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

Integrys Energy Group Inc. ( TEG)

Q3 2011 Earnings Call

November 3, 2011; 09:00 am ET

Executives

Charlie Schrock - Chairman, President & Chief Executive Officer

Joe O’Leary - Senior Vice President & Chief Financial Officer

Larry Borgard - President & Chief Operating Officer of Utilities

Mark Radtke - Executive Vice President & Chief Strategy Officer of Integrys Energy Group

Dan Verbanac - President of Integrys Energy Services

Analysts

Steven Gambuzza - Millennium

Ali Agha - Suntrust

Eric Beaumont - Copia Capital

Maury May - Power Insights

Presentation

Operator

Welcome to the third quarter 2011 earnings conference call for Integrys Energy Group Inc. All lines will remain in a 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 at Integrys Energy Group. Sir, you may now begin.

Steve Eschbach

Thank you very much and good morning everyone. Welcome to the Integrys Energy Group’s third 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 of Utilities; Mark Radtke, Executive Vice President and Chief Strategy Officer of Integrys Energy Group 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 Investors, select Presentation, and then today’s presentation. Before we begin, I will advise everyone that this call is being recorded and will be available for audio replay through February 27, 2012.

I need to direct you to slides three of our presentation and to point out that this presentation contains forward-looking statements within the definition of the United States Securities and Exchange Commission’s Safe Harbor rules, including projective results for Integrys Energy Group and its subsidiaries.

Forward-looking statements contain factors that are beyond our ability to control and in many cases we cannot predict what factors would cause actual results to differ materially from those indicated by forward-looking statements. Except as maybe required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statement contained in this presentation, whether the result of new information, future events or otherwise.

This slide is a condensed summary on forward-looking statements and you are encouraged to read and understand the more specific language that is contained in our filings with the Securities and Exchange Commission, including the Quarterly Report on Form 10-Q we filed last evening, the forward-looking statements section of yesterday news release and slide 49 in the appendix.

Slide four 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 insights 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 of this slide for information regarding these non-GAAP financial measures.

I will now turn the call over to Charlie Schrock. Charlie.

Charles Schrock

Thanks Steve. Good morning everyone and thanks for joining us on the call today. I’ll begin by providing a high level overview of our 2011 third quarter financial results and some operational highlights. Joe O’Leary will then discuss our financial results for the quarter in more detail, in addition to providing a summary of our revised capital expenditures and financing plans for 2011. And as usual, we will conclude with a question-and-answer session.

Turning to slide five, the key takeaway from today’s call is that the business continues to perform in-line with expectations, allowing us to narrow our guidance for 2011 diluted earnings per share adjusted, to a range of $3.33 to $3.47. Diluted earnings per share adjusted on a consolidated basis for the third quarter and year-to-date 2011 were higher than the comparable periods of 2010. Generally speaking, the primary drivers of the improvement for both, the three and nine month periods are reduced expenses across all of our segments and improved adjusted earnings at Integrys Energy Services.

Slide six provides a brief operational update on our regulated utilities. I am pleased to report that the accelerated main replacement program for the city of Chicago is well underway. Working with our contractors and our employees, we have been able to staff up to meet the workload of this project.

As with any major project of this kind, we’ve had to overcome numerous start-up issues. Through all of this, we are on track to spend the targeted amount for this year and we expect to have installed 165 miles of natural gas main by year-end. I congratulate the project team, our employees and our contractors for a successful first year of this project.

On September 30, 2011 the Illinois Appellate Court, First District, ruled that the Illinois Commerce Commission did not have the authority to approve the Infrastructure Cost Recovery Rider or Rider ICR for Peoples Gas. Rider ICR allows for the recovery of and return on the accelerated main replacement project costs in between rate cases. To be clear, cost recovery for the AMRP and traditional rate cases is not affected by the court decision. The court remanded the ICR portion of the 2009 Peoples Gas rate case back to the Illinois Commerce Commission, for further action in accordance with it’s decision.

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