Energy West, Incorporated Reports Results for Fourth Quarter and Fiscal Year 2008
GREAT FALLS, Mont., Sept. 30 /PRNewswire-FirstCall/ — Energy West, Incorporated today reported consolidated results for its fiscal 2008 fourth quarter and fiscal year ended June 30, 2008.
* Net income (including extraordinary gain) was $10.1 million, or $2.35 per diluted share, for the full year 2008.
* Excluding one-time items, adjusted net income for 2008 was $3.9 million, or $0.92 per diluted share, an increase of 39%, compared to adjusted net income for 2007 of $2.8 million, or $0.64 per diluted share.
The Company reported a net loss of $120,000, or $(0.03) per diluted share, for the fourth quarter of 2008, compared to net income of $3.2 million, or $0.72 per diluted share, for the fourth quarter of 2007. The fourth quarter of 2008 included $272,000 (after tax) of costs associated with an equity offering that did not occur. The fourth quarter of 2007 included a gain of $3.4 million (after tax) from the sale of propane assets. Excluding $272,000 (after tax) of costs associated with the equity offering in the fourth quarter of 2008, adjusted net income was $152,000, or $0.03 per diluted share, compared to an adjusted net loss of $152,000 or $(0.03) per diluted share in fourth quarter of 2007, excluding a gain of $3.4 million (after tax) from the sale of propane assets. The Natural Gas Operations segment contributed net income of $293,000 in the fourth quarter of 2008 compared to a net loss of $289,000 in the fourth quarter of 2007. The company’s new markets in North Carolina and Maine, contributed combined net income of $24,000 for the fourth quarter of 2008. The Marketing and Production segment reported a net loss of $49,000 in fourth quarter of 2008 compared to net income of $129,000 in the fourth quarter of 2007. The Pipeline Operations segment contributed net income of $12,000 in the fourth quarter of 2008 compared to $7,000 for the fourth quarter of 2007.
For the fiscal year ended June 30, 2008, net income was $10.1 million, or $2.35 per diluted share, which included a $6.8 million extraordinary gain offset by approximately $369,000 (after tax) of costs associated with the realignment of the Company’s management team and $272,000 (after tax) of costs associated with an equity offering that did not occur. The $6.8 million extraordinary gain resulted from the recognition of a deferred tax asset of $11.5 million from the purchase of assets in North Carolina and Maine. Excluding a $6.8 million extraordinary gain offset by approximately $369,000 (after tax) of costs associated with the realignment of the Company’s management team and $272,000 (after tax) of costs associated with an equity offering that did not occur, the adjusted net income for the fiscal year 2008 was $3.9 million, or $0.91 per diluted share, an increase of 39%, compared to adjusted net income for 2007. For the fiscal year ended June 30, 2007, net income was $6.2 million, or $1.39 per diluted share, which included a $3.4 million (after tax) gain from the sale of propane assets. Excluding the gain of $3.4 million (after tax) from the propane sale, the adjusted net income for fiscal year 2007 was $2.8 million, or $0.62 per diluted share. The Natural Gas Operations segment contributed net income of $2.3 million in 2008 compared to $1.3 million in 2007, an increase of 77%. This increase was due to the new markets in North Carolina and Maine, which contributed combined net income of $700,000 for the full year of 2008. The Marketing and Production segment contributed net income of $1.2 million in 2008 compared to $900,000 in 2007. The Pipeline Operations segment contributed net income of $80,000 in 2008 compared to $42,000 for 2007.
“2008 was another step in the right direction for Energy West,” said Richard M. Osborne, Chairman and CEO of Energy West. “We made great strides in bringing our new markets on line in Maine and North Carolina. In addition, we recently announced an agreement to acquire three natural gas distribution companies with customers in Northeastern Ohio and Western Pennsylvania, that, when completed, will increase our gas utility customer count by over 50%. The Energy West team accomplished all of this, while maintaining and improving our high customer service standards.”
