Energy services holding company
AGL Resources Inc.
) reported lackluster third-quarter 2012 results, owing to poor
performance from Distribution segments as well as higher
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The company - the largest domestic natural gas-only distribution
entity with about 4.5 million customers across seven states
following the December 2011 acquisition of Naperville,
Illinois-based Nicor Inc. - announced earnings per share
(excluding merger-related expenses) of 9 cents, improving from 2
cents earned in the comparable quarter last year. However,
the result failed to meet the Zacks Consensus Estimate of 22
Total operating revenues of $614.0 million, were shy of the Zacks
Consensus Estimate of $721.0 million but were up from the
year-ago level of $295.0 million.
This segment, comprised of seven utilities, witnessed earnings
before interest and taxes (EBIT) of $80.0 million, higher than
$70.0 million obtained during the third quarter of 2011. The
result was positively influenced by contributions from the
inclusion of Nicor Gas.
AGL's 'Retail' segment - made up of SouthStar Energy Services,
Nicor Services, Nicor Solutions and Nicor Advanced Energy -
achieved an EBIT of $5.0 million, against a loss of $5.0 million
in the year-earlier period. The quarter's performance benefited
from the addition of a retail business unit from Nicor along with
lower transportation and gas costs.
The segment that includes Sequent Energy Management reported a
loss of $23.0 million, narrower than the loss of $37.0 million
recorded in the prior-year quarter. Better commercial activities
aided the segment performance.
The earnings contribution from AGL's other businesses - Midstream
Operations and Cargo Shipping - were insignificant.
Management stated that the unfavorable weather conditions that
prevailed in the first half of 2012 will likely impact the
company's performance, which is reflected through a lower
earnings guidance of $2.60 to $2.75 per share.
Rating & Recommendation
Another natural gas distributor - Tulsa, Oklahoma-based
) - reported third-quarter 2012 earnings of 31 cents per diluted
share, missing our projection of 32 cents per diluted share.
AGL Resources currently retains a Zacks #3 Rank (short-term Hold
rating). We are also maintaining our long-term Neutral
recommendation on the stock.
AGL Resources offers a wide range of retail energy-related
products and services, natural gas wholesale marketing and other
gas supply management services. Over the past few years, these
businesses have contributed significantly to the company's
overall earnings and we expect this trend to continue in the
coming days as well.