Dominion Resources Inc. (D) reported second quarter 2014 operating earnings of 62 cents per share, a penny higher than the Zacks Consensus Estimate of 61 cents.
Earnings were on par with the year-ago figure and within the guidance range of 55 cents to 65 cents for the quarter.
GAAP earnings were 27 cents per share versus 35 cents per share in the year-ago quarter.
Total Revenue
Dominion’s operating revenue of $2.81 billion in the second quarter decreased nearly 5% year over year.
The decline in the top line was primarily due to lower contribution from Dominion Generation, marginally offset by higher contribution from Dominion Energy and Dominion Virginia Power.
Total revenue was marginally higher than the Zacks Consensus Estimate of $2.8 billion by 0.2%.
Segment Update
Dominion Virginia Power recorded revenues of $450 million in the second quarter of 2014, up 3.5% year over year.
Dominion Energy reported revenues of $681 million, up 8.3% year over year.
Dominion Generation’s revenues decreased nearly 10.4% year over year to $1.7 billion.
Operational Update
Total operating expenses in the second quarter decreased 6.5% year over year to $2.26 billion. The decline in total expenses was primarily due to a 25.6% year-over-year drop in energy fuel and other energy related purchases. This was marginally offset by a 14.5% increase in purchased gas expenses.
Interest and related charges in the reported quarter were $226 million versus $201 million in the year-ago quarter.
Financial Update
Dominion exited the quarter with cash and cash equivalents of $419 million, up from $316 million as of Dec 31 2013.
Long-term debt at quarter end increased to $18 billion from $16.88 billion at prior-year end.
Cash from operating activities in the first half of 2014 decreased to $1.44 billion from $1.79 billion in the comparable year-ago period.
Looking Ahead
Dominion expects to deliver third quarter operating earnings in a range of 90 cents to $1.05 per share.
The third quarter results are likely to benefit from more normal temperatures in its service territories and higher weather-normalized kilowatt sales and revenues related to electric transmission growth projects. However, higher interest and operating expenses are likely to offset these positives to some extent.
Dominion Resources reaffirmed its 2014 operating earnings guidance of $3.35 to $3.65 per share.
Other Company Releases
American Electric Power Co., Inc.’s (AEP) earnings per share of 80 cents in the second quarter 2014 surpassed the Zacks Consensus Estimate of 75 cents by nearly 6.7%.
Entergy Corp (ETR) reported second-quarter earnings of $1.11 per share, lagging the Zacks Consensus Estimate by 2.6%
DTE Energy Company (DTE) reported second-quarter 2014 operating earnings per share of 73 cents, lagging the Zacks Consensus Estimate of 77 cents by 5.2%.
Our View
Dominion Resources’ earnings were marginally ahead of our expectation in the reported quarter as lower costs boosted margins.
The company also succeeded in expanding its electric delivery customer base by 0.9% and most importantly its electric delivery volumes by 0.5% from the comparable year-ago period. Although marginal, this is an outcome of the company’s infrastructure growth plans.
Dominion continues to expand its green generation portfolio. In the reported quarter, the company announced that it has acquired two solar projects in Tennessee and has entered into an agreement to acquire a seventh in California, taking its total solar projects in service or development to 232 megawatts.
Dominion Resources holds a Zacks Rank #3 (Hold).
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