Safe Harbor Regarding Forward-Looking Statements
The Company is including the following cautionary statement in this release to make applicable and to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward- looking statements made by, or on behalf of, Energy West, Incorporated. Forward-looking statements are all statements other than statements of historical fact, including, without limitation, those that are identified by the use of the words “anticipates,”"estimates,”"expects,”"intends,”"plans,”"predicts,”"believes” and similar expressions. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those expressed. Factors that may affect forward-looking statements and the company’s business generally include but are not limited to: the company’s ability to complete the terms and conditions set forth in the definitive agreement with Orwell Natural Gas Company, Northeast Ohio Natural Gas Corp. and Brainard Natural Gas Corp, such as the receipt of regulatory and shareholder approvals and other closing conditions, any failure of which may delay or prevent the closing of the acquisition; the acquisition may involve unexpected costs; the expected benefits of the acquisition may not be achieved in a timely manner or at all; the company’s ability to successfully integrate the operations of acquired companies; the company’s continued ability to make dividend payments; the company’s ability to implement its business plan; fluctuating energy commodity prices; the possibility that regulators may not permit the company to pass through all of its increased costs to its customers; changes in the utility regulatory environment; future utilization of pipeline capacity; the company’s ability to meet financial covenants in debt agreements; changes in accounting policies; the company’s ability to implement key systems; wholesale and retail competition; weather conditions; litigation risks; risks associated with contracts accounted for as derivatives; the company’s ability to maintain effective internal controls in accordance with Section 404 of Sarbanes-Oxley and various other matters, many of which are beyond the company’s control; the risk factors and cautionary statements made in the company’s public filings with the Securities and Exchange Commission, including the company’s filing on Form 10-K for the year ended June 30, 2008, and other factors that the company is currently unable to identify or quantify, but may exist in the future. Energy West expressly undertakes no obligation to update or revise any forward-looking statement contained herein to reflect any change in Energy West’s expectations or any change in events, conditions or circumstances on which any such statement is based.
About Energy West
Energy West, Incorporated distributes and sells natural gas to end-use residential, commercial, and industrial customers. It distributes approximately 23 billion cubic feet of natural gas to approximately 36,000 customers through regulated utilities operating in Montana, Wyoming, North Carolina and Maine. The company markets approximately 1.6 billion cubic feet of natural gas to commercial and industrial customers in Montana and Wyoming on an unregulated basis. The company also has a majority ownership interest in 162 natural gas producing wells and gas gathering assets. In addition, the company owns the Shoshone interstate and the Glacier gathering pipelines located in Montana and Wyoming. The company’s Montana public utility was originally incorporated in 1909 and is headquartered in Great Falls, Montana.
For additional information about Energy West, please contact: James W. Garrett, Vice President of business development, at (440) 205-1987.
The company’s toll-free number is (800) 570-5688. The company’s address is 1 First Avenue South, Great Falls, Montana 59401 and its website is http://www.ewst.com/.
ENERGY WEST, INCORPORATED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES UNAUDITED
In this press release, the company presented adjusted net income and adjusted net income per share, which are non-GAAP financial measures. Management uses non-GAAP financial measures to evaluate the company’s performance for the periods presented, and believes that these measures of profitability provide a meaningful presentation of the underlying earnings of the company’s operations. Adjusted net income and adjusted net income per share exclude certain items that, in the opinion of management, may not be indicative of overall operating trends. These non-GAAP measures should not be considered an alternative to measurements required by GAAP. Our calculation of these measures may differ from similar measures used by other companies and investors should be careful when comparing the company’s non-GAAP financial measures to those of other companies.
