CH Energy Group's CEO Discusses Q3 2011 Results - Earnings Call Transcript

CH Energy Group, Inc. ( CHG)

Q3 2011 Earnings Conference Call

October 27, 2011 14:00 ET

Executives

Steve Lant – Chairman, President, and Chief Executive Officer

Chris Capone – Executive Vice President and Chief Financial Officer

Kim Wright – Vice President, Accounting and Controller

Stacey Renner - Treasurer

Analysts

Tim Winter

Presentation

Operator

Ladies and gentlemen, thanks for standing by. Welcome to the CH Energy Group Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session with instructions given at that time. (Operator instructions) I would now like to turn the conference over to host, Chairman, President and CEO Mr. Steve Lant. Please go ahead.

Steve Lant – Chairman, President, and Chief Executive Officer

Thank you. Good afternoon and welcome to our quarterly conference call. With me on today’s call are Chris Capone, Executive Vice President and CFO, CH Energy Group and CHEC, Kim Wright, Vice President of Accounting and Controller, Stacey Renner, our Treasurer.

All in my introductory remark, Kim Wright recover our earnings by business unit in detail and Chris Capone, who will provide an update on our future prospects. Following Chris is remarks with followed taking your question.

Before we begin, I would like to ask Stacey Renner to read our cautionary statement regarding undue reliance on forward-looking statements. Stacey?

Stacey Renner – Treasurer

Thanks Steve. I would like to first remind listeners that the presentation calls for this conference call and our supplemental third quarter 2011 financial information are available in the Investor Relations section of our website at www.chenergygroup.com.

I refer you now to the paragraph on forward-looking statements at the bottom of this morning’s press release. If you are following along with the presentation slides, please reference page three.

During this conference call presentation and in the question-and-answer session to follow, CH Energy Group participants may discuss management’s intentions, belief, expectations, projections, or make other statements that are not historical in nature.

Please note these forward-looking statements are subject to assumptions, risks, and uncertainties that could cause actual results to differ materially from the forward-looking statements. These risks are discussed in more detail in our filing on Form 10-K for the year ended December 31, 2010 under the section labeled risk factors as well as subsequent 10-Q filings. These filings are available in the Investor Relations section of our website at the link for SEC filings.

I will now return the call to Steve Lant.

Steve Lant – Chairman, President, and Chief Executive Officer

Thank you, Stacey. CH Energy Group’s earnings per share for the third quarter 2011 were $0.55 versus the $0.11 for the third quarter 2010. Just a moment Kim Wright will explain result by business unit fully, before should us I would like to discuss our reason action to increase our quarterly dividend by almost 3% and $1.05 per share and $0.54 to $5.55 effective November 1, 2011.

Last October, we announced strategic shift that we believe with produce a strong trend of growing earning per share and increasing dividend. Along with reduced earnings volatility going forward. Our refocused strategy entailed divesting our renewable energy portfolio and concentrating our efforts on our energy delivery businesses, which have attractive investment opportunities and in which we’ve demonstrated a strong track record of operations and improving financial performance. Since our announcement last October 28, we focused on the execution of this revised strategy and I’m pleased to say that that process is nearly complete.

During this quarter we divested two projects both are gains. In addition we recorded impairment for one project. On the small amount of renewable energy related assets remain on our balance sheet representing about 1% of our consolidated equity. A few minutes Chris Capone will provide the details of our divestures as well as our thoughts about this small access we retained.

As planned we use our net proceeds to retire debt associated with the portfolio assets we divested and we’ve repurchased approximately 6% of our common stock reducing our share account to about 14.9 million shares. We entered into an accelerated stock repurchase arrangement in August, which is provided immediate accretion to our earnings per share. However the full annualized effect and I’ll be talked into the third quarter of 2012.

While our divesture plan execution as proceeded well so far this year importantly we’ve also been producing strong operating results in our core businesses Central Hudson and Griffith. Central Hudson is performing well for the calendar year 2011 we expect to earn close to the lot ROE in our three year rate plan of 10% on weather normalized basis. Incorporated in net projection is deferral of approximately 13 million of stone storm storm and restoration expense associated with tropical storm or rain.

Kim Wright will describe that topic in detail shortly. I believe our company once again rose to the occasion response to Tropical Storm Irene, which interrupted service to 60% of our customers. Central Hudson is also continuing into improve it’s reliability in customer satisfaction metrics and it’s meeting and surpassing all the performance measures incorporated in our way plan.

Griffith is also showing good progress have he made a number of attractive acquisition so far this year. Chris Capone will discuss Griffith in more detail shortly. All in all with an eventful and gratifying quarter for the company. And we’re especially pleased to deliver both the stock repurchase and a dividend increase to our shareholders consistent with the strategy we announced at this time last year.

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