this year, mostly offset by milder weather in the second quarter. Compared to the six months ended
The decrease in total MWhs sold to industrial customers was primarily due to a contract renewal at a lower volume for one of our largest industrial customers which became effective July 1, 2013. This did not have an impact on our gross margin or net income.
Wholesale electric revenues decreased
The revenues from sales of fuel decreased
Other electric revenues decreased
The 2013 Idaho general rate case settlement includes an after-the-fact earnings test for 2013 and 2014, such that if
Natural Gas Revenues -- 2014 compared to 2013
Natural gas revenues increased
Retail natural gas revenues increased
Wholesale natural gas revenues increased
Utility Operating Expenses -- 2014 compared to 2013
Utility resource costs decreased
Utility other operating expenses increased
Utility depreciation and amortization increased
Ecova -- Discontinued Operations
Ecova's net income was
Other Businesses
The net income from these operations was
METALfx had net income of
Lastly, we incurred
Liquidity and Capital Resources
During the second quarter of 2014, we received cash proceeds of
We have a
AEL&P has a committed line of credit in the amount of
We expect to issue approximately
In the first half of 2014, we issued
On
2014 Earnings Guidance and Outlook
Based on the year-to-date results of
We expect
We expect AERC to contribute in the range of
We expect Ecova to contribute in the range of
We expect the other businesses to contribute between
Our guidance, including our 2014 guidance, generally includes only normal operating conditions and does not include unusual items such as settlement transactions, impairments or acquisitions/dispositions until the effects are known and certain.
NOTE: We will host a conference call with financial analysts and investors on August 6, 2014, at
This news release contains forward-looking statements, including statements regarding our current expectations for future financial performance and cash flows, capital expenditures, financing plans, our current plans or objectives for future operations and other factors, which may affect the company in the future. Such statements are subject to a variety of risks, uncertainties and other factors, most of which are beyond our control and many of which could have significant impact on our operations, results of operations, financial condition or cash flows and could cause actual results to differ materially from those anticipated in such statements.
The following are among the important factors that could cause actual results to differ materially from the forward-looking statements: weather conditions (temperatures, precipitation levels and wind patterns) which affect both energy demand and electric generating capability, including the effect of precipitation and temperature on hydroelectric resources, the effect of wind patterns on wind-generated power, weather-sensitive customer demand, and similar effects on supply and demand in the wholesale energy markets; state and federal regulatory decisions that affect our ability to recover costs and earn a reasonable return including, but not limited to, disallowance or delay in the recovery of capital investments and operating costs and discretion over allowed return on investment; changes in wholesale energy prices that can affect operating income, cash requirements to purchase electricity and natural gas, value received for wholesale sales, collateral required of us by counterparties on wholesale energy transactions and credit risk to us from such transactions, and the market value of derivative assets and liabilities; economic conditions in our service areas, including the economy's effects on customer demand for utility services; declining energy demand related to customer energy efficiency and/or conservation measures; our ability to obtain financing through the issuance of debt and/or equity securities, which can be affected by various factors including our credit ratings, interest rates and other capital market conditions and the global economy; the potential effects of legislation or administrative rulemaking, including possible effects on our generating resources of restrictions on greenhouse gas emissions to mitigate concerns over global climate changes; political pressures or regulatory practices that could constrain or place additional cost burdens on our energy supply sources, such as campaigns to halt coal-fired power generation and opposition to other thermal generation, wind turbines or hydroelectric facilities; changes in actuarial assumptions, interest rates and the actual return on plan assets for our pension and other postretirement benefit plans, which can affect future funding obligations, pension and other postretirement benefit expense and the related liabilities; volatility