Natural gas-focused energy company
) reported lackluster second quarter 2012 results, due to low
contributions from the business units coupled with steeper general
and administrative expenses.
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Earnings per share came in at 22 cents, unchanged from the profit
earned in the prior-year quarter. The result, however, missed the
Zacks Consensus Estimate by a penny.
Total revenue came in at $188.4 million, failing to match the Zacks
Consensus Estimate of $227.0. On a year-over-year basis, revenue
dropped 15.5% from the year-ago level of $222.9 million due to weak
performance by all segments.
The segment generated $130.2 million in revenue, down 20.6% from
the prior year, hurt by soft residential and commercial sales of
natural gas. The segment registered a loss of $2.3 million, against
the profit of $0.4 million in second quarter 2011.
As of June 30, 2012, Questar Gas served 924,000 customers, up
10,000, or 1.2% year over year.
Consolidated sales were down 3.6% year over year at $8.1 million in
the quarter. However, segmental income from continuing operations
increased to $25.8 million from $23.7 million in the prior-year
quarter, attributable to a higher average investment base.
Wexpro also reported 21.2% growth in the quarterly production of
natural gas to 14.3 billion cubic feet (Bcf), up from 11.8 Bcf in
second quarter 2011.
Consolidated revenue of $50.1 million declined slightly from the
year-ago quarter's $50.5 million. Income from continuing operations
came in at $16.1 million, reflecting a drop of 3.0%. The quarter's
performance was impacted by declining natural gas liquids prices
and higher depreciation costs.
Total natural gas transportation volumes in the quarter were 218.4
million decatherms, up from the prior-year level of 187.8
As of June 30, 2012, Questar had long-term debt (including current
portion) of $1,123.8 million, with a debt-to-capitalization ratio
During the quarter, the company bought back $2.62 million shares
for $19.96 per share, netting $52.2 million. Questar intends to
conduct more repurchases in the coming months.
Management reiterated its 2012 earnings guidance in the range of
$1.15 to $1.19 per average diluted share.
Despite a soft second quarter, Questar expects to register strong
growth in the coming months with a high investment base at Wexpro,
a multi-year pipeline-replacement program and strong customer
We maintain our long-term Neutral recommendation on the stock.
Questar, which competes with
AGL Resources Inc.
), currently holds a Zacks #3 Rank, implying a short-term Hold
rating for a period of one to three months.