UIL Reports Second Quarter 2012 Results And Affirms 2012 Earnings Guidance

UIL Holdings Corporation (NYSE: UIL) today reported consolidated net income of $12.0 million, or $0.23 per diluted share for the second quarter of 2012, compared to $14.2 million or $0.28 per diluted share for the same period in 2011. For the first six months of 2012, UIL’s consolidated net income was $59.0 million, or $1.16 per diluted share, compared to $66.2 million, or $1.30 per diluted share for the same period in 2011.

“We experienced the warmest winter on record and those warm temperatures continued into spring. The warm temperatures significantly impacted the financial results of our gas business,” said James P. Torgerson, UIL’s president and chief executive officer. “We have been able to mitigate some of the weather’s impact by maintaining our focus on short-term O&M cost controls. We also continue to execute on our growth strategy of converting businesses and households in our service territory to natural gas heat. Year-to-date 2012 conversions are 46% ahead of 2011 levels and we currently are on target to meet our 2012 goal.”

Electric distribution, CTA & other

Earnings from the electric distribution business for the second quarter in 2012 were $10.9 million, or $0.21 per diluted share, compared to $11.1 million, or $0.22 per diluted share, for the same period in 2011. The decrease in earnings for the quarter was primarily attributable to a decrease in allowance for funds used during construction (AFUDC), partially offset by increased income from UI’s equity investment in GenConn.

For the first six months of 2012, the electric distribution business had total earnings of $25.1 million, or $0.49 per diluted share, compared to $21.8 million, or $0.43 per diluted share, for the same period in 2011. The increase in earnings for the first six months was primarily attributable to increased income from UI’s equity investment in GenConn.

Pre-tax earnings from the equity investment in GenConn were $3.9 million, compared to pre-tax earnings of $2.6 million for the same period in 2011. For the first six months of 2012 pre-tax earnings from the equity investment in GenConn were $8.4 million, compared to $4.7 million for the same period in 2011.

Electric transmission

Earnings from the electric transmission business for the second quarter in 2012 were $7.8 million, or $0.15 per diluted share, compared to $7.9 million, or $0.15 per diluted share, for the same period in 2011. For the first six months of 2012, total transmission earnings were $15.2 million, or $0.30 per diluted share, compared to $15.6 million, or $0.31 per diluted share for the same period in 2011. The decrease was primarily attributable to a decrease in the AFUDC, partially offset by an increase in rate base.

Gas distribution

The gas distribution business incurred a loss of $3.2 million, or $0.06 per diluted share for the second quarter in 2012, compared to a loss of $1.5 million, or $0.03 per diluted share for the same period in 2011, consistent with the seasonal nature of the gas business. The reduction in gas distribution sales, primarily driven by warmer weather and reduced per customer usage, resulted in a $4.1 million decrease in pre-tax gross margin, compared to the second quarter in 2011.

For the first six months of 2012, earnings from the gas distribution business were $25.2 million, or $0.49 per diluted share, compared to $35.9 million, or $0.71 per diluted share for the same period in 2011. Earnings for the second quarter and first six months of 2012 were negatively impacted by lower sales volume primarily due to the impact of warmer weather compared to the same periods in 2011. Heating degree days for the first six months were 20.7% below normal and 21% lower compared to 2011. The warmer temperatures in the first six months of 2012, coupled with reduced per customer usage, resulted in an $18.1 million decrease in pre-tax gross margin, compared to the same period in 2011. The decrease in gross margin for the first six months was partially offset by weather insurance of $3.5 million.

“On a positive note, the warmer weather has helped us in our gas conversion efforts and allowed us to get a jump start on gas construction projects,” added Torgerson. “Year-to-date, we have converted more than 4,600 customers, compared to 3,190 customers in the first six months of 2011 and are on track to meet our 2012 goal.”

Corporate

UIL Holdings retains certain costs, primarily interest expense, at the holding company, or “corporate” level, which are not allocated to the various subsidiaries. UIL Corporate incurred net after-tax costs of $3.5 million, or $0.07 per diluted share, in the second quarter of 2012, compared to net after-tax costs of $3.3 million, or $0.06 per diluted share, in the same period of 2011. For the first six months of 2012, UIL Corporate incurred net after-tax costs of $6.5 million, or $0.12 per diluted share, compared to $7.1 million, or $0.15 per diluted share for the first six months of 2011. The reduction in costs for the first six months was primarily attributable to decreased interest expense resulting from lower short-term borrowings.

