Integrys Energy Group, Inc. Q2 2010 Earnings Call Transcript

Integrys Energy Group, Inc. Q2 2010 Earnings Call Transcript
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Integrys Energy Group, Inc. (TEG)

Q2 2010 Earnings Call Transcript

August 6, 2010 9:00 am ET

Executives

Steve Eschbach – VP, IR

Charlie Schrock – Chairman, President and CEO

Joe O'Leary – SVP and CFO

Larry Borgard – President and COO, Utilities

Mark Radtke – President and CEO, Integrys Energy Services

Analysts

Eric McCarthy – Praesidis Asset Management

Faisel Khan – Citigroup

John Ali [ph] – Decade Capital

Operator

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Previous Statements by TEG
» Integrys Energy Group, Inc. Q1 2010 Earnings Call Transcript
» Integrys Energy Group, Inc. Q4 2009 Earnings Call Transcript
» Integrys Energy Group Q2 2009 Earnings Call Transcript

Welcome to the second 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. As a 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.

Steve Eschbach

Thank you very much and good morning, everyone. Welcome to Integrys Energy Group's second 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; and Mark Radtke, Chief Executive Officer of our non-regulated subsidiary Integrys Energy Services, are available for question-and-answer session at the conclusion of our formal remarks.

The slides supporting today's presentation and an associated data package are located on our website at www.integrysgroup.com. Select Investor, select Presentations, 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 November 2nd, 2010. 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 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 as a 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 effects 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?

Charlie Schrock

Thanks, Steve. Good morning, everyone and thanks for joining us on the call today. I will begin by providing an overview of our 2010 second 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 second quarter of 2010 in more detail and our diluted earnings per share guidance for 2010 and 2011. We will conclude with a question-and-answer session.

Moving to Slide 6, this quarter, we are emphasizing reported earnings on an adjusted basis and introducing guidance on an earnings per share adjusted basis. We decided to do this to provide better clarity and understanding of the performance of the company. Earnings per share adjusted excludes the effect of certain items that are not comparable from one period to the next. So with that explanation, we reported diluted earnings per share adjusted of $0.47 for the second quarter of 2010 versus $0.26 in the same period a year ago.

Financial results on an adjusted basis for all segments improved during the second quarter of 2010 compared with the same quarter in 2009. Our earnings were driven by our regulated utilities and continuing investment in American Transmission Company, complemented by our restructured non-regulated operations and cost management throughout the company.

Our guidance for diluted earnings per share adjusted remains unchanged on a consolidated basis for 2010 and 2011. Joe will have more to say on that shortly. We declared a quarterly dividend of $0.68 per share payable in September 2010. We remain confident that successful execution of our business plan supports the dividend and will lead to a reasonable payout – reasonable dividend payout ratio over time.

Moving on to Slide 7, I will provide a brief operational overview, beginning with our regulated utilities. As you are aware, our customers are still facing tough economic times, and that is reflected in the demand and usage trends for our electric and natural gas utilities, particularly on the natural gas side. We have provided some additional economic data related to our service territories on Slide 19 in the Appendix.

Our plan to file rate cases as needed to bring our regulated utilities closer to their authorized returns on equity continues. We are in the process of a retail electric and natural gas rate case for Wisconsin Public Service, where we have requested that the decoupling cap for both electric and natural gas be replaced by an earnings cap. Commission staff testimony for that case is due on August 20th, 2010. Additional details on this rate case are included in the Appendix on Slide 21.

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