Empire District Electric Company (The) (EDE)

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The Empire District Electric Company (EDE)

Q4 2012 Earnings Call

February 15, 2013, 01:00 pm ET

Executives

Jan Watson - Secretary, Treasurer

Brad Beecher - President & CEO

Laurie Delano - VP, Finance & CFO

Analysts

Tim Winter - Gabelli & Company

Robert Howard - Prospective Partners

Peter Hark - Zimmer Lucas Partners

Jim von Riesemann - UBS

Presentation

Operator

Ladies and gentlemen thank you for standing by. Welcome to The Empire District Electric Fourth Quarter 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session and instructions will be provided. (Operator Instructions) I would like to remind everyone that this conference call is being recorded today Friday, February 15, 2013 at 01:00 PM Eastern.

And I would now like to turn the conference over to Jan Watson. Please go ahead.

Jan Watson

Thank you, Luke. Good afternoon everyone and welcome to The Empire District Electric’s earnings call for the quarter and year ending December 31, 2012. A live webcast of this call is available on The Empire website at empiredistrict.com.

With me today are Brad Beecher, President and Chief Executive Officer, and Laurie Delano, Vice President and Chief Financial Officer. Our press release announcing fourth quarter earnings and our earnings guidance for 2013 was issued yesterday afternoon. A replay of the call will be available for two weeks at 800-406-7325, passcode 4593126#.

Before I turn the call over to Brad, I need to remind you that during the course of the call some of the comments we make may contain forward-looking statements as defined by the Securities and Exchange Commission and there are a number of uncertainties inherent in such comments. Although we believe that our expectations and beliefs are based on reasonable assumptions, actual results may differ materially. We direct you to slide two of the investor presentation on our website and our most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission for a list of some of the factors that could cause future results to differ materially from our expectations.

Also for further clarification, the earnings per share impact of revenue expense are discussed on an after-tax basis and the estimated earnings per share impact of individual items and the presentation of gross margins are non-GAAP presentations. We believe these to be useful to investors showing the impact of the various components on earnings per share and analyzing changes in performance from one period to the next. These may not be comparable to other companies or more useful than the GAAP presentation included in the income statement and is not intended to be an alternative to GAAP earnings per share as a measure of operating performance or any other measure of financial performance presented in accordance with GAAP.

I will now turn the call over to Brad Beecher.

Brad Beecher

Thank you, Jan. Good afternoon everybody and welcome. Today, we discuss our financial results for the fourth quarter and 12 months ended December 31, 2012, and update you on various company activities.

As we announced on February 7th following the Board of Directors’ meeting, the Board declared a quarterly dividend of $0.25 per share payable March 15, 2013, for shareholders of record as of March 1st. This represents a 4.6% indicated annual yield at yesterday’s closing price of $21.61.

Yesterday, we reported consolidated fourth quarter 2012 earnings of $9.6 million or $0.23 per share. This compares to the same period in 2011 when earnings were $8.7 million or $0.21 per share. Heating Degree Days for the quarter were up about 1.8% over last year, but remain 0.6% lower than the 30 year norm.

For the 12 months period ending December 31, 2012 earnings were $55.7 million or $1.32 per share compared to December 31, 2011, 12 month earnings of $54.9 million or $1.31 per share. Increase in customer accounts during the year were offset by milder weather and changes in customer usage behavior leading us to a 3.4% reduction in electric sales when compared to 2011. Customer accounts grew by more than 1,400 or 0.85% placing us only about 400 customers behind pre-tornado levels. Offsetting this customer growth was primarily the impact of mild weather.

Cooling Degree Days were 2.9% less than 2011, though they were 27% above the 30-year normal. Heating Degree Days [were less thereof] was a dominant weather factor in 2012. We experienced Heating Degree Days 21% lower than both 2011 and a 30-year average. In fact, we recorded the lowest Heating Degree Day total in at least the last 60 years. Our 2012 results were also impacted in a positive manner by decreased depreciation expenses and increased electric rates. These positive results were tampered by increases in operating expenses in our electric business.

I will now turn the call over to Laurie for details of our financials.

Laurie Delano

Thank you, Brad. Good afternoon everybody. As we walk through the details of our financial results, comparing our earnings per share 2011 results of $1.31 to our 2012 results of $1.32 per share, I will be referring to our webcast presentation slides to talk about the various impacts year-over-year.

As usual, I would like to begin by providing non-GAAP basic earnings per share reconciliation for the year on a consolidated basis. For those of you who have our press release in front of you that will be the earnings per share reconciliation I will follow. For those of you looking at our slides, this begins on slide four. And as a reminder, the earnings per share figures throughout the call are provided on an after-tax basis.

Read the rest of this transcript for free on seekingalpha.com