The Empire District Electric Company Declares Quarterly Dividend; Reports 2015 Earnings; Provides 2016 Earnings Guidance
At the Board of Directors meeting of The Empire District Electric
Company (NYSE:EDE) held today, the Directors declared a quarterly
dividend of $0.26 per share. The dividend is payable March 15,
2016, to holders of record as of March 1, 2016. The Company, an
operator of regulated electric, gas and water utilities, announced today
the results for the quarter and twelve months ended December 31, 2015.
Highlights:
-
The Company reported consolidated earnings for the year ended December
31, 2015 of $56.6 million, or $1.30 per share ($1.29 on a diluted
basis). This compares to 2014 earnings of $67.1 million, or $1.55 per
share (basic and diluted). Earnings for the 2015 fourth quarter were
$9.9 million, or $0.23 per share (basic and diluted), compared with
2014 fourth quarter earnings of $11.1 million, or $0.26 per share
(basic and diluted).
-
The mildest fourth quarter weather in 30 years drove a decrease in
fourth quarter earnings, offsetting the positive margin impact from
new Missouri rates, which became effective July 26, 2015. Electric
segment sales declined 6.3% quarter over quarter. Higher depreciation
and interest expense also negatively impacted the quarter.
-
Earnings for the full year 2015 were also negatively impacted by the
mild fourth quarter weather. Year over year electric segment sales
were 1.8% lower in 2015. In addition, earnings were also lower due to
the effects of higher costs related to the Asbury Air Quality Control
System (AQCS) environmental upgrade that went into service December
15, 2014. These higher costs were not in electric rates until the new
Missouri rates took effect on July 26, 2015.
-
The Company expects 2016 earnings to be within a weather normalized
range of $1.38 to $1.54 per share. The higher range for 2016 reflects
a full year of recovery for Asbury AQCS related expenses and the
expectation of a partial year of new rates for the Company’s Riverton
combined cycle project. However, the Company will again experience the
effects of regulatory lag due to the timing of recovery of the
Riverton project costs in customer rates.
Brad Beecher, Empire’s President and CEO, noted that “We continued to
consistently execute our operating and financial plans during the fourth
quarter of 2015 even though confronted by exceptionally mild weather
during the period which had a negative impact on earnings per share.
With regard to the exploration of strategic alternatives confirmed in
the Company’s December 13, 2015 press release, we have no update.”
2015 Results
Electric segment gross margin (electric revenue less cost of fuel and
purchased power) increased $7.8 million or 2.1% during the year ended
December 31, 2015 versus the prior year period. Year over year electric
segment gross margin impacts include:
-
Increased customer rates of $10.4 million, net of a $3.3 million
decrease in Missouri base fuel recovery, increased revenues by an
estimated $7.1 million,
-
Improved customer counts added an estimated $2.3 million to revenues,
-
Weather and other volumetric factors decreased revenues by an
estimated $10.3 million and
-
A January 2015 FERC refund decreased revenues approximately $1.4
million.
Changes in other electric revenue, primarily related to Southwest Power
Pool (SPP) Integrated Market (IM) activity, and other fuel recovery
revenues were responsible for a decline in revenues of approximately
$35.1 million but were offset by corresponding changes in fuel expense,
resulting in little impact on gross margin.
Gas segment gross margin (gas revenues less cost of gas sold and
transported) was approximately $2.6 million lower than 2014 results. Gas
segment heating days in 2015 were 19% lower than in 2014 and 11% below
the 30-year average, resulting in a sales decline of 20% compared to the
prior year period.
Consolidated earnings for the year ended December 31, 2015 were also
negatively impacted by:
-
Operating expense increases of approximately $2.9 million, primarily
due to higher plant operations, transmission and health care expenses,
were partially offset by lower uncollectible accounts expense,
-
Maintenance expense increases of approximately $1.7 million related to
a planned outage at our SLCC facility and due to a Riverton
maintenance contract,
-
Depreciation and amortization expense increases of approximately $7.3
million,
-
Property and other taxes increase of approximately $2.1 million,
-
Interest expense increases of approximately $3.2 million, and
-
Changes in Allowance For Funds Used During Construction (AFUDC) which
decreased earnings $2.2 million.
These negative factors are largely reflective of under recovery of costs
due to the timing of the Company’s rate increases.
The increased electric margin from rates was more than offset by the
increase in expenses noted above, resulting in a decrease in
consolidated net income of approximately $10.5 million or 15.7% in 2015
compared to 2014.
Fourth Quarter 2015 Results
Electric segment gross margin increased approximately $2.3 million or
2.6% during the fourth quarter 2015 compared to the fourth quarter 2014.
Quarter over quarter electric segment gross margin impacts include:
-
Increased customer rates of $6.2 million, net of a decrease in
Missouri base fuel recovery of $1.8 million, increased revenues an
estimated $4.4 million, and
-
Weather and other volumetric factors decreased revenues an estimated
$8.0 million.
