The Laclede Group Reports Solid Fiscal 2012 Performance
ST. LOUIS, Nov. 19, 2012 /PRNewswire/ — The Laclede Group, Inc. (NYSE: LG) today reported overall solid operating results for its fourth quarter and fiscal year ended September 30, 2012. Highlights include:
All amounts per diluted
share Three Months Ended Twelve Months Ended
September 30 September 30
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----
Earnings (Loss) Per
Share (GAAP) $(0.03) $(0.13) $2.79 $2.86
Net Adjustments to GAAP
Earnings $0.05 $(0.01) $(0.07)
Net Economic Earnings
(Loss) Per Share (non-
GAAP)* $0.02 $(0.14) $2.79 $2.79
===== ======
Earnings from 2011 Propane Sale $(0.27)
Net Economic Earnings
Per Share Excluding
2011 Propane Sale (non-
GAAP)
$2.79 $2.52
===== =====
* See "Net Economic Earnings and
Reconciliation to GAAP" on page
9.
Fiscal 2012
The Laclede Group’s consolidated net income for its fiscal year ended September 30, 2012, was $62.6 million ($2.79 diluted earnings per share) compared to $63.8 million ($2.86 per share) for fiscal 2011. Fiscal 2012 net economic earnings were $62.6 million ($2.79 per share) compared to $62.4 million ($2.79 per share) last year. Excluding the impact of last year’s propane sale, net economic earnings (non-GAAP) grew by $6.3 million or 11%. Both of The Laclede Group’s primary business segments, Regulated Gas Distribution and Non-Regulated Gas Marketing, reported increases in year-over-year net income and net economic earnings.
Fourth Quarter
For its fiscal fourth quarter ended September 30, 2012, The Laclede Group reported a consolidated net loss of $0.7 million ($0.03 per share) compared to a net loss of $2.9 million ($0.13 per share) for the same period last year. Net economic earnings (non-GAAP) for the quarter were $0.4 million ($0.02 per share), compared to a loss of $3.1 million ($0.14 per share) last year. The improved results were mainly attributable to the effect of lower seasonal losses reported by the Regulated Gas Distribution segment, partially offset by reduced earnings reported by the Non-Regulated Gas Marketing segment. The Company’s earnings are seasonal in nature, and generally correspond to demand for natural gas in the heating season.
“In addition to having a solid year financially, we made excellent progress on our strategic growth initiatives, including making investments to upgrade our pipeline distribution network and IT system,” said Suzanne Sitherwood, president and chief executive officer of The Laclede Group. “We also realigned our organizational structure and leadership team including the October 1st appointment of Steven Lindsey as Executive Vice President and Chief Operating Officer of Distribution Operations. We are positioned to continue to deliver excellent customer service and to pursue growth opportunities in the natural gas marketplace,” she added.
REGULATED GAS DISTRIBUTION SEGMENT
Fiscal 2012
Operating revenues for this segment, representing the regulated gas operations of Laclede Gas Company, The Laclede Group’s core utility subsidiary, decreased 16% to $763.4 million in fiscal 2012. This decrease from the prior fiscal year was primarily due to lower sales volumes resulting from record warm temperatures in the utility’s service territory during the 2011-2012 heating season and lower natural gas commodity prices. The effect of reduced commodity prices on operating revenues was matched by a like reduction in natural gas expense, and had no direct impact on earnings.
Net income was $48.2 million for fiscal 2012, compared to $46.9 million for fiscal 2011. Net income increased primarily due to lower maintenance and customer service expenses and higher Infrastructure System Replacement Surcharge (ISRS) revenues. These factors were partially offset by the adverse effects of significantly warmer weather near the end of the heating season and higher benefit costs.
Fourth Quarter
Earnings are seasonal in nature and generally correspond with the heating season and, as a result, this segment typically reports a net loss in its fiscal fourth quarter. The Regulated Gas Distribution segment reported a net loss totaling $3.2 million for the quarter ended September 30, 2012, compared to a net loss of $6.1 million for the same period last year. The improvement was primarily due to increased ISRS revenues, higher net investment gains, and lower maintenance and customer service expenses.
Laclede Gas also continued to invest in its distribution system to enhance safety and reliability for its customers and in state-of-the-art technology to provide better service to its customers and to support future growth. For more information on capital expenditures, see the Cash Flows and Capital Structure section presented below.
