NiSource Inc. NI reported third-quarter 2015 operating earnings of 6 cents per share, surpassing the Zacks Consensus Estimate of 2 cents by 200.0%.
Before adjusting for non-recurring costs and accounting for discontinued operations, the company reported GAAP earnings of 5 cents per share as against a loss of 5 cents per share incurred in the year-ago period.
Revenues
In the third quarter of 2015, NiSource’s gross revenues of $821.1 million lagged the Zacks Consensus Estimate of $1,137 million by 27.8%. On a year-over-year basis, revenues decreased 3.6% primarily due to lower contribution from the Gas Distribution, Electric and Other segments. This was partially offset by higher revenues from the Gas Transportation segment.
Quarterly Operational Highlights
Sales from Electric operations declined 7.1% to 4,500.2 gigawatt hours. NiSource’s Gas Distribution sales decreased 1% to 164.5 million decatherm (MMDth).
Cost of sales decreased 20.3% year over year to $209.1 million.
Total operating expenses came in at $496.2 million, down 2% year over year primarily due to lower operation and maintenance expenses.
Interest expenses were $94.9 million, in line with the year-ago figure.
Financial Position
As of Sep 30, 2015, NiSource’s cash and cash equivalents were $31.7 million compared with $25.4 million as of Dec 31, 2014.
Long-term debt (excluding amounts due within a year) as of Sep 30, 2015, was $6,133.5 million compared with $8,155.9 million as of Dec 31, 2014.
In the first nine months of 2015, net cash from operating activities came in at $1,193.9 million compared with $886.5 million in the year-ago period.
NiSource’s capital expenditure in the period was $923.4 million compared with $914.3 million in the year-ago period.
Guidance
NiSource maintained the 2016 earnings guidance in the range of $1.00 to $1.10 per share.
NiSource is on track to invest nearly $1.3 billion in 2015 as part of its $30 billion of long-term regulated utility infrastructure investment opportunities.
Other Peer Releases
PG&E Corporation’s PCG adjusted operating earnings per share of 84 cents in the third quarter of 2015 missed the Zacks Consensus Estimate of 92 cents by 8.7%.
American Electric Power Co., Inc. AEP reported third-quarter 2015 operating earnings of $1.06 per share, beating the Zacks Consensus Estimate of $1.00 by 6%.
DTE Energy Co. DTE reported third-quarter 2015 operating earnings per share of $1.40, surpassing the Zacks Consensus Estimate of $1.22 by 14.8%
Our View
NiSource’s earnings in the reported quarter surpassed expectations. It appears that this pure play utility has strength enough to sustain its long-term growth objective post Columbia Pipeline Group separation.
The company’s investments will not only strengthen its existing infrastructure but also boost returns to meet its long-term earnings goal and increase the dividend rate by 4-6% annually.
NiSource currently has a Zacks Rank #3 (Hold).
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