Dominion Resources Inc. D reported second-quarter 2015 operating earnings of 73 cents per share, surpassing the Zacks Consensus Estimate by a penny. Earnings increased 17.7% from 63 cents per share a year ago.
The upside in earnings was a combined effect of higher revenues from growth projects, return to a normal weather and absence of a planned refueling outage at Millstone Power Station.
GAAP earnings were 70 cents per share compared with 27 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 3 cents.
Total Revenues
Dominion’s operating revenues of $2,747 million in the second quarter missed the Zacks Consensus Estimate of $2,931 million by 6.3%. Revenues also decreased nearly 2.3% year over year.
Highlights of the Release
Total operating expenses in the quarter decreased 8.7% year over year to $1,929 million. The decline in total expenses was primarily due to a 65.7% drop in the cost of purchased gas and a 6.6% decline in electric fuel and other energy-related expenses.
Interest and related charges in the reported quarter were $221 million compared with $226 million in the year-ago quarter.
Dominion Virginia Power recorded a 3.9% uptick in electricity sales volume to 20,097 Gwh in the second quarter along with a 1.1% increase in its customer base.
Segment Update
Dominion Virginia Power recorded net income of $117 million or 20 cents per share in the second quarter of 2015, up a slender 0.9% year over year.
Dominion Energy recorded earnings of $129 million or 22 cents per share, down 0.8% year over year.
Dominion Generation’s earnings were $250 million or 42 cents per share, up 57.2% year over year.
Corporate and Others incurred a loss of $67 million or 11 cents per share, wider than the year-ago loss of $44 million or 7 cents.
Financial Update
Dominion exited second-quarter 2015 with cash and cash equivalents of $271 million, down from $318 million as of Dec 31 2014.
Long-term debt as of Jun 30, 2015 was $23.1 billion compared with $21.8 billion at the end of 2014.
Cash from operating activities in the first half of 2015 was $2,160 million, up 49.3% from $1,447 million in the comparable year-ago period.
Looking Ahead
Dominion expects to generate third-quarter 2015 operating earnings in a range of 95 cents to $1.10 per share. Earnings in the year-ago period were 93 cents per share. The third-quarter results are likely to benefit from higher revenues from growth projects and a return to normal weather. However, higher operating expenses are expected to slightly offset the positives.
Dominion reaffirmed its 2015 earnings guidance of $3.50 to $3.85 per share.
Other Company Releases
Entergy Corporation ETR reported second-quarter 2015 operational earnings of 83 cents per share, widely missing the Zacks Consensus Estimate of $1.13 by 26.5%.
Edison International EIX reported second-quarter 2015 results wherein its adjusted earnings of $1.15 per share came in ahead of the Zacks Consensus Estimate of 81 cents by 42%.
Public Service Enterprise Group Inc. PEG or PSEG reported second-quarter 2015 operating earnings of 57 cents per share, surpassing the Zacks Consensus Estimate of 54 cents by 5.6%.
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. The Brunswick County project is nearing completion with commencement expected in mid-2016.
Dominion Resources holds a Zacks Rank #3 (Hold).
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