NON-REGULATED GAS MARKETING SEGMENT
Fiscal 2012
The Non-Regulated Gas Marketing segment includes the operating results of Laclede Energy Resources, Inc. (LER), Laclede Group’s non-regulated natural gas service provider. Operating revenues for this segment decreased by 46% from the prior year due to lower per unit natural gas commodity prices, as well as recording a higher percentage of its revenues and natural gas expenses on a net rather than gross basis in 2012 compared to 2011. While LER continues to specialize in procuring and delivering natural gas to meet its customers’ needs, the impact on the marketplace of the abundance of natural gas supply has resulted in LER also purchasing and selling natural gas at the same location. In accordance with GAAP, some of these activities are recorded on a net basis, and while this reduces reported operating revenues, it has no direct impact on earnings.
The Non-Regulated Gas Marketing segment reported net income of $12.3 million for fiscal 2012, compared to $10.4 million for the prior year. Net economic earnings (non-GAAP) were $12.3 million for 2012 compared to $9.0 million for 2011, with the improvement primarily due to lower transportation costs resulting from the renewal of contracts. On a GAAP basis, net income was also adversely impacted by the effect of lower net unrealized gains on energy-related derivatives compared to fiscal 2011.
Fourth Quarter
Net income for the quarter ended September 30, 2012 totaled $1.6 million, compared to $3.2 million for the same period last year. Net economic earnings (non-GAAP) totaled $2.7 million for the three months ended September 30, 2012, compared to $2.9 million for the same period last year. On a net economic earnings basis, the effect of lower sales margins was largely offset by increased transaction volumes. On a GAAP basis, the reduction in net income compared to the prior-year quarter was also attributable to higher net unrealized losses on energy-related derivatives.
OTHER
Net income reported by The Laclede Group’s other operating segments decreased $4.4 million in fiscal 2012, compared to fiscal 2011, largely due to the effect of last year’s $6.1 million in earnings from the non-regulated propane sale in April 2011. There was no sale of propane inventories in fiscal 2012. Net income for the quarter ended September 30, 2012 increased $0.9 million compared to the same quarter last year.
CASH FLOWS AND CAPITAL STRUCTURE
Net cash provided by operating activities for fiscal 2012 was $128.1 million compared to $167.2 million for fiscal 2011. The decrease is primarily attributable to the timing of collections of gas cost under Laclede Gas’s Purchased Gas Adjustment Clause, including the net effect of increased cash payments for margin deposits associated with the use of natural gas derivative instruments and changes in the cost of natural gas storage inventories. The decrease is also attributable to the effect of the non-regulated propane sale in fiscal 2011 and increased cash payments for the funding of pension plans in fiscal 2012. Excluding temporary changes in working capital, such as the effect of regulatory timing differences in the recovery of certain costs and the timing of cash payments for income taxes, operating cash flows (non-GAAP) for fiscal 2012 were $104.0 million, which was comparable to $107.0 million in the prior year. See reconciliation of Operating Cash Flows (non-GAAP) to Net Cash Provided by Operating Activities (GAAP) on page 10.
Capital expenditures for fiscal 2012 and 2011 were $108.8 million and $67.6 million, respectively. The increase primarily reflects significant investments in information technology as Laclede Gas continues on its previously announced multi-year upgrade of its technology platforms. In addition, Laclede Gas accelerated the replacement of portions of its distribution system totaling 41 miles of main in fiscal 2012, up from 20 miles in the prior year.
The Laclede Group maintains a strong capital structure, which at September 30, 2012, consisted of 36% long-term debt (excluding the current portion that was retired in October 2012), down from 39% at the end of fiscal 2011. Similarly, short-term debt outstanding was $40.1 million at September 30, 2012, down from $46.0 million at September 30, 2011. The Company’s objective is to maintain a strong balance sheet, and as previously disclosed, it entered into certain debt commitments during the fourth quarter of fiscal 2012 to borrow $125 million at rates between 3.0% and 3.4% per annum, with funding delayed until December 2012 and March 2013.
For additional details on The Laclede Group’s fiscal results for the fourth quarter and year-end 2012, please see the accompanying Statements of Consolidated Income, Condensed Consolidated Balance Sheets, and Condensed Consolidated Statements of Cash Flows.
CONFERENCE CALL AND WEBCAST
At 9 a.m. Central (10 a.m. Eastern) today, the Company will host a conference call to discuss its fiscal 2012 fourth quarter and full-year financial results. To access the call, please dial the number below 5-10 minutes prior to the start time.
U.S.: 1-877-317-6789
Canada: 1-866-605-3852
International: 1-412-317-6789
The call will also be webcast in a listen-only format for the media and general public. The webcast can be accessed at www.TheLacledeGroup.com under the Investor Services tab.
