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

TECO Energy (TE)

Q3 2011 Earnings Call

November 01, 2011 5:00 pm ET

Executives

Mark Kane - Director, IR

Unknown Executive -

John Ramil - Chief Executive Officer, President, Director and Member of Finance Committee

Sandra W. Callahan - Chief Financial Officer, Chief Accounting Officer and Senior Vice President of Finance & Accounting

Analysts

Dan Eggers - Crédit Suisse AG, Research Division

Jonathan P. Arnold - Deutsche Bank AG, Research Division

Ali Agha - SunTrust Robinson Humphrey, Inc., Research Division

Greg Gordon - ISI Group Inc., Research Division

Paul T. Ridzon - KeyBanc Capital Markets Inc., Research Division

Unknown Analyst -

Presentation

Operator

Good afternoon. My name is Keisha, and I will be your conference operator today. At this time, I would like to welcome everyone to the TECO Energy's Third Quarter Results and 2011 Outlook Conference Call. [Operator Instructions] Thank you. Mr. Mark Kane, Director of Investor Relations, you may begin your conference.

Mark Kane

Thank you, Keisha. Good afternoon, everyone, and thank you for joining us for TECO Energy's Third Quarter Results Conference Call and Webcast. Our earnings along with unaudited financial statements were released and filed with the SEC almost an hour ago. This presentation is being webcast in our earnings release financial statements and the slides for this presentation are available on our website at tecoenergy.com. Presentation will be available for replay through the website approximately 2 hours after the end of the presentation and will be available for 30 days.

In the course of our remarks today, we'll be making forward-looking statements regarding our financial outlook and plans for 2011 and preliminary outlook for 2012. There are number of factors that could cause our actual results to differ materially from those that we'll discuss as our outlook and expectations today. For a more complete discussion of these factors, we refer you to the discussion of risk factors in our annual report on Form 10-K for the period ended December 31, 2010. Also today, we'll be using non-GAAP measures in the course of the presentation. There are reconciliations to the nearest GAAP measures, along with other helpful information contained in the appendix to today's presentation. On the call today, Sandy Callahan, our Chief Financial Officer, will cover the third quarter results and 2012 -- '11, '12 outlooks. Also with us today to participate in answering your questions is John Ramil, our Chief Executive Officer. Now I'll turn it over to Sandy.

Sandra W. Callahan

Thank you, Mark. Good afternoon, everyone, and thank you for joining us in the middle of a very earnings season ahead of the EEI meeting next week. In consideration of the time of day, I'll keep my remarks brief in order to allow plenty of time for questions. Today, I'll cover our third quarter and year-to-date results, discuss our new reserve discovery at TECO Coal, provide an update on the Florida economy and comment on our outlook for the remainder of this year and a preliminary outlook for 2012.

In the third quarter, GAAP net income was $90.2 million, or $0.42 a share, compared to $74.1 million, or $0.24 a share in 2010. The results in 2010 included the $24 million pretax, onetime refund at Tampa Electric. The non-GAAP comparison for 2010 is $74.1 million, or $0.35 per share, which excludes net charges of $23.1 million, primarily for taxes on the undistributed earnings at DECA II, which we sold last year.

On a year-to-date basis, GAAP net income in 2011 was $219.4 million, or $1.02 per share, compared to $182.4 million, or $0.85 in 2010. And again, the 2010 non-GAAP results were $226.6 million, or $1.06 per share, excluding charges of $44 million, primarily for the DECA II taxes affecting the quarter and for debt-retirement premiums.

The results drivers for the quarter and year-to-date periods were covered extensively in our earnings release, so I'll just hit a few highlights. We were pleased to see our eighth consecutive quarter of customer growth at the Florida utilities and also to see at both companies an uptick in growth in the third quarter from what we were experiencing earlier in the year. Tampa Electric was up to 8/10 of 1% in the quarter, which is the highest level we've seen since the fourth quarter of 2007.

A couple of comments on Tampa Electric's energy sales, particularly why they were lower than the third quarter of last year even though the degree days were comparable. Rainfall was 14% above normal, which can reduce demand significantly, especially if it occurs at the peak time of the day. The other factor that entered into the calculation of degree days was unusually high overnight temperatures, and customers typically don't adjust their thermostat for night time temperatures they'll adjust it on a hot day.

Like Tampa Electric, Peoples Gas experienced an uptick in growth in the third quarter at 9/10 of 1%, which is the strongest growth we've seen at Peoples' since the third quarter of 2007. TECO Coal third quarter sales volumes were slightly below last year at 2.1 million tons. The average selling price for the quarter rose to almost $90 per ton, as we expected. And the all-in cost of production continued to rise this quarter to more than $81 per ton. Like the rest of the Central Appalachian producers, our production costs were affected by the same factors we've been discussing all year and were exacerbated this quarter by some difficult geology in some of our underground mines.

Read the rest of this transcript for free on seekingalpha.com

More from Stocks

REPLAY: Jim Cramer on How to Navigate the Stock Market Amid Tariff Worries

REPLAY: Jim Cramer on How to Navigate the Stock Market Amid Tariff Worries

Jim Cramer: 4 Stocks Could Get Throttled By a 'Knock Down Drag Out' With China

Jim Cramer: 4 Stocks Could Get Throttled By a 'Knock Down Drag Out' With China

3 Warren Buffett Stock Picks That Could Be Perfect for Your Retirement Portfolio

3 Warren Buffett Stock Picks That Could Be Perfect for Your Retirement Portfolio

50 Stocks That Could Be Shredded If a U.S. Trade War With China Ignites

50 Stocks That Could Be Shredded If a U.S. Trade War With China Ignites

Why Starbucks Latest Data Reveal Should Worry Investors

Why Starbucks Latest Data Reveal Should Worry Investors