Great Plains Energy Incorporated (GXP)
Q2 2010 Earnings Call Transcript
August 6, 2010 9:00 am ET
Mike Cline – VP, IR & Treasurer and Corporate Secretary
Mike Chesser – Chairman and CEO
Bill Downey – President and COO
Jim Shay – SVP, Finance and Strategic Planning and CFO
Paul Ridzon – KeyBanc
Paul Patterson – Glenrock Associates
Steven Gambuzza – Longbow Capital
Michael Lapides – Goldman Sachs
Jairo Chung – Oppenheimer & Co.
Previous Statements by GXP
» Great Plains Energy Incorporated Q1 2010 Earnings Call Transcript
» Great Plains Energy Incorporated Q4 2009 Earnings Call Transcript
» Great Plains Energy Incorporated Q3 2009 Earnings Call Transcript
Good Morning. My name is Andrea and I will be your conference operator today. At this time, I would like to welcome everyone to the second quarter 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator instructions)
I would like to now turn the call over to Mr. Mike Cline, Vice President of Investor Relations and Treasurer. Please go ahead, sir.
Thank you, Andrea, and good morning. Welcome to the Great Plains Energy’s second quarter 2010 conference call. Joining me on the call this morning are Mike Chesser, Chairman and CEO; Bill Downey, President and COO and Jim Shay, the company’s new Senior Vice President and CFO.
I must remind you of the inherent uncertainties in any forward-looking statements in our discussion this morning. Slide #2 and the disclosure in our SEC filings contain a list of some of the factors that could cause future results to differ materially from our expectations.
Before I hand the call to Mike, I wanted to remind everyone that we issued our earnings release and 10-Q for the second quarter after the market close yesterday. They are available along with supplemental financial information regarding the quarter and today’s webcast slides on the main page of our Web site at www.greatplainsenergy.com.
With that, it’s now my pleasure to introduce, Mike Chesser.
Thanks, Michael. Good morning, everyone. Thank you for joining us today. My remarks will be certainly brief this morning but there are a few key points that I’d like to cover.
First I’d like to introduce Jim Shay, our new Senior Vice President of Finance and Strategic Development and Chief Financial Officer. Jim replaces Terry Bassham, who has assumed the role of Executive Vice President of Utility Operations following John Marshall’s retirement.
Jim is the strong addition to our executive team and brings over 25 years of senior financial management experience to the company. He will be covering our financials today and will be on the road in the coming weeks to meet many of you in person. Also, though Terry is taking some well deserved vacation time – he is not joining us on the call today, he will certainly continue to have contact with investors in his new role going forward.
Second, I hope you’ve had the opportunity to read the press release we issued yesterday afternoon. We announced second quarter earnings that were above consensus expectations and also had an increase in our 2010 EPS guidance range.
As we described in the release, the positive impacts from weather that we experienced in the quarter and in the first six months have been a major driver of our results. Those impacts were also the primary factor behind our decision to raise guidance at this time. We’re pleased with the prospects of higher earnings in 2010 and Jim will discuss the changing guidance in his comments. I do, however, think it’s important to separate the positive effects of weather from underlying weather-normalized demand, which has been mixed across our three key customer segments.
Overall, our weather-normalized demand is up a little over 1% for the first six months of 2010 compared to 2009. The industrial segment has led the way. We’ve also seen gains in the residential segment, though that improvement occurred entirely in the first quarter.
The commercial sector, however, is lagging with demand a little less than 1% below the first half of 2009. So, overall, those signs point towards a slowly improving economy in our region and I would continue to characterize our near-term view of the local economy as cautiously optimistic.
In addition to our solid financial performance, we continue to be hitting on all cylinders from an operational perspective. Bill is going to cover these areas in greater detail in his comments but I want to point out a couple of highlights.
We are continuing to make very good progress on Iatan 2. We achieved a very important milestone on July 20 when we synchronized the unit to the grid and fired the unit on coal. Although we are progressing ahead of schedule, we still have a number of critical steps to complete.
Based upon the industry’s typical experience at this stage of the process, we continue project that the unit will be in service in the fourth quarter of the year. But there is a chance, however, for the unit to achieve provisional acceptance in the third quarter.
We’ve also been active on the regulatory front and filed cased in Missouri in June for KCP&L and GMO. A significant component of these cases is an inclusion of Iatan 2 in our rate base. The result of these proceedings along with the Kansas rate case that we filed in December will be critical to our ability to improve earnings and cash flow over the next few years and continue to provide excellent service for our customers.
On the topic of customer service, I’m extremely pleased with our outstanding performance in the most recent JD Power Residential Customer Satisfaction survey. KCP&L was ranked Tier 1 in both the Midwest large utilities category in among all U.S. utilities. This recognition from our residential customers complements the Tier 1 ranking we received in last year’s survey of business customers.