A replay of the call will be available beginning at 11 a.m. Central (12 Noon Eastern) on November 19 and continuing until December 20, 2012, by dialing 1-877-344-7529 (U.S.) or 1-412-317-0088 (Canada/International). The Conference ID is 10020874. The webcast will be available for replay beginning November 19, at www.TheLacledeGroup.com.
ABOUT THE LACLEDE GROUP
Headquartered in St. Louis, Missouri, The Laclede Group, Inc. is a public utility holding company. Its subsidiary, Laclede Gas Company, the regulated operations of which are included in the Regulated Gas Distribution segment, serves approximately 628,000 residential, commercial and industrial customers in St. Louis City and parts of 10 counties in eastern Missouri. The Laclede Group’s primary non-utility business, Laclede Energy Resources, Inc., included in the Non-Regulated Gas Marketing segment, provides non-regulated natural gas services. The Laclede Group, Inc. is committed to pursuing growth through 1) developing and investing in emerging technologies; 2) investing in infrastructure; 3) acquiring businesses to which the Company can apply its operating model, and 4) leveraging its current business unit competencies. For more information about The Laclede Group and its subsidiaries, visit www.TheLacledeGroup.com.
CAUTIONARY STATEMENTS ON FORWARD-LOOKING INFORMATION AND NON-GAAP MEASURES
This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. The Company’s future operating results may be affected by various uncertainties and risk factors, many of which are beyond the Company’s control, including weather conditions, economic factors, the competitive environment, and governmental and regulatory policy and action. For a more complete description of these uncertainties and risk factors, see the Company’s Form 10-Q for the quarter ended June 30, 2012, filed with the Securities and Exchange Commission.
This news release includes the non-GAAP financial measures of “net economic earnings,” “net economic earnings per share,” and “net economic earnings per share excluding 2011 propane sale.” Management also uses these non-GAAP measures internally when evaluating the Company’s performance. Net economic earnings exclude from net income the after-tax impacts of fair value accounting and timing adjustments associated with energy-related transactions. These adjustments, which primarily impact the Non-Regulated Gas Marketing segment, include net unrealized gains and losses on energy-related derivatives resulting from the current changes in the fair value of financial and physical transactions prior to their completion and settlement, lower of cost or market inventory adjustments, and realized gains and losses on economic hedges prior to the sale of the physical commodity. In calculating net economic earnings, management also excludes from net income the after-tax costs related to acquisition, divestiture, and restructuring activities, if any. “Net economic earnings per share excluding 2011 propane sale,” which excludes the impact of the Company’s sale of excess propane inventory, provides a more comparable analysis of year-to-year results. Management believes that excluding these items provides a useful representation of the economic impact of actual settled transactions and overall results of ongoing operations. These internal non-GAAP operating metrics should not be considered as an alternative to, or more meaningful than, GAAP measures such as net income.
This news release also includes the non-GAAP financial measure of “Operating Cash Flows.” Management also uses this measure internally when evaluating longer-term cash flow impacts. This measure excludes the effects of temporary changes in working capital, such as the effect of regulatory timing differences in the recovery of certain costs and the timing of cash payments for income taxes. Management believes that excluding these items provides a useful representation of the economic impact of longer-term cash flows generated from business activities. This internal non-GAAP cash flow metric should not be considered as an alternative to, or more meaningful than, GAAP measures such as net cash provided by operating activities.
STATEMENTS OF CONSOLIDATED INCOME
THE LACLEDE GROUP, INC.