Looking Forward

UIL affirms the earnings guidance reported on May 4, 2012, as shown below.
Category  

Approximate Net Income(2)
    EPS - diluted(3)
 
Electric distribution, CTA & other $46 - $51 $0.90 - $1.00
Electric transmission $28 - $33 $0.55 - $0.65
 
Total Electric(1) $76 - $84 $1.50 - $1.65
 
Gas distribution $36 - $41 $0.70 - $0.80
UIL Corporate ($14) - ($13) ($0.27) - ($0.25)
 
Total UIL(1) $102 - $109 $2.00 - $2.15
 
(1) Expectations are not expected to be additive
(2) Rounded to the nearest million
(3) Assumes approximately 51.1 million average shares outstanding

Second Quarter 2012 Earnings Conference Call

In conjunction with this earnings release, UIL Holdings will conduct a webcast conference call with financial analysts on Monday, August 6, 2012, beginning at 10:00 a.m. eastern time. UIL Holdings’ executive management will present an overview of the financial results followed by a question and answer session. Interested parties, including analysts, investors and the media, may listen live via the internet by logging onto the Investors section of UIL’s website at http://www.uil.com. Institutional investors can access the call via Thomson Street Events ( www.streetevents.com), a password-protected event management site.

Headquartered in New Haven, Connecticut , UIL Holdings Corporation (NYSE:UIL) is a diversified energy delivery company serving a total of approximately 700,000 electric and natural gas utility customers in 66 communities across two states, with combined total assets of over $4 billion.

UIL Holdings is the parent company for The United Illuminating Company (UI), Connecticut Natural Gas Corporation (CNG), The Southern Connecticut Gas Company (SCG), and The Berkshire Gas Company (Berkshire), each more than 100 years old. UI provides for the transmission and delivery of electricity and other energy related services for Connecticut’s Greater New Haven and Bridgeport areas. SCG and CNG are natural gas distribution companies that serve customers in Connecticut, while Berkshire serves natural gas customers in western Massachusetts. UIL Holdings employs more than 1,800 people in the New England region. For more information on UIL Holdings, visit http://www.uil.com.

Use of Non-GAAP Measures

UIL Holdings believes that a breakdown, presented on a net income and per share basis is useful in understanding the change in the consolidated results of operations for UIL Holdings from one reporting period to another. UIL Holdings presents such per share amounts by taking the pretax amounts determined in accordance with generally accepted accounting principles (GAAP), and applying UIL Holdings' combined effective statutory federal and state tax rate and then dividing the results by the average number of shares of UIL Holdings common stock outstanding for the periods presented. Any such amounts provided are provided for informational purposes only and are not intended to be used to calculate "Pro-forma" amounts.

UIL Holdings also believes earnings per share (EPS) information as presented in its earnings guidance is useful in understanding the earnings expectations for the business as a whole. The amounts presented in the earnings guidance show the EPS for each of UIL Holdings’ lines of business. EPS is calculated by dividing the 2012 net income for each line of business by the average number of shares of UIL Holdings common stock outstanding for 2012. Total consolidated EPS is a GAAP-basis presentation.

Forward-Looking Statements

Certain statements contained herein, regarding matters that are not historical facts, are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). These include statements regarding management’s intentions, plans, beliefs, expectations or forecasts for the future. Such forward-looking statements are based on UIL Holdings’ expectations and involve risks and uncertainties; consequently, actual results may differ materially from those expressed or implied in the statements. Such risks and uncertainties include, but are not limited to, general economic conditions, legislative and regulatory changes, changes in demand for electricity, gas and other products and services, unanticipated weather conditions, changes in accounting principles, policies or guidelines, and other economic, competitive, governmental, and technological factors affecting the operations, markets, products and services of UIL Holdings’ subsidiaries, The United Illuminating Company, The Southern Connecticut Gas Company, Connecticut Natural Gas Corporation and The Berkshire Gas Company. The foregoing and other factors are discussed and should be reviewed in UIL Holdings’ most recent Annual Report on Form 10-K and other subsequent periodic filings with the Securities and Exchange Commission. Forward-looking statements included herein speak only as of the date hereof and UIL Holdings undertakes no obligation to revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances.

