IDACORP Announces Third Quarter 2008 Results
BOISE, Idaho, Nov. 6 /PRNewswire-FirstCall/ — IDACORP, Inc. reported 2008 third quarter net income of $51.7 million or $1.14 per diluted share, compared to $28.9 million or $0.65 per diluted share in 2007. Idaho Power Company (IPC), IDACORP’s principal subsidiary, reported third quarter net income of $47.4 million compared to $24.1 million in 2007. IDACORP reported year-to-date results of $91 million or $2.02 per diluted share compared to $72 million or $1.63 per diluted share in 2007.
“Our improved financial performance today reflects the impact of three primary factors — progress from prolonged and purposeful regulatory efforts, Mother Nature, and operational efficiencies companywide,” said IDACORP President and Chief Executive Officer J. LaMont Keen. “This year’s regulatory accomplishments both in Idaho and Oregon highlight the achievement of key milestones of our strategy. Our service area experienced near-normal temperatures and better water conditions this year, in stark contrast to the extreme temperatures and drought of recent years. Our workforce responded well to both operational and economic challenges in 2008, demonstrating the ability to effectively manage the bottom line while continuing to provide our customers some of the lowest electric rates in the nation.”
“We are very encouraged by our year-to-date results; however, there is still work to do,” added Keen. “While our performance is an improvement relative to prior quarters, we are still not earning our allowed rate of return. Looking forward, we must continue our strategy of timely regulatory filings in order to match our revenues with our costs. We must also increase our efforts to evaluate and manage capital and operating expenditures to match economic realities.”
Performance Summary
A summary of IDACORP’s and each IDACORP subsidiary’s net income for the third quarter and year-to-date 2008 as compared to 2007 is as follows:
Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 (in thousands except per diluted share amounts) Earnings From: Idaho Power Company $ 47,405 $ 24,108 $ 86,404 $ 63,603 IDACORP Financial Services 710 1,752 2,212 5,374 Ida-West Energy 1,208 993 2,171 2,034 Holding Company (including discontinued operations) 2,416 2,078 182 1,033 Total Earnings $ 51,739 $ 28,931 $ 90,969 $ 72,044 Average outstanding shares-diluted 45,194 44,543 45,098 44,080 Earnings per diluted share $ 1.14 $ 0.65 $ 2.02 $ 1.63
The key factors affecting the change in IDACORP’s net income for the third quarter of 2008 include:
— IPC’s net income, the primary component of IDACORP’s net income, was $47.4 million for the quarter, an increase of $23.3 million. The key factors causing the change in IPC’s net income include: — General business revenue increased $34.8 million due to a $17.4 million increase in retail base rates and a $17.4 million increase in power cost adjustment (PCA) rates. — Improved hydroelectric generating conditions decreased net power supply costs (fuel and purchased power less off-system sales) by $27.2 million. — The PCA decreased $23.6 million primarily due to higher amortization expense from prior year excess net power supply costs as well as improved hydroelectric generating conditions. — A change in the monthly allocation of base net power supply costs increased the PCA $17.6 million. — O&M expense increased $5.6 million due to an increase of $6.4 million in payroll-related expenses and $2.2 million in water lease costs. Partially offsetting these increases was a decrease of $3.3 million from the fixed cost adjustment mechanism. — Earnings from Bridger Coal increased $3.2 million due to higher prices and volumes of coal sold. — Interest expense increased $2.0 million due primarily to increased long-term debt balances. — Income tax expense increased $10.3 million due principally to higher income before income taxes. — IFS net income decreased $1.0 million due to lower tax benefits from aging investments.
