Empire District Electric Company (The) (EDE)

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The Empire District Electric Company (EDE)

Q4 2009 Earnings Call

February 5, 2010 1:00 pm ET


Jan Watson - Secretary & Treasurer

Bill Gipson - President & Chief Executive Officer

Greg Knapp - Vice President & Chief Financial Officer


Michael Goldenberg - Luminus Management

Anthony Crowdell - Jeffries

Nancy Doyle - MetLife

Phyllis Gray - Dwight Asset Management

Anthony Crowdell - Jeffries

Julian Demulan Smith - UBS



Welcome to The Empire District Electric fourth quarter and 12 months ended 2009 earnings conference call. During today’s presentation all parties will be in a listen-only mode and following the presentation the conference will be open for questions. (Operator Instructions)

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

Jan Watson

Thank you, and good afternoon. Thank you for joining us for The Empire District Electric Company’s teleconference to discuss the company’s operations and review the financial results for the fourth quarter and 12 months ended December 31, 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 and CFO. A Q-and-A session will follow the presentation.

Our press release announcing fourth quarter earnings was issued yesterday afternoon. The press release maybe accessed on our website or a copy can be emailed or faxed 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 pass code 4205928 #. 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 for 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 can differ materially from those currently anticipated by reason of the factors noted in our filings with the SEC, including our most recent Form 10-K and Form 10-Q. The earnings per share impact of revenue and expense items are all discussed on an after tax basis and compare the period referred to as the same period of the prior year.

The estimated earnings per share impact of individual items is a non-GAAP presentation and the economic substance behind our non-GAAP earnings per share measure is to present the after tax impact of significant items and components of the statement of operations on a per share basis before the impact of additional stock issuances.

We believe this presentation is useful to investors because the statement of operations does not readily show the earnings per share impact of the various components including the affect of new stock issuances, which could limit the reader’s understanding of the reasons for the earnings per share change from previous years.

This information is useful to management and we think to and investors to better understand the reasons for the fluctuation in earnings per share between the prior and current year on a per share basis.

I’d now like to introduce Bill Gipson, President and CEO.

Bill Gipson

Thanks, Jan; good afternoon, everyone, and welcome. We ended 2009 with the snow that came in just in time for a White Christmas and brought a wintry blast of cold temperatures that continued into the New Year. As a result on Monday, January 4, when most returned to work after the New Year holiday.

Our natural gas customers established an all time gas usage peak when the temperature dipped two minus seven degrees; three days later on Thursday this peak was toppled when the thermometer read minus three and the usage reached about 73.3 million cubic feet.

On the electric side Friday, January 8 was the day for records. With a temperature of minus three customers established an all-time electric demand of 1,199 megawatts with a new record setting 25,970 megawatt hours of energy that were put into the system in a 24 hour period.

Unfortunately, however this type of weather was not with this during 2009, when we experienced a mild winter and a summer that was the coolest in 30 years. As a result of the mild weather and, to a lesser degree, the general economic slowdown our consolidated earnings were $41.3 million, or $1.18 per share for 2009. This compares against 2008 earnings of $39.7 million, or $1.17 a share.

Our consolidated fourth quarter earnings were $7.9 million, or $0.22 a share compared to the same period in ‘08 when we earned $7.7 million, or $0.23 a share. At yesterday’s Board Meeting, the directors declared a quarterly dividend of $0.32 per share payable March 15 for shareholders of record as of March 1, 2010. This represents 7.1% yield against yesterday’s closing price of $18.04.

I’ll now turn our presentation over to Greg, who’ll cover the financials in detail.

Greg Knapp

Thanks, Bill. As Bill stated, we reported 2009 year end earnings of $41.3 million or earnings per share of $1.18, compared to 2008 earnings of $39.7 million or earnings per share of $1.17. I’ll get to the details in a moment, but as is customary for us, I’d like to begin by providing non-GAAP basic earnings per share reconciliation for the year on a consolidated basis.

For those of you that 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 again, that those earnings per share figures throughout the call are provided on an after-tax estimated basis.

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