Vectren Corporation ( VVC) Q3 2011 Earnings Call November 4, 2011 10:00 a.m. ET Executives Robert Goocher – VP, Investor Relations Carl Chapman – President, CEO Jerry Benkert – EVP, CFO Analysts Steven Wang – Carlson Capitals Andrew Philips – RGO Capital Presentation Operator
With that, I'll turn it over to Jerry.Jerry Benkert Thanks, Robert. I would like to welcome everyone to today's call. As always, we really appreciate you joining us. Overall, we are pleased with our 2011 year-to-date results. Looking at slides three and four, our utility operations continue to provide a solid contribution earnings leading the way year-to-date. Our non-utility portfolio other than ProLiance also has performed very well in 2011. Highlighted by the increased earnings we are seeing year-to-date and particularly in the third quarter from infrastructure services and coal mining. ProLiance on the other hand continues to struggle on the ongoing weak natural gas market facing gas marketers. Carl will comment further on these market conditions and the significant progress that ProLiance has made to improve future performance. I will discuss where we did stand on our 2011 earnings guidance here in a few minutes, but first I want to touch up on a few recent highlights listed on slide three. I am pleased to report that on Wednesday our Board declared a 1.4% dividend increase bringing Vectren’s quarterly dividend to $0.35 per share or $1.40 per share annualized effective December 01, 2011. This marks the 52 nd consecutive year that annual dividends have increased. A record we are proud to maintain because of the contribution our dividend adds to total shareholder return for our investors. In addition we believe our current yield of approximately 5% remains very attractive. On the financing front, in October, we successfully priced $100 million of utility related long term debt and interest rate at 5%. With this, later this month, we will be able to call at par $96 million of 5.95% long term debt. As you recall back in March we priced $150 million of utility long term debt at a weighted average interest rate of 5.12% and with a delayed draw feature in order to receive the proceeds at the end of this month which coincides with a $250 million 6.58 (ph) debt maturity on December 1 st. Given the very low levels of short term debt currently outstanding supporting our utility operations we plan to refinance the remaining $100 million with short term debt. In total, the net impact of these financing actions will achieve annualized savings of nearly $9 million in 2012 and beyond, which will help our utility businesses offset rising costs expected in other areas of their operations such as depreciation and chemical cost for example.
Finally, on the state regulatory front we are pleased to receive Indiana Commission approval for extension of decoupling and energy efficiency programs for our natural gas customers through December 2015. In August we also received commission approval to implement additional electric customer and energy efficiency programs as well, as related to margin stabilization. Both actions by the Indiana Commission in the quarter demonstrate a regulatory environment that remains constructive for us.Turning to slide five our consolidated guidance for 2011 including the results of ProLiance is nearer to a range of $1.60 to a $1.80 per share. We are lowering the top end of our range by $0.05 per share to reflect the larger expected loss at ProLiance though it was substantially offset by the higher expected contribution from our infrastructure services business. Carl will have more to say on that topic in a few minutes, but suffice it to say that we are very pleased with the 2011 year-to-date results from infrastructure services including the positive contribution being made by Minnesota Limited that we acquired on March 31 st. We’re now projecting a $0.25 to $0.35 per share loss for ProLiance based upon the year-to-date results and the assumption that current difficult market conditions will persist for the fourth quarter. Read the rest of this transcript for free on seekingalpha.com