Empire District Electric Company (The) (EDE)

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Empire District Electric (EDE)

Q1 2013 Earnings Call

April 26, 2013 1:00 pm ET


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


Julien Dumoulin-Smith - UBS Investment Bank, Research Division

Neil Kalton - Wells Fargo Securities, LLC, Research Division

Timothy M. Winter - Gabelli & Company, Inc.



Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Empire District Electric First Quarter 2013 Earnings Conference Call. [Operator Instructions] I would now like to turn conference over to our host, Ms. Jan Watson. Please go ahead.

Janet S. Watson

Good afternoon, Michael. 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 and 12 months ended March 31, 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 first quarter earnings was issued yesterday morning. A replay of the call will be available for 2 weeks at (800) 406-7325 passcode 4614060#.

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 may 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 of this call, which is available on our website and also to our most recent Form 10-K 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 matters from the board and annual shareholders' meetings conducted yesterday, as well as our financial results for the first quarter and 12 months ending March 31, 2013. We will also update you on other recent company activities.

During their meeting yesterday, the board declared a quarterly dividend of $0.25 per share, payable June 17, for shareholders of record as of June 3. This represents a 4.3% annual yield at yesterday's closing price of $23.20.

As shown on Slide 3, we reported first quarter 2013 earnings of $12.6 million or $0.30 per share. This compares to the same period in 2012 when earnings were $9.8 million or $0.23 per share. The primary driver of the increase was the return of near-normal weather, resulting in a 10% increase in kilowatt hour sales compared to last year. We also continue to see a favorable increase in electrical -- electric customer counts. The customer count in the Joplin area increased by about 800 customers year-over-year and our systemwide electric system count is now less than 100 customers below the pre-May 2011 tornado levels. The positive impact of weather and customer counts was somewhat offset by a regulatory pretax write-off of $3.6 million resulting from our Missouri rate case stipulation. Laurie will give you more details on the write-off in her financial overview. We also experienced higher O&M expenses during the quarter.

For the 12-month period ending March 31, 2013, earnings were $58.5 million or $1.38 per share compared to March 31, 2012, 12-month earnings of $52.9 million or $1.26 per share for the same period last year.

In other news from yesterday's annual meeting, shareholders reelected board members Ross Hartley, Herbert Smith -- Schmidt and James Sullivan to 3-year terms. They also ratified the appointment of PricewaterhouseCoopers LLP as Empire's independent registered public accounting firm for the fiscal year ending December 31, 2013, and passed the non-binding advisory proposal approving the compensation of Empire's named executive officers as disclosed in the proxy statement.

The shareholder proposal for a report on actions the company is taking or could take to reduce risk through its energy portfolio by presenting all cost-effective energy efficiency resources was soundly rejected by an 86% to 14% margin.

During our call with you in February, we reported we had filed a unanimous stipulation and agreement with the Missouri Public Service Commission for changes in rates for our electric customers.

Turning to Slide 4. This agreement was approved by the Missouri Public Service Commission and new rates were put in place on April 1. The rates will allow us an annual increase in base revenues of about $27.5 million. You will recall our request had been for $30.7 million. Our total company rate base as of 12/31/12 was approximately $1.3 billion.

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