|
Nicor Inc. has added a news release to its Investor Relations website. Title: Nicor Announces 2009 Preliminary Third Quarter Earnings and Raises 2009 Annual Outlook
Date: 10/30/2009 6:00:00 AM
For a complete listing of our news releases, please click here
NAPERVILLE, Ill.--(BUSINESS WIRE)--Oct. 30, 2009--
Nicor Inc. (NYSE: GAS) today reported third quarter 2009 preliminary net
income, operating income and diluted earnings per common share were
$13.6 million, $29.8 million and $.30, respectively. This compares to
net income, operating income and diluted earnings per common share for
the same period in 2008 of $1.3 million, $9.3 million and $.03,
respectively.
Earnings for the third quarter 2009, compared to the same period in
2008, reflect improved operating income in the company�s gas
distribution and other energy-related businesses; and higher corporate
operating results, partially offset by lower operating income in the
company�s shipping business. The third quarter comparisons also reflect
a lower effective income tax rate partially offset by lower pretax
equity investment income.
For the nine months ended September 30, 2009, preliminary net income,
operating income and diluted earnings per common share were $80.3
million, $129.2 million and $1.77, respectively. This compares to net
income, operating income and diluted earnings per common share for the
same period in 2008 of $71.6 million, $113.1 million and $1.58,
respectively.
Earnings for the nine months ended September 30, 2009, compared to 2008,
reflect higher operating income in the company�s gas distribution and
other energy-related businesses, partially offset by lower operating
results in the company�s shipping business and lower corporate operating
results. The nine-month-ended comparisons also reflect lower interest
income and a higher effective income tax rate; partially offset by
higher pretax equity investment income in 2009.
�We are pleased with the consolidated operating results for the third
quarter and year-to-date,� said Russ Strobel, Nicor�s Chairman,
President and Chief Executive Officer. �The additional rate relief we
received on our rate case rehearing request, together with continued
success in cost containment efforts at our gas distribution business,
have provided the basis for raising our annual consolidated earnings�
guidance. While our shipping business continues to face volume
shortfalls from the economic slowdown, Tropical remains solidly
profitable due to operational adjustments and cost containment efforts
we have undertaken. Our other energy-related ventures look to be on
track to meet or exceed our earlier earnings expectations for the full
year.�
Details regarding the third quarter 2009 and nine months ended September
30, 2009 preliminary financial results compared to 2008 follow:
Gas distribution operating income increased $19.1 million for the
third quarter 2009 compared to the prior-year period. The three-month
results reflected:
Higher gas distribution margin (approximately $20 million) due
primarily to the base rate increase.
Lower operating and maintenance costs ($0.9 million) due in large
part to decreased company use and storage-related gas costs and
bad debt expense, partially offset by increased pension expense.
Partially offsetting these positive factors was higher
depreciation expense ($1.6 million).
Gas distribution operating income increased $15.0 million for the nine
months ended September 30, 2009 compared to the prior-year period. The
nine-month results reflected:
Higher gas distribution margin (approximately $31 million) due to
the base rate increase (approximately $45 million) partially
offset by lower demand unrelated to weather (approximately $6
million), lower franchise gas cost recoveries (approximately $3
million), and lower natural gas deliveries due to warmer weather
in 2009 (approximately $2 million).
Higher operating and maintenance costs ($10.5 million) due
primarily to higher payroll and benefit-related costs (primarily
attributable to increased pension expense) and the absence of
prior year legal recoveries recorded in the second quarter of
2008. These increases were partially offset by lower bad debt
expense (attributable principally to lower natural gas prices) and
lower franchise gas costs.
Higher depreciation expense ($4.9 million).
Shipping operating income decreased $2.9 million and $3.4 million for
the third quarter 2009 and the nine months ended September 30, 2009,
respectively, compared to the prior-year periods. Declines in both
periods were due to lower operating revenues partially offset by lower
operating costs. Decreased operating revenues for both 2009 periods,
compared to 2008, were attributable to lower volumes shipped and lower
average rates (resulting principally from lower surcharges for fuel).
Decreased operating costs for both 2009 periods, compared to 2008,
were primarily attributable to lower transportation-related costs (due
in large part to lower volumes shipped and lower fuel prices); and
lower charter costs.
Other energy ventures operating income increased $3.1 million and $6.4
million for the third quarter 2009 and the nine months ended September
30, 2009, respectively, compared to the prior-year periods due
primarily to higher operating income in the company�s retail
energy-related products and services businesses; and wholesale natural
gas marketing business.