The key factors affecting the change in IDACORP’s net income for the nine months ended September 30, 2008 include:
— IPC’s net income, the primary component of IDACORP’s net income, was $86.4 million, an increase of $22.8 million. The key factors causing the change in IPC’s net income include: — General business revenue increased $91.4 million due to an increase of $21.2 million in retail base rates, an increase of $65.7 million in PCA rates, and an increase of $5.8 million due to customer growth. — Improved hydroelectric generating conditions decreased net power supply costs (fuel and purchased power less off-system sales) by $19.6 million. — The PCA decreased $68.8 million primarily due to higher amortization expense from prior year excess net power supply costs as well as improved hydroelectric generating conditions. — Interest expense increased $7.0 million due primarily to increased long-term debt balances. — Gain on sale of emission allowances decreased $2.2 million due to fewer sales and lower prices in 2008. — Income tax expense increased $9.5 million due primarily to higher income before income taxes. — IFS earnings decreased $3.2 million due to lower tax benefits from aging investments. 2008 Operating & Financial Metrics The outlook for key operating and financial metrics for 2008 is: 2008 Estimates Key Operating & Financial Metrics Current Previous Idaho Power Operation & Maintenance Expense (Millions) No change $285-$295 Idaho Power Capital Expenditures (Millions) (1) $235-$250 $255-$270 Idaho Power Hydroelectric Generation (Million MWh) (2) 6.7-7.2 6.5-7.5 Non-Regulated Subsidiary Earnings (Millions) (3) No change $2.3-$4.6 Effective Tax Rates: Idaho Power No change 32%-36% Consolidated — IDACORP No change 22%-26% (1) The decrease in capital expenditures is largely due to the decline in new customer connections and the deferral of certain capital expenditures. (2) The range of estimated hydroelectric generation has been revised to reflect refinements related to river flows. (3) Estimates include contributions from Ida-West Energy and IDACORP Financial netted against holding company expenses. Web Cast / Conference Call
The company will hold an analyst conference call today at 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time). All parties interested in listening may do so through a live Web cast. Details of the conference call logistics are posted on the company’s Web site (http://www.idacorpinc.com/). A replay of the conference call will be available on the company’s Web site for a period of 12 months.
Background Information / Safe Harbor Statement
Boise, Idaho-based IDACORP, formed in 1998, is a holding company comprised of Idaho Power Company, a regulated electric utility; IDACORP Financial, a holder of affordable housing projects and other real estate investments; and Ida-West Energy, an operator of small hydroelectric generation projects that satisfy the requirements of the Public Utility Regulatory Policies Act of 1978. To learn more about Idaho Power or IDACORP, visit http://www.idahopower.com/ or http://www.idacorpinc.com/.
Certain statements contained in this news release, including statements with respect to future earnings, ongoing operations, and financial conditions, are “forward-looking statements” within the meaning of federal securities laws. Although IDACORP and Idaho Power believe that the expectations and assumptions reflected in these forward-looking statements are reasonable, these statements involve a number of risks and uncertainties, and actual results may differ materially from the results discussed in the statements. Factors that could cause actual results to differ materially from the forward-looking statements include: changes in and compliance with governmental policies, including new interpretations of existing policies, and regulatory actions and regulatory audits, including those of the Federal Energy Regulatory Commission, the North American Electric Reliability Corporation, the Western Electricity Coordinating Council, the Idaho Public Utilities Commission, and the Oregon Public Utility Commission with respect to allowed rates of return, industry and rate structure, day-to-day business operations, acquisition and disposal of assets and facilities, operation and construction of plant facilities, provision of transmission services, including critical infrastructure protection and system reliability, relicensing of hydroelectric projects, recovery of power supply costs, recovery of capital investments, present