AGL Resources Inc has added
a news release to its website.
Title: AGL
Resources Reports Fourth Quarter and Year-End 2011 Earnings
Date(s): 22-Feb-2012 8:00 AM
For a complete listing of our news releases, please click here
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- 2011
diluted earnings per share (EPS) of $2.12 versus $3.00 per diluted share
in 2010; Excluding Nicor merger-related expenses, adjusted diluted EPS of
$2.92 for 2011 and $3.05 for 2010
- Fourth
quarter diluted EPS of $0.37 versus diluted EPS of $0.81 in fourth quarter
2010; Excluding Nicor merger-related expenses, adjusted diluted EPS of
$0.87 for 4Q11 and $0.86 for 4Q10
- Nicor
merger successfully completed on December 9, 2011, and results include 22
days of contribution from Nicor
- Company
expects 2012 earnings to be in the range of $2.80 to $2.95 per diluted
share
ATLANTA,
February 22, 2012 -- AGL
Resources Inc. (NYSE: GAS) today reported net income for 2011 of $172 million,
or $2.14 per basic and $2.12 per diluted share, compared to $234 million, or
$3.02 per basic and $3.00 per diluted share, reported in 2010. Excluding Nicor
merger-related expenses of $64 million (after tax), adjusted EPS for 2011 was
$2.92 per diluted share. GAAP and adjusted results for both the full year and
the fourth quarter include 22 days of contribution from Nicor following the
completion of the acquisition on December 9, 2011.
Fourth quarter
2011 net income was $33 million, or $0.37 per basic and diluted
share, compared to net income of $64 million, or $0.82 per
basic and $0.81 per diluted share, reported for the same period last year.
Excluding Nicor merger expenses of $45 million (after tax), adjusted EPS for
the fourth quarter of 2011 was $0.87 per diluted share and $0.86 per diluted
share for the fourth quarter of 2010.
Consolidated
earnings before interest and taxes (EBIT) were $447 million for 2011, a
decrease of 10% compared to $499 million in the prior year. EBIT for the fourth
quarter of 2011 for AGL Resources was $121 million, compared to $135 million in
the fourth quarter of 2010.
"Our
business performed well during 2011, with particularly strong results from our
utility operations, which contributed 79 percent of operating EBIT during the
year. Despite these solid results, however, our wholesale business continued to
struggle in this environment of low natural gas price volatility and its
earnings contribution was significantly lower than our expectation," said
John W. Somerhalder II, AGL Resources Chairman, President and Chief Executive
Officer. "We completed the Nicor acquisition in December and integration
is well underway. Our expectations for merger-related efficiencies remain
intact, however we expect ongoing challenges in many of our non-utility
businesses in 2012."
"Year over
year, our 2011 consolidated EBIT, excluding merger-related expenses,
increased modestly by two percent. Our results were affected primarily by
the negative impact of persistently narrow transportation and storage spreads
in the wholesale market. Our 2012 guidance range of $2.80-$2.95 reflects our
expectation that these conditions will remain in place throughout the
year," said Andrew W. Evans, AGL Resources Executive Vice President and
Chief Financial Officer. "We continue to have a solid balance sheet and
strong credit metrics and ratings, as well as good liquidity to fund future
capital investments, with a particular bias toward regulated projects with good
returns and minimal regulatory lag on investment recovery."
With the
completion of the Nicor merger, financial reporting segments for AGL Resources
have been modified to the following: distribution operations, retail
operations, wholesale services, midstream operations, cargo shipping and other
(a non-operating segment).
BUSINESS
SEGMENT RESULTS
Distribution
Operations
The
distribution operations segment, which includes all legacy AGL Resources utilities
as well as Nicor Gas, contributed EBIT of $412 million in 2011, an increase of
17% compared to $352 million in 2010. Operating margin increased over 2010 by
$84 million, primarily driven by $47 million in operating margin from the
inclusion of Nicor Gas and $39 million in margin improvement from new rates and
infrastructure programs at Atlanta Gas Light and Elizabethtown Gas.
Operating
expenses increased $26 million relative to the prior-year period, driven mainly
by $31 million in increased expense resulting from the addition of Nicor Gas as
well as higher depreciation expenses due to more assets in service. These
higher expenses were partially offset by lower incentive compensation costs
resulting from lower corporate earnings.