Higher operating results for the third quarter 2009, as compared to
2008, in the company�s retail energy-related products and services
businesses were due primarily to lower operating expenses. Lower
operating expenses were attributable primarily to lower average cost per
utility-bill management contract partially offset by higher average
contract volumes. Higher operating results for the nine months ended
September 30, 2009, as compared to 2008, in the company�s retail
energy-related products and services businesses were due to higher
operating revenues partially offset by higher operating expenses. Higher
operating revenues were due to higher average contract volumes partially
offset by lower average revenue per utility-bill management contract,
attributable primarily to product mix. Higher operating expenses were
due primarily to higher average contract volumes and higher selling and
administrative costs (due to business growth), partially offset by lower
average cost per utility-bill management contract, attributable, in
part, to product mix.
Higher operating income in the company�s wholesale natural gas marketing
business for the third quarter 2009, compared to 2008, was due primarily
to favorable results from risk management activities associated with
hedging the product risks of the utility-bill management contracts
offered by the company�s retail energy-related products and services
businesses and favorable costing of physical sales activity, partially
offset by unfavorable changes in valuations of derivative instruments
used to hedge purchases and sales of natural gas inventory. Higher
operating income in the company�s wholesale natural gas marketing
business for the nine-months-ended September 30, 2009, compared to the
same period in 2008, was due primarily to favorable results from risk
management activities associated with hedging the product risks of the
utility-bill management contracts offered by the company�s retail
energy-related products and services businesses, partially offset by
unfavorable changes in valuations of derivative instruments used to
hedge purchases and sales of natural gas inventory and unfavorable
costing of physical sales activity.
The company�s wholesale natural gas marketing business uses derivatives
to mitigate commodity price risk in order to substantially lock-in the
profit margin that will ultimately be realized. A source of commodity
price risk arises as the wholesale natural gas marketing business
purchases and holds natural gas in storage to earn a profit margin from
its ultimate sale. However, gas stored in inventory is required to be
accounted for at the lower of weighted-average cost or market, whereas
the derivatives used to reduce the risk associated with a change in the
value of the inventory are carried at fair value, with changes in fair
value recorded in operating results in the period of change. In
addition, the wholesale natural gas marketing business also uses
derivatives to mitigate the commodity price risks of the utility-bill
management products offered by the company�s energy-related products and
services businesses. The gains and losses associated with the
utility-bill management products are recognized in the months that the
services are provided. However, the underlying derivatives used to hedge
the price exposure are carried at fair value. For those derivatives that
do not meet the requirements for hedge accounting, the changes in fair
value are recorded in operating results in the period of change. As a
result, earnings are subject to volatility as the fair value of
derivatives change. The volatility resulting from this accounting can be
significant from period to period.
Corporate operating results increased $1.2 million for the third quarter
2009, compared to the prior year period, due primarily to lower legal
and business development costs. Corporate operating results decreased
$1.9 million for the nine months ended September 30, 2009, compared to
the prior year period, due to the absence of a prior year legal recovery
of $3.1 million pretax, partially offset by lower legal and business
development costs, and a lower weather-related cost. The company
recorded a $2.8 million pretax negative weather-related impact in the
nine months ended September 30, 2009, compared to a $3.6 million pretax
negative weather-related impact recorded last year associated with
certain of the company�s retail utility-bill management products. Under
terms of a corporate swap agreement, benefits or costs resulting from
variances in normal weather associated with retail energy-related
products are recorded primarily in corporate operating results.
The third quarter 2009 financial results, compared to the same period
in 2008, reflect lower pretax equity investment income due primarily
to the absence of equity income from EN Engineering. The
nine-months-ended September 30, 2009 financial results, compared to
the same period in 2008, reflect lower interest income (due primarily
to lower average rates, lower average investment balances, and lower
interest on tax matters), and a higher effective income tax rate;
partially offset by higher pretax equity investment income. Higher
equity investment income was due primarily to a gain of $10.1 million
pretax, recorded in the first quarter of 2009, related to the sale of
the company�s equity investment interest in EN Engineering.
Rate Case Rehearing Results
On October 7, 2009, the Illinois Commerce Commission (ICC) approved an
approximately $11 million increase in annual base revenues, representing
a rate of return on rate base of 8.09 percent, as part of its decision
on rehearing in the rate case of the company�s gas distribution company,
Nicor Gas. New rates became effective October 15, 2009 on a prospective
basis. This $11 million increase is incremental to the approximately $69
million increase approved in the ICC�s March 2009 rate order. Therefore,
the total annual base revenue increase resulting from the rate case
originally filed by the company in April 2008 is approximately $80
million. Nicor Gas has appeals of the ICC�s rate orders on file in state
appellate court.