The following are summaries of UIL Holdings’ unaudited consolidated financial information for the second quarter and first six months of 2012 and 2011:
UIL HOLDINGS CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(In Thousands except per share amounts)
(Unaudited)
       
Three Months Ended Six Months Ended
June 30, June 30,
2012 2011 2012 2011
 
Operating Revenues $ 283,508 $ 314,049 $ 741,846 $ 875,102
 
Operating Expenses
Operation
Purchased power 34,358 37,311 75,016 86,574
Natural gas purchased 39,953 63,537 190,758 292,880
Operation and maintenance 88,586 90,393 174,793 175,525
Transmission wholesale 17,234 17,607 33,282 34,629
Depreciation and amortization 43,048 39,077 89,607 84,048
Taxes - other than income taxes   23,822   25,900   54,422   61,407
Total Operating Expenses   247,001   273,825   617,878   735,063
Operating Income   36,507   40,224   123,968   140,039
 
Other Income and (Deductions), net   4,872   5,604   13,789   10,269
 
Interest Charges, net
Interest on long-term debt 21,825 22,670 42,927 44,007
Other interest, net   1,312   422   2,847   1,729
23,137 23,092 45,774 45,736
Amortization of debt expense and redemption premiums   599   505   1,208   1,335
Total Interest Charges, net   23,736   23,597   46,982   47,071
 
 
Income Before Income Taxes, Equity Earnings 17,643 22,231 90,775 103,237
 
Income Taxes   9,546   10,708   40,089   41,718
 
Income Before Equity Earnings 8,097 11,523 50,686 61,519
Income from Equity Investments   3,915   2,647   8,402   4,709
 
Net Income 12,012 14,170 59,088 66,228
Less:
Preferred Stock Dividends of
Subsidiary, Noncontrolling Interests   13   14   39   28
 
Net Income attributable to UIL Holdings $ 11,999 $ 14,156 $ 59,049 $ 66,200
 
Average Number of Common Shares Outstanding - Basic 50,793 50,628 50,740 50,574
Average Number of Common Shares Outstanding - Diluted 51,041 50,872 51,002 50,824
       
Earnings Per Share of Common Stock - Basic: $ 0.24 $ 0.28 $ 1.16 $ 1.31
 
Earnings Per Share of Common Stock - Diluted: $ 0.23 $ 0.28 $ 1.16 $ 1.30
 
Cash Dividends Declared per share of Common Stock $ 0.432 $ 0.432 $ 0.864 $ 0.864
 
               

UIL HOLDINGS CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Three and Six Months Ended June 30, 2012 and 2011
(Thousands of Dollars)
(Unaudited)
2012 2011 2012 2011
 
Net Income $ 12,012 $ 14,170 $ 59,088 $ 66,228
Other Comprehensive Income, net   (154)   (26)   201   146
Comprehensive Income 11,858 14,144 59,289 66,374
Less:
Preferred Stock Dividends of
Subsidiary, Noncontrolling Interests   13   14   39   28
Comprehensive Income attributable to UIL Holdings $ 11,845 $ 14,130 $ 59,250 $ 66,346
UIL HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
   
June 30, December 31,
(thousands of dollars)   2012   2011
ASSETS
Current assets $ 558,346 $ 667,228
Other investments 149,706 153,653
Net property, plant and equipment 2,651,170 2,570,355
Regulatory assets 914,971 983,222
Goodwill 266,205 266,797
Deferred charges and other assets   103,819   103,354
Total Assets $ 4,644,217 $ 4,744,609
 
 
 
LIABILITIES AND CAPITALIZATION
Current liabilities $ 427,649 $ 641,868
Noncurrent liabilities 611,679 650,555
Deferred income taxes 413,436 388,553
Regulatory liabilities   430,771   420,175
Total Liabilities 1,883,535 2,101,151
 
Long-term debt, net of unamortized discount and premium 1,645,139 1,548,347
Preferred stock of subsidiary 750 750
Net common stock equity   1,114,793   1,094,361
Total Capitalization 2,760,682 2,643,458
   
Total Liabilities and Capitalization $ 4,644,217 $ 4,744,609

Copyright Business Wire 2010

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