Published: November 08, 2010
Central Vermont Reports 2010 Third Quarter Earnings
Central Vermont Public Service (NYSE: CV)
-- Year-to-date earnings of $15.6 million, or $1.27 per diluted share,
30 cents lower than 2009
- $1.2 million increase in operating revenue
- $2.1 million increase in purchased power expense
- $1.7 million increase in other operating expenses (includes $3.6
million regulatory deferral)
- $2.7 million increase in equity in earnings of affiliates
-- Third-quarter earnings of $10 million, or 79 cents per diluted
share, 27 cents higher than 2009
- $3.6 million increase in operating revenue
- $3.4 million increase in purchased power expense
- $6.7 million decrease in other operating expenses (includes $3.6
million regulatory deferral)
- $1.0 million increase in equity in earnings of affiliates
-- Earnings forecast for 2010 reaffirmed in the range of $1.50 to
$1.60 per diluted share.
Central Vermont Public Service (NYSE: CV) reported consolidated earnings of
$15.6 million, or $1.27 per diluted share of common stock, for the first
nine months of 2010, compared to $18.6 million, or $1.57 per diluted share
of common stock, for the same period in 2009.
CV reported third-quarter 2010 consolidated earnings of $10 million, or 79
cents per diluted share of common stock, compared to $6.2 million, or 52
cents per diluted share of common stock, for the same period last year.
"We continue to make steady progress on achieving our 2010 earnings
guidance," President Bob Young said. "Although we had sustained storm
activity throughout the year, unplanned costs of major storms are
deferrable under our Alternative Regulation Plan so the impact of storms on
earnings for the nine months is tempered. We also saw a resurgence in
retail demand in the third quarter due to warmer weather."
"Based on year-to-date performance, we are reaffirming our earnings
guidance range of $1.50 to $1.60 per diluted share for the year," Young
said.
Year-to-Date 2010 results compared to 2009
Operating revenues increased $1.2 million, including an $11.9 million
increase in retail revenues, a $3.5 million increase in provision for rate
refund and a $0.5 million increase in other operating revenue, largely
offset by a $14.6 million decrease in resale revenue. The increase in
retail revenues primarily resulted from a 5.58 percent base rate increase,
effective January 1, 2010 and $0.9 million recovery of 2008 major storm
costs, in addition to a weather-related resurgence of retail load in the
third quarter of 2010. The provision for rate refund is primarily the net
deferrals and refunds of over- or under-collections of power, production
and transmission costs as required by the power cost adjustment clause
within our alternative regulation plan. This increase included the
favorable impact of $2.3 million of net deferrals and refunds in 2010 vs.
the unfavorable impact of $1.1 million of net deferrals and refunds in
2009. Other operating revenues increased primarily due to higher levels of
mutual aid performed for other utilities in 2010 and the sale of renewable
energy credits. Resale revenues decreased mostly due to lower 2010
contract prices associated with the sale of our excess energy, and a
decrease in volumes sold due to the scheduled refueling outages at the
Vermont Yankee plant and Millstone Unit #3.
Purchased power expense increased $2.1 million, including an $8.6 million
increase in short-term purchases, due to higher retail load and higher
replacement power requirements, largely offset by a $6.1 million decrease
in purchases under long-term contracts, due to the extended scheduled
refueling outage at the Vermont Yankee plant and lower capacity costs from
Hydro-Quebec.
Other operating expenses increased $1.7 million, comprised principally of a
$3.1 million increase in service restoration costs from a major storm in
February 2010, a $1.1 million increase from a major storm in May 2010, and
higher property taxes of $1.5 million. In 2010, $2.5 million of major
storm costs was deferred and included in the exogenous deferral described
below. Other operating expenses also included a $4.7 million decrease in
transmission expenses, resulting from higher NOATT reimbursements,
partially offset by higher rates from ISO-NE; lower regulatory
amortizations of $1.2 million, mostly from the $3.6 million deferral of
2010 exogenous events recorded in the third quarter, partially offset by a
$0.9 million increase for recovery of 2008 major storm costs and other
regulatory amortizations; $1 million of lower reserves for uncollectible
accounts, primarily due to a customer bankruptcy in 2009 and $1.1 million
of higher employee benefit costs. Operating income tax expense increased
$0.9 million, mostly as a result of an unfavorable charge of $0.7 million
required by the Patient Protection and Affordable Care Act, as modified by
the Health Care and Education Reconciliation Act, in the first quarter of
2010. The Act also eliminated the tax deduction in 2010.
Equity in earnings of affiliates increased $2.7 million, principally due to
the $20.8 million investment that we made in Transco in December 2009.
