Great Plains Energy Incorporated (GXP)
Q3 2009 Earnings Call Transcript
October 30, 2009 9:00 am ET
Michael Cline - VP, IR and Treasurer
Mike Chesser - Chairman and CEO
Bill Downey - President and COO
Terry Bassham - EVP, Finance & Strategic Development and CFO
Michael Lapides - Goldman Sachs
Michael Goldenberg – Luminus Management
Dan Lifshitz – Fir Tree Partners
Waldo Matthews [ph] – CDP, U.S.
Timothy Yee – KeyBanc
Previous Statements by GXP
» Great Plains Energy, Inc. Q2 2009 Earnings Call
» Great Plains Energy Incorporated F1Q09 Earnings Call Transcript
» Great Plains Energy Q4 2008 Earnings Call Transcript
Thank you, Amanda and good morning, everyone. Welcome to Great Plains Energy's third quarter conference call. Joining me on the call this morning are Mike Chesser, Chairman and CEO of Great Plains Energy and Kansas City Power & Light, who will provide a strategic overview; Bill Downey, President and COO of Great Plains Energy and Kansas City Power & Light, who will discuss KCP&L Operations and Terry Bassham, Executive Vice President and CFO of Great Plains Energy, who will provide details on Great Plains Energy's third quarter 2009 financial results. Also joining us on the call today is John Marshall, Executive Vice President, Utility Operations, who will be available for questions.
Since some of our remarks will be forward-looking, I must remind you of the uncertainties inherent in such comments. The second slide included in this webcast and the disclosure in our SEC filings, contain a list of some of the factors that could cause future results to differ materially from our expectations.
Before I hand the call to Mike, I have three items to highlight for you. First, we filed our third quarter 10-Q after the market close yesterday. It is available along with supplemental financial information regarding the quarter in today's webcast slides on the main page of our website at www.greatplainsenergy.com.
Second, I want to again remind everyone that we closed the acquisition of Aquila, which we now refer to at GMO on July 14th, 2008. Therefore, there were two fewer weeks of GMO results in the 2008 quarterly period, compared to the 2009 third quarter and for the year-to-date period GMO is not reflected in the 2008 numbers until July 14th, 2008.
Third, as a reminder, Great Plains Energy provides the financial information in its earnings releases in accordance with GAAP. In prior years, the company also provided core earnings, a non-GAAP measure that excluded the effects of discontinued operations, certain unusual items and mark-to-market gains and losses on energy contracts.
The company believes that in prior periods, core earnings provided a meaningful indicator of results that was comparable among periods, because it excluded the effects of these items. Given that the majority of the financial statement impacts of Strategic Energy ceased at the end of last year, beginning in the first quarter of 2009, the company no longer provides core earnings.
I'd now like to introduce Mike Chesser, Chairman and CEO of Great Plains Energy and Kansas City Power & Light.
Thanks, Michael and good morning everyone. Thank you for joining us today. I know there is a lot of earnings activity in the run up to the EEI Conference next week, so we'll keep our comments brief this morning.
By now I'm sure you've read yesterday afternoon's press release announcing our third quarter earnings and the comparison of 2009 earnings guidance rate to $1.10 to $1.18 per share. Our third quarter results were a major contributor tour decision to lower the top end of the guidance range.
The story for us in the quarter revolved around much more core of a normal summer weather and continued energy consumption pressures from the recession. We estimate these factors reduced top line revenue by nearly $35 million compared to last year's quarter. These forces were definitely challenging and beyond our control in many ways.
We worked hard to mitigate some of their impact through process improvement, disciplined expense management. Our progress throughout the year gives us confident in keeping the low end of our guidance range intact. Terry will provide you the details on the numbers and his comments, however I did want to touch a couple overarching factors to help put the quarter and our outlook in context.
As this slide depicts, the foundation of Great Plains Energy is our core regulated electric utility business. We serve Kansas City and the surrounding area since the late 19th century and have core fundamentals that will endure and provide the platform for growth once market conditions begin to improve. So, when may that happen?
As Terry will discuss, the pace of overall energy consumption declined we experienced in the third quarter, exceeded what we were seeing earlier in the year. However, we are seeing some signs that the economy in our region is beginning to level off. As an example, we've seen an upward trend in building permits over the past few months.
Just yesterday, the Mid-America Regional Council reported that they expect to see the economy in the Kansas City region return to pre-recession levels somewhere between mid-2010 and mid-2011. But there are still a lot of unknowns and we are cautious about economic recovery in the near term