or prospective wholesale and retail competition, including but not limited to retail wheeling and transmission costs, and other refund proceedings; changes arising from the Energy Policy Act of 2005; changes in tax laws or related regulations or new interpretations of applicable law by the Internal Revenue Service or other taxing jurisdiction; litigation and regulatory proceedings, including those resulting from the energy situation in the western United States, and penalties and settlements that influence business and profitability; changes in and compliance with laws, regulations, and policies including changes in law and compliance with environmental, natural resources, endangered species and safety laws, regulations and policies and the adoption of laws and regulations addressing greenhouse gas emissions or global climate change; global climate change and regional weather variations affecting customer demand and hydroelectric generation; over-appropriation of surface and groundwater in the Snake River Basin resulting in reduced generation at hydroelectric facilities; construction of power generation, transmission and distribution facilities, including an inability to obtain required governmental permits and approvals, rights-of-way and siting, and risks related to contracting, construction and start-up; operation of power generating facilities including performance below expected levels, breakdown or failure of equipment, availability of transmission and fuel supply; changes in operating expenses and capital expenditures, including costs and availability of materials, fuel and commodities; blackouts or other disruptions of Idaho Power Company’s transmission system or the western interconnected transmission system; impacts from the formation of a regional transmission organization or the development of another transmission group; population growth rates and other demographic patterns; market prices and demand for energy, including structural market changes; increases in uncollectible customer receivables; fluctuations in sources and uses of cash; results of financing efforts, including the ability to obtain financing or refinance existing debt when necessary or on favorable terms, which can be affected by factors such as credit ratings, volatility in the financial markets and other economic conditions; actions by credit rating agencies, including changes in rating criteria and new interpretations of existing criteria; changes in interest rates or rates of inflation; performance of the stock market, interest rates, credit spreads and other financial market conditions, as well as changes in government regulations, which affect the amount and timing of required contributions to pension plans and the reported costs of providing pension and other postretirement benefits; increases in health care costs and the resulting effect on medical benefits paid for employees; increasing costs of insurance, changes in coverage terms and the ability to obtain insurance; homeland security, acts of war or terrorism; natural disasters and other natural risks, such as earthquake, flood, drought, lightning, wind and fire; adoption of or changes in critical accounting policies or estimates; and new accounting or Securities and Exchange Commission requirements, or new interpretation or application of existing requirements. Any such forward-looking statements should be considered in light of such factors and others noted in the companies’ Annual Report on Form 10-K for the year ended December 31, 2007, and the Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008, June 30, 2008, and other reports on file with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which such statement is made. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.
IDACORP, Inc. Condensed Consolidated Statements of Income Summary Financial Information (unaudited) (thousands of dollars except for per share amounts) Three months ended Nine months ended September 30, September 30, 2008 2007 2008 2007 Operating Revenues: Electric utility: General business $246,639 $211,873 $602,700 $511,337 Off-system sales 34,637 34,843 93,640 129,859 Other revenues 16,831 13,800 43,508 37,776 Total electric utility revenues 298,107 260,516 739,848 678,972 Other 1,609 947 3,534 2,976 Total operating revenues 299,716 261,463 743,382 681,948 Operating Expenses: Electric utility: Purchased power 79,513 110,108 174,900 241,393 Fuel expense 46,467 43,291 112,385 101,724 Power cost adjustment (20,105) (43,749) (38,678) (107,457) Other