Published:
Energy West Reports Net Income Increase of 20% for Fiscal 2008 Third Quarter
GREAT FALLS, Mont., May 15 /PRNewswire-FirstCall/ -- Energy West
(Nasdaq: EWST) today reported consolidated results for its fiscal 2008 third
quarter and nine months ended March 31, 2008.
Net income for the third quarter of 2008 was $2.3 million, or $0.53 per
diluted share. Net income for the third quarter of 2008 increased 20%
compared to net income of $1.9 million or $0.42 per diluted share in the
fiscal 2007 third quarter, which included $636,000 or $0.14 per diluted share
relating to the results of discontinued operations. The Natural Gas
Operations segment contributed net income of $1.6 million for the third
quarter compared to $0.9 million for the same quarter of 2007, an increase of
72%. This increase was primarily due to the acquisitions of Frontier
Utilities inNorth Carolina and Bangor Gas Company inMaine in October 2007
and December 2007, respectively, which contributed combined net income of
$439,211 for the quarter. The Marketing and Production segment contributed
$671,125 for the third quarter of 2008 compared to $367,326 for the same
quarter of 2007. The Pipeline Operations segment contributed net income of
$21,805 for the third quarter of 2008 compared to a loss of $8,607 for the
same quarter of 2007.
For the nine months ended March 31, 2008, net income was $10.2 million, or
$2.37 per diluted share, which included a $6.8 million extraordinary gain
offset by approximately $600,000 associated with the realignment of the
Company's management team. The $6.8 million extraordinary gain resulted from
the recognition of a deferred tax asset of $11.5 million from the purchase of
assets inNorth Carolina andMaine. Excluding the extraordinary item of $6.8
million and the management restructuring charge of approximately $600,000
(approximately $369,000 after tax), the adjusted net income for the first nine
months of 2008 was $3.8 million, or $0.88 per diluted share. For the nine
months ended March 31, 2007, net income was $3.0 million, or $0.67 per diluted
share, including $0.13 per diluted share relating to the results of
discontinued operations. The Natural Gas Operations segment contributed net
income of $2.1 million for the nine months of 2008 compared to $1.6 million
for the same period in 2007, an increase of 36%. This increase was primarily
due to the acquisitions of Frontier Utilities and Bangor Gas which contributed
combined net income of $641,625 for the first nine months of 2008. The
Marketing and Production segment contributed $1.2 million for the first nine
months of 2008 compared to $816,485 for 2007. The Pipeline Operations segment
contributed net income of $67,913 for the first nine months of 2008 compared
to $35,460 for 2007.
"Our strategy of growing Energy West through internal opportunities and
gas utility acquisitions is yielding positive results. The third quarter of
2008 was the first full quarter that included both ourMaine andNorth
Carolina operations as part of the Energy West team," said Richard M. Osborne,
Chairman and CEO of Energy West. "We expect future growth in ourMaine and
North Carolina markets as we fully integrate these growing markets into our
company. We continue to concentrate on enhancing marketing and productivity
in our operations, includingMaine andNorth Carolina, and reducing our
expenses."
