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NV Energy, Inc. (NVE)
Q1 2009 Earnings Call Transcript
April 29, 2009 10:00 am ET
Britta Carlson – Manager, Investor and Shareholder Relations
Bill Rogers – Corporate SVP, CFO and Corporate Treasurer
Michael Yackira – President and CEO
Paul Patterson – Glenrock Associates
Steve Fleishman – Catapult
Emily Christie – RBC Capital Markets
Greg Gordon – Citigroup
Robert Howard – Prospector Partners
Amit Tagore [ph] – Deutsche Bank
Neil Mehta [ph] – Goldman Sachs
Brian Russo – Ladenburg Thalmann
Maurice May – Power Insights
Dan Eggers – Credit Suisse
Jonathan Arnold – Merrill Lynch
Chris Bassett [ph] – Decade [ph]
Chris Ellinghaus – Shields & Company
Previous Statements by NVE
» NV Energy, Inc., Q3 2009 Earnings Call Transcript
» NV Energy, Inc. Q4 2008 Earnings Call Transcript
» Sierra Pacific Resources Q3 2008 Earnings Call Transcript
I would now like to turn the conference over to Britta Carlson. Please go ahead.
Thank you, Cynthia. Good morning and thank you for joining us to review NV Energy’s results for the first quarter 2009. In addition to the press release that was issued over the Newswire this morning, we expect to file our first quarter 2009 Form 10-K with the SEC next week.
I would also like to remind you that comments we make during this call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the future performance of NV Energy, Inc. and its subsidiaries, Nevada Power Company and Sierra Pacific Power Company, both doing business as NV Energy.
These statements are current expectations and as such are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations. These risks and uncertainties include the factors discussed in the company's Form 10-K for the year ended December 31, 2008. I would also like to mention that reconciliations of certain non-GAAP financial information presented during today's call can be found in our earnings press release, which was posted on our company Web site at www.nvenergy.com.
With me this morning are Michael Yackira, President and Chief Executive Officer, and Bill Rogers, Corporate Senior Vice President and Chief Financial Officer. Bill will begin this morning by reviewing our 2009 results and discuss key financial drivers and trends. Michael will then provide an update on the corporate strategy, including recent industry developments.
I will now turn the call over to Bill Rogers.
Thanks, Britta. Good morning everyone and thank you for joining us.
In our earnings press release, we included certain financial highlights from our company's income statements and balance sheets. Rather than repeat our financials, I will discuss key drivers and trends that affect our earnings. As released this morning, NV Energy reported a loss $22 million or $0.09 per share in the first quarter of 2009 as compared with earnings of $24 million or $0.10 per share in the first quarter of 2008. The reduction in earnings in the first quarter of 2009 versus the first quarter of 2008 was in order due to; first, higher operating, maintenance, depreciation, and interest expenses largely associated with recent investments in power plants; second, reduced energy sales volume; and third, lower other income. I will discuss each of these in order in more detail.
As I just mentioned, the higher expenses are largely associated with the completed construction of the Clark Peakers and the purchase of the Walter M. Higgins generating station and are not currently in rates.
These assets and others are part of the general rate case that is currently before the Public Utilities Commission of Nevada and we are expecting decision in that case late in June. The impact of not recovering end rates increased capital, depreciation, operating and maintenance expenses associated with these capital additions was approximately $0.10 per share in the first quarter. As mentioned in prior calls, the near term earnings dilution of these investments will continue through the second quarter of this year. In addition, higher pension expenses reduced earnings by approximately $0.02 per share on a quarter to quarter basis. The higher pension expense will continue throughout 2009 and is not included in current general rate case.
With respect to our revenue, while we are pleased that the gross margin increased approximately $7 million or 3% our retail electric sales decreased throughout the state by 6% in the first quarter 2009 compared to 2008. The reduction in megawatt hour sales was primarily due to milder winter weather throughout our entire state and was most visible in residential sales volume. The quarter to quarter earnings impact of this volume sales reduction was approximately $0.05 per share.
Our NV Energy southern territory contributed 55% of consolidated gross margin and the electric and gas business as of NV Energy’s northern service territory contributed 40% and 5% respectively. Residential customer growth in the south for the first quarter of 2009 was approximately the same as we experienced in all of 2008 with a 0.6% increase in customers. In the north there was no material change in our customer count.
Within other income, we had the benefit of recognition of several one-time items in the first quarter of 2008, including a settlement with Calpine, the reinstatement of previously disallowed costs related to our Pinon Pine investment, and the reversal of previous provisions for bad debt allowance. In aggregate, these one-time items totaled approximately $7.5 million after tax or $0.03 per share in first quarter 2008.