Wisconsin Energy Inc.
) posted second-quarter 2012 earnings per share of 51 cents, up
24.4% year over year from 41 cents per share. The reported
quarter's earnings also comfortably surpassed the Zacks Consensus
Estimate of 44 cents per share.
The significant increase was driven by warm summer temperatures,
lower operation and maintenance costs, as well as the company's
share repurchase program.
Revenue in the second quarter of 2012 was $944.7 million, down 4.7%
from $991.7 million in the year-ago quarter. Revenue also fell
short of Zacks Consensus Estimate by $44.3 million.
During the reported quarter, residential sales were up 8.3% year
over year. Electricity sales to small commercial and industrial
customers were up 5%, however, it declined 3.7% for large
commercial and industrial customers.
Total operating expenses in the reported quarter were $722.1
million, down 11.6% from the prior-year period. The decline
reflects year-over-year decrease in fuel and purchased power
expenses, cost of gas sold and other operation and maintenance
expenses by 9.5%, 38.4% and 10.4%, respectively. However, it also
reflects 27.6% year-over-year increase in operating income to
Cash and cash equivalents as of June 30, 2012 were $13.1 million
versus $10.6 million as of June 30, 2011. Long-term debt as of June
30, 2012 was $4,297.5 million versus $4,334.6 million as of June
30, 2011. For the six months ended June 30, 2012, the company has
repurchased $38.4 million of common stock versus $22 million at the
end of June 30, 2011.
At the Peer
One of the company's peer,
) reported second-quarter 2012 pro forma earnings of 45 cents per
share, in line with the Zacks Consensus Estimate of 45 cents per
share, but surpassing the year-ago earnings by a penny.
The company reported quarterly operating revenue of $1,629.0
million, up 55.4% from $1,048.0 million a year ago. Revenue in the
reported quarter edged past the Zacks Consensus Estimate of $1,503
Though in line with Wisconsin Energy's expectations, commercial and
industrial sales were down due to a planned outage that affected
the operations of the company's largest customer. Further, the
company indicated that this outage will continue in third quarter
of 2012. However, the company was able to beat our expectation in
the reported quarter.
Construction of the company's biomass-fueled power plant in
northern Wisconsin is also in process. Going forward, we expect the
company to earn considerable profits based on its capital spending
focus, increase in the company's electric generating capacity based
on its projects and a renewed focus on core electric and gas
Moreover, in order to return better value to the shareholders,
the company has targeted a dividend payout ratio that will trend to
60% of earnings in fiscal 2014. Also, the company has authorized a
share repurchase program for up to $300 million of its common stock
through the end of 2013.
However, we remain concerned about the temperature fluctuations as
well as current and future legislations. The company presently
retains a short-term Zacks #2 Rank (Buy). We have a long-term
Neutral recommendation on the stock.
Milwaukee-based Wisconsin Energy Corporation is a diversified
holding company, engaged in generation and distribution of
electricity in southeastern, east central, and northern Wisconsin,
as well as in the upper peninsula of Michigan.
The company also distributes natural gas; and owns, develops,
and operates hydro, coal, nuclear, and wind electricity generating
facilities, as well as invests in other energy-related entities. It
also develops and invests in real estate.
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