Empire District Electric Company (The) (EDE)

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The Empire District Electric Company (NYSE:EDE)

Q2 2014 Earnings Conference Call

August 1, 2014 01:00 PM ET


Bradley P. Beecher – President and Chief Executive Officer

Laurie A. Delano – Chief Financial Officer and Vice President - Finance


Julien Dumoulin-Smith – UBS Investment Bank



Good day everyone and welcome to The Empire District Electric Company Second Quarter 2014 Earnings Call. At this time, I'd like to turn the conference over to Jan Watson. Please go ahead ma’am.

Janet S. Watson

Thank you. Good afternoon and thank you for joining us for our earnings call to review the financial results for the second quarter and 12-months ended June 30, 2014. Brad Beecher, President and CEO, and Laurie Delano, Vice President of Finance and CFO, will discuss our financial results and provide highlights on other key points. We also have other members of management who may assist in answering questions following the prepared remarks.

Our press release announcing second quarter earnings was issued yesterday afternoon. 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 one 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, the first quarter 10-Q 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. Please see the second quarter earnings press release for further information on why we feel the non-GAAP presentation is beneficial for investors in understanding our financial results.

I’ll now turn the call over to Brad Beecher.

Bradley P. Beecher

Thank you, Jan. Good afternoon everyone, and thank you for joining us. Today, we will discuss our financial results for the second quarter year-to-date and 12-months ended June 30, 2014 period. We will also update you on other recent company activities.

During our meeting yesterday, the Board of Directors declared a quarterly dividend of $0.255 per share payable September 15, 2014 for shareholders of record as of September 02. This dividend represents a 4.2% annual yield at yesterday’s closing price of $24.51 per share.

During the second quarter, the favorable weather that drove higher earnings in the first quarter retreated. We transitioned into a beautiful and weather normal hazard spring. As a result, second quarter results were pretty much on track with expectations. We reported second quarter 2014 earnings of $11.2 million or $0.26 per share. This compares to the same period in 2013 when earnings were $11.7 million or $0.27 per share.

For the 12 month period ending June 30, earnings were $71.3 million or $1.66 per share compared to the June 30, 2013 period 12 month earnings of $59.5 million or $1.40 per share. Laurie will provide more details on our financial results in her discussion.

On May 28, 2014, we filed a notice of intended case filing with the Missouri Public Service Commission stating our intention in the file for new electric rates some time after August 01. Our investment in the Asbury power plant is driving this case, the filing of which follows the path we laid out in our ongoing environmental complaint plan. We will time the filing to capture our Asbury construction cost in the true up period of the case. I’ll talk more about Asbury construction progress in a few minutes.

In Arkansas on December 03, 2013, we filed for a general increase of $2.2 million or 18%. We have reached an agreement with the parties in this case for an increase of $1.375 million or about 11%. The increase is based on a 9.3% return on equity and includes recovery of transmission expenses including those related to Plum Point through the transmission rider. A hearing on the settlement agreement was held July 22, 2014, this case is currently pending before the commission.

I will now turn the call over to Laurie for a detailed discussion of the financial results.

Laurie A. Delano

Thanks, Brad, and good afternoon everybody. As we review our second quarter 2014 earnings per share results of $0.26 per share compared to 2013 results of $0.27, I’ll refer to our webcast presentation slide to talk about the various impacts to the quarter.

As usual, the slides provide a consolidated non-GAAP basic earnings per share reconciliation for the quarter, year-to-date and 12 month ended periods. This information augments the earnings per share reconciliation we provided in our press release. The earnings per share numbers throughout the call are provided on an after tax estimated basis. As Brad mentioned, second quarter results were relatively flat compared to the 2013 quarter. However, our year-to-date and 12-month ended results continue to be positively impacted by higher customer electric grades and cold weather during the 2014 heating season.

Slide 4 provides a roll forward of the 2013 second quarter earnings per share of $0.27 million to the 2014 quarter results of $0.26 per share. When we look at the second quarter compared to last year, an electric revenue increase of approximately $13.8 million, netted with an increase in electric fuel and purchase power expense of $12.4 million resulted in an increase in electric gross margin of approximately $1.4 million are about $0.02 million per share. The margin callout box on Slide 4 provides a breakdown of our estimates of the various components of this earnings per share impact on gross margin.

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