(Thousands, Except Per Share Amounts)
Three Months Ended Twelve Months Ended
September 30, September 30,
------------- -------------
2012 2011 2012 2011
---- ---- ---- ----
OPERATING REVENUES
Regulated Gas Distribution $97,466 $95,949 $763,447 $913,190
Non-Regulated Gas Marketing 70,109 173,547 358,145 669,375
Other 1,963 1,550 3,883 20,742
Total Operating Revenues 169,538 271,046 1,125,475 1,603,307
OPERATING EXPENSES
Regulated Gas Distribution
Natural and propane gas 32,748 39,244 397,304 549,947
Other operation expenses 36,193 36,597 144,440 147,889
Maintenance 6,130 6,536 22,911 25,049
Depreciation and amortization 10,289 9,981 40,739 39,214
Taxes, other than income taxes 8,070 7,986 53,672 60,752
Total Regulated Gas Distribution
Operating Expenses 93,430 100,344 659,066 822,851
Non-Regulated Gas Marketing 73,499 168,332 353,283 652,567
Other 740 571 2,524 9,642
Total Operating Expenses 167,669 269,247 1,014,873 1,485,060
Operating Income 1,869 1,799 110,602 118,247
----- ----- ------- -------
Other Income and (Income Deductions) - Net (499) (2,292) 3,272 177
---- ------ ----- ---
Interest Charges:
Interest on long-term debt 5,740 5,740 22,958 23,161
Other interest charges 446 555 1,987 2,256
Total Interest Charges 6,186 6,295 24,945 25,417
Income (Loss) Before Income Taxes (4,816) (6,788) 88,929 93,007
Income Tax Expense (Benefit) (4,165) (3,961) 26,289 29,182
------ ------ ------ ------
Net Income (Loss) $(651) $(2,827) $62,640 $63,825
===== ======= ======= =======
Weighted Average Number of Common Shares
Outstanding:
Basic 22,318 22,136 22,262 22,099
Diluted 22,318 22,136 22,340 22,171
Basic Earnings (Loss) Per Share of Common
Stock $(0.03) $(0.13) $2.80 $2.87
Diluted Earnings (Loss) Per Share of Common
Stock $(0.03) $(0.13) $2.79 $2.86
CONDENSED CONSOLIDATED BALANCE SHEETS
THE LACLEDE GROUP, INC.
(Thousands)
September 30, September 30,
2011
2012
ASSETS
Utility Plant $1,497,419 $1,386,590
Less:
Accumulated
depreciation
and
amortization 478,120 457,907
------- -------
Net Utility
Plant 1,019,299 928,683
--------- -------
Other Property
and
Investments 56,814 55,373
------ ------
Current Assets:
Cash and cash
equivalents 27,457 43,277
Accounts
receivable
(net of
allowance for
doubtful
accounts) 133,842 124,483
Inventories 106,472 128,360
Other 75,245 73,014
------ ------
Total Current
Assets 343,016 369,134
------- -------
Regulatory
assets and
other deferred
charges 461,133 429,892
Total Assets $1,880,262 $1,783,082
========== ==========
CAPITALIZATION
AND
LIABILITIES
Capitalization:
Common stock
and paid-in
capital $191,146 $186,133
Retained
earnings 414,581 389,298
Accumulated
other
comprehensive
loss (4,116) (2,100)
------ ------
Total Common
Stock Equity 601,611 573,331
Long-term debt
(less current
portion) -
Laclede Gas 339,416 364,357
------- -------
Total
Capitalization 941,027 937,688
------- -------
Current
Liabilities:
Notes payable 40,100 46,000
Accounts
payable 89,503 96,561
Advance
customer
billings 25,146 15,230
Current portion
of long-term
debt 25,000 -
Accrued
liabilities
and other 72,375 74,143
------ ------
Total Current
Liabilities 252,124 231,934
------- -------
Deferred
Credits and
Other
Liabilities:
Deferred income
taxes and
unamortized
investment tax
credits 358,622 318,731
Pension and
postretirement
benefit costs 196,558 185,701
Regulatory
liabilities 56,319 50,846
Asset
retirement
obligations
and other 75,612 58,182
------ ------
Total Deferred
Credits and
Other
Liabilities 687,111 613,460
------- -------
Total
Capitalization
and
Liabilities $1,880,262 $1,783,082
========== ==========
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
THE LACLEDE GROUP, INC.
(Thousands)
Twelve Months Ended
September 30,
-------------
2012 2011
---- ----
Operating
Activities:
Net Income $62,640 $63,825
Adjustments to
reconcile net
income to net cash
provided by (used
in) operating
activities:
Depreciation,
amortization, and
accretion 41,339 39,764
Deferred income
taxes and
investment tax
credits 30,554 23,885
Other - net 75 3,431
Changes in assets
and liabilities (6,507) 36,282
Net cash provided
by operating
activities 128,101 167,187
------- -------
Investing
Activities:
Capital
expenditures (108,843) (67,638)
Other investments 3,439 631
----- ---
Net cash used in
investing
activities (105,404) (67,007)
-------- -------
Financing
Activities:
Maturity of first
mortgage bonds - (25,000)
Repayment of short-
term debt - net (5,900) (83,650)
Issuance of common
stock 4,311 2,549
Dividends paid (36,896) (35,821)
Other (32) (1,900)
--- ------
Net cash used in
financing
activities (38,517) (143,822)
------- --------
Net Decrease in
Cash and Cash
Equivalents (15,820) (43,642)
Cash and Cash
Equivalents at
Beginning of
Period 43,277 86,919
------ ------
Cash and Cash
Equivalents at End
of Period $27,457 $43,277
======= =======
NET ECONOMIC EARNINGS AND RECONCILIATION TO GAAP
THE LACLEDE GROUP, INC.
