Westar Energy, Inc. (WR) reported third-quarter 2014 earnings per share of $1.10, beating the Zacks Consensus Estimate of $1.07 by 2.8%.
Quarterly earnings increased 5.8% from the year-ago level primarily due to higher prices and lower operating and maintenance costs at the power plants.
Total Revenue
Westar Energy posted total revenues of $764.1 million, beating the Zacks Consensus Estimate of $717 million by 6.6%. Revenues also improved 9.9% from the year-ago figure of $694.8 million.
The top-line improvement was attributable to better performance of its reporting segments despite a milder summer.
Operational Update
The company’s total operating cost increased 8% year over year to $508.6 million. However, the increase in total revenue more than offset the negative impact of rising expenses.
As a result, operating income in the reported improved 13.9% year over year to $255.4 million.
Interest expenses were down 2.6% year over year to $44.5 million.
Financial Condition
Cash and cash equivalents of Westar Energy as of Sep 30, 2014, were $5.8 million, up from $4.5 million as of Dec 31, 2013.
The company’s long-term debt increased to $3.2 billion as of Sep 30, 2014 from $2.97 billion as of Dec 31, 2013 due to the issuance of new debts during the first nine months of 2014.
Westar Energy’s cash flow from operating activities during the first nine months of 2014 was $650.2 million, up 17.6% from $553.1 million in the first nine months of 2013.
Guidance
Westar Energy’s 2014 earnings are expected in the range of $2.35 to $2.45 per share.
Other Company Releases
ALLETE Inc. (ALE) reported third-quarter 2014 earnings of 97 cents per share, beating the Zacks Consensus Estimate of 72 cents by 34.7%.
FirstEnergy Corporation (FE) announced third-quarter 2014 operating earnings of 89 cents per share, beating the Zacks Consensus Estimate by a penny.
PPL Corporation (PPL) reported third-quarter 2014 pro forma earnings per share of 54 cents, beating the Zacks Consensus Estimate by 2 cents.
Our View
Westar Energy benefited from a 2.8% year-over-year increase in electricity sales in the quarter in spite of a milder summer. This was helped by a 7.1% hike in the retail rate per MWh sold.
Even though Westar lowered its coal based generation by 7.5% from the comparable year-ago period, coal still comprised 65% of the fuel mix in the third quarter 2014. This is a concern given the proposed stringent emission control measures announced by the government this year.
Westar Energy currently carries a Zacks Rank #3 (Hold).
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