2009 Earnings Outlook
The company raised its estimate for 2009 diluted earnings per common
share to the range of $2.69 to $2.89; an increase from guidance provided
in the company�s second quarter earnings release on July 31, 2009 of
$2.54 to $2.74 per share. As a reminder, these estimates include
approximately $.09 per share for the positive impact of the first
quarter 2009 sale of the company�s equity interest in EN Engineering.
The revision reflects improved earnings expectations for the gas
distribution business offset in part by reduced earnings in the shipping
business.
Consistent with prior guidance, the annual outlook excludes, among other
things, any future impacts associated with the ICC�s Performance-Based
Rate plan/Purchased Gas Adjustment review, other contingencies, or
changes in tax law. The company also indicated that its estimate does
not reflect the additional variability in earnings due to fair value
accounting adjustments in its businesses and other impacts that could
occur because of future volatility in the natural gas markets. While
these items could materially affect 2009 earnings, they are not
currently estimable. The company's 2009 estimate assumes normal weather
for the remainder of the year.
The company will provide updates to its annual earnings outlook only as
part of its quarterly and annual earnings� releases.
Conference Call
As previously announced, the company will hold a conference call to
discuss its third quarter 2009 financial results, and 2009 outlook. The
conference call will be this Friday morning, October 30, 2009 at 8:30
a.m. central, 9:30 a.m. eastern time. To hear the conference call live,
please log on to Nicor�s corporate website at www.nicor.com,
choose �Investor� and then select the webcast icon on the �Overview�
page. A replay of the call will be available until 10:30 a.m. central
time, Friday, November 13, 2009. To access the recording, call (888)
286-8010, or (617) 801-6888 for callers outside the United States, and
enter reservation number 45410688. The call will also be archived on
Nicor�s corporate website for 90 days.
Nicor Inc. (NYSE: GAS) is a holding company and is a member of the
Standard & Poor�s 500 Index. Its primary business is Nicor Gas, one of
the nation�s largest natural gas distribution companies. Nicor owns
Tropical Shipping, a containerized shipping business serving the
Caribbean region and the Bahamas. In addition, the company owns and/or
has an equity interest in several energy-related businesses. For more
information, visit the Nicor website at www.nicor.com.
Caution Concerning Forward-Looking
Statements
This document includes certain forward-looking statements about the
expectations of Nicor and its subsidiaries and affiliates. Although
Nicor believes these statements are based on reasonable assumptions,
actual results may vary materially from stated expectations. Such
forward-looking statements may be identified by the use of
forward-looking words or phrases such as �anticipate,� �believe,�
�expect,� �intend,� �may,� �planned,� �potential,� �should,� �will,�
�would,� �project,� �estimate,� �ultimate,� or similar phrases. Actual
results may differ materially from those indicated in the company�s
forward-looking statements due to the direct or indirect effects of
legal contingencies (including litigation) and the resolution of those
issues, including the effects of an ICC review, and undue reliance
should not be placed on such statements.
Other factors that could cause materially different results include, but
are not limited to, weather conditions; natural disasters; natural gas
and other fuel prices; fair value accounting adjustments; inventory
valuation; health care costs; insurance costs or recoveries; legal
costs; borrowing needs; interest rates; credit conditions; economic and
market conditions; accidents, leaks, equipment failures, service
interruptions, environmental pollution, and other operating risks;
tourism and construction in the Bahamas and Caribbean region; energy
conservation; legislative and regulatory actions; tax rulings or audit
results; asset sales; significant unplanned capital needs; future
mercury-related charges or credits; changes in accounting principles,
interpretations, methods, judgments or estimates; performance of major
customers, transporters, suppliers and contractors; labor relations; and
acts of terrorism.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
release. Nicor undertakes no obligation to publicly release any revision
to these forward-looking statements to reflect events or circumstances
after the date of this release.
Nicor Inc.
