Avista Corp. Reports Financial Results for Fourth Quarter and Fiscal Year 2012, and Confirms 2013 Earnings Guidance
"We had a challenging year in 2012, with earnings below our expectations, reflecting under-performance in all of our business segments. This was primarily due to warmer weather in the first and fourth quarters, which decreased earnings at our core utility business, expenses related to our voluntary severance incentive program and continued slow load growth. Additionally, there were increased costs at all of our segments and slower than expected integration of the acquisitions at our primary unregulated subsidiary, Ecova. However, we believe that we are well positioned for significant improvement in our 2013 consolidated results and are confirming our consolidated earnings guidance range of
"
"The resolution of the
"We believe that both settlements provide a fair and reasonable outcome for our customers and shareholders, and that they give our customers more certainty in their energy rates for the next two years. In both settlements, we have agreed to no further general rate increases prior to
"Ecova had a very difficult year in 2012. This was primarily due to increased operating costs and limited increases in revenues. With forecasted revenue growth and process and efficiency improvements, we expect Ecova's performance to improve significantly in 2013.
"We had a number of challenges related to our other non-utility businesses in 2012. In 2013, we expect some improvement in results; however, we remain committed to pursue opportunities for future growth," Morris said.
Summary Results:
($ in thousands, except per-share data) | Q4 2012 | Q4 2011 | Year 2012 | Year 2011 | ||||||||||||
Operating Revenues | $ | 410,528 | $ | 438,927 | $ | 1,547,002 | $ | 1,619,780 | ||||||||
Income from Operations | $ | 41,047 | $ | 58,324 | $ | 190,070 | $ | 228,004 | ||||||||
Net Income attributable to Avista Corporation Shareholders | $ | 15,858 | $ | 24,603 | $ | 78,210 | $ | 100,224 | ||||||||
Net Income (Loss) attributable to Avista Corporation Shareholders by Business Segment: | ||||||||||||||||
Avista Utilities | $ | 16,547 | $ | 22,169 | $ | 81,704 | $ | 90,902 | ||||||||
Ecova | $ | 862 | $ | 2,656 | $ | 1,825 | $ | 9,671 | ||||||||
Other | $ | (1,551 | ) | $ | (222 | ) | $ | (5,319 | ) | $ | (349 | ) | ||||
Earnings (Loss) per diluted share by Business Segment attributable to Avista Corporation Shareholders: | ||||||||||||||||
Avista Utilities | $ | 0.28 | $ | 0.38 | $ | 1.38 | $ | 1.56 | ||||||||
Ecova | $ | 0.01 | $ | 0.04 | $ | 0.03 | $ | 0.16 | ||||||||
Other | $ | (0.03 | ) | $ | -- | $ | (0.09 | ) | $ | -- | ||||||
Total earnings per diluted share attributable to Avista Corporation | $ | 0.26 | $ | 0.42 | $ | 1.32 | $ | 1.72 | ||||||||
The decrease in quarterly utility earnings was primarily due to an increase in other operating expenses (including costs under the voluntary severance incentive plan), depreciation and amortization, and interest expense. This was partially offset by a slight increase in gross margin (due to general rate increases mostly offset by warmer weather) and a decrease in taxes other than income taxes. We estimate that warmer weather, as compared to the fourth quarter of 2011, decreased our utility earnings contribution by
The decrease in annual utility earnings was primarily due to reduced retail loads during the first and fourth quarters of the year (primarily as a result of warmer weather) and an increase in other operating expenses, and depreciation and amortization, which was partially offset by the implementation of general rate increases. We estimate that warmer weather, as compared to 2011, decreased our utility earnings contribution by
Net income for Ecova for the fourth quarter and full year of 2012 decreased as revenue growth for the expense and data management services, and energy management services was not as high as expected and did not offset increased operating costs. In addition, Ecova's earnings were reduced by increased costs associated with completing and integrating the acquisitions of Prenova and LPB Energy Management (LPB), and an increase in depreciation and amortization.
