Pepco Holdings (POM) Q1 2012 Earnings Call May 04, 2012 11:00 am ET Executives Donna J. Kinzel - Vice President of Investor Relations Joseph M. Rigby - Chairman, Chief Executive Officer, President and Member of Executive Committee Frederick J. Boyle - Chief Financial Officer and Senior Vice President Anthony J. Kamerick - Chief Regulatory Officer and Executive Vice President Kirk J. Emge - Senior Vice President and General Counsel David M. Velazquez - Executive Vice President of Power Delivery Analysts Paul Patterson - Glenrock Associates LLC Matthew Davis - Crédit Suisse AG, Research Division Paul T. Ridzon - KeyBanc Capital Markets Inc., Research Division Maury May Presentation Operator
Also please note that today's call will include a discussion of our results excluding an item that we feel is not representative of the company's ongoing business operations. The item and the associated financial impact are described in our earnings release dated today. The earnings release can be found on our website at www.pepcoholdings.com/investors. Joe?Joseph M. Rigby Thanks, Donna, and good morning, ladies and gentlemen, and thanks for joining us today. Before I get into the earnings discussion, I'd like to take this opportunity to introduce to you Fred Boyle, who joined us as Senior Vice President and Chief Financial Officer in early April. We're really pleased to have Fred on the team. He brings a strong background as an experienced financial leader in the utility industry. He most recently served as Chief Financial Officer of DPL Incorporated, which is the holding company of Dayton Power and Light. Also effective in April, Tony Kamerick was promoted to Executive Vice President and Chief Regulatory officer for PHI. And Tony will continue to report to me and he'll lead our regulatory process through the current cycle of rate cases until his retirement in early 2013. As you would expect, executive succession planning is a key responsibility for both myself and our Board of Directors, and we're very pleased that these appointments carryout that responsibility in a way that we think effectively aligns and strengthens our senior management team as we move forward. So with that, let me turn to our financial results. As seen on Slide 3, earnings from continuing operations for the first quarter of 2012 were $68 million compared to $62 million for the first quarter of 2011. The 2011 earnings include $2 million of mark-to-market losses resulting from economic hedging activities associated with the Retail Energy Supply business of Pepco Energy Services. Excluding the impact of the mark-to-market losses, earnings in the first quarter of 2011 would have been $64 million. Mark-to-market losses in the 2012 quarter were less than $1 million.
Our earnings from continuing operations reflect our investment in utility infrastructure, as well as the positive impact of tax adjustments which more than mitigated the effects of the mild winter weather we experienced in our service area. Later on the call, Fred will address the financial results in our operating segment performance in more detail, but first, I'd like to address some topics of interest.Improving system reliability was a top priority for our company last year and it remains so in 2012. Our reliability enhancements efforts, which initially focused primarily in the Pepco region, have now been extended across the service territories of Atlantic City Electric and Delmarva Power. We continue to make good progress in advancing infrastructure improvements and performing system maintenance. As shown on Slide 4, during the first quarter of 2012, our utilities invested $280 million in the Power Delivery business. These investments were aimed at enhancing the distribution and transmission systems and providing new services to our customers. Our efforts to improve system reliability are yielding meaningful results, as we continue to see positive trends in the operating performance of our electric system. We've also seen improvement in customer satisfaction. A recent survey by the American Customer Satisfaction Index showed a 28% improvement in our customer satisfaction score compared to the survey results from one year ago. Our customer satisfaction ratings as measured by the most recent surveys conducted by J.D. Power and Market Strategies International have also shown improvement. And on March 21, the Edison Electric Institute presented Pepco Holdings with the Emergency Recovery Award for the restoration efforts of all of our 3 utilities following Hurricane Irene in August of last year. While we realize there is still more work to be done, we're pleased that these indicators point to our customers' experience in improved level of service. Read the rest of this transcript for free on seekingalpha.com