PRELIMINARY CONSOLIDATED STATEMENTS
OF OPERATIONS
Unaudited (millions, except per share data)
Three months ended
Nine months ended
September 30
September 30
2009
2008
2009
2008
Operating revenues
Gas distribution
$ 215.0
$ 306.1
$ 1,525.3
$ 2,330.4
Shipping
83.3
108.5
256.5
308.8
Other energy ventures
34.7
34.9
163.0
157.8
Corporate and eliminations
(7.4
)
(9.2
)
(60.8
)
(61.2
)
Total operating revenues
325.6
440.3
1,884.0
2,735.8
Operating expenses
Gas distribution
Cost of gas
70.2
180.0
943.2
1,762.9
Operating and maintenance
63.3
64.2
223.0
212.5
Depreciation
44.4
42.8
133.4
128.5
Taxes, other than income taxes
17.6
18.9
127.3
143.3
Property sale gains
-
(.2
)
-
(.2
)
Shipping
76.7
99.0
240.8
289.7
Other energy ventures
31.0
34.3
144.0
145.2
Other corporate expenses and eliminations
(7.4
)
(8.0
)
(56.9
)
(59.2
)
Total operating expenses
295.8
431.0
1,754.8
2,622.7
Operating income (1)
29.8
9.3
129.2
113.1
Interest expense, net of amounts capitalized
9.3
9.9
27.4
29.6
Equity investment income, net
1.0
2.9
14.3
7.2
Interest income
.7
1.4
1.8
6.9
Other income (expense), net
.4
(.1
)
.9
.1
Income before income taxes
22.6
3.6
118.8
97.7
Income tax expense, net of benefits
9.0
2.3
38.5
26.1
Net income
$ 13.6
$ 1.3
$ 80.3
$ 71.6
Average shares of common stock outstanding
Basic
45.4
45.3
45.4
45.3
Diluted
45.5
45.4
45.5
45.4
Earnings per average share of common stock
Basic
$ .30
$ .03
$ 1.77
$ 1.58
Diluted
.30
.03
1.77
1.58
(1) Operating income (loss) by business segment
Gas distribution
$ 19.5
$ .4
$ 98.4
$ 83.4
Shipping
6.6
9.5
15.7
19.1
Other energy ventures
3.7
.6
19.0
12.6
Corporate and eliminations
-
(1.2
)
(3.9
)
(2.0
)
$ 29.8
$ 9.3
$ 129.2
$ 113.1
Nicor Inc.
Gas Distribution Statistics
Three months ended
Nine months ended
September 30
September 30
2009
2008
2009
2008
Operating revenues (millions)
Sales
Residential
$ 126.1
$ 196.1
$ 969.8
$ 1,572.4
Commercial
28.9
50.5
245.9
402.1
Industrial
2.8
3.8
27.8
45.9
157.8
250.4
1,243.5
2,020.4
Transportation
Residential
9.7
7.3
34.1
28.5
Commercial
14.0
11.9
56.9
54.9
Industrial
10.7
9.3
30.0
28.7
Other
.1
1.3
4.0
24.0
34.5
29.8
125.0
136.1
Other revenues
Revenue taxes
13.1
14.6
114.5
131.6
Environmental cost recovery
1.3
.7
9.2
6.8
Chicago Hub
1.8
2.6
5.6
8.5
Other
6.5
8.0
27.5
27.0
22.7
25.9
156.8
173.9
$ 215.0
$ 306.1
$ 1,525.3
$ 2,330.4
Deliveries (Bcf)
Sales
Residential
12.7
12.3
134.9
142.6
Commercial
3.5
3.5
35.5
37.2
Industrial
.5
.3
4.4
4.5
16.7
16.1
174.8
184.3
Transportation
Residential
1.6
1.5
17.1
16.3
Commercial
9.4
9.5
60.6
61.7
Industrial
23.0
21.3
76.6
76.7
34.0
32.3
154.3
154.7
50.7
48.4
329.1
339.0
Customers at end of period (thousands)
Sales
Residential
1,743
1,751
Commercial
128
127
Industrial
7
7
1,878
1,885
Transportation
Residential
221
215
Commercial
51
53
Industrial
5
5
277
273
2,155
2,158
Other statistics
Degree days
66
37
3,937
3,999
Colder (warmer) than normal (1)
8
%
(47
)%
10
%
6
%
Average gas cost per Mcf sold
$ 3.91
$ 11.12
$ 5.24
$ 9.52
(1) Normal weather for Nicor Gas' service territory, for purposes of
this report, is considered to be 5,600 degree days per year for 2009
and 5,830 degree days per year for 2008.
Nicor Inc.
Shipping Statistics
Three months ended
Nine months ended
September 30
September 30
2009
2008
2009
2008
Twenty-foot equivalent units (TEUs) shipped (thousands)
43.0
49.5
128.3
146.3
Revenue per TEU
$ 1,942
$ 2,196
$ 2,000
$ 2,111
At end of period
Ports served
25
25
Vessels operated
15
17
Source: Nicor Inc.
Nicor Inc.Contact: Kary Brunner, re: N-1019630 388-2529orMedia
Contact: Richard Caragol630 388-2686
|