Integrys Energy Group's CEO Discusses Q1 2011 Results - Earnings Call Transcript

Integrys Energy Group, Inc. ( TEG)

Q1 2011 Earnings Call

May 5, 2011 09:00 AM ET


Steven Eschbach – VP, IR

Charles Schrock – Chairman, President and CEO

Joseph O’Leary – SVP and CFO

Lawrence Borgard – President and COO, Utilities

Daniel Verbanac – President, Integrys Energy Services


Ali Agha – SunTrust

Michael Bates – D.A. Davidson

James Bellessa – D.A. Davidson

Maurice May – Soleil Securities



Welcome to the First Quarter 2011 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.

Steven Eschbach

Thank you very much and good morning everyone. Welcome to Integrys Energy Group’s First Quarter 2011 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 Daniel J. 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, 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 August 2, 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 financial 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 for more information regarding this 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 a high level overview of our 2011 first quarter financial and operating results. Joe O’Leary will then discuss our financial results for the quarter in greater detail, in addition to providing a summary of our investment and financing plans for 2011 we will conclude with a question and answer session.

Turning to Slide 6, I am pleased to report that first quarter 2011 diluted earnings per share adjusted on a consolidated basis were stronger than the same periods a year ago. Our positive financial results reflect the effective execution of our business plan. Operational excellence initiatives and cost control efforts across all of Integrys Energy Group, subsidiaries are a key element of our plan.

Our employees have been focused on reducing cost without sacrificing safety or reliability, and this has helped drive improved financial performance.

Our first quarter 2011 financial results also reflect the retail rate increases for our regulated utilities that were implemented across our various jurisdictions. And finally, the combination of customer mix and discipline pricing higher volumes from retain business and reduced operating expenses enable us to improve on the financial results from a non-regulated business.

To complete our high level financial overview, our guidance for 2011 diluted earnings per share adjusted on a consolidated basis remains between $3.24 and $3.57, with no changes among our segments.

Slide 7 provides a brief overview of the first quarter 2011 achievements for our regulated utilities. We are implementing a natural gas standardization initiative which is designed to improve processes and reduce costs. Essentially we are integrating processes and procedures at our five regulated natural gas utilities and providing common best practices where possible to increase efficiencies throughout the natural gas group. On our accelerated main replacement project at Peoples Gas responses to bid requests are coming in lower than originally anticipated.

As a result we will be able to replace more main for the dollars we spend. The efficient use of contractors will free up our own employees to work on other high value projects that require timely completions such as service work.

On the regulated electric side, the Public Service Commissioner of Wisconsin approved the environmental control equipment expenditures for the Colombia Power Plant. We jointly owned that power generating facility with other nonaffiliated utilities so our share of this environmental upgrade project will total about $200 million over the next three years.

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