For the fourth quarter ended June 30, 2008, adjusted net income and adjusted net income per share exclude a one-time charge associated with an equity offering that did not occur, and for the fourth quarter ended June 30, 2007, adjusted net income and adjusted net income per share exclude a gain associated with the sale of propane assets. For the year ended June 30, 2008, adjusted net income and adjusted net income per share exclude an extraordinary gain related to a deferred tax asset, a one-time management restructuring charge and a one-time charge associated with an equity offering that did not occur, and for the year ended June 30, 2007, adjusted net income and adjusted net income per share exclude a gain associated with the sale of propane assets. The following is a reconciliation to the most directly comparable GAAP financial measure:
Reconciliation of GAAP Net Income to Adjusted Net Income Twelve Months Ended June 30 2008 2007 $ (000) Per Share $ (000) Per Share GAAP basis net income as reported $10,131 $2.35 $6,212 $1.39 (1) Deduct gain on sale of discontinued operations (3,360) (0.75) Deduct extraordinary gain (6,819) (1.58) – – Add management restructuring costs (net of tax) 369 0.09 – – Add costs of equity offering that did not occur 272 0.06 Adjusted net income $3,953 $0.92 $2,852 $0.64 (1) (1) FY07 amts include net income from discontinued operations $594 $0.13 Reconciliation of GAAP Net Income to Adjusted Net Income Three Months Ended June 30 2008 2007 $ (000) Per Share $ (000) Per Share GAAP basis net income (loss) as reported $(120) $(0.03) $3,208 $0.72 Deduct gain on sale of discontinued operations (3,360) (0.75) Add costs of equity offering that did not occur 272 0.06 Adjusted net income $152 $0.03 $(152) $(0.03) ENERGY WEST INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS, JUNE 30, 2008 AND 2007 ASSETS 2008 2007 Current Assets: Cash $796,302 $7,010,020 Marketable securities 910,778 – Accounts receivable less $136,399 and $64,054 respectively, allowance for bad debt 5,108,796 3,532,083 Unbilled gas 1,252,638 649,939 Derivative assets 145,428 57,847 Natural gas and propane inventories 5,505,337 5,474,309 Materials and supplies 955,467 377,296 Prepayment and other 193,581 142,964 Income tax receivable 417,164 162,432 Recoverable cost of gas purchases 1,054,875 1,369,584 Deferred tax asset – 53,370 Total current assets 16,340,366 18,829,844 Property, Plant and Equipment, Net 32,475,133 30,473,991 Deferred Charges 2,761,656 3,031,425 Deferred Tax Assets – Long term 6,825,575 – Other Investments 1,118,264 – Other Assets 279,810 560,463 TOTAL ASSETS $59,800,804 $52,895,723 LIABILITIES AND CAPITALIZATION Current Liabilities: Bank overdraft $532,901 $4,543,525 Accounts payable 7,994,513 – Derivative liabilities 146,206 58,018 Deferred income taxes 18,039 – Refundable purchased gas costs 522,347 1,061,685 Accrued and other current liabilities 2,747,947 3,092,726 Total current liabilities 11,961,953 8,755,954 Other Obligations: Deferred income taxes – 4,585,170 Deferred investment tax credits 250,096 271,158 Other long-term liabilities 3,939,976 3,987,731 Total other obligations 4,190,072 8,844,059 Long-Term Debt 13,000,000 13,000,000 Commitments and Contingencies (note 12) Stockholders’ Equity: Preferred stock; $.15 par value, 1,500,000 shares authorized, no shares outstanding – – Common stock; $.15 par value, 5,000,000 shares authorized, 4,347,769 and 4,288,657 shares outstanding at June 30, 2008 and 2007, respectively 652,165 643,299 Capital in excess of par value 6,280,649 5,867,726 Retained earnings 23,715,965 15,784,685 Total stockholders’ equity 30,648,779 22,295,710 TOTAL CAPITALIZATION 43,648,779 35,295,710 TOTAL LIABILITIES AND CAPITALIZATION $59,800,804 $52,895,723
Please refer to the notes as filed on Form 10-K that are an integral part of these consolidated financial statements.
ENERGY WEST INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED JUNE 30, 2008, 2007, AND 2006 2008 2007 2006 REVENUES: Natural gas operations $59,338,996 $46,439,506 $55,452,395 Gas and electric-wholesale 17,124,081 12,545,359 18,831,929 Pipeline operations 370,171 388,175 411,237 Total revenues 76,833,248 59,373,040 74,695,561 COST OF SALES: Gas purchased 41,337,397 33,541,993 43,160,830 Gas and electric-wholesale 14,833,353 10,264,633 17,237,396 Total cost of sales 56,170,750 43,806,626 60,398,226 GROSS MARGIN 20,662,498 15,566,414 14,297,335 Distribution, general, and administrative 10,661,878 6,197,529 6,389,130 Maintenance 650,553 566,683 504,671 Depreciation and amortization 1,865,294 1,692,486 1,671,647 Taxes other than income 2,080,144 1,696,936 1,453,375 Total expenses 15,257,869 10,153,634 10,018,823 OPERATING INCOME 5,404,629 5,412,780 4,278,512 OTHER INCOME 315,779 241,519 390,677 INTEREST (EXPENSE) (1,076,345) (2,124,155) (1,648,897) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE 4,644,063 3,530,144 3,020,292 INCOME TAX (EXPENSE) (1,332,688) (1,272,664) (1,109,043) INCOME FROM CONTINUING OPERATIONS 3,311,375 2,257,480 1,911,249 DISCONTINUED OPERATIONS: Gain from disposal of operations – 5,479,166 – Income from discontinued operations – 975,484 671,084 Income tax (expense) – (2,499,875) (265,663) INCOME FROM DISCONTINUED OPERATIONS – 3,954,775 405,421 INCOME BEFORE EXTRAORDINARY ITEM 3,311,375 6,212,255 2,316,670 EXTRAORDINARY GAIN 6,819,182 NET INCOME $10,130,557 $6,212,255 $2,316,670 BASIC INCOME PER COMMON SHARE: Income from continuing operations $0.77 $0.51 $0.44 Income from discontinued operations – 0.89 0.09 Income from extraordinary gain 1.58 – – $2.35 $1.40 $0.53 DILUTED INCOME PER COMMON SHARE: Income from continuing operations $0.77 $0.50 $0.43 Income from discontinued operations – 0.88 0.09 Income from extraordinary gain 1.58 – – $2.35 $1.39 $0.52 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 4,314,748 4,437,807 4,386,768 Diluted 4,316,244 4,484,073 4,422,069
Please refer to the notes as filed on Form 10-K that are an integral part of these consolidated financial statements.