During the
fourth quarter of 2011, the distribution segment contributed EBIT of $127
million, an increase of 35% compared to $94 million for the same period in
2010. Operating margin increased $53 million, primarily driven by a $47 million
operating margin increase from the inclusion of Nicor Gas.
Operating
expenses during the fourth quarter of 2011 increased $21 million relative to
the prior-year period, driven mainly by $31 million in increased expenses
resulting from the addition of Nicor Gas. Again, these expenses were partially
offset by lower incentive compensation costs.
Retail
Operations
The retail
operations segment, which consists of SouthStar Energy Services as well as
Nicor Services, Nicor Solutions and Nicor Advanced Energy, reported EBIT of $93
million for 2011, a decrease of 10% compared to $103 million in 2010. Operating
margin decreased by $15 million due largely to reduced average customer usage
and warmer than prior year weather. Operating expenses were lower by $5 million
as a result of lower legal and bad debt expenses.
During the
fourth quarter of 2011, EBIT for the retail segment was $29 million, a decrease
of 22% compared to $37 million for the same period in 2010. Operating margin
decreased by $8 million due primarily to reduced average customer usage and
warmer than prior year weather. In addition, due to declines in natural gas
prices during the fourth quarter, the retail segment recorded a $5 million
lower-of-cost-or-market (LOCOM) inventory adjustment. Operating expenses for
the quarter were flat year-over-year.
Wholesale Services
The wholesale
services segment, consisting primarily of Sequent Energy Management and Nicor
Enerchange, reported EBIT of $5 million for 2011, compared to $49 million in
2010. Operating margin decreased $48 million largely driven by reduced
commercial activity ($23 million) and take-away constraints experienced by
Sequent in the Marcellus shale region ($18 million) and credit losses of $4
million. Low natural gas price volatility throughout much of the year resulted
in lower storage and transportation spreads and diminished asset optimization
opportunities. Sequent also recorded a $24 million increase in LOCOM
adjustments, net of current period recoveries. These losses were partially
offset by a $21 million increase in storage and transportation hedge gains.
Operating expenses for the wholesale segment were lower by $5 million due
primarily to decreased incentive compensation expenses.
During the
fourth quarter of 2011, the wholesale segment recorded EBIT of $14 million, an
increase of 27% compared to $11 million for the same period in 2010. Operating
margin decreased $1 million for the fourth quarter of 2011 as compared to the
prior-year period, largely driven by a $49 million increase in storage and
transportation hedge gains, offset by lower commercial activity of $28 million
and a $22 million increase in LOCOM adjustments. Operating expenses for the
wholesale segment decreased $4 million compared to the prior-year period,
mainly due to decreased incentive compensation expenses.
Midstream
Operations
The midstream
operations segment, consisting primarily of our natural gas storage facilities
including Jefferson Island Storage and Hub, Golden Triangle Storage and Central
Valley, contributed EBIT of $9 million for 2011, an increase of 50% compared to
2010. Operating margin for 2011 was higher by $7 million, primarily as a result
of increased revenues from having a full year of operations at Golden Triangle
Storage Cavern 1. Operating expenses increased by $4 million primarily as a result
of higher depreciation expense at Golden Triangle Storage, offset in part by
lower project development costs in 2011.
During the
fourth quarter of 2011, the midstream segment contributed EBIT of $3 million,
compared to EBIT of $2 million during the prior-year period.
Cargo Shipping
As a result of
the Nicor merger, our cargo shipping segment consists primarily of Tropical
Shipping, a containerized cargo shipping company serving the Bahamas and
Caribbean regions. The cargo shipping segment did not have a material impact on
AGL Resources' consolidated results for the 22 days of ownership in 2011.
INTEREST
EXPENSE AND INCOME TAXES
Interest
expense for 2011 of $136 million was $27 million higher than 2010, primarily
due to higher average debt outstanding as a result of the additional long-term
debt issuances of $975 million used to fund the Nicor merger. In the fourth
quarter of 2011, interest expense was $44 million, up $15 million from the
fourth quarter of 2010, also due to higher average debt outstanding.
Income tax
expense for 2011 was $125 million compared to $140 million for 2010, reflecting
lower consolidated earnings. Income tax expense was $40 million for the fourth
quarter of 2011 compared to $36 million the fourth quarter of 2010, driven
mainly by a higher effective tax rate in 2011. The higher rate was the
result of non-deductible merger transaction expenses.