and illiquidity in wholesale energy markets, including the availability of willing buyers and sellers, and prices of purchased energy and demand for energy sales including related energy commodity derivative instruments that we rely upon to hedge our wholesale energy risks; the outcome of pending legal proceedings arising out of the "western energy crisis" of 2000 and 2001; the outcome of legal proceedings and other contingencies; changes in environmental and endangered species laws, regulations, decisions and policies, including present and potential environmental remediation costs and our compliance with these matters; wholesale and retail competition including alternative energy sources, growth in customer-owned power resource technologies that displace utility-supplied energy or that may be sold back to the utility, and alternative energy suppliers and delivery arrangements; growth or decline of our customer base and the extent to which new uses for our services may materialize or existing uses may decline; the ability to comply with the terms of the licenses for our hydroelectric generating facilities at cost-effective levels; severe weather or natural disasters that can disrupt energy generation, transmission and distribution, as well as the availability and costs of materials, equipment, supplies and support services; explosions, fires, accidents, mechanical breakdowns, or other incidents that may impair assets and may disrupt operations of any of our generation facilities, transmission and distribution systems or other operations; public injuries or damage arising from or allegedly arising from our operations; blackouts or disruptions of interconnected transmission systems (the regional power grid); disruption to information systems, automated controls and other technologies that we rely on for our operations, communications and customer service; terrorist attacks, cyber attacks or other malicious acts that may disrupt or cause damage to our utility assets or to the national economy in general, including any effects of terrorism, cyber attacks or vandalism that damage or disrupt information technology systems; cyber attacks or other potential lapses that result in unauthorized disclosure of private information, which could result in liabilities against us, costs to investigate, remediate and defend, and damage to our reputation; delays or changes in construction costs, and/or our ability to obtain required permits and materials for present or prospective facilities; changes in the costs to implement new information technology systems and/or obstacles that impede our ability to complete such projects timely and effectively; changes in the long-term global and our utilities' service area climates, which can affect, among other things, customer demand patterns and the volume and timing of streamflows to our hydroelectric resources; changes in industrial, commercial and residential growth and demographic patterns in our service territory or changes in demand by significant customers; the loss of key suppliers for materials or services or disruptions to the supply chain; default or nonperformance on the part of any parties from which we purchase and/or sell capacity or energy; deterioration in the creditworthiness of our customers; potential decline in our credit ratings, with effects including impeded access to capital markets, higher interest costs, and restrictive covenants in our financing arrangements and wholesale energy contracts; increasing health care costs and the resulting effect on employee injury costs and health insurance provided to our employees and retirees; increasing costs of insurance, more restrictive coverage terms and our ability to obtain insurance; work force issues, including changes in collective bargaining unit agreements, strikes, work stoppages, the loss of key executives, availability of workers in a variety of skill areas, and our ability to recruit and retain employees; the potential effects of negative publicity regarding business practices, whether true or not, which could result in litigation or a decline in our common stock price; changes in technologies, possibly making some of the current technology obsolete; changes in tax rates and/or policies; changes in interest rates that affect borrowing costs, our ability to effectively hedge interest rates for anticipated debt issuances, variable interest rate borrowing and the extent that we recover interest costs through utility operations; potential difficulties in integrating acquired operations and in realizing expected opportunities, diversions of management resources and losses of key employees, challenges with respect to operating new businesses and other unanticipated risks and liabilities; changes in our strategic business plans, which may be affected by any or all of the foregoing, including