In our other businesses, the
We may invest incremental funds to protect our existing investments and invest in new opportunities that we believe fit with our overall corporate strategy. We are focused on discovering new ways to accelerate growth for
On an annual basis, operating revenues (exclusive of intracompany revenues of
Electric revenues decreased
Retail electric revenues decreased due to a decrease in total MWhs sold offset by an increase in revenue per MWh. The decrease in MWhs sold was primarily the result of warmer weather during the heating season, and in part due to lower usage at certain industrial customers. This was partially offset during the cooling season by warmer weather (and increased loads), which increased electric use per customer. Compared to 2011, residential electric use per customer decreased 4 percent. Cooling degree days at
Wholesale electric revenues increased due to an increase in sales volumes, partially offset by a decrease in sales prices. The increase in sales volumes was primarily due to the fact that our retail sales were lower than expected. We sold the resulting excess capacity and energy on the wholesale market through our optimization procedures.
When electric wholesale market prices are below the cost of operating our natural gas-fired thermal generating units, we sell the natural gas purchased for the generation of electricity into the wholesale market rather than operate the generating units. The revenues from sales of fuel decreased due to a decrease in sales of natural gas fuel as part of thermal generation resource optimization activities and higher usage of our thermal generation plants in 2012 as compared to 2011, as well as a decrease in natural gas prices. Higher usage of our thermal generation plants was due in part to decreased hydroelectric generation.
Natural gas revenues decreased
Retail natural gas revenues decreased
Wholesale natural gas revenues decreased
Intracompany revenues between electric and natural gas which are eliminated in the total results of
Utility other operating expenses increased
Utility depreciation and amortization increased
Ecova: On a quarterly basis, Ecova's revenues decreased
On an annual basis, Ecova's revenues increased
Ecova's total operating expenses increased
In 2012, Ecova managed bills totaling
Other Businesses: The decline in results was due in part to losses on investments of
Liquidity and Capital Resources: We have a
In
As of
We are making significant capital investments in generation, transmission and distribution systems to preserve and enhance service reliability for our customers and replace aging infrastructure. Utility capital expenditures were
Ecova has a
2013 Earnings Guidance and Outlook
Avista is confirming its 2013 guidance for consolidated earnings to be in the range of
We have made a slight revision to our guidance for
For 2013, we expect Ecova to contribute in the range of
We expect the other businesses to be between a loss of
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 energy demand and electric generation, 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 impacts 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; 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 customer demand for utility services, as well as the effect of increased energy efficiency; 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; changes in actuarial assumptions, interest rates and the actual return on plan assets for our pension plan, which can affect future funding obligations, pension expense and pension plan 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; the outcome of pending regulatory and legal proceedings arising out of the "western energy crisis" of 2000 and 2001, including possible refunds; the outcome of legal proceedings and other contingencies; changes in, and compliance with, environmental and endangered species laws, regulations, decisions and policies, including present and potential environmental remediation costs; wholesale and retail competition including alternative energy sources, suppliers and delivery arrangements and the extent that new uses for our services may materialize; 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 cause unplanned outages at any of our generation facilities, transmission and distribution systems or other operations; public injuries or damages 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 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; 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 climate of the
