Integrys Energy Group, Inc.
) reported first quarter 2013 pro forma earnings of $1.76 per
share, up 12.8% from the year-ago quarter. Earnings also
comfortably beat the Zacks Consensus Estimate by 10.7%.
The upside was due to higher natural gas returns from a cold
winter, positive impact from decoupling mechanisms related to
People Gas and North Shore Gas businesses and encouraging outcome
from the Wisconsin Public Service rate case.
GAAP earnings were $2.37 per share in the reported quarter
compared with $1.25 per share in first quarter 2012. The
difference between quarterly GAAP and pro forma earnings was due
to a 53 cent gain from derivative as well as inventory accounting
activities and an 8 cent gain from discontinued operations.
Integrys Energy's total revenue shot up 34.5% year over year
to $1,678.2 million. Reported revenue also outpaced the Zacks
Consensus Estimate by 24.3%.
The revenue upturn resulted from favorable sales from the
company's regulated as well as non-regulated business
Total sales from the regulated segment rose 4.1% year over
year to 3,953.1 million kilowatt-hours ("Kwh").
In the non-regulated segment, retail electric sales volume in
the first quarter was 4,318.2 million Kwh versus 2,918.9 million
Kwh in the comparable year-ago period. Retail natural gas sales
volume was 50.7 billion cubic feet ("Bcf") compared with 39.6 Bcf
in the year-ago quarter. Wholesale electric sales volume
was 18.0 million Kwh versus 22.2 million Kwh in the year-ago
Total operating expenses increased 26.5% year over year to
$1,385.1 million. This was mainly due to a 19.7% rise in fuel,
natural gas and power costs during the quarter. Non-regulated
sales cost also aggravated the expense hike, climbing 60% to
$436.8 million from the year-ago quarter.
Operating profit in the first quarter escalated sharply by
91.5% to $293.1 million from the year-ago quarter. The
substantial upside in revenue outweighed the cost increase
thereby boosting profits.
Cash and cash equivalents were $72.0 million as of Mar 31,
2013 compared with $27.4 million as of Dec 31, 2012. As of Mar
31, 2013, long-term debt remained flat at $1,931.7 million.
Net cash generated from operating activities during the
quarter was $319.6 million compared with $224.8 million in the
As of Mar 31, 2013, capital expenditure was $147.0 million
versus $123.0 million as of Mar 31, 2012.
Guidance for 2013
Integrys Energy Group expects pro forma earnings in 2013 in
the band of $3.25 - $3.60 per share. The company estimates GAAP
earnings for 2013 in the range $3.32 - $3.67 per share.
Other Utility Company Releases
TECO Energy Inc.
) reported first quarter 2013 earnings of 19 cents per share
surpassing the Zacks Consensus Estimate by 11.8%.
NextEra Energy Inc.
) reported pro forma earnings of $1.12 per share beating the
Zacks Consensus Estimate by 10.9%.
Integrys Energy posted impressive results this quarter,
beating our expectations. This is a definite turnaround from the
lackluster performance from the energy company last year.
Going forward, the company's power service contract win from
the Chicago government will be the major growth driver. With the
onset of summer, the company's electric sales are also expected
to go up.
Also, its large-scale midstream development efforts, Main
Replacement Activity project in Chicago, modernization programs
Alliant Energy Corp.
) and focus on rate-based investments would act as tailwinds.
However, rising natural gas prices would lead to a reduction
in the coal-to-gas switch. This would impact the company's gas
based utility businesses. Further, regulatory pressures will
continue to expose Integrys to increasing cost of operations and
compliance costs. The company currently retains a Zacks Rank #3
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
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