Changes in other electric revenue, primarily related to Southwest Power
Pool (SPP) Integrated Market (IM) activity, and other fuel recovery
revenues were responsible for a decline in revenues of approximately
$7.3 million but were offset by a corresponding change in fuel expense,
resulting in only a negligible impact on gross margin.
Gas segment gross margin of $5.8 million was approximately $1.4 million
or 19.2% below the fourth quarter of 2014 due to a 27.3% decline in
sales driven by milder weather.
Consolidated quarterly earnings were also favorably impacted by lower
maintenance and repair expense which decreased $1.9 million, while
unfavorable impacts included the following:
-
Operating expense increases of approximately $1.5 million,
-
Depreciation and amortization expense increases of approximately $1.8
million,
-
Other taxes increases of approximately $0.2 million,
-
Interest expense increases of approximately $1.0 million, and
-
Changes in AFUDC, which decreased earnings by approximately $0.6
million.
Consolidated net income decreased approximately $1.2 million or 10.9% in
the fourth quarter of 2015 compared to the 2014 quarter.
Selected unaudited consolidated financial data for the quarters and
years ended December 31, 2015 and December 31, 2014 is presented in the
following table.
|
|
|
|
|
|
|
|
|
(dollars in millions, except Per Share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
Years Ended
December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
Change*
|
|
|
|
2015
|
|
|
2014
|
|
|
Change*
|
|
Electric Margin
|
|
|
87.8
|
|
|
85.5
|
|
|
2.3
|
|
|
|
385.2
|
|
|
377.4
|
|
|
7.8
|
|
Gas Margin
|
|
|
5.8
|
|
|
7.2
|
|
|
(1.4)
|
|
|
|
22.2
|
|
|
24.8
|
|
|
(2.6)
|
|
Other Revenues
|
|
|
2.5
|
|
|
2.0
|
|
|
0.5
|
|
|
|
8.8
|
|
|
8.0
|
|
|
0.8
|
|
Gross Margin
|
|
|
96.1
|
|
|
94.7
|
|
|
1.4
|
|
|
|
416.2
|
|
|
410.2
|
|
|
6.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and Maintenance Expenses
|
|
|
40.9
|
|
|
41.3
|
|
|
(0.4)
|
|
|
|
165.4
|
|
|
160.5
|
|
|
4.9
|
|
Depreciation and Amortization
|
|
|
20.3
|
|
|
18.5
|
|
|
1.8
|
|
|
|
80.5
|
|
|
73.2
|
|
|
7.3
|
|
Taxes
|
|
|
15.1
|
|
|
15.6
|
|
|
(0.5)
|
|
|
|
74.0
|
|
|
76.5
|
|
|
(2.5)
|
|
Operating Income
|
|
|
19.8
|
|
|
19.3
|
|
|
0.5
|
|
|
|
96.3
|
|
|
100.0
|
|
|
(3.7)
|
|
Interest Expense and Other, net
|
|
|
9.9
|
|
|
8.2
|
|
|
1.7
|
|
|
|
39.7
|
|
|
32.9
|
|
|
6.8
|
|
Net Income
|
|
|
$9.9
|
|
|
$11.1
|
|
|
($1.2)
|
|
|
|
$56.6
|
|
|
$67.1
|
|
|
($10.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share (Basic)
|
|
|
$0.23
|
|
|
$0.26
|
|
|
($0.03)
|
|
|
|
$1.30
|
|
|
$1.55
|
|
|
($0.25)
|
|
Earnings Per Share (Diluted)
|
|
|
$0.23
|
|
|
$0.26
|
|
|
($0.03)
|
|
|
|
$1.29
|
|
|
$1.55
|
|
|
($0.26)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
Years Ended
December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
% Change*
|
|
|
|
2015
|
|
|
2014
|
|
|
% Change*
|
|
Electric On-System kWh Sales (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
385
|
|
|
444
|
|
|
(13.2)%
|
|
|
|
1,836
|
|
|
1,950
|
|
|
(5.9)%
|
|
Commercial
|
|
|
369
|
|
|
386
|
|
|
(4.5)%
|
|
|
|
1,577
|
|
|
1,583
|
|
|
(0.4)%
|
|
Industrial
|
|
|
260
|
|
|
257
|
|
|
1.3%
|
|
|
|
1,065
|
|
|
1,032
|
|
|
3.2%
|
|
Other
|
|
|
108
|
|
|
111
|
|
|
(2.6)%
|
|
|
|
462
|
|
|
465
|
|
|
(0.5%)
|
|
Total On-System Electric Sales
|
|
|
1,122
|
|
|
1,198
|
|
|
(6.3)%
|
|
|
|
4,940
|
|
|
5,030
|
|
|
(1.8%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Gas Sales (billion cubic feet):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
0.63
|
|
|
0.87
|
|
|
(27.7)%
|
|
|
|
2.22
|
|
|
2.76
|
|
|
(19.6%)
|
|
Commercial/Industrial
|
|
|
0.30
|
|
|
0.40
|
|
|
(26.4)%
|
|
|
|
1.08
|
|
|
1.33
|
|
|
(19.0%)
|
|
Other
|
|
|
0.01
|
|
|
0.01
|
|
|
(18.5)%
|
|
|
|
0.03
|
|
|
0.04
|
|
|
(19.6%)
|
|
Total Retail Gas Sales
|
|
|
0.94
|
|
|
1.28
|
|
|
(27.2)%
|
|
|
|
3.33
|
|
|
4.13
|
|
|
(19.4%)
|
|
* Slight differences from actual results may occur due to
rounding to millions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Earnings Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
Twelve Months Ended
|
|
|
|
Basic Earnings Per Share – December 31, 2014
|
|
|
$
|
0.26
|
|
|
|
|
$
|
1.55
|
|
|
|
|
Gross Margins
|
|
|
|
|
|
|
|
|
|
|
Electric segment
|
|
|
|
0.03
|
|
|
|
|
|
0.12
|
|
|
|
|
Gas segment
|
|
|
|
(0.02
|
)
|
|
|
|
|
(0.04
|
)
|
|
|
|
Other segment
|
|
|
|
0.01
|
|
|
|
|
|
0.01
|
|
|
|
|
Total Gross Margin
