TECO Energy Misses Earnings Estimates - Analyst Blog


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Energy utility TECO Energy Inc. ( TE ) announced second-quarter 2013 operating earnings of 25 cents per share or net income of $53.4 million. TECO's earnings were a penny or 3.8% lower than the Zacks Consensus Estimate of 26 cents.  Earnings were also 16.7% below the year-ago figure.  

Total Revenue

Total revenue at TECO Energy at the end of the second quarter was $735.9 million, nominally missing the Zacks Consensus Estimate of $736 million.

Total revenue was 2.2% lower than the year-ago figure. The year-over-year decline was primarily due to lower contribution from its Unregulated segment, with contribution from Regulated Electric and Gas segments partially offsetting the negative impact.

Highlights of the Release

The company saw a 2.1% year-over-year increase in total expenses during the quarter, which was due to a 3.9% rise in fuel prices, an 11.8% increase in purchased power costs and a 13.1% increase in other costs.

The year-over-year decline in total revenues and increase in total expense impacted the operating margins of the company. The second quarter operating margin contracted 358 basis points to 16.2%.

Interest expenses declined 10.8% year over year to $42.7 million. The reductions in interest expense were primarily due to lower long-term debt interest rates and a lower interest rate on customer deposits.

Financial Update

Cash and cash equivalents of the company as of Jun 30, 2013, were $153.3 million, down from $200.5 million as of Dec 31, 2012.

Capital expenditure in the reported quarter was $146.6 million, up from $123.5 million spent in the second quarter of 2012.  

Long-term debt as of Jun 30, 2013, was $2.9 billion, marginally lower than the 2012 year-end level of $2.97 billion.


TECO Energy maintained its 2013 earnings per share expectation in the range of 90 cents to $1.00.

Peoples Gas expects to earn above the mid-point of its allowed return on equity (ROE) range of 9.75% to 11.75%. The segment expects to benefit from moderate customer growth and customer switching from other sources of fuel to natural gas.

Tampa Electric expects the year-to-date trend of customer growth to continue but sales growth is expected to be lower than the increase in customer count. This is primarily due to lower average customer usage.

Other Company Releases

CMS Energy Corp. ( CMS ) reported earnings of 29 cents per share in the second quarter of 2013, lagging the Zacks Consensus Estimate of 34 cents by 14.7%.

Northwestern Corporation ( NWE ) announced second-quarter 2013 operating earnings of 35 cents per share, 16.7% above the Zacks Consensus Estimate of 30 cents.

NiSource Inc. ( NI ) announced second-quarter 2013 operating earnings of 23 cents per share, 4.2% lower than the Zacks Consensus Estimate of 24 cents.

Our View

TECO Energy maintained its customer growth trend for both electricity and gas from the prior quarter. In the reported quarter, Tampa Electric and People Gas recorded customer growth of 1.4% each year over year. Despite an increase in customer count, operating revenues from Tampa Electric fell by 7.7% year over year while People Gas recorded an operating revenue increase of 7.0%.

Though the decline in electricity revenue was primarily due to lower usage by residential and commercial customers, we are not entirely disappointed as the increase in customer count indicates a gradual recovery in the Florida economy.

Based in Tampa, Fla., TECO Energy is involved in the generation, purchase, transmission, distribution and sale of electricity in the state. TECO Energy currently has a Zacks Rank #4 (Sell).

CMS ENERGY (CMS): Free Stock Analysis Report

NISOURCE INC (NI): Free Stock Analysis Report

NORTHWESTERN CP (NWE): Free Stock Analysis Report

TECO ENERGY (TE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: CMS , NI , NWE , TE

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