Pepco Holdings Inc. (POM) reported fourth quarter 2014 earnings from continuing operations of 23 cents per share, a penny down from the year-ago figure. Earnings were higher than the Zacks Consensus Estimate of 18 cents by 27.8%.
GAAP earnings per share were 14 cents compared with 23 cents in the fourth quarter of 2013. The difference between GAAP and operating earnings during the reported quarter was due to 3 cents of merger related costs and 6 cents of impairment charge related to Pepco Energy Services’ long-lived assets.
Pepco Holdings' 2014 operating earnings were $1.27 per share, up 11.4% from $1.14 per share in 2013. Earnings were above the Zacks Consensus Estimate of $1.22 by 1.11%.
The upside was driven by higher electric distribution and transmission revenues (primarily due to higher rates from continued infrastructure investment).
GAAP earnings per share in 2014 were 96 cents compared with 45 cents in 2013.
Total Revenue
Total revenues in the fourth quarter were $1,118 million, up 2.5% from $1,091 million in the year-ago period. Quarterly revenues also fell short of the Zacks Consensus Estimate of $1,444 million by 22.6%.
2014 revenues of $4,878 million were marginally above the Zacks Consensus Estimate of $4,833 million by 0.9%. Total revenues rose 4.5% from the year-ago period.
The year-over-year improvement was primarily due to higher contribution from Pepco Energy Services which improved 36.9% on a year-over-year basis and solid performance from Power Delivery which grew 3.1%.
Operating Details
In 2014, total regulated transmission & distribution electric sales, at Power Delivery, dipped 0.6% to 47,215 gigawatt hours (GWh). The downside was due to erratic weather pattern, which impacted residential sales. Sales to commercial and industrial customers also dipped 0.8% year over year.
Total operating expenses in the reported quarter and the full year increased 7.3% and 6.9%, respectively, from the comparable year-ago period. Higher expenses were primarily due to an increase in other operating and maintenance expenses.
Operating income was $604 million in 2014, down 9.6% from $668 million in 2013.
In 2014, Pepco Holdings’ total regulated Transmission and Distribution electric customer count increased by nearly 1% year over year to 1,871,000.
Financial Update
Cash and cash equivalents, including restricted cash, were $39 million as of Dec 31, 2014, up from $36 million as of Dec 31, 2013.
Long-term debts as of Dec 31, 2014, were $4,441 million, up 9.6% from $4,053 million as of Dec 31, 2013.
Exelon Merger
Pepco Holdings did not provide any insight into 2015 due to its pending merger with Exelon Corporation (EXC), which is expected to be completed in the second half of 2015.
Other Company Release
DTE Energy Company’s (DTE) fourth-quarter 2014 operating earnings per share of $1.17 surpassed the Zacks Consensus Estimate of $1.04 by 12.5%
PG&E Corp.'s (PCG) earnings per share of 53 cents in the fourth quarter missed the Zacks Consensus Estimate of 54 cents by a penny.
Zacks Rank
Pepco Holdings currently has a Zacks Rank #3 (Hold).
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