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) | |||||||||||||||||||
Year Ended | |||||||||||||||||||
Fourth Quarter | December 31, | ||||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||||
Operating revenues | $ | 410,528 | $ | 438,927 | $ | 1,547,002 | $ | 1,619,780 | |||||||||||
Operating expenses: | |||||||||||||||||||
Utility resource costs | 192,322 | 214,758 | 693,127 | 790,048 | |||||||||||||||
Other operating expenses (1) | 124,363 | 114,659 | 453,994 | 404,781 | |||||||||||||||
Depreciation and amortization | 33,109 | 29,327 | 126,402 | 113,600 | |||||||||||||||
Utility taxes other than income taxes (1) | 19,687 | 21,859 | 83,409 | 83,347 | |||||||||||||||
Total operating expenses | 369,481 | 380,603 | 1,356,932 | 1,391,776 | |||||||||||||||
Income from operations | 41,047 | 58,324 | 190,070 | 228,004 | |||||||||||||||
Interest expense, net of capitalized interest | 18,933 | 17,605 | 75,034 | 71,266 | |||||||||||||||
Other income - net (1) | (2,134 | ) | (947 | ) | (5,025 | ) | (3,433 | ) | |||||||||||
Income before income taxes | 24,248 | 41,666 | 120,061 | 160,171 | |||||||||||||||
Income tax expense | 8,155 | 15,695 | 41,261 | 56,632 | |||||||||||||||
Net income | 16,093 | 25,971 | 78,800 | 103,539 | |||||||||||||||
Net income attributable to noncontrolling interests | (235 | ) | (1,368 | ) | (590 | ) | (3,315 | ) | |||||||||||
Net income attributable to Avista Corporation shareholders | $ | 15,858 | $ | 24,603 | $ | 78,210 | $ | 100,224 | |||||||||||
Weighted-average common shares outstanding (thousands), basic | 59,774 | 58,304 | 59,028 | 57,872 | |||||||||||||||
Weighted-average common shares outstanding (thousands), diluted | 59,826 | 58,583 | 59,201 | 58,092 | |||||||||||||||
Earnings per common share attributable to Avista Corporation shareholders: | |||||||||||||||||||
Basic | $ | 0.27 | $ | 0.42 | $ | 1.32 | $ | 1.73 | |||||||||||
Diluted | $ | 0.26 | $ | 0.42 | $ | 1.32 | $ | 1.72 | |||||||||||
Dividends paid per common share | $ | 0.29 | $ | 0.275 | $ | 1.16 | $ | 1.10 | |||||||||||
Issued February 20, 2013 |
(1) | Includes an immaterial correction of an error related to the reclassification of certain operating expenses from other income-net to other operating expenses and utility taxes other than income taxes. This correction did not have an impact on net income or earnings per share. |
AVISTA CORPORATION | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||||
(Dollars in Thousands) | |||||||||
December 31, | |||||||||
2012 | 2011 | ||||||||
Assets | |||||||||
Cash and cash equivalents | $ | 75,464 | $ | 74,662 | |||||
Accounts and notes receivable | 193,683 | 203,452 | |||||||
Investments and funds held for clients | 88,272 | 118,536 | |||||||
Other current assets | 148,375 | 217,906 | |||||||
Total net utility property | 3,023,716 | 2,860,776 | |||||||
Other non-current assets | 248,670 | 212,209 | |||||||
Regulatory assets for deferred income taxes | 79,406 | 84,576 | |||||||
Regulatory assets for pensions and other postretirement benefits | 306,408 | 260,359 | |||||||
Other regulatory assets | 129,164 | 160,083 | |||||||
Other deferred charges | 20,021 | 21,972 | |||||||
Total Assets | $ | 4,313,179 | $ | 4,214,531 | |||||
Liabilities and Equity | |||||||||
Accounts payable | $ | 198,914 | $ | 166,954 | |||||
Current portion of long-term debt | 50,372 | 7,474 | |||||||
Current portion of nonrecourse long-term debt of Spokane Energy | 14,965 | 13,668 | |||||||
Short-term borrowings | 52,000 | 96,000 | |||||||
Client fund obligations | 87,839 | 118,325 | |||||||
Other current liabilities | 172,059 | 224,753 | |||||||
Long-term debt | 1,178,367 | 1,169,826 | |||||||
