Integrys Energy Group, Inc.
) reported third-quarter 2012 pro forma earnings of 55 cents per
share, outshining the Zacks Consensus Estimate of 38 cents per
share. The quarter's results were significantly up from the
year-ago figure of 42 cents per share.
The results were driven by rate increases effective from January
2012 at The Peoples Gas Light and Coke Company, North Shore Gas
Company, and Upper Peninsula Power Company. However, these were
partially offset by the impact of lower sales volumes at the
natural gas utilities and wholesale electric utility.
The company's GAAP earnings were 83 cents per share in the
reported quarter, up from with 47 cents in the year-earlier
quarter. The variance of 28 cents between quarterly GAAP and pro
forma earnings reflects a non-cash gain of 31 cents per share
related to derivative and inventory accounting activities, a tax
benefit of 7 cents at the regulated utility segments related to
health care reform legislation and loss from discontinued
operations of 10 cents per share.
Integrys Energy's total revenue stood at $927.6 million,
marginally down 0.73% from $934.4 million in the prior-year
quarter. Reported revenue also missed the Zacks Consensus
Estimate of $948 million.
Integrys Energy's retail electric sales volume in the third
quarter of 2012 was 4,010.6 million kilowatt-hours ("Kwh"), up
from 3,504.6 million Kwh in the comparable year-ago period.
Retail natural gas sales volume was 22.3 billion cubic feet
("Bcf"), up from 18.3 Bcf in the year-ago quarter.
In the reported quarter, Integrys Energy's fuel, natural gas and
power costs declined 7.1% to $228.2 million from $245.7 million
in the year-ago quarter. Operating and maintenance expenses in
the third quarter of 2012 were $240.6 million, approximately flat
year over year. Operating income surged 53.9% to $108.2 million
from $70.3 million in the prior-year quarter.
Cash and cash equivalents were $18.1 million as of September 30,
2012 versus $27.3 million as of September 30, 2011. Long-term
debt was $1,707.1 million, down from $2,080.7 million as of
September 30, 2011.
Guidance for 2012
Integrys Energy Group increased its adjusted earnings for
full-year 2012 and expects it to be in the range of $3.22 to
$3.88 per share versus its previous expectation of $3.00-$3.15
per share. The increase reflects the company's continued cost
The company expects GAAP earnings per share in the range of $3.19
to $3.37 per share. The guidance reflects continued operational
improvements, the availability of generation units, and normal
weather conditions for the rest of 2012.
One of the Integrys Energy's peers,
Wisconsin Energy Inc.
) posted third-quarter 2012 earnings from continuing operations
per share of 67 cents, up 21.8% year over year from 55 cents per
share. The reported quarter's earnings also comfortably surpassed
the Zacks Consensus Estimate of 57 cents per share. Revenue in
the third quarter of 2012 was $1.04 billion, down 1.28% from
$1.05 billion in the year-ago quarter. Revenues also fell short
of the Zacks Consensus Estimate by $32.7 million.
Though Integrys Energy's earnings surpassed the Zacks Consensus
Estimate, the top line could not meet our expectations. Going
forward, we expect increasing retail competitive pressure in the
northeastern US markets and risks from weather variations to
weigh on margins. Pro-environment regulations set by
Environmental Protection Agency will also pose serious challenges
to the company's growth prospects.
However, these negatives could be offset by the company's
involvement in infrastructure expansion projects in Chicago and
Columbia power plant in the near term to some extent. The company
presently retains a short-term Zacks #3 Rank (Hold). We have a
long-term Underperform recommendation on the stock.
Chicago, Illinois-based Integrys Energy Group is a diversified
holding company providing products and services in both regulated
and non-regulated energy markets, through its subsidiaries. In
addition, the company has a 34% equity ownership interest in
American Transmission Company LLC ("ATC"), an electric
transmission company operating in Wisconsin, Michigan, Minnesota,
INTEGRYS ENERGY (TEG): Free Stock Analysis
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