|
|
|
|
0.02
|
|
|
|
|
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
|
|
(0.02
|
)
|
|
|
|
|
(0.04
|
)
|
|
|
|
Maintenance and repairs
|
|
|
|
0.03
|
|
|
|
|
|
(0.03
|
)
|
|
|
|
Depreciation and amortization
|
|
|
|
(0.03
|
)
|
|
|
|
|
(0.11
|
)
|
|
|
|
Other taxes
|
|
|
|
0.00
|
|
|
|
|
|
(0.03
|
)
|
|
|
|
Change in effective income tax rates
|
|
|
|
0.00
|
|
|
|
|
|
(0.01
|
)
|
|
|
|
Other income and deductions
|
|
|
|
(0.01
|
)
|
|
|
|
|
(0.03
|
)
|
|
|
|
Interest charges
|
|
|
|
(0.01
|
)
|
|
|
|
|
(0.05
|
)
|
|
|
|
AFUDC
|
|
|
|
(0.01
|
)
|
|
|
|
|
(0.03
|
)
|
|
|
|
Dilutive effect of additional shares issued
|
|
|
|
0.00
|
|
|
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per Share – December 31, 2015
|
|
|
$
|
0.23
|
|
|
|
|
$
|
1.30
|
|
|
|
|
Diluted Earnings Per Share – December 31, 2015
|
|
|
$
|
0.23
|
|
|
|
|
$
|
1.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The reconciliation of basic earnings per share (EPS) presented above
compares the quarter and year ended December 31, 2015 versus December
31, 2014 and is a non-GAAP presentation. The economic substance behind
this non-GAAP EPS measure is to present the after tax impact of
significant items and components of the statement of income on a per
share basis before the impact of additional stock issuances. The Company
believes this presentation is useful to investors because the statement
of income does not readily show the EPS impact of the various
components, including the effect of new stock issuances. This could
limit the readers’ understanding of the reasons for the EPS change from
previous years. This information is useful to management, and the
Company believes useful to investors, to better understand the reasons
for the fluctuation in EPS between the prior and current years on a per
share basis.
In addition, although a non-GAAP presentation, the Company believes
the presentation of gross margin (reflected in the table above and
elsewhere in this press release) is useful to investors and others in
understanding and analyzing changes in operating performance from one
period to the next, and have included the analysis as a complement to
the financial information provided in accordance with GAAP. This
reconciliation and margin information may not be comparable to other
companies or more useful than the GAAP presentation included in the
statements of income. The presentation does not purport to be an
alternative to EPS determined in accordance with GAAP as a measure of
operating performance or any other measure of financial performance
presented in accordance with GAAP. Management compensates for the
limitations of using non-GAAP financial measures by using them to
supplement GAAP results to provide a more complete understanding of the
factors and trends affecting the business than GAAP results alone. The
dilutive effect of additional shares issued in this table reflects the
impact of all shares issued in the respective periods presented.
Earnings Guidance
We expect full-year 2016 earnings to be within the weather normalized
range of $1.38 to $1.54 per share. This 2016 guidance range assumes
30-year average weather, overall system energy growth of less than 1%,
an October 1, 2016 effective date for our pending Missouri rate case at
the filed amount of $33.4 million, and increased operating costs, driven
by costs related to our Riverton combined cycle project.
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.
Earnings Conference Call
Brad Beecher, President and CEO, will host a conference call Friday,
February 5, 2016, at 1:00 p.m. Eastern Time to discuss earnings for the
fourth quarter and twelve months ended December 31, 2015. To phone in to
the conference call, parties in the United States should dial
1-888-243-4451, any time after 12:45 p.m. Eastern Time. The webcast
presentation and accompanying presentation slides can also be accessed
from Empire’s website at www.empiredistrict.com.
The webcast presentation will be available for replay for one year from
today’s date. Forward-looking and other material information may be
discussed during the conference call.
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 future plans, objectives, expectations, earnings, and
events or conditions concerning various 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 Form 10-Q.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160204006614/en/
Copyright Business Wire 2016