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CH Energy Group, Inc (



Q1 2011 Earnings Call

April 28, 2011 2:15 pm ET


Steven Lant – Chairman, President and CEO

Chris Capone – CFO and President

Kim Wright – VP, Accounting and Controller

Stacey Renner – Treasurer


John Hanson – Praesidis

Gordon Howald – East Shore Partners



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Ladies and gentlemen, thank you for standing by and welcome to the CH Energy Group conference call. At this time, all phone participants are in a listen-only mode. Later there will be an opportunity for your questions. Instructions will be given at that time. (Operator instructions) And as a reminder, this conference is being recorded.

I’d now like to turn the conference over to Chairman, President and CEO, Steven Lant. Please go ahead, sir.

Steven Lant

Thank you, Gayle. Good afternoon and welcome to our call. With me on today’s call are Chris Capone, Chief Financial Officer and President of CHG; Kim Wright, Vice President of Accounting and Controller, and Stacey Renner, our Treasurer.

Following my introductory remarks, Kim Wright will cover our earnings by business unit in detail and Chris Capone will provide an update on our future prospects and the progress we are making on divesting our renewable energy portfolio.

Before we begin, I'd like Stacey Renner to read our cautionary statements regarding undue reliance on forward-looking statements.

Stacey Renner

Thanks, Steve. I’d like to first remind listeners that the presentation slides for this conference call and our supplemental first quarter 2011 financial information are available in the Investor Relations section of our website at,

I refer you now to the paragraph on forward-looking statements at the bottom of this morning's press release. If you are following along with the presentation slides, please reference page three. During this conference call presentation and in the question-and-answer session to follow, CH Energy Group participants may discuss management’s intentions, belief, expectations, projections, or make other statements that are not historical in nature.

Please note these forward-looking statements are subject to assumptions, risks, and uncertainties that could cause actual results to differ materially from the forward-looking statements. These risks are discussed in more detail in our filing on Form 10-K for the year ended December 31, 2010 under the section labeled risk factors. The 10-K is available in the Investor Relations section of our website at the link for SEC filings.

I'll now return the call to Steve Lant.

Steven Lant

Thank you, Stacey. CH Energy Group’s earnings per share for the first quarter of 2011 were $1.08 versus $1.30 in the first quarter of 2010, a decrease of $0.22. Central Hudson, our primary subsidiary was down $0.25. Two factors were primarily responsible for this decrease.

First, Central Hudson’s tree trimming expenses were much higher in 2011. This was due to the low normal trimming in 2010’s first quarter partly due to the Twin Peaks storm. And this is combined with an above normal level of tree trimming in the first quarter of 2011.We took advantage of unusually favorable contract pricing and crude availability and accelerated our 2011 tree trimming plan. This timing difference will disappear by year end.

The second primary factor was weather and storm-related expenses. In 2010, the large expense of the Twin Peaks storm was deferred, whereas in 2011 we experienced a tough winter with numerous smaller storms and associated operating problems, none of which rose to the level that qualified for deferred accounting treatment. Also the PSC ruled on our deferred accounting petition for a recovery of the Twin Peaks storm cost and didn’t approve the petition in its entirety. Of the approximately 20 million we requested, all but 850,000 was approved, but that 850,000 represents $0.03 per share that we need to recognize in the first quarter of 2011.

I would note that we are considering filing a petition for rehearing regarding the portions of our petition that were not approved. Kim Wright will cover all the Central Hudson’s earnings impacts more fully in just a moment.

I’m pleased to note that Griffith came in $0.02 per share higher in the first quarter of 2011 despite the run-up in wholesale oil prices. We also experienced a $0.04 per share drag related to our divestiture activity, which we hope will not continue too much longer. The process is proceeding well and Chris Capone will discuss it more fully later in the call.

Kim Wright will now review the quarter in detail by business unit Kim?

Kim Wright

Thanks, Steve. Good afternoon, everyone. As Steve mentioned, I'll be reviewing our results for the first quarter and will be covering pages five through eight of the PowerPoint presentation for those of you who are following along online.

Beginning with our consolidated results, you can see on page 5 that we earned $1.08 in the first quarter of 2011, that’s a $0.22 decrease from last year’s first quarter earnings of $1.30 and this was due to lower earnings from Central Hudson, which I will discuss next.

And moving on to page six, Central Hudson’s earnings of $0.79 were $0.25 lower than the first quarter of 2010. As Steve noted Central Hudson's earnings decreased primarily due to the timing of our tree trimming expenditures as well as higher costs to restore service to customers following storms. And regarding our tree trimming costs, in 2010, the impact of the significant storm events in late February put us behind schedule, reducing our expenditures in this area.

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