2012 EARNINGS OUTLOOK
AGL Resources
expects its 2012 earnings to be in the range of $2.80 to $2.95 per diluted
share. The Company's guidance assumes achievement of anticipated efficiencies
related to corporate overhead and non-utility businesses post-acquisition,
normal weather conditions, continued low volatility in natural gas prices, with
no material impact to earnings from the effect of forward natural gas price
movements on storage and transportation hedges in the Wholesale Services
segment. EPS guidance also assumes average diluted shares outstanding of
approximately 117.5 million and an effective tax rate of 37.9%. Additionally,
the earnings expectations exclude integration expenses related to the merger
with Nicor.
Unanticipated
changes in these events or other circumstances could materially impact
earnings, and could result in earnings for 2012 significantly above or below
this outlook. Factors that could cause such changes are described below in
Forward-Looking Statements and in other company documents on file with the Securities
and Exchange Commission.
AGL Resources
will hold its annual analyst day on March 20, 2012, at the New York Stock
Exchange. At that time, segment-specific earnings expectations will be issued
by the company. Please RSVP to investor relations if you would like to attend
the meeting.
EARNINGS
CONFERENCE CALL/WEBCAST
AGL Resources
will hold a conference call to discuss its fourth quarter and year end 2011
results on February 22 at 9 a.m. Eastern Time. The conference call will be
webcast, and can be accessed via the Investor Relations section of the
company's Web site (www.aglresources.com), or by dialing 866.543.6403 if
calling from the U.S., or 617.213.8896 if dialing from outside of the U.S.
(Passcode: 11344657). A replay of the conference call will be available by
dialing 888-286-8010 in the United States or 617-801-6888 outside the United
States (Passcode: 46724795). A replay of the call also will be available on the
Investor Relations section of the company's Web site for seven days following
the call.
About AGL Resources
AGL Resources
(NYSE: GAS) is an Atlanta-based energy services holding company with operations
in natural gas distribution, retail operations, wholesale services, midstream
operations and cargo shipping. As the nation's largest natural gas-only
distributor based on customer count, AGL Resources serves approximately 4.5
million utility customers through its regulated distribution subsidiaries in
seven states. The company also serves more than one million retail customers
through its SouthStar Energy Services joint venture and Nicor National, which
market natural gas and related home services. Other non-utility businesses
include asset management for natural gas wholesale customers through Sequent
Energy Management, ownership and operation of natural gas storage facilities,
and ownership of Tropical Shipping, one of the largest containerized cargo
carriers serving the Bahamas and Caribbean region. AGL Resources is a member of
the S&P 500 Index. For more information, visit
www.aglresources.com.
Forward-Looking Statements
Certain
expectations and projections regarding our future performance referenced in
this press release, in other reports or statements we file with the SEC or otherwise
release to the public, and on our website, are forward-looking statements.
Senior officers and other employees may also make verbal statements to
analysts, investors, regulators, the media and others that are forward-looking.
Forward-looking statements involve matters that are not historical facts, such
as statements regarding our future operations, prospects, strategies, financial
condition, economic performance (including growth and earnings), industry
conditions and demand for our products and services. Because these statements
involve anticipated events or conditions, forward-looking statements often
include words such as "anticipate," "assume,"
"believe," "can," "could," "estimate," "expect,"
"forecast," "future," "goal,"
"indicate," "intend," "may," "outlook,"
"plan," "potential," "predict,"
"project," "seek," "should," "target,"
"would," or similar expressions. Forward-looking statements contained
in this press release include, without limitation, the quotes from John W.
Somerhalder II and Andrew W. Evans, and our 2012 earnings outlook and related
expectations assumptions.
Such events,
risks and uncertainties include, but are not limited to, changes in price,
supply and demand for natural gas and related products; the impact of changes
in state and federal legislation and regulation including changes related to
climate change; actions taken by government agencies on rates and other
matters; concentration of credit risk; utility and energy industry
consolidation; the impact on cost and timeliness of construction projects by
government and other approvals, development project delays, adequacy of supply
of diversified vendors, unexpected change in project costs, including the cost
of funds to finance these projects; the impact of acquisitions and divestitures;
including the Nicor merger; including the limits on natural gas pipeline
capacity; direct or indirect effects on our business, financial condition or
liquidity resulting from a change in our credit ratings or the credit ratings
of our counterparties or competitors; interest rate fluctuations; financial
market conditions, including disruptions in the capital markets and lending
environment and the current economic uncertainty; general economic conditions;
uncertainties about environmental issues and the related impact of such issues;
the impact of changes in weather, including climate change, on the
temperature-sensitive portions of our business; the impact of natural disasters
such as hurricanes on the supply and price of natural gas; the outcome of
litigation; acts of war or terrorism; and other factors which are provided in
detail in our filings with the Securities and Exchange Commission, which we
incorporate by reference in this press release. Forward-looking statements are
only as of the date they are made, and we do not undertake to update these
statements to reflect subsequent changes.
