Empire District Electric Company (The) (EDE)

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Id: 2188803

The Empire District Electric Company (EDE)

Q1 2014 Results Earnings Conference Call

May 02, 2014 01:00 PM ET

Executives

Jan Watson - Secretary and Treasurer

Brad Beecher - President and CEO

Laurie Delano - VP of Finance and CFO

Analysts

Presentation

Operator

Good day, ladies and gentlemen and thank you for standing by. Welcome to The Empire District Electric First Quarter 2014 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).

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

Jan Watson

Thank you. Good afternoon, and thank you for joining us for our earnings call to review the financial results for the quarter and 12 months ended March 31, 2014. Brad Beecher, President and Chief Executive Officer and Laurie Delano, Vice President of Finance and Chief Financial Officer, will discuss our first quarter and 12 months ended results and provide highlights on other key points. We also have other members of management due may answering questions following the prepared remarks.

Our press release announcing first quarter earnings was issued yesterday morning. The press release and a live webcast of this call are available on the Empire website at empiredistrict.com. The replay of the call will be available on the Empire website for 1 year.

Today's discussion will include forward-looking information and the use of non-GAAP financial measures. Slide 2 of the slide deck presents the Safe Harbor statement which accompanies our presentation materials. You should also refer to the information in our 2013 Annual Report on Form 10-K and other SEC filings concerning factors that could cause future results to differ from this forward-looking information.

Also, the estimated earnings per share impact of individual items and the presentation of gross margins are non-GAAP presentations and we would direct you to the first quarter earnings press release issued yesterday morning for further information on why we feel the non-GAAP presentation is beneficial for investors in understanding our financial results.

And with that, I'll turn the call over to Brad Beecher.

Brad Beecher

Thank you, Jan. Good afternoon, everyone, and welcome.

Today, we will discuss matters from yesterday's Board of Directors and Annual Shareholders Meeting as well as our financial results for the first quarter and 12 months ended March 31, 2014. We also will update you on other recent activities within the company.

During our Annual Meeting of shareholders held yesterday's Board Directors were re-elected to serve three years terms Kenneth Allen, William Gipson, Thomas Ohlmacher and myself.

In other businesses, shareholders ratified the appointment of PricewaterhouseCoopers as Empire's independent registered public accounting firm for the fiscal year ending December 31, 2014.

Shareholders also approved a non-binding advisory proposal regarding compensation of our named executive officers, approved and amended and restated employee stock purchase plan, approved the 2015 stock purchase plan and approved and amended and restated stock unit plan for Directors.

During the meeting yesterday, the Board declared a quarterly dividend of $0.255 per share payable June 16, for shareholders of record as of June 2, 2014. This represents a 4.2% annual yield at yesterday's closing price of $24.31.

On slide 3 of our slide presentation we’ve provided some of the highlights of the quarter and 12 month ended periods, we’ll discuss these more throughout the call.

In summary, great weather makes for great results, we reported first quarter 2014 earnings of $20.9 million, or $0.48 per share. This compares to the same period in 2013 when earnings were $12.6 million or $0.30 per share. For the 12 month ended period March 31, 2014 earnings were $71.7 million or a $1.67 per share compared to March 31, 2013 12 month earnings of $58.5 million or a $1.38 per share for the same period last year.

Temperatures were considerably colder than the normal in the comparable 2013 quarter. In fact first quarter 2014 temperatures across our service territory were the coldest in over 30 years. This cold weather had a significant impact on first quarter results driving a 7.6% increase in kilowatt hour sales.

As scheduled on March 1, the Southwest Power Pool and its market participant implemented the integrated marketplace. The marketplace functions as a centralized dispatcher matching offers to sale and bids to purchase power. 90% to 95% of all next day generation needed throughout the Southwest Power Pool territory is being cleared through the marketplace. The marketplace showed positive benefits for our customers immediately. The net financial impact of these transactions will be processed through our fuel adjustment mechanisms.

In the past 10 years, we have weathered 9 major storms including the two ice storms in 2007, the May 2009 the Derecho that interrupted service for over half of our customers and the massive Japan Tornado in May 2011. With each and every storm Empire employees stepped up followed our restoration plan and return customer to service as quickly as they safely could.

So when a Tornado hit the Kansas and Quapaw, Oklahoma communities last Sunday evening, we were well rehearsed to respond and our customers were ready to show the resilient as they dealt with aid their neighbors. At the height of the storm, we had approximately 6,000 customers without service. We lost approximately 29 transmission structures and 200 distribution poles.

We called on crews from other areas of the company and brought in 25 contract linemen to help with transmission line repairs. As a result, we had approximately 135 linemen working on restoration activities by Monday morning.

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