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Westar Energy's CEO Discusses Q3 2011 Results - Earnings Call Transcript

Tony will offer highlights on the quarter, comment on guidance and update you on major projects. Mark will then comment on regulatory activities, EPA regulations that have been so much in the news recently and offer a few thoughts on the Kansas economy.

With that, I'll turn the call to Tony.

Tony Somma

Thanks, Bruce. Good morning, everyone. Earnings per share for the quarter were $1.15 compared with $1.2 last year. After adjusting for $0.17 of one-time items ongoing earnings per share for the quarter were $0.98, down a bit from last year. We reversed an accrual for legal claims for a $0.11 benefit, plus we picked up $0.06 from the sale of a non-utility investment that have been written off.

Our earnings release reconciles GAAP EPS to ongoing EPS. Earnings of a $100 million for the quarter after adjusting for those benefits were essentially flat compared to last year. EPS for the quarter reflects additional share issued to fund capital investments. For the quarter, gross margin increased $19 million or 4% due mostly to higher prices.

As measured by cooling degree days, weather in the quarter was warmer than last year. We estimate weather added about $0.07 a share. On the expense side, O&M for the quarter increased about $8 million or 8% excluding a $3 million increase in SPP transmission cost, most of which is covered by a revenue offset.

Major drivers for the O&N increases include $3 million at Wolf Creek due primarily to the increased amortization of this year’s refueling and maintenance outage cost, $3 million for higher maintenance at our other power plants, $2 million on our distribution system for tree trimming and other reliability activities and $2 million in property taxes which like transmission has a revenue offset.

Partially offsetting the increases was $2 million, a reduction in storm amortization expense, an item that will continue through the remainder of the year. SG&A expenses increased $23 million, due primarily to a reverse in a legal accrual. In combination O&N and SG&A excluding SPP transmission cost and the legal settlements are 4% and 8% higher than last year for the quarter and year-to-date respectively.

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