Natural Gas Pipeline Year Ended June 30, 2008 Operations EWR Operations Operating revenue: Natural gas operations $60,093,090 $- $- Marketing and wholesale – 29,395,960 – Pipeline operations – – 370,171 Total operating revenue 60,093,090 29,395,960 370,171 Gas purchased 42,091,491 – – Gas and electric – wholesale – 27,105,232 – Distribution, general, and administrative 9,710,294 370,374 140,087 Maintenance 641,211 1,094 8,248 Depreciation and amortization 1,566,359 242,551 56,384 Taxes other than income 2,035,403 16,704 28,037 Operating expenses 56,044,758 27,735,955 232,756 Operating income 4,048,332 1,660,005 137,415 Other income 245,487 578 17 Interest (expense) (933,655) (124,827) (17,863) Income from continuing operations before income taxes 3,360,164 1,535,756 119,569 Income taxes (expense) (1,091,105) (343,646) (40,007) Net income before extraordinary item 2,269,059 1,192,110 79,562 Extraordinary gain – Net income $2,269,059 $1,192,110 $79,562 Capital expenditures and natural gas properties $3,578,307 $250,091 $41,434 Total assets $50,837,931 $7,486,996 $988,318 Corporate and Year Ended June 30, 2008 Other Eliminations Consolidated Operating revenue: Natural gas operations $- $(754,094) $59,338,996 Marketing and wholesale – (12,271,879) 17,124,081 Pipeline operations – – 370,171 Total operating revenue – (13,025,973) 76,833,248 Gas purchased – (754,094) 41,337,397 Gas and electric – wholesale – (12,271,879) 14,833,353 Distribution, general, and – administrative 441,123 – 10,661,878 Maintenance – – 650,553 Depreciation and amortization – – 1,865,294 Taxes other than income – – 2,080,144 Operating expenses 441,123 (13,025,973) 71,428,619 Operating income (441,123) – 5,404,629 – Other income 69,697 – 315,779 – Interest (expense) – – (1,076,345) Income from continuing operations before income taxes (371,426) – 4,644,063 Income taxes (expense) 142,070 – (1,332,688) Net income before extraordinary item (229,356) – 3,311,375 Extraordinary gain 6,819,182 6,819,182 Net income $6,589,826 $- $10,130,557 Capital expenditures and natural gas properties $- $- $3,869,832 Total assets $25,713,911 $(25,228,603) $59,800,804 Natural Gas Pipeline Year Ended June 30, 2007 Operations EWR Operations Operating revenue: Natural gas operations $47,074,560 $- $- Marketing and wholesale – 22,466,030 – Pipeline operations – – 388,175 Total operating revenue 47,074,560 22,466,030 388,175 Gas purchased 34,177,047 – – Gas and electric – wholesale – 20,185,304 – Distribution, general, and administrative 5,676,195 315,279 206,055 Maintenance 563,912 297 2,474 Depreciation and amortization 1,414,003 222,110 56,373 Taxes other than income 1,652,661 20,529 23,746 Operating expenses 43,483,818 20,743,519 288,648 Operating income 3,590,742 1,722,511 99,527 Other income 228,515 1,592 11,412 Interest (expense) (1,896,650) (185,365) (42,140) Income from continuing operations before income taxes 1,922,607 1,538,738 68,799 Income taxes (expense) (653,130) (593,078) (26,456) Income from continuing operations 1,269,477 945,660 42,343 Discontinued operations: Gain from disposal of operations – – – Income from discontinued operations – – – Income tax (expense) – – – Income from discontinued operations – – – Net income $1,269,477 $945,660 $42,343 Capital expenditures and natural gas properties $2,024,443 $361,379 $21,088 Total assets $39,574,187 $5,882,390 $1,003,145 Discontinued Year Ended June 30, 2007 Operations Eliminations Consolidated Operating revenue: Natural gas operations $- $(635,054) $46,439,506 Marketing