Safe Harbor Regarding Forward-Looking Statements
The Company is including the following cautionary statement in this
release to make applicable and to take advantage of the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995 for any
forward-looking statements made by, or on behalf of, Energy West,
Incorporated. Forward-looking statements are all statements other than
statements of historical fact, including, without limitation, those that are
identified by the use of the words "anticipates," "estimates," "expects,"
"intends," "plans," "predicts," "believes" and similar expressions. Such
statements are inherently subject to a variety of risks and uncertainties that
could cause actual results to differ materially from those expressed. Factors
that may affect forward-looking statements and the company's business
generally include but are not limited to the impact of regulation on the
Company's business, the Company's gas purchase practices, operational issues,
hazards involved in storing and transporting natural gas, consumption
sensitivity, the Company's ability to implement its business plan (including
controlling costs and managing growth), fluctuating energy commodity prices,
the cost of natural gas, loss of customers, integration of acquired
businesses, maintenance of effective internal controls, the possibility that
regulators may not permit the company to pass through all of its increased
costs to its customers, changes in the utility regulatory environment,
wholesale and retail competition, weather conditions, future utilization of
pipeline capacity, litigation risks, risks associated with contracts accounted
for as derivatives, ability to meet financial covenants imposed by the
Company's lenders, continued ability to make dividend payments and various
other matters, many of which are beyond the Company's control, the risk
factors and cautionary statements made in the company's public filings with
the Securities and Exchange Commission, and other factors that the company is
currently unable to identify or quantify, but may exist in the future. Energy
West expressly undertakes no obligation to update or revise any
forward-looking statement contained herein to reflect any change in Energy
West's expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
About Energy West
Energy West, Incorporated distributes and sells natural gas to end-use
residential, commercial, and industrial customers. It distributes
approximately 23 billion cubic feet of natural gas to approximately 36,000
customers through regulated utilities operating inMontana,Wyoming,North
Carolina andMaine. The Company markets approximately 1.6 billion cubic feet
of natural gas to commercial and industrial customers inMontana andWyoming
on an unregulated basis. The Company also has a majority ownership interest
in 162 natural gas producing wells and gas gathering assets. In addition, the
Company owns the Shoshone interstate and the Glacier gathering pipelines
located inMontana andWyoming. The Company'sMontana public utility was
originally incorporated in 1909 and is headquartered inGreat Falls, Montana.
For additional information regarding Energy West, please contact: James W.
Garrett, President and Chief Operating Officer, at (440) 205-1987. The
Company's toll-free number is (800) 570-5688. The Company's web site is
http://www.energywest.com. The Company's address is 1 First Avenue South,
Great Falls, Montana 59401.
ENERGY WEST, INCORPORATED
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
UNAUDITED
In this press release, the company presented adjusted net income and
adjusted net income per share, which are non-GAAP financial measures.
Management uses non-GAAP financial measures to evaluate the company's
performance for the periods presented, and believes that these measures of
profitability provide a meaningful presentation of the underlying earnings of
the company's operations. Adjusted net income and adjusted net income per
share exclude certain items that, in the opinion of management, may not be
indicative of overall operating trends. These non-GAAP measures should not be
considered an alternative to measurements required by GAAP. Our calculation
of these measures may differ from similar measures used by other companies and
investors should be careful when comparing the company's non-GAAP financial
measures to those of other companies.
For the nine months ended March 31, 2008, adjusted net income and adjusted
