Dominion Resources Inc. D reported first-quarter 2015 operating earnings of 99 cents per share, beating the Zacks Consensus Estimate of 96 cents by 3.1%. Earnings were near the upper end of the guidance range of 85 cents to $1.00.
Operating earnings in the first quarter were down 4.8% from $1.04 per share in the year-ago period. The decline in earnings was due to lower merchant generation margins and a higher effective tax rate, partially offset by additional earnings from Marcellus farmout transactions and higher revenues from growth projects.
GAAP earnings were 91cents per share compared with 65 cents per share in the year-ago quarter. The difference between GAAP and operating earnings in the reported quarter was due to a one-time net charge of 8 cents.
Total Revenues
Dominion’s operating revenues of $3,427 million in the first quarter missed the Zacks Consensus Estimate of $3,637 million by 5.8%. Revenues also decreased nearly 5.6% year over year.
Highlights of the Release
Total operating expenses in the quarter decreased 7% year over year to $2,322 million. The decline in total expenses was primarily due to a 3.3% and 53.1% respective drop in electric fuel and other energy related purchases and purchased gas prices.
Interest and related charges in the reported quarter were $223 million compared with $236 million in the year-ago quarter.
Dominion Virginia Power recorded a 2.2% increase in electricity sales volume to 22,869 Gwh in the reported quarter along with a 1% increase in its customer base.
Segment Update
Dominion Virginia Power recorded net income of $140 million or 43 cents per share in the first quarter of 2015, up 6.9% year over year.
Dominion Energy recorded earnings of $207 million or 35 cents per share, down 0.5% year over year.
Dominion Generation’s earnings were $282 million or 48 cents per share, down 8.7% year over year.
Corporate and Others incurred a loss of 8 cents per share, wider than the year-ago loss of 7 cents.
Financial Update
Dominion exited first-quarter 2015 with cash and cash equivalents of $275 million, down from $318 million as of Dec 31 2014.
Long-term debt as of Mar 31, 2015 was $21.3 billion, down from $21.8 billion at the prior-year end.
Cash from operating activities in the first quarter of 2015 was $1,131 million, up 50.2% from $753 million in the comparable year-ago period.
Looking Ahead
Dominion expects to generate second-quarter 2015 operating earnings in a range of 65 cents to 75 cents per share. Earnings in the year-ago period were 62 cents per share. The second-quarter results are likely to benefit from higher revenues from growth projects and the absence of planned refueling outages at Millstone Power Station and a return to normal weather.
Dominion reaffirmed its 2015 earnings guidance in a range of $3.50 to $3.85 per share.
Other Company Releases
DTE Energy Co. DTE reported first-quarter 2015 operating earnings per share of $1.65, beating the Zacks Consensus Estimate of $1.49 by 10.7%.
CMS Energy Corp. CMS reported first-quarter 2015 adjusted earnings per share of 73 cents, outpacing the Zacks Consensus Estimate of 66 cents by 10.6%
FirstEnergy Corp. FE reported first-quarter 2015 operating earnings of 62 cents per share, beating the Zacks Consensus Estimate by a dime.
Our View
Dominion Resources is working on its plan to improve its infrastructure and expand renewable power generation capacity. Dominion’s focus to add natural gas and renewable power generation assets to its portfolio is appreciable given the increasingly stringent regulations to lower carbon emission from electricity generation.
We expect the completion of its 1,358-megawatt natural gas combined cycle facility in Brunswick County and Cove Point Liquefaction project to act as a tailwind.
Dominion Resources holds a Zacks Rank #3 (Hold).
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