Other income, net decreased $1.2 million, largely due to changes in the
cash surrender value of variable life insurance policies included in our
Rabbi Trust.
Third quarter 2010 results compared to 2009
Third quarter operating revenues increased $3.6 million for many of the
same reasons described above.
Purchased power expense increased $3.4 million over the same period last
year. Short-term purchases increased $4 million due to higher retail load
and higher replacement power requirements at higher market prices, and
purchases under long-term contracts increased $0.3 million due to higher
costs from Vermont Yankee. Purchases from independent power producers
decreased $0.9 million due to lower output, partially offset by higher
average prices.
Other operating expenses decreased $6.7 million, due to the $3.6 million
deferral of 2010 exogenous events and for the same reasons described above.
Equity in earnings of affiliates increased $1 million for the same reasons
described above.
Other income, net decreased $0.3 million for the same reasons described
above.
2010 Common Stock Issuance
On January 15, 2010, we filed a Prospectus Supplement with the SEC, noting
that we entered into an equity distribution agreement that allowed us to
issue up to $45 million of common equity under an at-the-market ("ATM")
continuous offering program.
Earnings per share for 2010 reflect the impact of our ATM program. From
April to September 2010, CV issued 848,057 shares, yielding net proceeds of
approximately $17.1 million. The net proceeds of the offering were used
for general corporate purposes, including capital expenditures and working
capital requirements. The common stock issuance decreased
per-diluted-share earnings by 3 cents for the first nine months of 2010 and
by 5 cents for the third quarter of 2010. We expect to raise $30 million
under this program in 2010.
2010 Earnings Guidance
CV reiterates that it expects annual 2010 earnings to be in the range of
$1.50 to $1.60 per diluted share. As part of the alternative regulation
plan base rate filing approved by the Vermont Public Service Board last
winter, the company's allowed rate of return on its Vermont regulatory
business is 9.59 percent for 2010, down from 9.77 percent for
2009. Earnings guidance for 2011 will be released in the first quarter of
2011.
Webcast
CV will host an earnings teleconference and webcast on November 9, 2010,
beginning at 2 p.m. Eastern Time. At that time, CV President and CEO
Robert Young and CV Chief Financial Officer Pamela Keefe will discuss the
company's financial results, as well as progress made toward achieving the
company's long-term strategy.
Interested parties may listen to the conference call live on the Internet
by selecting the "CVPS Qtr 3 2010 Earnings Call" link on the "Investor
Relations" section of the company's website at www.cvps.com. An audio
archive of the call will be available later that day at the same location
or by dialing 1-877-660-6853 within the U.S. or internationally by dialing
1-201-612-7415 and entering Account 286 and Conference ID 357298.
About CV
CV is Vermont's largest electric utility, serving approximately 159,000
customers statewide. CV's non-regulated subsidiary, Catamount Resources
Corporation, sells and rents electric water heaters through a subsidiary,
SmartEnergy Water Heating Services.
Form 10-Q
On Monday, November 8, 2010, the company filed its quarterly 2010 Form 10-Q
with the Securities and Exchange Commission. A copy of that report is
available on our web site, www.cvps.com, under the "Investor Relations"
section. Please refer to it for additional information regarding our
condensed consolidated financial statements, results of operations, capital
resources and liquidity.
Reconciliation of Earnings Per Diluted Share
First Nine Third
Months Quarter
2010 vs. 2010 vs.
2009 2009
--------- ---------
2009 Earnings per diluted share $ 1.57 $ 0.52
Year-over-Year Effects on Earnings:
Higher maintenance expenses (0.25) 0.00
Higher other operating expenses (primarily
regulatory amortizations) (0.21) (0.02)
Higher purchased power expense (0.11) (0.17)
Higher taxes other than income (0.09) (0.03)
Lower other income, net (0.08) (0.02)
Health Care Reform/Medicare Part D - Income tax
impact (0.06) 0.00
Common stock issuance (April to September 2010) -
848,057 additional shares (0.03) (0.05)
Lower transmission expenses 0.23 0.23
Regulatory deferral - exogenous costs 0.18 0.18
Higher equity in earnings of affiliates 0.13 0.06
Higher operating revenues 0.06 0.18
Other (various items) (0.07) (0.09)
--------- ---------
2010 Earnings per diluted share $ 1.27 $ 0.79
========= =========
Note: For presentation purposes in the table above, the additional average
shares from the 2010 stock issuance were excluded from the 12,545,987
average shares of common stock - diluted for the third quarter and the
12,140,191 average shares of common stock - diluted for the first nine
months, in order to compute the individual EPS variances and to provide
comparable information for 2010 vs. 2009. The additional shares were
included in the total EPS calculations.
