Avista Corporation (AVA)
Q3 2012 Earnings Call
November 6, 2012 10:30 am ET
Jason Lang – Investor Relations
Scott L. Morris – Chairman of the Board, President and Chief Executive Officer
Mark Thies – Senior Vice President and Chief Financial Officer
Kelly Norwood – Vice President, Avista Corp., Vice President of State and Federal Regulations, Avista Utilities
Dennis Vermillion – Vice President, Avista Corp., President, Avista Utilities
Brian Russo – Ladenburg Thalmann & Co.
Michael Klein – Sidoti & Company
James von Riesemann – UBS Investment Bank
Timothy Yee – KeyBanc Capital Markets
Previous Statements by AVA
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» Avista Corp. Q2 2010 Earnings Call Transcript
Thank you, John and good morning, everyone. Welcome to Avista's third quarter 2012 earnings conference call. Our earnings were released pre-market this morning, and the release is available on our website at avistacorp.com.
Joining me this morning are Avista Corp's Chairman of the Board, President and CEO, Scott Morris; Senior Vice President and CFO, Mark Thies; Senior Vice President and the President of Avista Utilities, Dennis Vermillion; Vice President of State and Federal Regulation, Kelly Norwood and the Vice President, Controller and Principal Accounting Officer, Christy Burmeister-Smith.
I’d like to remind everyone that some of the statements that will be made today are forward-looking statements that involve assumptions, risks, and uncertainties which are subject to change. For reference to the various factors, which could cause actual results to differ materially from those discussed in today's call, please refer to our Form 10-K for 2011 and our Form 10-Q for the second quarter of 2012, which are available on our website.
To begin this presentation, I'd like to recap the financial results presented in today's press release. Our consolidated earnings remain unchanged from those initially reported on our October 23rd call. Our consolidated earnings were $0.10 per diluted share for the third quarter of 2012 compared to $0.18 for the third quarter of 2011. On a year-to-date basis our consolidated earnings were $1.06 per diluted share for 2012 compared to $1.30 for 2011.
Now, I'll turn the discussion over to Scott Morris.
Scott L. Morris
Thank you, Jason, and before I start I just want to reach out to all of our folks on the phone that are from the East Coast and after watching just that devastating hurricane hit the East Coast, our thoughts and prayers are certainly been with you. And I hope that you and your family, and friends are safe and your property wasn't overly damaged than that you all are on the way to a good recovery. And I know that the industry is working really hard to get, all the energy restored on the East Coast. So our thoughts are certainly have been with you during this very difficult time.
As we initially reported on our October 23rd call, our results for the third quarter and forecast results for the reminder of the 2012 were below our expectations. As such we lowered our consolidated earnings guidance for the year, this was primarily due to weak results at Ecova's as well as losses at our other non-utility businesses.
We continue to expect our utility results to be at the lower end of our original guidance for 2012 largely due to retail loads are being lower than we originally anticipated. We are well-positioned for the future at our utility, which contributes over 90% of our consolidated earnings. We are implementing certain programs to slow the pace of growth and our operating costs and achieve long-term sustainable cost savings.
Such measures include evaluating all operating and maintenance activities, reprioritizing projects and implementing a voluntary severance program. At Ecova, revenues were up in 2012 primarily due to acquisitions. We are expecting organic revenue growth of 5% for 2012 compared to organic revenue growth of 13% in 2011. Operating expenses are up due to the addition of employees and other fixed infrastructure to support anticipated higher revenue growth, which do not fully materialize in 2012.
Mark is going to provide some more details on Ecova results for 2012 in just a few minutes. To maintain service reliability at our utility and meet the energy needs of our customers, we continue to make significant capital investments generation transmission and distribution. Utility CapEx was $178 million for the first nine months of 2012 out of a capital budget of $257 million. We expect utility CapEx to be about $260 million in each of 2013 and 2014.
As discussed in our earlier call, we reached a Multi-Party Settlement and Washington in general rate case in October, which is pending Washington Commission approval and we found electric and natural gas generate cases in Idaho. We attract three key economic indicators affecting our three district metropolitan areas and our service territories Spokane, Coeur d'Alene and Medford. The key indicators are employment change, unemployment rates and foreclosure rate.
On a year-over-year basis, September 2012 employment indicators are positive for all three service areas. We noted that unemployment rates are lower in all three areas and foreclosure rates have decreased compared to prior period.
Our service area economy has been recovering more slowly than the United States as a whole. And in 2012, we continue to expect economic growth in our service area to be lower as compared to the rest of the nation.