Integrys Energy Group CEO Discusses Q3 2010 - Earnings Call Transcript
Integrys Energy Group, Inc. (
)
Q3 2010 Earnings Call
November 4, 2010 9:00 am ET
Executives
Charles Schrock – Chairman, President, Chief Executive Officer
Joseph O’Leary – Senior Vice President, Chief Financial Officer
Steven Eschbach – Vice President, Investor Relations
Mark Radtke – Chief Executive Officer, Integrys Energy Services
James Schott – Vice President, External Affairs
Analysts
Paul Patterson – Glenrock Associates
Ali Agha – SunTrust Robinson Humphrey
Chris Shelton – Millennium Partners
Faisal Khan – Citigroup
Ashar Khan – Visium Asset Management
Presentation
Operator
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Welcome to the third quarter 2010 earnings conference call for Integrys Energy Group Incorporated. All lines will remain in listen-only until the question and answer session. At that time, instructions will be given should you wish to participate. At the request of Integrys Energy Group, today’s call will be recorded for instant replay.
I would now like to introduce today’s host, Mr. Steve Eschbach, Vice President of Investor Relations at Integrys Energy Group. Sir, you may now begin.
Steven Es
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hbach
Thank you very much and good morning everyone. Welcome to Integrys Energy Group’s Third Quarter 2010 Earnings conference call. Delivering formal remarks with me today are Charlie Schrock, our Chairman, President, and Chief Executive Officer; and Joe O’Leary, our Senior Vice President and Chief Financial Officer. Mark Radtke, Chief Executive Officer of our non-regulated subsidiary, Integrys Energy Services; and Jim Schott, our Vice President, External Affairs are also available for the question and answer session at the conclusion of our formal remarks. Larry Borgard, our President and Chief Operating Officer of the utility group, is unavailable for today’s call.
The slides supporting today’s presentation and an associated data package are located on our website at
. Select Investor, select Presentation, and then today’s presentation.
Before we begin, I will advise everyone that this call is being recorded and will be available for replay through February 22, 2011.
I need to direct you to Slide 3 and 4 of our presentation and point out that this presentation contains forward-looking statements within the definition of the Securities and Exchange Commission’s Safe Harbor rules including projected results for Integrys Energy Group and its subsidiaries. Forward-looking statements contain factors that are beyond the ability of Integrys Energy Group to control, and in many cases Integrys Energy Group cannot predict what factors would cause actual results to differ materially from those indicated by forward-looking statements. I also refer you to the forward-looking statement section of yesterday’s news release for further information. Except as may be required by federal securities laws, Integrys Energy Group and its subsidiaries undertake no obligation to publicly update or revise any forward-looking statement contained in this presentation whether the result of new information, future events, or otherwise.
Slide 5 indicates that today’s presentation includes non-GAAP financial information related to diluted earnings per share adjusted and adjusted earnings or loss. We believe that these are useful measures for providing investors with additional insight into our operating performance and the efforts of certain items that are not comparable from one period to the next. Please review the text of this slide regarding non-GAAP financial information.
I will now turn this call over to Charlie Schrock. Charlie?
Charles Schrock
Thanks, Steve. Good morning everyone and thanks for joining us on the call today. I will begin by providing an overview of our third quarter from a financial standpoint as well as a brief overview of our operating results. Joe O’Leary will then discuss our financials for the third quarter of 2010 in more detail and our guidance for 2010 and 2011 diluted earnings per share adjusted. We will conclude with a question and answer session.
Moving to Slide 6, we are emphasizing reported earnings on an adjusted basis as we did last quarter. As a reminder, earnings per share adjusted excludes the effect of certain items that are not comparable from one period to the next and is how we evaluate our financial performance.
So with that explanation, we reported diluted earnings per share adjusted of $0.35 for the third quarter of 2010 versus $0.29 in the same quarter a year ago. This quarter-over-quarter increase was primarily driven by increased sales at our regulated electric utility segment mainly due to warmer weather than in 2009. As a reminder to what we released a week ago, our guidance range for 2010 diluted earnings per share adjusted is between $3.00 and $3.17; and as indicated in the news release that we issued last evening, we are reaffirming our guidance range for 2011 diluted earnings per share adjusted of between $3.24 and $3.57.
Please move to Slide 7 as I provide a brief operational overview of our regulated utilities and non-regulated retail energy supply and services subsidiary. The performance of our regulated utilities was in line with our expectations. In fact, for the regulated electric utility segment, the third quarter was strong as a result of the hottest summer since 1995 in Wisconsin and the upper peninsula of Michigan. The addition of Weston 4 in 2008 in our efforts to adjust the operation of our generating plants to optimize their performance within the Midwest Independent System Operator energy market has resulted in benefits for both customers and shareholders.
With weather much warmer than in 2009, electric consumption was up significantly, including residential consumption which was 15.2% over the same quarter of last year. Even with higher demand, we were able to supply our customers with lower cost internally generated electricity as well as sell excess generation into the marketplace through opportunity sales. Customers and shareholders in turn benefited as well because of our current position in the Wisconsin fuel window.
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