the entry into new businesses and/or the exit from existing businesses and the extent of our business development efforts where potential future business is uncertain; compliance with extensive federal, state and local legislation and regulation, including numerous environmental, health, safety and other laws and regulations that affect our operations and costs; information that was covered under management's representations and warranties related to the Ecova sale could be inaccurate or incomplete at the time of sale, or new information could be identified subsequent to the sale date, which could impact our ability to fully collect the indemnification escrow amounts; and the majority of hydroelectric power generation for our
For a further discussion of these factors and other important factors, please refer to our Annual Report on Form 10-K for the year ended
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Issued by:
AVISTA CORPORATION | ||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | ||||||||||||||||||
(Dollars in Thousands except Per Share Amounts) | ||||||||||||||||||
Second Quarter | Year-to-Date | |||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||
Operating revenues | $ | 312,580 | $ | 307,488 | $ | 759,158 | $ | 747,987 | ||||||||||
Operating expenses: | ||||||||||||||||||
Utility resource costs | 128,922 | 126,511 | 349,419 | 356,141 | ||||||||||||||
Other operating expenses | 68,229 | 75,199 | 144,949 | 149,988 | ||||||||||||||
Depreciation and amortization | 31,331 | 29,200 | 62,204 | 57,325 | ||||||||||||||
Utility taxes other than income taxes | 21,367 | 21,608 | 49,513 | 47,425 | ||||||||||||||
Total operating expenses | 249,849 | 252,518 | 606,085 | 610,879 | ||||||||||||||
Income from continuing operations | 62,731 | 54,970 | 153,073 | 137,108 | ||||||||||||||
Interest expense, net of capitalized interest | 17,825 | 18,613 | 36,019 | 37,039 | ||||||||||||||
Other income - net | (3,055 | ) | (2,192 | ) | (5,655 | ) | (3,951 | ) | ||||||||||
Income from continuing operations before income taxes | 47,961 | 38,549 | 122,709 | 104,020 | ||||||||||||||
Income tax expense | 16,691 | 14,310 | 43,973 | 38,562 | ||||||||||||||
Net income from continuing operations | 31,270 | 24,239 | 78,736 | 65,458 | ||||||||||||||
Net income from discontinued operations | 69,312 | 1,491 | 70,827 | 3,373 | ||||||||||||||
Net income | 100,582 | 25,730 | 149,563 | 68,831 | ||||||||||||||
Net loss (income) attributable to noncontrolling interests | 289 | (73 | ) | (193 | ) | (833 | ) | |||||||||||
Net income attributable to Avista Corp. shareholders | $ | 100,871 | $ | 25,657 | $ | 149,370 | $ | 67,998 | ||||||||||
AVISTA CORPORATION | ||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (continued) (UNAUDITED) | ||||||||||||||
(Dollars in Thousands except Per Share Amounts) | ||||||||||||||
Second Quarter | Year-to-Date | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Amounts attributable to Avista Corp. shareholders: | ||||||||||||||
Net income from continuing operations attributable to Avista Corp. shareholders | $ | 31,254 | $ | 24,212 | $ | 78,730 | $ | 65,432 | ||||||
Net income from discontinued operations attributable to Avista Corp. shareholders | 69,617 | 1,445 | 70,640 | 2,566 | ||||||||||
Net income attributable to Avista Corp. shareholders | $ | 100,871 | $ | 25,657 | $ | 149,370 | $ | 67,998 | ||||||
Weighted-average common shares outstanding (thousands), basic | 60,184 | 59,937 | 60,153 | 59,926 | ||||||||||
Weighted-average common shares outstanding (thousands), diluted | 60,463 | 59,962 | 60,316 | 59,954 | ||||||||||
Earnings per common share attributable to Avista Corp. shareholders, basic: | ||||||||||||||
Earnings per common share from continuing operations | $ | 0.52 | $ | 0.40 | $ | 1.31 | $ | 1.09 | ||||||
Earnings per common share from discontinued operations | 1.16 | 0.03 | 1.17 | 0.04 | ||||||||||
Total earnings per common share attributable to Avista Corp. shareholders, basic | $ | 1.68 | $ | 0.43 | $ | 2.48 | $ | 1.13 | ||||||
Earnings per common share attributable to Avista Corp. shareholders, diluted: | ||||||||||||||
Earnings per common share from continuing operations | $ | 0.52 | $ | 0.40 | $ | 1.31 | $ | 1.09 | ||||||
Earnings per common share from discontinued operations | 1.15 | 0.03 | 1.17 | 0.04 | ||||||||||
Total earnings per common share attributable to Avista Corp. shareholders, diluted | $ | 1.67 | $ | 0.43 | $ | 2.48 | $ | 1.13 | ||||||
Dividends declared per common share | $ | 0.3175 | $ | 0.305 | $ | 0.635 | $ | 0.61 | ||||||
Issued August 6, 2014 | ||||||||||||||
AVISTA CORPORATION | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||||
(Dollars in Thousands) | |||||||||
June 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
Assets | |||||||||
Cash and cash equivalents | $ | 207,967 | $ | 82,574 | |||||
