Empire District Electric Company (The) (EDE)

EDE 
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The Empire District Electric Company (EDE)

Q2 2013 Earnings Call

July 26, 2013 1:00 pm ET

Executives

Janet S. Watson - Secretary and Treasurer

Bradley P. Beecher - Chief Executive Officer, President and Director

Laurie A. Delano - Chief Financial Officer and Vice President of Finance

Analysts

Michael Goldenberg - Luminus Management, LLC

Andrew Levi

Julien Dumoulin-Smith - UBS Investment Bank, Research Division

John Hanson

Presentation

Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Empire District Electric Second Quarter 2013 Earnings Conference Call. [Operator Instructions] The conference is being recorded today, July 26, 2013.

I would now like to turn the conference over to Ms. Jan Watson. Please go ahead, ma'am.

Janet S. Watson

Thank you. Good afternoon. Thank you for joining us for the Empire District Electric Company's teleconference to discuss the company's operations and to review the financial results for the first quarter -- or second quarter and 12 months ended June 30, 2013. 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 second quarter earnings was issued yesterday afternoon. A replay of the call will be available for 2 weeks at (800) 406-7325, passcode 4630133#.

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 2 of the slide deck for this call, which is available on our website and to our most recent Form 10-K and 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 and expense are discussed on an after-tax basis, and the estimated earnings per share impact of individual items and the presentation of gross margin 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 now turn the call over to Brad Beecher.

Bradley P. Beecher

Thank you, Jan. Good afternoon, everyone, and welcome. Today, we will discuss the financial results from the second quarter and 12 months ended June 30, 2013 period and other recent company activities.

During their meeting yesterday, the board declared a quarterly dividend of $0.25 per share payable September 16, 2013, for shareholders of record as of September 3. This represents a 4.2% annual yield at yesterday's closing price of $23.93.

As shown on Slide 3, we reported consolidated second quarter 2013 earnings of $11.7 million or $0.27 per share. This compares to the same period in 2012 when earnings were $10.7 million or $0.25 per share. The primary drivers for the quarter were one full quarter of increased Missouri electric rates, offset by cool weather during early June that delayed the start of cooling season and higher electric operating depreciation and amortization expenses. For the 12-month period ending June 30, 2013, earnings were $59.5 million or $1.40 per share compared to $54.4 million or $1.29 per share for the same period last year.

On July 15, we topped the $1 billion market capitalization level for the first time in our history. At yesterday's market close, our market cap stood around $1.02 billion. As communicated in February of this year, our full year earnings guidance range is $1.26 to $1.43 per share.

I will now turn the call over to Laurie for a discussion of the financial details.

Laurie A. Delano

Thank you, Brad, and good afternoon, everybody. As we review our second quarter 2013 earnings per share results of $0.27 compared to our 2012 results of $0.25, I'll continue to refer to our webcast presentation slides to talk about the various impacts to the quarter. As usual, I'll provide a consolidated non-GAAP basic earnings per share reconciliation. For those of you who have our press release in front of you, that will be the earnings per share reconciliation I'll follow. And for those of you looking at our slides, the earnings per share illustration begins on Slide 4. As indicated earlier, these earnings per share figures throughout the call are provided on an after-tax estimated basis.

As Slide 4 illustrates, our total gross margin, which we define as revenues less fuel and purchase power costs, increased an estimated $0.10 per share during the quarter. Increases in operating and maintenance expenses of approximately $2.9 million reduced earnings per share about $0.05. Depreciation and amortization expense increased approximately $2.4 million due to higher levels of plant in service and increased depreciation rates resulting from our recently settled Missouri rate case. That all decreased earnings per share another $0.04.

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