Supplemental
Information
Company
management evaluates segment financial performance based on earnings before
interest and taxes (EBIT), which includes the effects of corporate expense
allocations and on operating margin. EBIT is a non-GAAP (accounting principles
generally accepted in the United States of America) financial measure that
includes operating income, other income and expenses. Items that are not included
in EBIT are financing costs, including debt and interest expense and income
taxes. The company evaluates each of these items on a consolidated level and
believes EBIT is a useful measurement of our performance because it provides
information that can be used to evaluate the effectiveness of our businesses
from an operational perspective, exclusive of the costs to finance those
activities and exclusive of income taxes, neither of which is directly relevant
to the efficiency of those operations.
Operating
margin is a non-GAAP measure calculated as operating revenues minus cost of
goods sold and revenue taxes, excluding operation and maintenance expense,
depreciation and amortization, and taxes other than income taxes. These items
are included in the company's calculation of operating income. The company
believes operating margin is a better indicator than operating revenues of the
contribution resulting from customer growth, since cost of gas and revenue
taxes are generally passed directly through to customers.
In addition, in
this press release AGL Resources has presented a non-GAAP measure of adjusted
earnings per share which excludes expenses incurred with respect to the Nicor
merger. As the company does not routinely engage in transactions of the
magnitude of the Nicor merger, and consequently does not regularly incur
transaction and integration-related expenses of correlative size, the company
believes presenting EPS excluding Nicor merger-related expenses provides
investors with an additional measure of AGL Resources' core operating
performance. AGL Resources also expects to record certain merger-related
expenses in 2012 and will exclude non-recurring integration-related expenses
from its 2012 adjusted results. Examples of such expenses related to the merger
and integration are: employee severance, relocation, consulting services,
temporary labor and certain travel costs.
EBIT, operating
margin and EPS excluding merger expenses should not be considered as
alternatives to, or more meaningful indicators of, the company's operating
performance than operating income, net income attributable to AGL Resources
Inc. or EPS as determined in accordance with GAAP. In addition, the company's
EBIT, operating margin and adjusted EPS may not be comparable to similarly
titled measures of another company.
Reconciliation
of non-GAAP financial measures referenced in this press release and otherwise
in the earnings conference call and webcast is attached to this press release
and is available on the company's Web site at http://www.aglresources.com/ under the Investor Relations
section.
AGL Resources Inc.
Condensed Consolidated Statements of Income
Unaudited
|
Three Months
|
|
Twelve Months
|
In millions, except per share amounts
|
12/31/11
|
12/31/10
|
Fav / (Unfav)
|
|
12/31/11
|
12/31/10
|
Fav / (Unfav)
|
Operating
revenues
|
$790
|
$665
|
$125
|
|
$2,338
|
$2,373
|
$(35)
|
Operating
expenses
|
|
|
|
|
|
|
|
Cost of goods sold
|
396
|
332
|
(64)
|
|
1,097
|
1,164
|
67
|
Operation and maintenance expenses
|
146
|
139
|
(7)
|
|
490
|
497
|
7
|
Nicor merger expenses
|
49
|
6
|
(43)
|
|
68
|
6
|
(62)
|
Depreciation and amortization expenses
|
60
|
41
|
(19)
|
|
186
|
160
|
(26)
|
Taxes other than income taxes
|
21
|
10
|
(11)
|
|
57
|
46
|
(11)
|
Total
operating expenses
|
672
|
528
|
(144)
|
|
1,898
|
1,873
|
(25)
|
Operating
income
|
118
|
137
|
(19)
|
|
440
|
500
|
(60)
|
Other (expense) income
|
3
|
(2)
|
5
|
|
7
|
(1)
|
8
|
Earnings before interest and taxes
|
121
|
135
|
(14)
|
|
447
|
499
|
(52)
|
Interest expenses, net
|
44
|
29
|
(15)
|
|
136
|
109
|
(27)
|
Earnings before income
taxes
|
77
|
106
|
(29)
|
|
311
|
390
|
(79)
|
Income tax expenses
|
40
|
36
|
(4)
|
|
125
|
140
|
15
|
Net
income
|
37
|
70
|
(33)
|
|
186
|
250
|
(64)
|
Less net income attributable to the noncontrolling
interest
|
4
|
6
|
2
|
|
14
|
16
|
2
|
Net income attributable to AGL Resources Inc.