Accounts and notes receivable | 127,614 | 221,343 | |||||||
Investments and funds held for clients | - | 96,688 | |||||||
Other current assets | 106,686 | 149,074 | |||||||
Total net utility property | 3,282,063 | 3,202,425 | |||||||
Other non-current assets | 100,020 | 240,437 | |||||||
Regulatory assets for deferred income taxes | 66,555 | 71,421 | |||||||
Regulatory assets for pensions and other postretirement benefits | 153,426 | 156,984 | |||||||
Other regulatory assets | 127,557 | 126,173 | |||||||
Other deferred charges | 30,242 | 14,804 | |||||||
Total Assets | $ | 4,202,130 | $ | 4,361,923 | |||||
Liabilities and Equity | |||||||||
Accounts payable | $ | 73,349 | $ | 182,088 | |||||
Current portion of long-term debt | 4,348 | 358 | |||||||
Current portion of nonrecourse long-term debt of Spokane Energy | 9,812 | 16,407 | |||||||
Short-term borrowings | 151,500 | 171,000 | |||||||
Client fund obligations | - | 99,117 | |||||||
Other current liabilities | 225,322 | 156,370 | |||||||
Long-term debt | 1,268,530 | 1,272,425 | |||||||
Nonrecourse long-term debt of Spokane Energy | - | 1,431 | |||||||
Long-term debt to affiliated trusts | 51,547 | 51,547 | |||||||
Long-term borrowings under committed line of credit | - | 46,000 | |||||||
Regulatory liability for utility plant retirement costs | 248,129 | 242,850 | |||||||
Pensions and other postretirement benefits | 103,421 | 122,513 | |||||||
Deferred income taxes | 542,090 | 535,343 | |||||||
Other non-current liabilities and deferred credits | 114,537 | 130,318 | |||||||
Total Liabilities | 2,792,585 | 3,027,767 | |||||||
Redeemable Noncontrolling Interests | - | 15,889 | |||||||
Equity | |||||||||
Avista Corporation Shareholders' Equity: | |||||||||
Common stock (60,220,099 and 60,076,752 outstanding shares) | 885,741 | 896,993 | |||||||
Retained earnings and accumulated other comprehensive loss | 524,275 | 401,273 | |||||||
Total Avista Corporation Shareholders' Equity | 1,410,016 | 1,298,266 | |||||||
Noncontrolling interests | (471 | ) | 20,001 | ||||||
Total Equity | 1,409,545 | 1,318,267 | |||||||
Total Liabilities and Equity | $ | 4,202,130 | $ | 4,361,923 | |||||
Issued August 6, 2014 | |||||||||
AVISTA CORPORATION | |||||||||||||||||
FINANCIAL AND OPERATING HIGHLIGHTS (UNAUDITED) | |||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||
Second Quarter | Year-to-Date | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Avista Utilities | |||||||||||||||||
Retail electric revenues | $ | 168,230 | $ | 167,252 | $ | 376,680 | $ | 365,673 | |||||||||
Retail kWh sales (in millions) | 1,963 | 2,051 | 4,365 | 4,453 | |||||||||||||
Retail electric customers at end of period | 365,285 | 361,678 | 365,285 | 361,678 | |||||||||||||
Wholesale electric revenues | $ | 35,597 | $ | 36,867 | $ | 72,887 | $ | 76,961 | |||||||||
Wholesale kWh sales (in millions) | 1,124 | 1,363 | 2,100 | 2,512 | |||||||||||||
Sales of fuel | $ | 22,029 | $ | 33,488 | $ | 46,179 | $ | 65,260 | |||||||||
Other electric revenues | $ | 7,069 | $ | 6,590 | $ | 13,482 | $ | 24,041 | |||||||||
Provision for electric earnings sharing | $ | (1,237 | ) | $ | - | $ | (3,104 | ) | $ | - | |||||||
Retail natural gas revenues | $ | 47,998 | $ | 46,643 | $ | 180,986 | $ | 167,859 | |||||||||
Wholesale natural gas revenues | $ | 48,934 | $ | 35,436 | $ | 109,419 | $ | 95,134 | |||||||||
Transportation and other natural gas revenues | $ | 3,484 | $ | 3,777 | $ | 8,034 | $ | 8,134 | |||||||||
Provision for natural gas earnings sharing | $ | (137 | ) | $ | - | $ | (139 | ) | $ | - | |||||||
Total therms delivered (in thousands) | 193,631 | 176,757 | 507,096 | 522,491 | |||||||||||||
Retail natural gas customers at end of period | 325,163 | 321,767 | 325,163 | 321,767 | |||||||||||||
Intracompany revenues | $ | 28,412 | $ | 31,884 | $ | 63,295 | $ | 73,316 | |||||||||
Income from operations (pre-tax) | $ | 54,737 | $ | 55,240 | $ | 145,605 | $ | 137,991 | |||||||||
Net income attributable to Avista Corp. shareholders | $ | 26,685 | $ | 24,568 | $ | 74,681 | $ | 66,818 | |||||||||
Ecova - Discontinued Operations | |||||||||||||||||
Revenues | $ | 43,150 | $ | 44,560 | $ | 87,534 | $ | 86,967 | |||||||||
Net income attributable to Avista Corp. shareholders | $ | 69,696 | $ | 1,521 | $ | 70,807 | $ | 2,719 | |||||||||
Other | |||||||||||||||||
Revenues | $ | 9,475 | $ | 9,769 | $ | 18,929 | $ | 19,141 | |||||||||
Income (loss) from operations (pre-tax) | $ | 7,994 | $ | (270 | ) | $ | 7,468 | $ | (883 | ) | |||||||
Net income (loss) attributable to Avista Corp. shareholders | $ | 4,490 | $ | (432 | ) | $ | 3,882 | $ | (1,539 | ) | |||||||
Issued August 6, 2014 | |||||||||||||||||
Media:
Jessie Wuerst
(509) 495-8578
jessie.wuerst@avistacorp.com
Investors:
(509) 495-2930
jason.lang@avistacorp.com
Avista 24/7 Media Access
(509) 495-4174
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