Pepco Holdings Inc. (POM) reported second quarter 2011 earnings from continuing operations of 42 cents per share, beating the year-ago figure by 8 cents and the Zacks Consensus Estimate by 11 cents.
The year-over-year growth stemmed from higher distribution revenue, increased default electricity supply margins, lower interest expense, and favorable income tax adjustments.
Total Revenue
Total revenue of the company at the end of the second quarter was $1.4 billion, down 13.9% from $1.63 billion in the year-ago period. The year-over-year decline was primarily due to lower contribution from Pepco Energy Service and Power Delivery Services.
Revenues also failed to match the Zacks Consensus Estimate of $1.73 billion.
Quarterly Highlights
Total operating expenses were $1.2 billion versus $1.4 billion in the year-ago period. The decline stemmed from a 24.9% decrease in fuel and purchase energy costs.
Despite a fall in total revenue in the reported quarter, the decrease in expenses benefited the operating profit of the company. Operating income at Pepco was $202 million in second quarter 2011 versus $193 million in the prior-year quarter.
Interest expenses at second quarter end were $63 million versus $89 million at the end of the year-earlier period.
Financials Update
Cash and cash equivalents, including restricted cash, were $69 million as of June 30, 2011, higher than $31 million as of December 31, 2010.
Long-term debts of the company as of June 30, 2011 were $3,725 million versus $3,629 as of December 31, 2010.
Guidance
Pepco Holdings reiterated its 2011 earnings per share outlook in the range of $1.10 to $1.25. The guidance excludes the impact of discontinued operations and assumes normal weather during the year.
Peer Comparison
In the energy products and services niche, the company competes with Constellation Energy Group Inc. (CEG). The latter announced operating earnings for the second quarter 2011 of 76 cents per share, falling short of Zacks Consensus Estimate of 82 cents but surpassing the year-ago quarter earnings of 71 cents per share.
Constellation Energy's quarterly revenues were $3.36 billion, falling short of the Zacks Consensus Estimate of $3.95 billion. On a year-over-year basis, revenues decreased by $49.9 million.
Pepco Holdings currently retains a Zacks #3 Rank (short-term Hold rating).
Based in Washington, District of Columbia, Pepco Holdings, through its two operating divisions, Power Delivery and Competitive Energy, involves in transmission and distribution of electricity, as well as delivery and supply of natural gas.
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