Avista Corp. Reports Financial Results for Second Quarter and Year-to-Date 2016, Confirms 2016 Earnings Guidance
"I am pleased with our second quarter performance, as our results continue to be slightly above our expectations. During the quarter, we continued to invest in our utility infrastructure to enhance the safety and reliability of our system for our customers and to support both electric and natural gas customer growth. The timely recovery of these costs continues to be essential to earning an adequate return on our shareholders' investment. Based on our earnings for the first half of the year and our expectations for the second half, we are confirming our earnings guidance range," said
"Again this quarter,
Summary Results:
Second Quarter | Year-to-Date | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Net Income (Loss) by Business Segment: | |||||||||||||||||
Avista Utilities | $ | 26,771 | $ | 24,478 | $ | 81,758 | $ | 68,862 | |||||||||
Alaska Electric Light and Power Company (AEL&P) | 1,058 | 925 | 4,019 | 3,559 | |||||||||||||
Ecova (discontinued operations) | - | 196 | - | 196 | |||||||||||||
Other | (575 | ) | (353 | ) | (874 | ) | (922 | ) | |||||||||
Total net income attributable to Avista Corp. shareholders | $ | 27,254 | $ | 25,246 | $ | 84,903 | $ | 71,695 | |||||||||
Earnings (Loss) per Diluted Share by Business Segment: | |||||||||||||||||
Avista Utilities | $ | 0.42 | $ | 0.39 | $ | 1.29 | $ | 1.10 | |||||||||
AEL&P | 0.02 | 0.02 | 0.06 | 0.06 | |||||||||||||
Ecova (discontinued operations) | - | - | - | - | |||||||||||||
Other | (0.01 | ) | (0.01 | ) | (0.01 | ) | (0.02 | ) | |||||||||
Total earnings per diluted share attributable to Avista Corp. shareholders | $ | 0.43 | $ | 0.40 | $ | 1.34 | $ | 1.14 | |||||||||
The table below presents a reconciliation of net income attributable to
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2015 net income and diluted earnings per share attributable to Avista Corp. shareholders | $ | 25,246 | $ | 0.40 | $ | 71,695 | $ | 1.14 | ||||||||
Changes in net income and diluted earnings per share: | ||||||||||||||||
Avista Utilities | ||||||||||||||||
Electric gross margin (including intracompany) (a)(*) | 9,513 | 21,914 | ||||||||||||||
Natural gas gross margin (including intracompany) (b)(*) | 3,719 | 14,964 | ||||||||||||||
Other operating expenses (c)(*) | (5,442 | ) | (8,289 | ) | ||||||||||||
Depreciation and amortization (d)(*) | (4,000 | ) | (8,869 | ) | ||||||||||||
Other (e)(*) | 220 | (1,323 | ) | |||||||||||||
Income tax expense (f) | (1,717 | ) | (5,501 | ) | ||||||||||||
Total Avista Utilities | 2,293 | 0.03 | 12,896 | 0.19 | ||||||||||||
AEL&P earnings | 133 | - | 460 | - | ||||||||||||
Other businesses earnings | (222 | ) | - | 48 | 0.01 | |||||||||||
Discontinued operations | (196 | ) | - | (196 | ) | - | ||||||||||
2016 net income and diluted earnings per share attributable to Avista Corp. shareholders | $ | 27,254 | $ | 0.43 | $ | 84,903 | $ | 1.34 |
* Pre-tax |
Analysis of Earnings Reconciliation
(a) Electric gross margin (operating revenues less resource costs) increased for both the quarter and year-to-date primarily due to the following:
- An increase in retail electric rates due to a general rate increase in
Idaho and the expiration of the Energy Recovery Mechanism (ERM) rebate inWashington , partially offset by a general rate decrease inWashington ; - An increase in decoupling revenue which offset a decrease in year-to-date retail electric loads. The weather was cooler than the prior year in the first quarter (higher heating loads), and it was offset by weather that was warmer than the prior year in April and May (lower heating loads) and cooler than the prior year during June (lower cooling loads). Decoupling also increased due to the implementation of a decoupling mechanism in
Idaho , effectiveJan. 1, 2016 ; and - A decrease in electric resource costs primarily due to a decrease in purchased power, fuel for generation, other fuel costs and power cost amortizations. For the second quarter of 2016, we had a
$0.2 million pre-tax expense under the ERM inWashington . We did not have any benefit or expense under the ERM for the second quarter of 2015. For the six months endedJune 30, 2016 , we recognized a pre-tax benefit of$4.2 million under the ERM inWashington compared to a benefit of$5.7 million for the six months endedJune 30, 2015 .
(b) Natural gas gross margin (operating revenues less resource costs) increased for both the quarter and year-to-date primarily due to the following:
- General rate increases in
Washington ,Idaho andOregon ; - An increase in year-to-date retail natural gas loads due to weather that was cooler in the first quarter (higher heating loads) and was partially offset by weather that was warmer in April and May (lower heating loads). Both periods were warmer than normal; and
- An increase in decoupling revenue due to the warmer than normal weather described above. Decoupling also increased due to the implementation of decoupling mechanisms in
Idaho , effectiveJan. 1, 2016 , and inOregon , effectiveMarch 1, 2016 .
