Pepco Holdings Inc.
) reported second quarter 2013 earnings from continuing
operations of 22 cents per share, 2 cents lower than the Zacks
Consensus Estimate. However, earnings were 10% higher than the
year-ago number of 20 cents.
The year-over-year increase in operating earnings was
primarily due to a rise in electric distribution revenue and
lower operation and maintenance expenses partially offset by a
decline in electric supply margins and lower unbilled revenue
related to Atlantic City Electric basic generation service.
GAAP earnings were 16 cents per share versus 23 cents in the
second quarter of 2012. The difference between GAAP and operating
earnings during the reported quarter was due to a 2 cent charge
from cross-border energy lease including related interest expense
on uncertain tax positions and a charge of 4 cents related to
cross-border energy lease net loss on early terminations.
Pepco Holdings' total revenue at the end of the second
quarter was $1.05 billion, down marginally from $1.07 billion in
the year-ago period. Quarterly revenue also fell short of the
Zacks Consensus Estimate of $1.4 billion by 22.5%.
The year-over-year decline was primarily due to lower top-line
contribution from Pepco Energy Services partially offset by
increased returns from Power delivery services.
Highlights of the Release
In the second quarter, Pepco Holdings' total electric
sales, at Power Delivery, plummeted 2.3% to 11,172 gigawatt hours
(GWh). The mild weather in its service territories impacted the
demand for electricity.
Total operating expenses at the end of the quarter declined
marginally to $921 million from $933 million in the comparable
Pepco Holdings' installations as well as activation of smart
meters in the District of Columbia and Maryland service zones
were nearly completed. Installation and activation tasks of smart
meters by Delmarva Power was concluded in its Delaware electric
service territory while work is currently progressing in the
Maryland service areas.
Pepco Holdings' cash and cash equivalents, including
restricted cash, were $35.0 million as of Jun 30, 2013, flat with
the cash balance as of Dec 31, 2012. Long-term debts as of Jun
30, 2013 were $3.8 billion, up 4.5% from $3.6 billion as of Dec
Pepco Holdings reiterated its 2013 earnings outlook in the
range of $1.05 to $1.20 per share. The guidance assumes normal
weather during the year.
Other Company Releases
) reported earnings of 53 cents per share in the second quarter
of 2013, missing the Zacks Consensus Estimate by a penny.
) announced second-quarter 2013 operating earnings of 23 cents
per share, 4.2% below the Zacks Consensus Estimate.
Public Service Enterprise Group Inc.
) reported second quarter 2013 earnings of 48 cents per share,
surpassing the Zacks Consensus Estimate by 4.3%.
Pepco Holdings presented favorable year over year earnings
results in the reported quarter backed by effective cost control
initiatives and acceleration in distribution operations though
the mild weather proved to be a deterrent.
Going forward, the company's aggressive investments in
modernizing its utility infrastructure will act as a key growth
catalyst and will help retain its customer base. Moreover,
prudent capital outlay and continued implementation of
cost-containment measures will bode well for Pepco Holdings'
future development plans.
However, the discouraging distribution rate base outcomes
might hurt the company's margins. Pepco Holdings currently
retains a Zacks Rank #3 (Hold).
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