|
$33
|
$64
|
$(31)
|
|
$172
|
$234
|
$(62)
|
|
|
|
|
|
|
|
|
Earnings per common share
|
|
|
|
|
|
|
|
Basic
|
$0.37
|
$0.82
|
$(0.45)
|
|
$2.14
|
$3.02
|
$(0.88)
|
Diluted
|
$0.37
|
$0.81
|
$(0.44)
|
|
$2.12
|
$3.00
|
$(0.88)
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding (1)
|
|
|
|
|
|
|
|
Basic
|
87.8
|
77.6
|
(10.2)
|
|
80.4
|
77.4
|
(3.0)
|
Diluted
|
88.4
|
78.1
|
(10.3)
|
|
80.9
|
77.8
|
(3.1)
|
|
|
|
|
|
|
|
|
(1) The increase in the weighted average
shares outstanding is related to share issuance associated with the Nicor
merger. The full share count as of December, 31 2011 is 117.1 million.
AGL Resources Inc.
EBIT Schedule
For the Three and Twelve Months Ended December 31, 2011 and 2010
Unaudited
|
Three Months
|
|
Twelve Months
|
In millions, except per share amounts
|
12/31/11
|
12/31/10
|
Fav / (Unfav)
|
|
12/31/11
|
12/31/10
|
Fav / (Unfav)
|
Distributions
Operations
|
$127
|
$94
|
$33
|
|
$412
|
$352
|
$60
|
Retail Operations
|
29
|
37
|
(8)
|
|
93
|
103
|
(10)
|
Wholesale Operations
|
14
|
11
|
3
|
|
5
|
49
|
(44)
|
Midstream Operations
|
3
|
2
|
1
|
|
9
|
6
|
3
|
Cargo
Shipping
|
-
|
-
|
-
|
|
-
|
-
|
-
|
Corporate/Other
|
(52)
|
(9)
|
(43)
|
|
(72)
|
(11)
|
(61)
|
Consolidated EBIT
|
121
|
135
|
(14)
|
|
447
|
499
|
(52)
|
Interest expenses, net
|
44
|
29
|
(15)
|
|
136
|
109
|
(27)
|
Income tax expense
|
40
|
36
|
(4)
|
|
125
|
140
|
15
|
Net
income
|
37
|
70
|
(33)
|
|
186
|
250
|
(64)
|
Less net income attributable to the noncontrolling
interest
|
4
|
6
|
2
|
|
14
|
16
|
2
|
Net income attributable to AGL Resources Inc.
|
$33
|
$64
|
$(31)
|
|
$172
|
$234
|
$(62)
|
|
|
|
|
|
|
|
|
Earnings per common share
|
|
|
|
|
|
|
|
Basic
|
$0.37
|
$0.82
|
$(0.45)
|
|
$2.14
|
$3.02
|
$(0.88)
|
Diluted
|
$0.37
|
$0.81
|
$(0.44)
|
|
$2.12
|
$3.00
|
$(0.88)
|
AGL Resources Inc.
Reconciliation of Operating Margin to Operating Revenues
Unaudited
|
Three Months
|
|
Twelve Months
|
In
millions
|
12/31/11
|
12/31/10
|
Fav / (Unfav)
|
|
12/31/11
|
12/31/10
|
Fav / (Unfav)
|
Operating
revenues
|
$790
|
$665
|
$125
|
|
$2,338
|
$2,373
|
$(35)
|
Cost of goods sold
|
(396)
|
(332)
|
(64)
|
|
(1,097)
|
(1,164)
|
67
|
Revenue
tax expense
|
(9)
|
-
|
(9)
|
|
(9)
|
-
|
(9)
|
Operating
margin
|
$385
|
$333
|
$52
|
|
$1,232
|
$1,209
|
$23
|
Contacts:
Financial
Sarah Stashak
Director - Investor Relations
Office: 404-584-4577
Cell: 404-895-7634
sstashak@aglresources.com
Media
Annette Martinez
Director - External
Relations
Office: 630-388-2781
Cell: 630-918-2321
amartinez@aglresources.com