(c) Other operating expenses for the second quarter and year-to-date 2016 increased due to an increase in medical costs, electric generation operating and maintenance expenses, natural gas distribution expenses, and pension and other postretirement benefit expenses.
(d) Depreciation and amortization increased for the second quarter and year-to-date 2016 due to additions to utility plant.
(e) Other for the year-to-date 2016 increased primarily related to an increase in interest expense due to additional long-term debt being outstanding for the first half of 2016 as compared to the first half of 2015. This was partially offset by a decrease in taxes other than income taxes.
(f) The increase in income tax expense for the quarter and year-to-date 2016 was primarily due to an increase in earnings before taxes. For the year-to-date 2016, this was partially offset by a decrease in the effective income tax rate from 36.6 percent to 35.6 percent, which was due to the adoption of new accounting guidance, which resulted in excess tax benefits of
Non-Generally Accepted Accounting Principles (Non-GAAP) Financial Measures
The table above includes electric gross margin and natural gas gross margin, two financial measures that are considered "non-GAAP financial measures." Generally, a non-GAAP financial measure is a numerical measure of a company's financial performance, financial position or cash flows that excludes (or includes) amounts that are included (excluded) in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (GAAP). The presentation of electric gross margin and natural gas gross margin for
The following table presents our operating revenues, resource costs and resulting gross margin for the three months ended
Electric | Natural Gas | Intracompany | Total | |||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
Operating revenues | $ | 234,791 | $ | 236,254 | $ | 80,955 | $ | 111,002 | $ | (13,105 | ) | $ | (26,558 | ) | $ | 302,641 | $ | 320,698 | ||||||||
Resource costs | 73,350 | 84,326 | 46,362 | 80,128 | (13,105 | ) | (26,558 | ) | 106,607 | 137,896 | ||||||||||||||||
Gross margin | $ | 161,441 | $ | 151,928 | $ | 34,593 | $ | 30,874 | $ | - | $ | - | $ | 196,034 | $ | 182,802 | ||||||||||
The following table presents our operating revenues, resource costs and resulting gross margin for the six months ended
Electric | Natural Gas | Intracompany | Total | |||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
Operating revenues | $ | 497,593 | $ | 503,148 | $ | 236,365 | $ | 285,985 | $ | (31,170 | ) | $ | (44,352 | ) | $ | 702,788 | $ | 744,781 | ||||||||
Resource costs | 167,702 | 195,171 | 129,153 | 193,737 | (31,170 | ) | (44,352 | ) | 265,685 | 344,556 | ||||||||||||||||
Gross margin | $ | 329,891 | $ | 307,977 | $ | 107,212 | $ | 92,248 | $ | - | $ | - | $ | 437,103 | $ | 400,225 | ||||||||||
Liquidity and Capital Resources
We have a
AEL&P has a
In the six months ended
For 2016, we expect to issue approximately
2016 Earnings Guidance and Outlook
We expect
For 2016, we expect AEL&P to contribute in the range of
We expect the other businesses to be between a loss of
Our 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
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; 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; 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 to which we recover interest costs through retail rates collected from customers; 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; external pressure to meet financial goals that can lead to short-term or expedient decisions that reduce the likelihood of long-term objectives being met; deterioration in the creditworthiness of our customers; the outcome of pending legal proceedings arising out of the "western energy crisis" of 2000 and 2001, specifically related to the
For a further discussion of these factors and other important factors, please refer to our Quarterly Report on Form 10-Q for the quarter ended
AVISTA CORPORATION | ||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | ||||||||||||||||||
(Dollars in Thousands except Per Share Amounts) | ||||||||||||||||||
Second Quarter | Year-to-Date | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Operating revenues | $ | 318,838 | $ | 337,332 | $ | 737,011 | $ | 783,822 | ||||||||||
Operating expenses: | ||||||||||||||||||
Utility resource costs | 109,815 | 141,116 | 271,534 | 350,676 | ||||||||||||||
Other operating expenses | 84,947 | 79,758 | 166,551 | 162,746 | ||||||||||||||
Depreciation and amortization | 39,870 | 35,841 | 79,250 | 70,310 | ||||||||||||||
Utility taxes other than income taxes | 22,615 | 23,257 | 52,000 | 53,155 | ||||||||||||||