net income per share exclude an extraordinary gain related to a deferred tax
asset and a one-time management restructuring charge. The following is a
reconciliation to the most directly comparable GAAP financial measure:
Reconciliation of GAAP Net Income to Adjusted Net Income
Nine Months Ended
March 31
2008 2007
$(000) Per Share $(000) Per Share
GAAP basis net income as reported $10,250 $2.37 $3,005 $0.67(1)
Deduct extraordinary gain (6,819) (1.58) - -
Add management restructuring costs
(net of tax) 369 0.09 - -
Adjusted net income $3,800 $0.88 $3,005 $0.67(1)
(1) FY07 amounts include net
income from discontinued operations $594 $0.13
ENERGY WEST, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended
March 31, March 31,
2008 2007 2008 2007
REVENUES:
Natural gas operations $24,167,479 $17,917,310 $45,285,774 $38,243,199
Gas and electric --
wholesale 6,620,996 3,521,291 12,437,687 9,508,646
Pipeline operations 89,797 94,086 276,652 293,277
Total revenues 30,878,272 21,532,687 58,000,113 48,045,122
EXPENSES:
Gas purchased 17,709,457 13,754,736 31,681,884 28,028,269
Gas and electric --
wholesale 5,529,655 2,756,280 10,260,840 7,675,841
Total cost of sales 23,239,112 16,511,016 41,942,724 35,704,110
GROSS MARGIN 7,639,160 5,021,671 16,057,389 12,341,012
Distribution, general,
and administrative 2,750,428 1,479,429 7,352,336 4,580,704
Maintenance 203,190 149,543 529,105 393,978
Depreciation and
amortization 487,248 418,920 1,376,619 1,269,122
Taxes other than income 644,844 615,265 1,508,457 1,290,680
Total expenses 4,085,710 2,663,157 10,766,517 7,534,484
OPERATING INCOME 3,553,450 2,358,514 5,290,872 4,806,528
OTHER INCOME 48,157 33,614 238,250 171,962
INTEREST (EXPENSE) (287,748) (382,323) (817,459) (1,186,228)
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAX 3,313,859 2,009,805 4,711,663 3,792,262
INCOME TAX (EXPENSE) (1,006,561) (716,802) (1,280,389) (1,382,089)
INCOME FROM CONTINUING
OPERATIONS 2,307,298 1,293,003 3,431,274 2,410,173
DISCONTINUED OPERATIONS:
Income from discontinued
operations - 1,040,057 - 972,861
Income tax benefit (expense) - (403,747) - (378,484)
INCOME FROM DISCONTINUED
OPERATIONS: - 636,310 - 594,377
INCOME BEFORE EXTRAORDINARY
ITEM 2,307,298 1,929,313 3,431,274 3,004,550
EXTRAORDINARY ITEM - - 6,819,182 -
NET INCOME $2,307,298 $1,929,313 $10,250,456 $3,004,550
BASIC EARNINGS PER
COMMON SHARE:
Income from continuing
operations $0.53 $0.29 $0.80 $0.54
Income from discontinued
operations $0.00 $0.14 $0.00 $0.13
Extraordinary item $0.00 $0.00 $1.58 $0.00
$0.53 $0.43 $2.38 $0.68
DILUTED EARNINGS PER
COMMON SHARE:
Income from continuing
operations $0.53 $0.28 $0.79 $0.54
Income from discontinued
operations $0.00 $0.14 $0.00 $0.13
Extraordinary item $0.00 $0.00 $1.58 $0.00
$0.53 $0.42 $2.37 $0.67
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:(a)
Basic 4,337,363 4,484,160 4,304,018 4,440,446
Diluted 4,342,462 4,540,815 4,316,500 4,482,440
(a) On February 1, 2008, a 3:2 stock split was effectuated. Weighted
average shares and earning per share have been restated to reflect
the stock split.
Please refer to the notes as filed on Form 10-Q that are an integral part
of these condensed consolidated financial statements.
ENERGY WEST, INCORPORATED AND SUBSIDIARIES
SEGMENTS OF OPERATIONS
Income from continuing operations is summarized in the table below:
Three Months Ended Nine Months Ended
March 31 March 31
2008 2007 2008 2007
Gross margin (operating
revenue less cost of
gas sold):
Natural gas operations $6,458,022 $4,162,574 $13,603,890 $10,214,930
Marketing and production
operations 1,091,341 765,011 2,176,847 1,832,805
Pipeline operations 89,797 94,086 276,652 293,277
7,639,160 5,021,671 16,057,389 12,341,012
Operating income:
Natural gas operations 2,558,912 1,737,540 3,457,680 3,286,577
Marketing and production
operations 954,819 630,007 1,719,632 1,438,536
Pipeline operations 39,719 (9,033) 113,560 81,415
3,553,450 2,358,514 5,290,872 4,806,528
Net income from continuing
operations:
Natural gas operations 1,610,688 934,284 2,118,182 1,558,228
Marketing and production
operations 671,125 367,326 1,241,499 816,485
Pipeline operations 21,805 (8,607) 67,913 35,460
$2,303,618 $1,293,003 $3,427,594 $2,410,173
ENERGY WEST, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, MARCH 31, 2008 AND 2007, AND
JUNE 30, 2007
ASSETS March 31, June 30,
(unaudited) (audited)
2008 2007 2007
Current Assets:
Cash $2,264,078 $1,147,704 $7,010,020
Marketable securities 301,989 - -
Accounts and notes receivable
