Empire District Electric Company (The) (EDE)

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The Empire District Electric Company (EDE)

Q3 2009 Earnings Call

October 23, 2009 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 Crowdell - Jeffries & Company

Phyllis Gray - Dwight Asset Management

Billy Haggstrom - Catapult Capital

Julian Demulan Smith - UBS



Good morning, ladies and gentlemen. Thank you for standing by. 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) At this time, I would like to turn the conference over to Jan Watson. Please go ahead, Madam.

Jan Watson

Thank you. Good afternoon and 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 third quarter and 12 months ended September 30, 2009. A live webcast of this call is available on the Empire website at www.empiredistrict.com.

Giving our presentation this afternoon will be Bill Gipson, President and CEO; and Greg Knapp, Vice President of Finance and CFO. A Q&A session will follow the presentation.

Our press release announcing third quarter earnings was issued yesterday afternoon. The press release may be accessed on our website or 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 800-406-7325 and entering passcode 4171947#. 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 in each case can differ materially from those currently anticipated in such statements by reason of the 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 as 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.

Bill Gipson will now begin our presentation.

William L. Gipson

Thanks, Jan. Today we intend to discuss our financial results for the third quarter and 12 months ended September 30, 2009. We will also bring you up to date on a few other recent company activities.

At our meeting yesterday, the board of directors declared a quarterly dividend of $0.32 per share payable December 15th for shareholders of record as of December 1 and this represents a 6.9% annual yield at yesterday’s closing price of $18.50.

Yesterday we reported third quarter 2009 consolidated earnings of $14.8 million or $0.43 per share. This is down from the same period of 2008 when earnings were $20.2 million, or about $0.60 per share. And as I am sure you have read in our press release yesterday, extremely mild weather on our electric property was the driver.

For the 12 month period ending September 30, 2009, earnings were $41.1 million, or $1.20 per share, and this compares to September 30, 2008 12 month ended earnings of $31.6 million, or $0.95 per share.

I’ll now turn it over to Greg who will further cover the financial details.

Gregory A. Knapp

Thanks, Bill. As Bill stated, we reported third quarter earnings of $14.8 million, or earnings per share of $0.43 a share compared to 2008 third quarter earnings of $20.2 m, or earnings per share of $0.60 basic and $0.59 diluted. I’ll get into the details in a moment but as customary for us, I’d like to begin by providing a non-GAAP basic earnings per share reconciliation for the quarter on a consolidated basis. For those of you that have read our press release or have it in front of you, that will be the earnings per share reconciliation I’ll follow. I should remind you once again that these earnings per share figures throughout the call are provided on an after-tax estimated basis. The basic earnings per share September 30 of 2008 was $0.60. To adjust from that positive or negative going forward here, revenues in the electric segment would be a negative. They were down $0.19 per share approximately. Revenues in the gas segment down about $0.02. On the other segment would be no impact. On the expense side, fuel and purchased power costs actually were down or it would be an increase to the earnings per share calculation of $0.06. Cost of natural gas sold and transported would also be an increase of $0.03. Operating expenses on the electric segment would be a negative $0.01. Operating expenses on both the gas and the other segments would be flat with no impact. [inaudible] and repair costs would be a negative takeaway from this of $0.02. Depreciation and amortization and the change in effective income tax rates would each be a positive penny a piece. Other income and deductions would be a negative penny. Interest charge is a negative $0.02, and the [inaudible] effect of additional shares, approximately a negative penny, so if you go through the pluses and minuses, that should move you from the $0.60 down to the $0.43.

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