- Consolidated earnings for the third quarter ended September 30, 2016 were $27.5 million, or $0.62 per share, inclusive of $0.3 million of pre-tax merger costs. Earnings for the same quarter 2015 were $25.3 million, or $0.58 per share.
- Consolidated earnings for the twelve months ended September 30, 2016, including $8.7 million of pre-tax merger-related costs, were $60.6 million, or $1.38 per share. Absent merger-related costs, twelve months ended tax-adjusted earnings would have been $66.0 million, or $1.50 per share. Earnings for the twelve months ended September 30, 2015 were $57.8 million, or $1.33 per share ($1.32 diluted).
- Earnings for the third quarter 2016 were higher than the respective 2015 period primarily as a result of increased Missouri electric rates that became effective in late July 2015. New Missouri rates effective on September 14, 2016 and higher sales from more favorable weather also had a positive impact. Lower operating and maintenance expenses were also a positive driver, but were more than offset by higher depreciation expenses discussed below.
- The July 2015 Missouri rate increase was also a positive driver of the September 2016 twelve month ended results, however this positive effect was offset in the 2016 twelve-month period by mild winter heating season weather.
- On September 9, 2016, the Missouri Public Service Commission (MPSC) approved the Unanimous Stipulation and Agreement for changes in Missouri customer rates. The approval provided for an annual increase in base revenues of approximately $20.4 million, or 4.46%, to be effective, as mentioned above, on September 14, 2016. Base revenues established by the agreement are lower than the originally requested level of $33.4 million due primarily to lower fuel and purchased power costs than those built into current customer rates. The offsetting effect of reduced revenues and reduced fuel costs results in little impact to gross margin.
- On September 7, 2016, the Company announced the MPSC's approval of the Company's merger with Liberty Utilities (Central) Co., an indirect subsidiary of Algonquin Power & Utilities Corp. The Arkansas Public Service Commission also approved the merger on September 29, 2016. And most recently on October 6, 2016, the Company announced the filing of a joint motion with the Kansas Corporation Commission (KCC) for approval of a Unanimous Settlement Agreement to approve the merger. Approval of the Settlement Agreement is pending before the KCC, and an order is due no later than January 10, 2017.
- Increased customer rates, net of a $1.1 million decrease in Missouri base fuel recovery, increased revenues by an estimated $3.9 million.
- Weather and other volumetric factors increased revenues by an estimated $3.0 million, and
- Improved customer counts added an estimated $1.2 million to revenues.
Gas segment gross margin (gas revenues less cost of gas sold and transported) was relatively flat when compared to third quarter 2015 results.Consolidated third quarter 2016 earnings were favorably impacted by decreased operating and maintenance costs of approximately $2.4 million, primarily driven by lower transmission expense, while unfavorable impacts included the following:
- Depreciation and amortization expense increases of approximately $3.7 million, reflecting a one-time $2.6 million adjustment for the 2016 Missouri electric rate case and higher depreciation due to the completion of our Riverton combined cycle facility,
- Interest expense increases of approximately $0.3 million,
- Changes in AFUDC, which decreased earnings by approximately $1.6 million, and
- Merger-related costs of approximately $0.3 million.
- Increased customer rates, net of a decrease in Missouri base fuel recovery of $5.4 million, increased revenues an estimated $18.3 million,
- Improved customer counts added an estimated $3.2 million to revenues, and
- Weather and other volumetric factors decreased revenues an estimated $13.7 million.
Gas segment gross margin was approximately $2.3 million, or 10.1%, below the twelve month period ended September 30, 2015, as mild weather during the current period winter heating season drove a 13.8% decline in overall sales.Twelve month ended consolidated earnings were favorably impacted by lower maintenance expenses of approximately $5.8 million, primarily driven by lower transmission and distribution maintenance costs and the timing of a plant outage in 2015 at our State Line Combined Cycle plant. Unfavorable impacts included the following:
- Depreciation and amortization expense increases of approximately $6.6 million, reflecting a one-time $2.6 million adjustment for the 2016 Missouri electric rate case and higher depreciation due to the completion of our Riverton combined cycle facility,
- Interest expense increase of approximately $2.3 million resulting from the issuance of long-term debt in August 2015 which had a full-year impact in the current period ,
- Changes in AFUDC, which decreased earnings by approximately $1.3 million, and
- Merger-related costs of approximately $8.7 million.