Total operating expenses | 257,247 | 279,972 | 569,335 | 636,887 | ||||||||||||||
Income from operations | 61,591 | 57,360 | 167,676 | 146,935 | ||||||||||||||
Interest expense, net of capitalized interest | 20,635 | 19,102 | 41,132 | 38,199 | ||||||||||||||
Other income - net | (3,041 | ) | (1,836 | ) | (5,463 | ) | (4,067 | ) | ||||||||||
Income before income taxes | 43,997 | 40,094 | 132,007 | 112,803 | ||||||||||||||
Income tax expense | 16,710 | 15,016 | 47,055 | 41,263 | ||||||||||||||
Net income from continuing operations | 27,287 | 25,078 | 84,952 | 71,540 | ||||||||||||||
Net income from discontinued operations | - | 196 | - | 196 | ||||||||||||||
Net income | 27,287 | 25,274 | 84,952 | 71,736 | ||||||||||||||
Net income attributable to noncontrolling interests | (33 | ) | (28 | ) | (49 | ) | (41 | ) | ||||||||||
Net income attributable to Avista Corp. shareholders | $ | 27,254 | $ | 25,246 | $ | 84,903 | $ | 71,695 | ||||||||||
Amounts attributable to Avista Corp. shareholders: | ||||||||||||||||||
Net income from continuing operations attributable to Avista Corp. shareholders | $ | 27,254 | $ | 25,050 | $ | 84,903 | $ | 71,499 | ||||||||||
Net income from discontinued operations attributable to Avista Corp. shareholders | - | 196 | - | 196 | ||||||||||||||
Net income attributable to Avista Corp. shareholders | $ | 27,254 | $ | 25,246 | $ | 84,903 | $ | 71,695 | ||||||||||
Weighted-average common shares outstanding (thousands), basic | 63,386 | 62,281 | 62,995 | 62,299 | ||||||||||||||
Weighted-average common shares outstanding (thousands), diluted | 63,783 | 62,600 | 63,368 | 62,744 | ||||||||||||||
Earnings per common share, basic: | ||||||||||||||||||
Earnings per common share from continuing operations | $ | 0.43 | $ | 0.41 | $ | 1.35 | $ | 1.15 | ||||||||||
Earnings per common share from discontinued operations | - | - | - | - | ||||||||||||||
Total earnings per common share, basic | $ | 0.43 | $ | 0.41 | $ | 1.35 | $ | 1.15 | ||||||||||
Earnings per common share, diluted: | ||||||||||||||||||
Earnings per common share from continuing operations | $ | 0.43 | $ | 0.40 | $ | 1.34 | $ | 1.14 | ||||||||||
Earnings per common share from discontinued operations | - | - | - | - | ||||||||||||||
Total earnings per common share, diluted | $ | 0.43 | $ | 0.40 | $ | 1.34 | $ | 1.14 | ||||||||||
Dividends declared per common share | $ | 0.3425 | $ | 0.3300 | $ | 0.6850 | $ | 0.6600 | ||||||||||
Issued Aug. 3, 2016 | ||||||||||||||||||
AVISTA CORPORATION | ||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||||
(Dollars in Thousands) | ||||||||||
June 30, | December 31, | |||||||||
2016 | 2015 | |||||||||
Assets | ||||||||||
Cash and cash equivalents | $ | 13,522 | $ | 10,484 | ||||||
Accounts and notes receivable | 121,277 | 169,413 | ||||||||
Other current assets | 133,920 | 126,149 | ||||||||
Total net utility property | 3,990,699 | 3,898,589 | ||||||||
Other non-current assets | 148,822 | 143,646 | ||||||||
Regulatory assets for deferred income taxes | 99,325 | 101,240 | ||||||||
Regulatory assets for pensions and other postretirement benefits | 226,737 | 235,009 | ||||||||
Regulatory asset for unsettled interest rate swaps | 191,959 | 83,973 | ||||||||
Other regulatory assets | 136,086 | 132,218 | ||||||||
Other deferred charges | 6,674 | 5,928 | ||||||||
Total Assets | $ | 5,069,021 | $ | 4,906,649 | ||||||
Liabilities and Equity | ||||||||||
Accounts payable | $ | 63,056 | $ | 114,349 | ||||||
Current portion of long-term debt and capital leases | 93,227 | 93,167 | ||||||||
Short-term borrowings | 160,000 | 105,000 | ||||||||
Other current liabilities | 185,431 | 162,164 | ||||||||
Long-term debt and capital leases | 1,479,668 | 1,480,111 | ||||||||
Long-term debt to affiliated trusts | 51,547 | 51,547 | ||||||||
Regulatory liability for utility plant retirement costs | 267,918 | 261,594 | ||||||||
Pensions and other postretirement benefits | 202,063 | 201,453 | ||||||||
Deferred income taxes | 783,955 | 747,477 | ||||||||
Other non-current liabilities and deferred credits | 165,419 | 161,500 | ||||||||
Total Liabilities | 3,452,284 | 3,378,362 | ||||||||
Equity | ||||||||||
Avista Corporation Shareholders' Equity: | ||||||||||
Common stock (63,704,295 and 62,312,651 outstanding shares) | 1,052,190 | 1,004,336 | ||||||||
Retained earnings and accumulated other comprehensive loss | 564,837 | 524,290 | ||||||||
Total Avista Corporation Shareholders' Equity | 1,617,027 | 1,528,626 | ||||||||
Noncontrolling interests | (290 | ) | (339 | ) | ||||||
Total Equity | 1,616,737 | 1,528,287 | ||||||||
Total Liabilities and Equity | $ | 5,069,021 | $ | 4,906,649 | ||||||
Issued Aug. 3, 2016 |
Contact:
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
Source: