Integrys Energy Group Inc. (

TEG

)

Q4 2010 Earnings Call

February 24, 2011 9:00 am ET

Executives

Charlie Schrock – Chairman, President, Chief Executive Officer

Joe O’Leary – Senior Vice President, Chief Financial Officer

Steve Eschbach – Vice President, Investor Relations

Analysts

Ted Heyn – Catapult Capital

John Ali – Decade Capital

Presentation

Operator

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» Integrys Energy Group, Inc. Q4 2009 Earnings Call Transcript

Welcome to the Fourth Quarter 2010 Earnings conference call for Integrys Energy Group Incorporated. All lines will remain on 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 of Integrys Energy Group. Sir, you may now begin.

Steve Eschbach

Thank you and good morning everyone. Welcome to Integrys Energy Group’s Fourth 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. Other executives, including Larry Borgard, our President and Chief Operating Officer, Utilities; Mark Radtke, Executive Vice President and Chief Strategy Officer of Integrys Energy Group and Chairman of our non-regulated subsidiary, Integrys Energy Services; and Dan Verbanac, President of Integrys Energy Services are also available for the question and answer session at the conclusion of our formal remarks.

The slide supporting today’s presentation and an associated data package are located on our website at

www.integrysgroup.com

, select Investor, select Presentation, and then today’s presentation.

Before I begin, I will advise everyone that this call is being recorded and will be available for replay through May 3, 2011. I need to direct you to Slides 3 and 4 of our presentation and to 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 statement. I’d 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 undertakes no obligation to publicly update or revise any forward-looking statements 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 because they eliminate the effects of certain items that are not comparable from one period to the next. Please review the text in the slide regarding non-GAAP financial information.

I will now turn this call over to Charlie Schrock. Charlie?

Charlie Schrock

Thanks, Steve. Good morning everyone and thanks for joining us on the call today. Before we move on with our conference call today, you will note that Steve mentioned both Mark Radtke and Dan Verbanac will be available during our question and answer session after our formal remarks are completed. Mark has recently accepted the position of Executive Vice President and Chief Strategy Officer for Integrys Energy Group and he remains Chair of our non-regulated subsidiary, Integrys Energy Services. Dan is President of Integrys Energy Services and is directly responsible for the day-to-day leadership and oversight of our non-regulated operations. In the future, I expect you will be seeing more of Dan at our investor relations forums.

Moving on to today’s presentation, I will begin by providing a high-level overview of our 2010 fourth quarter and full year financial and operating results. Joe O’Leary will then discuss our financial results for 2010 in greater detail, in addition to providing insights regarding our investment and financing plans for 2011 and reviewing our guidance for 2011. We will conclude with a question and answer session.

Turning to Slide 6, I am pleased to report that our fourth quarter and full-year 2010 diluted earnings per share adjusted on a consolidated basis were stronger than the same periods a year ago. As a reminder, diluted earnings per share adjusted is how we internally evaluate our financial performance as it eliminates the effect of certain items that are not comparable from one period to the next.

Our positive financial results reflect the effective execution of our business plan. The benefits of cost control efforts across all of Integrys Energy Group’s subsidiaries are now being seen. Reductions in workforce at our regulated utilities, Integrys Energy Services, and our business support subsidiary along with furloughs throughout Integrys Energy Group, were key drivers of labor savings. Our employees have been focused on minimizing non-labor costs without sacrificing safety or reliability, and this has helped drive improved financial performance.

The solid operating performance of our electric generating fleet resulted in lower fuel and purchase power costs than were authorized to be recovered in rates and increased opportunity sales throughout our system. Our 2010 financial results also reflect the retail rate increases for our regulated utilities that were implemented in 2010 across our various jurisdictions. And finally, the improved realized unit margins and lower operating expenses at Integrys Energy Services enabled us to achieve our projected financial results for our non-regulated subsidiary.

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