|(dollars in millions, except Per Share data)|
|Three Months Ended September 30, 2016||Twelve Months Ended September 30, 2016|
|Operating and Maintenance Expenses||38.4||40.8||(2.4||)||159.4||165.7||(6.3||)|
|Depreciation and Amortization||23.8||20.1||3.7||85.4||78.8||6.6|
|Interest Expense and Other, net||11.5||10.5||1.0||40.8||38.0||2.8|
|Earnings Per Share (Basic)||$||0.62||$||0.58||$||0.04||$||1.38||$||1.33||$||0.05|
|Earnings Per Share (Diluted)||$||0.62||$||0.58||$||0.04||$||1.38||$||1.32||$||0.06|
|Reconciliation of Net Income/Earnings Per Share|
|Net Income (GAAP)||$||27.5||$||25.3||$||2.2||$||60.6||$||57.8||$||2.8|
|Merger-related costs (adjusted for taxes)||0.2||0.0||0.2||5.4||0.0||5.4|
|Net Income (excl. merger-related costs)||$||27.7||$||25.3||$||2.4||$||66.0||$||57.8||$||8.2|
|Earnings Per Share (Basic)||$||0.63||$||0.58||$||0.05||$||1.50||$||1.33||$||0.17|
|Earnings Per Share (Diluted)||$||0.63||$||0.58||$||0.05||$||1.50||$||1.32||$||0.18|
|Three Months Ended September 30, 2016||Twelve Months Ended September 30, 2016|
|2016||2015||% Change*||2016||2015||% Change*|
|Electric On-System kWh Sales ( in millions):|
|Total On-System Electric Sales||1,404||1,366||2.8||%||4,902||5,016||-2.3||%|
|Retail Gas Sales ( billion cubic feet):|
|Total Retail Gas Sales||0.19||0.21||-11.8||%||3.05||3.68||-17.1||%|
|Reconciliation of Earnings Per Share|
|Quarter Ended||Twelve Months Ended|
|Basic Earnings Per Share - September 30, 2015||$||0.58||$||1.33|
|Total Gross Margin||0.08||0.23|
|Maintenance and repairs||0.01||0.08|
|Depreciation and amortization||(0.05||)||(0.09||)|
|Change in effective income tax rates||(0.01||)||(0.01||)|
|Other income and deductions||0.02||0.01|
|Dilutive effect of additional shares issued||(0.01||)||(0.01||)|
|Basic Earnings Per Share - September 30, 2016||$||0.62||$||1.38|
Other factors that may impact earnings include variations in customer growth and usage projections, unanticipated or unplanned events that may impact operating and maintenance costs and the impact of actual rate case results differing from our assumptions. The effects of assumptions and other factors evaluated for the purpose of providing guidance are not necessarily independent of one another, and the combination of effects can cause individual impacts smaller or larger than the indicated guidance range.Based in Joplin, Missouri, The Empire District Electric Company (NYSE:EDE) is an investor-owned, regulated utility providing electric, natural gas (through its wholly owned subsidiary, The Empire District Gas Company) and water service, with approximately 218,000 customers in Missouri, Kansas, Oklahoma, and Arkansas. A subsidiary of the Company also provides fiber optic services. Certain matters discussed in this press release are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Such statements address or may address future plans, objectives, expectations and events or conditions concerning various matters such as the pending acquisition of Empire by Liberty Utilities (Central) Co. (Liberty Central), a subsidiary of Algonquin Power & Utilities Corp. (APUC) (the Merger), capital expenditures, earnings, pension and other costs, competition, litigation, our construction program, our generation plans, our financing plans, rate and other regulatory matters, liquidity and capital resources and accounting matters. Actual results in each case could differ materially from those currently anticipated in such statements, by reason of the factors noted in the Company's filings with the SEC, including the most recent Form 10-K and 10-Q.