Public Service Enterprise Group Inc. PEG or PSEG reported first-quarter 2015 operating earnings of $1.04 per share, surpassing the Zacks Consensus Estimate by 6.1%. Quarterly earnings exceeded the year-ago figure of $1.01 by 2.97%.
The earnings beat reflects investments made by the company in its stable regulated business.
On a GAAP basis, quarterly earnings were $1.15 per share compared with 76 cents per share a year ago.
Total Revenue
Revenues of $3,135 million in the reported quarter beat the Zacks Consensus Estimate of $3,105 million by 0.9% but lagged the year-ago figure of $3,223 million by 2.7%.
Electric sales volume increased 1% year over year to 10,381 million kilowatt-hours, while Gas sales volume decreased 1.3% to 1,870 million therms.
Electricity sales were driven by 0.6% growth from the commercial and industrial sector which offset a decline in demand from residential customers. Total gas sales in the reported quarter declined from the prior-year period due to a reduction in non-firm sales volume of gas.
Highlights of the Release
Operating income increased 48.6% year over year to $1,048 million in the quarter. Total operating expenses were $2,087 million, down 17.1% year over year. The decrease in total expenses was due to a 19.3% fall in energy costs and a 22.5% decline in operation and maintenance expenses.
Interest expenses in the reported quarter were $98 million compared with $97 million a year ago.
Segment Performance
PSE&G: Segment operating earnings were $242 million, up 13.1% from $214 million in the prior-year period. The upside was due to an expansion of its capital program, colder-than-normal weather and the recovery of storm costs from the settlement of Sandy-related insurance claims.
PSEG Power: The segment generated operating earnings of $278 million, down 5.2% year over year. An increase in operating and maintenance expenses impacted earnings.
PSEG Enterprise/Other: The segment generated operating earnings of $9 million compared with $8 million in the prior-year quarter. Favorable interest and other income led to the increase.
Financial Update
As of Mar 31, 2015, cash and cash equivalents were $1,008 million compared with $402 million as of Dec 31, 2014.
Long-term debt as of Mar 31, 2015, was $8.9 billion, in line with 2014 end levels.
Public Service Enterprise Group generated $1,679 million in cash from operations during first quarter 2015, up 50.5% year over year.
2015 Guidance
PSE&G’s operating earnings are expected in the range of $735–$775 million.
PSEG Power's operating earnings are expected in the $620–$680 million range.
PSEG Enterprise/Other’s operating earnings are expected to remain in the $40–$45 million band.
Public Service Enterprise reiterated its 2015 earnings per share guidance in the range of $2.75–$2.95. Operating earnings will likely fall in the range of $1,395−$1,500 million.
Other Utility Releases
CMS Energy Corporation CMS reported first-quarter 2015 adjusted earnings per share of 73 cents, outpacing the Zacks Consensus Estimate of 66 cents by 10.6%.
American Electric Power Company Inc. AEP reported first-quarter 2015 operating earnings of $1.28 per share, beating the Zacks Consensus Estimate of $1.11 by 15.3%.
DTE Energy Company DTE reported first-quarter 2015 operating earnings per share of $1.65, beating the Zacks Consensus Estimate of $1.49 by 10.7%.
Our View
Public Service Enterprise has a strong portfolio of regulated and non-regulated assets, which provides stability to its earnings. The slow but ongoing improvement in economic conditions in its service territories is having a positive impact on demand.
Investments made by the company to strengthen its operations enabled its power fleet to perform even during the harsh winter months. These initiatives are helping the company to serve its customers efficiently.
Public Service Enterprise Group currently holds a Zacks Rank #3 (Hold).
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