Empire District Electric Company (The) (EDE)

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The Empire District Electric Company (EDE)

Q3 2008 Earnings Call

October 24, 2008 1:00 pm ET


Jan Watson – Secretary & Treasurer

William L. Gipson – President, Chief Executive Officer & Director

Gregory A. Knapp – Chief Financial Officer & Vice President Finance


[Anthony Crawdell] – Jefferies & Company

Phyllis Gray - Dwight Asset Management

Nancy Doyle - MetLife

Selman Akyol - Stifel Nicolaus & Company, Inc.

[Billy Hagstrom] – Catapult Capital



Welcome to the Empire District Electric third quarter earnings conference call. During today’s presentation, all parties will be in a listen only mode. Following the presentation the conference will be opened for questions. (Operator Instructions) This conference is being recorded today Friday, October 24, 2008. I would now like to turn the conference over to Jan Watson.

Jan Watson

Welcome to the Empire District Electric Company’s third quarter 2008 earnings conference call. A live webcast of this call is also available on the Empire website at www.EmpireDistrict.com. Giving our presentation this afternoon are Bill Gipson, President and CEO of Empire District and Greg Knapp, Vice President and CFO.

A Q&A session will follow the presentation. Our press release announcing third quarter earnings was issued yesterday evening. The press release may be accessed on our website our a copy can be emailed or faxed to you by calling 417-625-6142. A telephonic replay of the call will be available for two weeks by dialing 800-405-2236 and entering passcode 11121116#. The webcast will also be available for replay on our website.

As always, certain matters discussed in this call are forward-looking statements intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. Such statements address future plans, objectives, expectations and events or conditions concerning various matters. Actual results can differ materially from those currently anticipated by reasons of factors noted in our filings with the SEC including our most recent Form 10K and Form 10Q.

The earnings per share impact of revenue and expense items are all discussed on an after tax basis and compare the period referred to with the same period of the prior year. The estimated earnings per share impact of individual items is a non-GAAP presentation however, we believe this information is useful in understanding the change in the company’s earnings between periods.

I’d now like to introduce Bill Gibson, President and CEO of the Empire District Electric Company.

William L. Gipson

Today we’ll discuss the financial results for the third quarter and 12 months ended September 30 and then we’ll also update you on a few other recent events. At yesterday’s meeting our board of directors declared a quarterly dividend of $0.32 per share payable December 15th for shareholders of record as of December 1. This represents about a 6.9% yield at yesterday’s closing price of $18.52.

We reported consolidated third quarter 2008 earnings of $20.2 million or about $0.60 per share compared to the same period in 20079 when earnings were $23.3 million or $0.76 per share. Mild weather or to a lesser degree modest customer growth were the major drivers for this decline in earnings. For the 12 months ended September 30, earnings were $31.6 million or $0.95 per share and that compares to September 30, 2007 12 months ended earnings of $41.8 or $1.38 per share.

I’m going to turn it now over to Greg to give you the details on that.

Gregory A. Knapp

As Bill stated we reported 2008 third quarter earnings of $20.2 million or basic earnings per share of $0.60 and diluted earnings per share of $0.59 compared to 2007 earnings of $23.3 million or basic and diluted earnings per share of $0.76. I’ll get in to the details in a moment but as customary for us I’d like to first begin by providing a non-GAAP basis earnings per share reconciliation for the third quarter on a consolidated basis.

For those of you who have read our press release or have it in front of you, that will be the earnings per share reconciliation I’ll follow. I’d remind you again that these earnings per share figures throughout the call are provided on an after tax estimated basis. Earnings per share at September 30, 2007 for the quarter were $0.76.

Now, adding and subtracting from that number to get to the current quarter earnings per share would be first electric segment revenues that would subtract from that by $0.10, gas segment and other segment revenues that would add by $0.01, expenses, electric fuel and purchase power expenses that would be an addition of $0.01, the cost of natural gas sold and transported would be -$0.02 and then operating expenses on the electric side and operating expenses on the gas side each would be a subtraction of $0.01 each and our maintenance and repairs cost would be a subtraction of $0.01.

The next change of significance would be interest charges that would be a subtraction of $0.02 while AFUDC increased this quarter over last by $0.03 per share and lastly in this reconciliation would be the diluted effect of additional shares that would be a negative $0.06. So all the positives and minuses there move you from the $0.76 the third quarter in 2007 to this quarter.

Now, I’ll review the results by category in more detail starting with electric revenues. As we noted in yesterday’s press release our electric revenues were lower in the third quarter as a result of much cooler weather compared to last year. In fact, part of the way we estimate the impact of weather is determining the number of cooling degree days and that comparison we had almost 22% fewer cooling degree days in the 2008 third quarter compared to 2007.

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