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AGL Resources CEO Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: GAS

Turning briefly to slide four, you can see that our year-to-date financial results for the first two quarters. Diluted EPS adjusted for Nicor expenses was $1.47, down from $1.96 for the same period last year. The primary reason for the declines are again, the unprecedented warmer than normal weather which had a $0.13 impact on our earnings results year-to-date.

Weaker results at the wholesale business and increases in the number of shares outstanding following the completion of merger, these were partially offset by the addition of the Nicor businesses.

On slide five, you can see that approximately 77% of the total consolidated operating EBIT for the first six-month of 2012 was generated by our distribution operations segment. Retail operations account for 19% year-to-date, wholesale services 3% and mid stream moderations, 1%.

I will cover some of the major segment variances starting with out distribution business on slide six. EBIT was $26 million, compared to the second quarter of 2011. This includes an EBIT contribution of $20 million from Nicor Gas. The warm weather had a negative EBIT effect of approximately $4 million during the quarter built across our distribution business.

We are starting to see benefits from our shared service model accrue across our entire business and one of the key metrics that we used to gauge this is O&M expense per customer. For the first six months of 2012, O&M per customer was $69, down from $75 per customer for the same period in 2011.

These numbers are adjusted to exclude rider investment programs where there is a corresponding revenue offset to associated expense. We are also seeing additional improvement for our non-regulated businesses.

Turning to the retail segment on slide seven, we reported EBIT for the second quarter of $14 million, a $13 million increase compared to the second quarter of last year. This large increase mainly reflects the addition of Nicor's retail business to our portfolio. Those businesses are less seasonal than the SouthStar business that historically was the company's entire retail operating segment.

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