less $195,384,$220,118 and
$64,054, respectively,
allowance for bad debt 7,261,014 5,774,107 3,532,083
Unbilled gas 2,783,185 1,574,040 649,939
Derivative assets 92,258 107,975 57,847
Natural gas and propane inventories 442,069 675,050 5,474,309
Materials and supplies 972,792 394,109 377,296
Prepayments and other 565,366 287,373 142,964
Prepaid income tax 959,697 - 162,432
Recoverable cost of gas purchases 645,103 1,544,680 307,899
Deferred tax asset - - 53,370
Assets held for sale - 12,524,572 -
Total current assets 16,287,551 24,029,610 17,768,159
Property, Plant and Equipment, Net 31,479,732 30,370,404 30,473,991
Deferred Charges 2,820,116 3,610,615 3,031,425
Deferred Tax Asset Long Term 7,095,185 - -
Other Investments 597,792 - -
Other Assets 405,046 594,222 560,463
TOTAL ASSETS $58,685,422 $58,604,851 $51,834,038
LIABILITIES AND CAPITALIZATION
Current Liabilities:
Accounts payable $6,035,241 $5,265,257 $4,543,525
Current portion of long-term debt - 1,060,000 -
Derivative liabilities 92,423 63,039 58,018
Accrued income taxes - 111,214 -
Deferred income taxes 73,711 431,964
Accrued and other current
liabilities 4,168,474 3,975,397 3,092,726
Liabilities held for sale - 936,305 -
Total current liabilities 10,369,849 11,843,176 7,694,269
Other Obligations:
Deferred income taxes - 5,529,869 4,585,170
Deferred investment tax credits 255,362 276,424 271,158
Other long-term liabilities 3,875,811 4,069,602 3,987,731
Total 4,131,173 9,875,895 8,844,059
Long-Term Debt 13,000,000 15,218,333 13,000,000
Commitments and Contingencies
(see note 7 on Form 10-Q)
Stockholders' Equity:
Preferred stock; $.15 par value,
1,500,000 shares authorized,
no shares outstanding - - -
Common stock; (a) $.15 par value,
15,000,000 shares authorized,
4,346,644, 4,502,928 and 4,288,656
shares outstanding at March 31, 2008
and 2007, and June 30, 2007
respectively 651,997 675,439 643,298
Capital in excess of par value 6,192,241 7,964,587 5,867,727
Retained earnings 24,340,162 13,027,421 15,784,685
Total stockholders' equity 31,184,400 21,667,447 22,295,710
TOTAL CAPITALIZATION 44,184,400 36,885,780 35,295,710
TOTAL LIABILITIES AND CAPITALIZATION $58,685,422 $58,604,851 $51,834,038
(a) On February 1, 2008 a 3:2 stock split was effectuated. Outstanding
common shares have been restated to reflect the stock split.
Please refer to the notes as filed on Form 10-Q that are an integral part
of these condensed consolidated financial statements.
ENERGY WEST, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended
March 31,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $10,250,456 $3,004,550
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization, including
deferred charges and financing costs 1,541,599 1,583,075
Derivative assets (34,411) 29,890
Derivative liabilities 34,405 20,375
Deferred gain 60,712 (182,806)
Investment tax credit (15,796) (15,796)
Deferred income taxes (7,794,502) (143,216)
Changes in assets and liabilities:
Accounts receivable (4,816,726) (2,656,231)
Natural gas and propane inventories 5,032,240 4,183,549
Accounts payable (199,074) 1,436,316
Recoverable/refundable cost of gas
purchases (372,713) (1,465,169)
Prepayments and other (347,095) (25,609)
Net assets held for sale - (753,939)
Other assets & liabilities 924,131 (996,180)
Net cash provided by operating
activities 4,263,226 4,018,809
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures (2,389,620) (1,846,985)
Purchase of Marketable Securities (301,989) -
Purchase of stock - Frontier Utilities and
Penobscot Natural Gas (4,601,599) -
Other investments (597,792) -
Customer advances received for construction 138,408 216,150
Contributions in aid of construction 33,353 7,251
Net cash used in investing activities (7,719,239) (1,623,584)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt - (2,384,880)
Proceeds from lines of credit 12,475,495 8,777,000
Repayments of lines of credit (12,475,495) (8,777,000)
Repurchase of common stock (161,651) -
Sale of common stock 410,221 565,563
Dividends paid (1,538,499) (1,067,782)
Net cash used in financing activities (1,289,929) (2,887,099)
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,745,942) (491,874)
CASH AND CASH EQUIVALENTS:
Beginning of period 7,010,020 1,639,578
End of period $2,264,078 $1,147,704
Please refer to the notes as filed on Form 10-Q that are an integral part
of these condensed consolidated financial statements.
SOURCE Energy West, Incorporated
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