Diversified utility NiSource Inc. (NI) posted first quarter 2011 net operating earnings of 72 cents per share, in line with the Zacks Consensus Estimate as well as year-ago results. Net operating earnings totaled $202.3 million, up 2% year over year.
On a GAAP basis, net income was $204.8 million or 73 cents per share, higher from $197.4 million or 71 cents per share in the year-ago quarter.
Operational Update
Gross revenue in the quarter under review improved 4.3% year over year to $2.14 billion driven by higher revenues at Gas Distribution and Electric, partially offset by lower revenues at Gas Transportation and Storage. Revenue, however, missed the Zacks Consensus Estimate of $ 2.39 billion.
During the quarter the weather adjusted electric sales volume increased by 8% to 4,317.2 Gigawatt hours (GWh) from 3,993.3 GWh in the year-ago quarter.
Total operating expenses dipped 1.5% in the quarter to $662.5 million. The decline primarily resulted from lower operation and maintenance expense.
Operating income of the company decreased 2.5% to $394.9 million from $405.2 million in the year-ago quarter.
Interest expenses during the quarter decreased 9.9% primarily due to a reduction in debt levels.
Segment Update
Gas Distribution Operations: Revenue increased 2% year over year to gross $1.37 billion in the quarter. Operating earnings in the quarter were $237.1 million versus $114.6 million in the year-ago quarter, reflecting an increase of 1%.
Gas Transmission and Storage Operations: Segment revenue grossed $345.8 million, up 7% year over year. Operating earnings during the first quarter declined 5.9% year over year to $118.5 million.
Electric Operations: Revenue increased 26% year over year to $402.9 million in the quarter. Operating earnings during the first quarter was $41.9 million, down 10% over the prior-year period.
Corporate and Other Operations: Segment revenue was $23.9 million, compared with $22.1 million in the year-ago quarter. The segment posted a wider operating loss of $2.6 million in the quarter than a loss of $1.7 million a year ago.
Financial Update
NiSource ended the quarter with cash and cash equivalents of $62.5 million, substantially up from the 2010 end level.
Long-term debts (excluding the debts due within a year) at quarter end was $5.93 billion, a tad below $5.94 billion at 2010 end.
Net cash from operating activities in the quarter totaled $436.8 million, marking a nearly four-fold increase from the year-ago quarter. Capital expenditures were $209.4 million, up 50% year over year.
Looking Forward
NiSource affirmed its 2011 net operating earnings guidance of $1.25 to $1.35 per share.
The company also expects to deliver 3% to 5% annual earnings growth over the long term on the back on balanced business strategy and growth investment opportunities.
NiSource also expects the near-term operating earnings growth to outweigh the longer-term range with the execution of a number of regulatory initiatives.
Peer Comparison
Dominion Resources Inc. (D) competes with NiSource Inc. The former announced its operating earnings for the first quarter 2011 of 93 cents per share, surpassing the Zacks Consensus Estimate of 91 cents but falling short of the year-ago quarterly earnings of 96 cents per share.
Dominion Resource’s revenue during the reported quarter was $4.1 billion, down 2.7% from the year-ago revenue of $4.2 billion. Revenue also fell behind the Zacks Consensus Estimate of $4.3 billion.
Our View
NiSource is making a steady progress in key business priorities, including the advancement of customer service, capitalizing on strategic investments made in the Marcellus Shale region of Appalachia, and execution of its strategy of combining long-term infrastructure replacement programs with complementary regulatory initiatives in its Gas Distribution Operations.
We also favor the company’s strategy of divesting its non-core assets and transforming itself into a pure play regulated company.
We maintain our Neutral recommendation on NiSource.The quantitative Zacks #2 Rank (short-term Buy rating) for the company indicates upward pressure on the stock over the near term.
DOMINION RES VA (D): Free Stock Analysis Report
Be the first to comment