At the Board of Directors meeting of The Empire District Electric Company held today, the Directors declared a quarterly dividend of $0.255 per share, reflecting a 2.0% increase over the previous quarter’s dividend. The dividend is payable December 16, 2013, to holders of record as of December 2, 2013. The Company, an operator of regulated electric, gas and water utilities, announced today the results for the quarter and twelve months ended September 30, 2013.
Highlights
- The Company reported consolidated earnings for the third quarter of 2013 of $24.0 million, or $0.56 per share, compared to same quarter 2012 earnings of $25.5 million, or $0.60 per share. Earnings for the twelve months ended September 30, 2013 were $57.9 million, or $1.36 per share, compared to earnings of $54.7 million, or $1.30 per share, for the 2012 twelve month period.
- Cooler weather compared to the 2012 quarter offset the impact of increased Missouri electric rates, which became effective April 1, 2013. In addition, higher electric operating, depreciation and amortization expenses decreased earnings compared to last year.
- The Company expects full-year 2013 earnings results to be in the mid to upper end of its guidance range of $1.26 to $1.43 per share which was communicated in February 2013.
- According to Brad Beecher, president and CEO, “We are pleased to announce the dividend increase approved today by our Board of Directors. The increase comes as a result of improved financial metrics on both our income statement and balance sheet over the last two years. It also reflects the future earnings growth we expect to see as we continue to execute our business strategy and complete our investment in our Asbury environmental upgrade and Riverton combined cycle projects.”
Electric segment gross margin (electric revenue less cost of fuel and purchased power) increased approximately $0.8 million during the third quarter 2013 compared to the 2012 quarter on decreased revenue of approximately $2.3 million. Increased electric rates for Missouri customers added an estimated $9.9 million to revenue during the quarter. An increase in average customer counts added about $1.1 million to revenue. Both of these items had a positive impact on gross margin. These revenue increases were offset by weather impacts which reduced revenue an estimated $10.3 million, negatively impacting margin. Although weather during the quarter was slightly cooler than normal, the July and August cooling season months were much cooler than normal and significantly cooler than the 2012 quarter. As a result, on-system kWh sales decreased 8.4% compared to the 2012 quarter. Quarter over quarter results were also negatively impacted by a change in the Company’s estimate for unbilled revenue of approximately $3.4 million that was made during the 2012 quarter. A $1.1 million increase in fuel recovery revenues increased total revenue during the 2013 quarter; however, the increased fuel recovery revenue is offset by a corresponding increase in fuel expense, resulting in no net impact on gross margin. Off-system revenues decreased $1.6 million during the quarter, but have little impact on margin. Miscellaneous and other revenues increased $0.7 million.
Electric segment operating expenses increased approximately $2.3 million quarter over quarter, primarily reflecting increases in transmission and production operations and labor expenses. Electric segment depreciation expense increased approximately $2.6 million during the quarter due to increased levels of plant in service and higher depreciation rates resulting from the April 2013 Missouri rate case settlement. Electric segment maintenance expenses were lower by approximately $0.3 million compared to the 2012 quarter. AFUDC and interest expense changes combined to increase earnings approximately $0.9 million during the 2013 quarter compared to the 2012 quarter.
Gas segment retail sales decreased 5.8% during the third quarter 2013 compared to the previous year’s quarter, however quarter over quarter gas segment gross margin (gas revenues less cost of gas sold and transported) was relatively unchanged.
Consolidated net income declined approximately $1.5 million during the 2013 quarter as compared to the 2012 quarter.
Twelve Month Ended September 2013 Results
Electric segment gross margin increased approximately $16.8 million during the twelve month period on increased revenue of $5.8 million. Increased Missouri customer electric rates added an estimated $18.4 million to revenue. Increased customer counts, reflecting recovery from the May 2011 tornado, added an estimated $5.4 million to revenues. Both of these revenue items had a positive impact on gross margin. Weather impacts reduced revenue during the 2013 twelve month period by an estimated $7.5 million, negatively impacting gross margin. As mentioned above, third quarter 2013 weather was significantly cooler than the comparable 2012 quarter, offsetting the very favorable weather experienced during the 2012-2013 winter heating season. The change in the Company’s estimate for unbilled revenue mentioned above also negatively impacted twelve month period over period results. A decrease in fuel recovery revenue of approximately $9.4 million reduced total revenue during the 2013 period. As discussed above, the reduced fuel recovery revenue has no net impact on gross margin due to the offsetting reduction in fuel expense. Off-system revenues decreased during the twelve month 2013 period, but as noted previously, have little impact on gross margin. Miscellaneous and other revenue increased $2.9 million.
Electric segment operating expenses increased $11.0 million period over period. Increases in transmission, labor, employee health care, plant operating expenses, uncollectable customer accounts expenses, property insurance expense, and a one-time regulatory reversal of a gain on sale of assets negatively impacted earnings during the period. Depreciation expense increased approximately $7.1 million during the 2013 twelve month period due to increased plant in service and higher depreciation rates. Other taxes were $2.2 million higher. The impact of a pre-tax write off of $2.4 million resulting from the April 2013 Missouri rate case settlement also negatively impacted period over period earnings. Electric segment maintenance expenses decreased approximately $3.0 million. AFUDC and interest expense changes combined to increase earnings around $4.4 million in the 2013 twelve month period compared to the 2012 period.
Consolidated net income increased approximately $3.2 million in the 2013 twelve month period compared to the 2012 period.
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