Integrys Energy Group, Inc.
) reported first quarter 2012 pro forma earnings of $1.55 per share
compared with $1.57 in the year-ago quarter. Quarterly earnings
decreased due to a mild winter and decline in Electric Utility
segment margins. This was partially offset by implementation of
decoupling mechanism by the company. The earnings missed the Zacks
Consensus Estimate of $1.57.
Company's GAAP earnings were $1.25 per share in the reported
quarter compared with $1.56 in first quarter 2011. The variance
between quarterly GAAP and pro forma earnings was due to a 3 cents
gain from discontinued operations and a non-cash 33 cents loss for
derivative and inventory accounting activities.
Integrys Energy's total quarterly revenue of $1.25 billion was
down from $1.63 billion reported in the prior-year quarter. This
decline in revenue was due to lower sales from utility and
non-regulated segment. However, it was partially offset by rate
increase at the Peoples Gas Light and Coke Company. Reported
revenue missed the Zacks Consensus Estimate of $1.72 billion.
Integrys Energy's retail electric sales volume in the first
quarter 2012 was 2,918.9 million kilowatt-hours ("Kwh") versus
2,952.5 million Kwh in the comparable year-ago period. Quarterly
retail natural gas sales volume was 43.8 billion cubic feet ("Bcf")
compared with 48.5 Bcf in the year-ago quarter. Wholesale electric
sales volume in the first quarter 2012 was 88.9 million Kwh versus
72.6 million Kwh in the year-ago quarter.
In the reported quarter, Integrys Energy's fuel, natural gas and
power costs decreased by 28.5% to $472.3 million from $660.7
million in the year-ago quarter.
Operating and maintenance costs were $261 million in the first
quarter 2012, dipping 1.4% year over year from $264.6 million in
the year-ago period.
Operating income decreased to $151.6 million in the first
quarter 2012 from $208.7 million in the year-ago quarter due to
decline in total revenue, partially offset by cost control.
Cash and cash equivalents were $42.3 million as of March 31,
2012 compared with $28.1 million as of December 31, 2011.
As of March 31, 2012, long-term debt was $1.85 billion versus
$1.87 billion as of December 31, 2011.
Net cash generated from operating activities was $225.8 million
as of March 31, 2012 compared with $395.5 million as of March 31,
As of March 31, 2012, capital expenditure was $123 million
versus $51.2 million in the year-ago period.
Guidance for 2012
Integrys Energy Group expects pro forma earnings in 2012 to be
in the band of $3.35 - $3.55 per share. The company estimates GAAP
earnings in fiscal 2012 to be in the range of $3.38 - $3.58 per
share. This takes into account normal weather conditions in current
fiscal, operational improvement assumptions and availability of
generation units. However, it excludes the impact of inventory
accounting activities and derivatives.
Integrys Energy Group's peer
CMS Energy Corporation
) reported adjusted earnings of 37 cents per share in first quarter
2012 compared with 51 cents in the year-ago quarter. The quarterly
earnings missed the Zacks Consensus Estimate of 39 cents.
CMS Energy's revenue in the reported quarter grossed $1.74
billion versus $2.18 billion in the year-ago comparable period. The
reported revenue fell short of the Zacks Consensus Estimate of
Integrys Energy's results in the first quarter failed to meet
our expectations primarily due to a mild winter.
We view Integrys Energy as a well managed and high-quality
energy provider in high-growth areas such as Illinois, Michigan,
Minnesota, and Wisconsin. At the same time, the company is
frequently investing on infrastructural development, implementation
of new technologies associated with electricity generation,
transmission and distribution and to meet fuel expenses for
We believe that these initiatives will ensure smooth,
uninterrupted and hassle-free power supply to the consumers and
make way for the company's future earnings and revenue growth in
But at the same time, we are concerned about the chances of
customers switching to alternate energy sources and fluctuating
Integrys Energy Group. Inc. currently retains a Zacks #2 Rank,
which translates into a short-term Buy rating. We have a long-term
neutral recommendation on the stock.
Chicago, Illinois-based Integrys Energy Group, Inc. is a
diversified holding company providing products and services in both
regulated and non-regulated energy markets through its
CMS ENERGY (CMS): Free Stock Analysis Report
INTEGRYS ENERGY (TEG): Free Stock Analysis
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