Forward-Looking Statements
Statements contained in this press release that are not historical fact are
forward-looking statements intended to qualify for the safe-harbors from
the liability established by the Private Securities Litigation Reform Act
of 1995. Statements made that are not historical facts are forward-looking
and, accordingly, involve estimates, assumptions, risks and uncertainties
that could cause actual results or outcomes to differ materially from those
expressed in the forward-looking statements. Actual results will depend,
among other things, upon the actions of regulators, performance of the
Vermont Yankee nuclear power plant, effects of and changes in weather and
economic conditions, volatility in wholesale electric markets, volatility
in the financial markets, and our ability to maintain our current credit
ratings. These and other risk factors are detailed in CV's Securities and
Exchange Commission filings. CV cannot predict the outcome of any of these
matters; accordingly, there can be no assurance that such indicated results
will be realized. Readers are cautioned not to place undue reliance on
these forward-looking statements that speak only as of the date of this
press release. CV does not undertake any obligation to publicly release
any revision to these forward-looking statements to reflect events or
circumstances after the date of this press release.
Central Vermont Public Service Corporation - Consolidated
Earnings Release
(dollars in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
Condensed income statement 2010 2009 2010 2009
---------- ---------- ---------- ----------
Operating revenues:
Retail sales $ 73,766 $ 68,067 $ 217,413 $ 205,532
Resale sales 8,299 10,188 26,622 41,252
Provision for rate refund 18 (27) 2,344 (1,128)
Other 3,309 3,563 9,957 9,489
---------- ---------- ---------- ----------
Total operating revenues 85,392 81,791 256,336 255,145
---------- ---------- ---------- ----------
Operating expenses:
Purchased power -
affiliates and other 41,109 37,676 120,038 117,891
Other operating expenses 31,247 37,994 117,857 116,111
Income tax (benefit)
expense 4,407 905 5,454 4,541
---------- ---------- ---------- ----------
Total operating expense 76,763 76,575 243,349 238,543
---------- ---------- ---------- ----------
Utility operating income 8,629 5,216 12,987 16,602
---------- ---------- ---------- ----------
Other income:
Equity in earnings of
affiliates 5,347 4,320 15,857 13,196
Other, net 491 774 334 1,508
Income tax expense (1,631) (1,186) (4,934) (4,008)
---------- ---------- ---------- ----------
Total other income 4,207 3,908 11,257 10,696
---------- ---------- ---------- ----------
Interest expense 2,846 2,924 8,607 8,729
---------- ---------- ---------- ----------
Net income 9,990 6,200 15,637 18,569
Dividends declared on
preferred stock 92 92 276 276
---------- ---------- ---------- ----------
Earnings available for
common stock $ 9,898 $ 6,108 $ 15,361 $ 18,293
========== ========== ========== ==========
Per common share data
Earnings per share of
common stock - basic $ 0.79 $ 0.52 $ 1.27 $ 1.57
Earnings per share of
common stock - diluted $ 0.79 $ 0.52 $ 1.27 $ 1.57
Average shares of common
stock outstanding - basic 12,516,488 11,679,133 12,109,796 11,647,626
Average shares of common
stock outstanding -
diluted 12,545,987 11,717,218 12,140,191 11,685,795
Dividends declared per
share of common stock $ 0.23 $ 0.23 $ 0.92 $ 0.92
Dividends paid per share of
common stock $ 0.23 $ 0.23 $ 0.69 $ 0.69
Supplemental financial
statement data
Balance sheet
Investments in affiliates $ 134,802 $ 107,459
Total assets $ 646,297 $ 622,108
Common stock equity $ 253,966 $ 228,619
Long-term debt (excluding
current portions) $ 158,300 $ 178,300
Cash Flows
Cash and cash equivalents
at beginning of period $ 2,069 $ 6,722
Cash provided by
operating activities 38,042 33,326
Cash used for investing
activities (21,623) (21,970)
Cash provided by
financing activities (14,543) (7,802)
Cash and cash equivalents
at end of period $ 3,945 $ 10,276
========== ==========
Refer to our third-quarter 2010 Form 10-Q for additional information
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