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CH Energy Group, Inc (



Q2 2011 Earnings Call

July 29, 2011 11:00 am ET


Steven Lant - Chairman, President, & CEO

Kim Wright - VP, Accounting & Controller

Christopher Capone - EVP & CFO

Stacey Renner - Treasurer


Maurice May - Ticonderoga Securities

Scott Carroll - Goldman Sachs

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» CH Energy CEO Discusses Q1 2011 Results - Earnings Call Transcript
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» CH Energy Group CEO Discusses Q3 2010 Results – Earnings Call Transcript
» CH Energy Group Inc. Q2 2010 Earnings Call Transcript

Ladies and gentlemen, thanks for standing by. Welcome to the CH Energy Group Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Instructions will be given at that time. (Operator instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to host, Steven Lant. Please go ahead, sir.

Steven Lant

Good afternoon and welcome to our call. With me on today’s call are Kim Wright, Vice President of Accounting and Controller; Stacey Renner, our Treasurer; and Chris Capone, Executive Vice President and CFO, and President of CHEC.

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

Stacey Renner

Thanks Steve. I would like to first remind listeners that the presentation slides for this conference call and our supplemental second 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 as well as subsequent 10-Q filings. These filings are available in the Investor Relations section of our website at the link for SEC filings.

I will now return the call to Steve Lant.

Steven Lant

Thank you, Stacey. CH Energy Group is in the midst of a strategic shift toward exclusive on energy distribution through Central Hudson and Griffith. That transition is proceeding well, both on the standpoint of our divestiture of renewable energy projects and from the standpoint of executing our plan at Central Hudson and Griffith to produce sustainable earnings growth.

Our second quarter results contain a number of items that results from our transition, as well as timing differences that affected the second quarters of both 2010 and '11. Kim Wright will explain each variation so that you can see that our underlying earnings trend continues on an upward path.

Following Kim's remarks Chris Capone will provide an update on the status of our divestitures and the earnings of Central Hudson and Griffith as well as our plan to repurchase common shares later this year. Following Chris Capone's remarks we will glad to answer any questions. Kim?

Kim Wright

Thanks Steve. Good afternoon everyone. As Steve mentioned, I will be reviewing our results for the second quarter and will be covering pages 4 through 7 of the PowerPoint presentation for those of you who are following along online.

Beginning with our consolidated results, you see on page 4 that we earned $0.38 in the second quarter of 2011. while this represents a $0.05 decrease from last year's second quarter earnings of $0.43. as you will see as I go through the presentation the execution of our new strategy is moving along well and the performance of our core business particularly Central Hudson is strong.

Moving on to page 5, while you see that Central Hudson's earnings of $0.46 were $0.16 lower than the second quarter of 2010. there were items in both years that mapped the actual year-over-year growth we find in Central Hudson's financial performance. Starting with 2010, we must exclude from the second quarter results the impact of deferral petitions to be filed with the Public Service Commission to recover uncollectible account write offs that exceed our rate allowance. This added $0.14 to our 2010 earnings related to expenses we incurred in 2009 and 2010. these petitions were necessary to correct an imbalance featuring the high level of write off we began experiencing in 2008 as a result of a weak economy and the amount included in our rates for recovery of these expenses. This imbalance was corrected with the rates that went into effect in July 2010.

Since our uncollectible expenses for the rate year we just completed in June did not exceed our rate allowance we did not record the impact of a deferral petition as we did in the second quarter of 2010. therefore, we did not have the type of favorable impact to earnings in the second quarter of 2011 that we experienced last year.

Another important note on this aspect of our business is that we have seen the level of write off stabilize with essentially the same level of write off in the second quarter of 2011, as we incurred in the period last year, any modest improvement on the year to date basis.

Removing the impact of the deferral petitions from the comparison, our 2011 second quarter earnings would have been $0.02 lower relative to last year. However, there is one other important effect of our year over year financial results that needs to be put in to the proper context in order to understand how well Central Hudson actually performed during the last quarter relative to the same period last year. And we talked about this last quarter as well, the timing of our tree trimming expenditures.

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