(Millions, except per share amounts)
Regulated Non- Other Total Per
Gas Regulated Share Amounts
(2)
Distribution Gas Marketing
------------ -------------
Quarter Ended September 30, 2012
Net Economic Earnings (Loss)
(Non-GAAP) $(3.3) $2.7 $1.0 $0.4 $0.02
Add: Unrealized gain (loss) on
energy-related derivatives (1) 0.1 (1.1) - (1.0) (0.04)
Add: Lower of cost or market
inventory adjustments (1) - 0.1 - 0.1 -
Add: Realized loss on economic
hedges prior to the sale of the
physical commodity (1) - (0.1) - (0.1) -
Add: Acquisition, divestiture
and restructuring activities (1) - - (0.1) (0.1) (0.01)
Net Income (Loss) (GAAP) $(3.2) $1.6 $0.9 $(0.7) $(0.03)
Net Economic EPS (Non-GAAP) (2) $(0.15) $0.12 $0.05 $0.02
Diluted EPS (GAAP) $(0.14) $0.07 $0.04 $(0.03)
Quarter Ended September 30, 2011
Net Economic Earnings (Non-GAAP) $(6.1) $2.9 $0.1 $(3.1) $(0.14)
Add: Unrealized gain on energy-
related derivatives (1) - 0.3 - 0.3 0.01
Net Income (GAAP) $(6.1) $3.2 $0.1 $(2.8) $(0.13)
Net Economic EPS (Non-GAAP) (2) $(0.27) $0.13 $ - $(0.14)
Diluted EPS (GAAP) $(0.27) $0.15 $(0.01) $(0.13)
Twelve Months Ended September 30, 2012
Net Economic Earnings (Non-GAAP) $48.1 $12.3 $2.2 $62.6 $2.79
Add: Unrealized gain on energy-
related derivatives (1) 0.1 0.2 - 0.3 0.02
Add: Realized loss on economic
hedges prior to the sale of the
physical commodity (1) - (0.2) - (0.2) (0.01)
Add: Acquisition, divestiture
and restructuring activities (1) - - (0.1) (0.1) (0.01)
Net Income (GAAP) $48.2 $12.3 $2.1 $62.6 $2.79
Net Economic EPS (Non-GAAP) (2) $2.14 $0.55 $0.10 $2.79
Diluted EPS (GAAP) $2.15 $0.55 $0.09 $2.79
Twelve Months Ended September 30, 2011
Net Economic Earnings (Non-GAAP) $46.9 $9.0 $6.5 $62.4 $2.79
Add: Unrealized gain on energy-
related derivatives (1) - 1.4 - 1.4 0.07
Net Income (GAAP) $46.9 $10.4 $6.5 $63.8 $2.86
Net Economic EPS (Non-GAAP) (2) $2.10 $0.40 $0.29 $2.79
Diluted EPS (GAAP) $2.10 $0.47 $0.29 $2.86
(1) Amounts presented net of
income taxes, which were
calculated by applying federal,
state, and local income tax
rates applicable to ordinary
income to the amounts of the
pre-tax reconciling items. For
the quarters ended September
30, 2012 and 2011, the total
net income tax (benefit)
expense included in the
reconciling items is $(0.7)
million and $0.2 million,
respectively. For the twelve
months ended September 30,
2012, the total net income tax
expense included in the
reconciling items is negligible
but is $0.9 million for the
twelve months ended September
30, 2011.
(2) Consolidated net economic
earnings per share (EPS) are
calculated by replacing
consolidated net income (loss)
with consolidated net economic
earnings (loss) in the GAAP
diluted EPS calculation.
Note: EPS amounts by segment
represent contributions to The
Laclede Group's consolidated
EPS.
OPERATING CASH FLOWS AND RECONCILIATION TO GAAP
THE LACLEDE GROUP, INC.
(Millions)
Twelve Months Ended
September 30,
-------------
2012 2011
---- ----
Operating Cash Flows
(Non-GAAP) $104.0 $107.0
Add (deduct):
Changes in assets and
liabilities (6.5) 36.3
Deferred income taxes and
investment tax credits 30.6 23.9
---- ----
Net cash provided by
operating activities
(GAAP) $128.1 $167.2
====== ======
Net cash used in
investing activities
(GAAP) $(105.4) $(67.0)
Net cash used in
financing activities
(GAAP) $(38.5) $(143.8)
SOURCE The Laclede Group, Inc.
