Energy services holding company
AGL Resources Inc.
) reported weaker-than-expected first quarter 2013 earnings, hurt
by low and volatile natural gas prices.
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AGL Resources - which became the largest domestic natural
gas-only distribution entity with about 4.5 million customers
across seven states following the Dec 2011 acquisition of
Naperville, IL-based Nicor Inc. - announced earnings per share of
$1.31, below the Zacks Consensus Estimate of $1.35.
However, compared with the year-earlier period, AGL Resources'
earnings per share rose by 12.9% - from $1.16 (excluding
merger-related expenses) to $1.31 - amid higher energy use on the
back of lower-than-expected temperatures, as against the
unusually warm last one.
Total operating revenues, at $1,709.0 million, were ahead of the
Zacks Consensus Estimate of $1,422.0 million and were also up
from the year-ago level of $1,404.0 million.
The segment, comprising seven utilities, reported earnings before
interest and taxes (EBIT) of $218.0 million, up from $194.0
million achieved during the first quarter of 2012. The result was
positively influenced by favorable weather conditions and
enhanced revenues from AGL Resources' regulatory infrastructure
Comprising SouthStar Energy Services, Nicor Services, Nicor
Solutions and Nicor Advanced Energy, this segment achieved an
EBIT of $70.0 million against a profit of $60.0 million in the
year-earlier period. The quarter's performance benefited from a
colder-than-normal winter and contribution from the Jan
acquisition of 500,000 retail warranty contracts.
The unit, which includes Sequent Energy Management, reported a
profit of $15.0 million, lower than $19.0 million recorded in the
prior-year quarter. Hedge losses affected the segments'
performance, partially offset by better commercial activities.
This segment, mainly comprising natural gas storage facilities,
reported EBIT of $2.0 million, down from $3.0 million earned
during the first quarter of 2012. The decline was on account of
higher operating expenses, to an extent negated by improved
operating margin and other income.
This segment generated profits of $2.0 million in the reported
quarter, double that of the year-earlier period. The positive
comparison was driven by a rise in cargo capacity and lower
depreciation and amortization expense incurred by AGL Resources.
AGL Resources management reiterated its earnings guidance of
$2.50-$2.70 per share for 2013. But excluding the Wholesale
Services segment, the same is expected in the range of $2.40 to
$2.50 per share.
AGL Resources currently carries a Zacks Rank #3 (Hold), implying
that it is expected to perform in line with the broader U.S.
equity market over the next one to three months.
However, there are certain natural gas distribution utilities
Atmos Energy Corp.
) that offer tremendous value and are worth buying now. All these
companies sport a Zacks Rank #1 (Strong Buy).