and wholesale – (9,920,671) 12,545,359 Pipeline operations – – 388,175 Total operating revenue – (10,555,725) 59,373,040 Gas purchased – (635,054) 33,541,993 Gas and electric – wholesale – (9,920,671) 10,264,633 Distribution, general, and administrative – – 6,197,529 Maintenance – – 566,683 Depreciation and amortization – – 1,692,486 Taxes other than income – – 1,696,936 Operating expenses – (10,555,725) 53,960,260 Operating income – – 5,412,780 Other income – – 241,519 Interest (expense) – – (2,124,155) Income from continuing operations before income taxes – – 3,530,144 Income taxes (expense) – – (1,272,664) Income from continuing operations – – 2,257,480 Discontinued operations: Gain from disposal of operations 5,479,166 – 5,479,166 Income from discontinued operations 975,484 – 975,484 Income tax (expense) (2,499,875) – (2,499,875) Income from discontinued operations 3,954,775 – 3,954,775 Net income $3,954,775 $- $6,212,255 Capital expenditures and natural gas properties $- $- $2,406,910 Total assets $- $6,436,001 $52,895,723 Natural Gas Pipeline Year Ended June 30, 2006 Operations EWR Operations Operating revenue: Natural gas operations $56,044,531 $- $- Marketing and wholesale – 32,879,779 – Pipeline operations – – 411,237 Total operating revenue 56,044,531 32,879,779 411,237 Gas purchased 43,752,966 – – Gas and electric – wholesale – 31,285,246 – Distribution, general, and administrative 5,830,719 473,341 85,070 Maintenance 504,473 198 – Depreciation and amortization 1,394,169 221,814 56,064 Taxes other than income 1,430,101 15,672 7,602 Operating expenses 52,912,428 31,996,271 148,736 Operating income 3,132,103 883,508 262,501 Other income 358,213 32,464 – Interest (expense) (1,425,186) (182,422) (41,290) Income from continuing operations before income taxes 2,065,130 733,550 221,211 Income taxes (expense) (740,624) (283,339) (85,080) Income from continuing operations 1,324,506 450,211 136,131 Discontinued operations: Income from discontinued operations – – – Income tax (expense) – – – Income from discontinued operations – – – Net income $1,324,506 $450,211 $136,131 Capital expenditures and natural gas properties $1,744,046 $114,747 $6,801 Total assets $38,887,681 $5,424,107 $1,044,214 Discontinued Year Ended June 30, 2006 Operations Eliminations Consolidated Operating revenue: Natural gas operations $- $(592,136) $55,452,395 Marketing and wholesale – (14,047,850) 18,831,929 Pipeline operations – – 411,237 Total operating revenue – (14,639,986) 74,695,561 Gas purchased – (592,136) 43,160,830 Gas and electric – wholesale – (14,047,850) 17,237,396 Distribution, general, and administrative – – 6,389,130 Maintenance – – 504,671 Depreciation and amortization – – 1,672,047 Taxes other than income – – 1,453,375 Operating expenses – (14,639,986) 70,417,449 Operating income – – 4,278,112 Other income – – 390,677 Interest (expense) – – (1,648,898) Income from continuing operations before income taxes – – 3,019,891 Income taxes (expense) – – (1,109,043) Income from continuing operations – – 1,910,848 Discontinued operations: Income from discontinued operations 671,485 – 671,485 Income tax (expense) (265,663) – (265,663) Income from discontinued operations 405,822 – 405,822 Net income $405,822 $- $2,316,670 Capital expenditures and natural gas properties $- $- $1,865,594 Total assets $12,199,782 $525,278 $58,081,062
Energy West, Incorporated
CONTACT: James W. Garrett, Vice President of business development ofEnergy West, Incorporated, +1-440-205-1987
Web site: http://www.ewst.com/