Nonrecourse long-term debt of Spokane Energy | 17,838 | 32,803 | |||||||
Long-term debt to affiliated trusts | 51,547 | 51,547 | |||||||
Long-term borrowings under committed line of credit | 54,000 | -- | |||||||
Regulatory liability for utility plant retirement costs | 234,128 | 227,282 | |||||||
Pensions and other postretirement benefits | 283,985 | 246,177 | |||||||
Deferred income taxes | 524,877 | 505,954 | |||||||
Other non-current liabilities and deferred credits | 110,215 | 116,084 | |||||||
Total Liabilities | 3,031,106 | 2,976,847 | |||||||
Redeemable Noncontrolling Interests | 4,938 | 51,809 | |||||||
Equity | |||||||||
Avista Corporation Stockholders' Equity: | |||||||||
Common stock (59,812,796 and 58,422,781 outstanding shares) | 889,237 | 855,188 | |||||||
Retained earnings and accumulated other comprehensive loss | 370,240 | 330,513 | |||||||
Total Avista Corporation Stockholders' Equity | 1,259,477 | 1,185,701 | |||||||
Noncontrolling interests | 17,658 | 174 | |||||||
Total Equity | 1,277,135 | 1,185,875 | |||||||
Total Liabilities and Equity | $ | 4,313,179 | $ | 4,214,531 | |||||
Issued February 20, 2013 | |||||||||
AVISTA CORPORATION | |||||||||||||||||
FINANCIAL AND OPERATING HIGHLIGHTS (UNAUDITED) | |||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||
Year Ended, | |||||||||||||||||
Fourth Quarter | December 31, | ||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||
Avista Utilities | |||||||||||||||||
Retail electric revenues | $ | 184,240 | $ | 190,109 | $ | 728,534 | $ | 734,475 | |||||||||
Retail kWh sales (in millions) | 2,275 | 2,358 | 8,861 | 9,023 | |||||||||||||
Retail electric customers at end of period | 362,369 | 360,361 | 362,369 | 360,361 | |||||||||||||
Wholesale electric revenues | $ | 30,717 | $ | 23,108 | $ | 102,736 | $ | 78,305 | |||||||||
Wholesale kWh sales (in millions) | 901 | 674 | 3,733 | 2,796 | |||||||||||||
Sales of fuel | $ | 32,390 | $ | 22,111 | $ | 115,835 | $ | 153,470 | |||||||||
Other electric revenues | $ | 4,734 | $ | 6,038 | $ | 21,067 | $ | 21,937 | |||||||||
Retail natural gas revenues | $ | 92,412 | $ | 112,527 | $ | 301,580 | $ | 338,221 | |||||||||
Wholesale natural gas revenues | $ | 47,450 | $ | 46,843 | $ | 158,631 | $ | 195,882 | |||||||||
Transportation and other natural gas revenues | $ | 3,679 | $ | 3,445 | $ | 13,962 | $ | 14,123 | |||||||||
Total therms delivered (in thousands) | 283,250 | 279,370 | 1,054,950 | 1,006,413 | |||||||||||||
Retail natural gas customers at end of period | 322,700 | 320,592 | 322,700 | 320,592 | |||||||||||||
Intracompany revenues | $ | 33,648 | $ | 21,430 | $ | 88,160 | $ | 93,090 | |||||||||
Income from operations (pre-tax) (1) | $ | 41,182 | $ | 51,014 | $ | 188,778 | $ | 202,373 | |||||||||
Net income attributable to Avista Corporation shareholders | $ | 16,547 | $ | 22,169 | $ | 81,704 | $ | 90,902 | |||||||||
Ecova | |||||||||||||||||
Revenues | $ | 39,957 | $ | 46,641 | $ | 155,664 | $ | 137,848 | |||||||||
Income from operations (pre-tax) | $ | 1,112 | $ | 7,018 | $ | 2,972 | $ | 20,917 | |||||||||
Net income attributable to Avista Corporation shareholders | $ | 862 | $ | 2,656 | $ | 1,825 | $ | 9,671 | |||||||||
Other | |||||||||||||||||
Revenues | $ | 9,046 | $ | 9,985 | $ | 38,953 | $ | 40,410 | |||||||||
Income (loss) from operations (pre-tax) (1) | $ | (1,247 | ) | $ | 292 | $ | (1,680 | ) | $ | 4,714 | |||||||
Net loss attributable to Avista Corporation shareholders | $ | (1,551 | ) | $ | (222 | ) | $ | (5,319 | ) | $ | (349 | ) | |||||
Issued February 20, 2013 | |||||||||||||||||
(1) | Includes an immaterial correction of an error related to the reclassification of certain operating expenses from other expense-net to utility and non-utility other operating expenses and utility taxes other than income taxes. This correction did not have an impact on net income or earnings per share. | |
Contact:
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(509) 495-8578
jessie.wuerst@avistacorp.com
Investors:
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jason.lang@avistacorp.com
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