TECO Energy's CEO Discusses Q4 2011 Results - Earnings Call Transcript

TECO Energy (TE)

Q4 2011 Earnings Call

February 02, 2012 9:00 am ET

Executives

Mark M. Kane - Director of Investor Relations

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

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

Analysts

Dan Eggers - Crédit Suisse AG, Research Division

Paul Patterson - Glenrock Associates LLC

Unknown Analyst

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

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

Andrew Levi - Caris & Company, Inc., Research Division

Andrew Bischof - Morningstar Inc., Research Division

Greg Gordon - ISI Group Inc., Research Division

Ashar Khan

Presentation

Operator

Good morning, my name is Marcy, and I will be your conference operator today. At this time, I would like to welcome everyone to the TECO Energy Fourth Quarter Results and 2012 Outlook Conference Call. [Operator Instructions] Thank you, Mr. Kane, you may begin your conference.

Mark M. Kane

Thank you, Marcy, and good morning, everyone. I'd like thank you for joining us for TECO Energy's fourth quarter results conference call and webcast. Our earnings, along with unaudited financial statements were released and filed with the SEC earlier this morning. This presentation is being webcast and our earnings release, financial statements and the slides for this presentation are available on our website at tecoenergy.com. The presentation will be available for replay through the website approximately 2 hours after the end of the presentation this morning 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 2012. There are a 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 the risk factors in our annual report on Form 10-K for the period ended December 31, 2010, and as updated in subsequent SEC filings.

Also, today we'll be using non-GAAP measures in the course of the presentation. There are reconciliations to the nearest GAAP measure along with other helpful information contained in the appendix to today's presentation.

On our call this morning, Sandy Callahan, our Chief Financial Officer, who will cover the fourth quarter and full-year 2011 results and discuss our dividend increase announced this morning and our guidance for 2012. Also with us today to participate in answering your questions is John Ramil, our CEO. Now let me turn it over to Sandy.

Sandra W. Callahan

Thank you, Mark. Good morning, everyone and thank you for joining us. Mark gave you an overview of what I'll cover and I will assure you that I'll allow plenty of time for Q&A at the end.

In the fourth quarter, GAAP net income was $53.2 million or $0.25 a share compared to $56.7 million or $0.27 in 2010. There were no charges or gains in the fourth quarter of 2011, while results in 2010 included a net gain of $7.8 million, which captured the gain on the sale of our ownership interest in DECA II and the charge for the early retirement of TECO Energy debt. So the non-GAAP comparison for 2010 is $48.9 million or $0.23 a share, which excludes those charges and gains.

On a full-year basis, GAAP net income in 2011 was $272.6 million or $1.27 per share compared to $239 million or $1.12 in 2010. The 2010 non-GAAP results were $275.5 million or $1.29 per share. Excluding net charges of $36.5 million related to debt retirement premiums, taxes on the undistributed earnings of DECA II and the gain on the sale of DECA II. The results drivers for the quarter and year-to-date period were covered extensively in the earnings release and I'll cover a few highlights. The real driver for Tampa Electric was mild weather compared to 2010 when we had a fourth quarter with extremely cold weather.

As measured by heating degree days, December of 2011 was the mildest December we've experienced since 1992. Around the holiday, the Tampa area was tying records for high temperatures, but it wasn't hot enough to generate cooling load. Also in the fourth quarter, this time measured by cooling degree days, we saw the mildest October we've experienced, again, since 1992. For the year, the weather worked against us 3 out of the 4 quarters. We had a mild late winter in the first quarter, a wet summer and then the fourth quarter with it's Chamber of Commerce start to the 2011 2012 winter.

Tampa Electric reported $31 million lower base revenues this year. But remember, in 2010, revenue was reduced by $24 million under our regulatory settlement. So the change in revenue from 2010 with favorable weather to a year with really unfavorable weather was actually $55 million. The very positive news was customer growth and improvements in the economy. The fourth quarter customer growth was 0.8%, representing about 5,000 additional customers and the full-year customer growth was 0.7%.

The stronger economy is evident in commercial sales, which held up well for the full year despite the weather, and a non-phosphate industrial sales which increased throughout the year. A significant factor in mitigating some of the weather impact in 2011 was successful management of cost by all of the operating companies, all of the operating areas at Tampa Electric as outlined in our earnings release.

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