operations and maintenance 74,778 69,154 219,321 215,870 Demand-side management 5,956 4,307 13,249 8,970 Gain on sale of emission allowances (158) (1,872) (504) (2,754) Depreciation 25,717 25,967 78,084 76,870 Taxes other than income taxes 4,827 4,714 14,431 14,267 Total electric utility expenses 216,995 211,920 573,188 548,883 Other expense 1,144 1,613 3,331 4,782 Total operating expenses 218,139 213,533 576,519 553,665 Operating Income (Loss): Electric utility 81,112 48,596 166,660 130,089 Other 465 (666) 203 (1,806) Total operating income 81,577 47,930 166,863 128,283 Other Income 4,629 4,616 15,128 13,867 Earnings (Losses) of Unconsolidated Equity- Method Investments 2,642 (380) (4,672) (3,257) Other Expense 2,764 2,055 4,949 6,838 Interest Expense: Interest on long-term debt 17,226 15,862 49,847 43,306 Other interest 1,310 763 3,219 3,881 Total interest expense 18,536 16,625 53,066 47,187 Income Before Income Taxes 67,548 33,486 119,304 84,868 Income Tax Expense 15,809 4,555 28,335 12,891 Income from Continuing Operations 51,739 28,931 90,969 71,977 Income from Discontinued Operations, net of tax – – – 67 Net Income $51,739 $28,931 $90,969 $72,044 Weighted Average Common Shares Outstanding – Basic (000′s) 44,998 44,417 44,923 43,947 Weighted Average Common Shares Outstanding – Diluted (000′s) 45,194 44,543 45,098 44,080 Earnings Per Share of Common Stock-diluted: Earnings per share from Continuing Operations $ 1.14 $0.65 $ 2.02 $ 1.63 Earnings per share from Discontinued Operations – – – – Earnings Per Share of Common Stock-diluted $ 1.14 $0.65 $ 2.02 $ 1.63 Dividends Paid Per Share of Common Stock $ 0.30 $0.30 $ 0.90 $ 0.90 IDACORP, Inc. Condensed Consolidated Statements of Cash Flows For the Nine months ended September 30, 2008 and 2007 Summary Financial Information (unaudited) (Thousands of Dollars) Nine months ended September 30, 2008 2007 Operating Activities Net Income $ 90,969 $ 72,044 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 93,192 91,286 Deferred income taxes and investment tax credits 16,075 29,224 Changes in regulatory assets and liabilities (50,081) (110,813) Undistributed earnings of subsidiaries (3,772) (4,648) Gain on sales of assets (3,369) (4,437) Other non-cash adjustments to net income 4,779 5,679 Change in: Accounts receivable and prepayments (11,819) (9,703) Accounts payable and other accrued liabilities (16,782) (19,981) Taxes accrued 6,244 (15,079) Other (10,031) 13,628 Net cash provided by operating activities 115,405 47,200 Investing Activities Additions to property, plant and equipment (176,475) (203,067) Proceeds from the sale of IDACOMM – 7,283 Proceeds from the sale of non-utility assets 5,753 – Proceeds from the sale of emissions allowances 2,959 19,846 Investments in affordable housing (8,486) 300 Investments in unconsolidated affiliates (3,065) (4,925) Purchase of available-for-sale securities – (24,349) Proceeds from the sale of available-for-sale securities – 26,110 Purchase of held-to-maturity securities (2,885) (3,116) Maturity of held-to-maturity securities 4,610 3,267 Tax deposit withdrawal 20,000 – Other assets (7,932) (187) Net cash used in investing activities (165,521) (178,838) Financing Activities Increase in term loans 170,000 – Issuance of long-term debt 120,000 140,000 Retirement of long-term debt (7,630) (9,978) Purchase of pollution control bonds (166,100) – Dividends on common stock (40,516) (39,629) Net change in short-term borrowings 13,570 15,813 Issuance of common stock 12,550 34,893 Acquisition of treasury stock (304) (346) Other (1,694) (2,355) Net cash provided by financing activities 99,876 138,398 Net increase in cash and cash equivalents 49,760 6,760 Cash and cash equivalents at beginning of period 7,966 9,892 Cash and cash equivalents at end of period $ 57,726 $ 16,652 IDACORP, Inc. Condensed Consolidated Balance Sheets As of September 30, 2008 and December 31, 2007 Summary Financial Information (unaudited) (Thousands of Dollars) September 30, December 31, 2008 2007 Assets Cash and cash equivalents $ 57,726 $ 7,966 Receivables, net of allowance 108,353 118,695 Other current assets 148,572 140,046 Total current assets 314,651 266,707 Investments 201,807 201,085 Property, plant and equipment-net 2,717,150 2,616,552 Regulatory assets 502,565 449,668 Employee notes – long-term 89 2,325 Other assets 115,001 116,971 Total other assets 617,655 568,964 Total Assets $ 3,851,263 $ 3,653,308 Liabilities and Shareholders’ Equity Current maturities of long-term debt $ 7,817 $ 11,456 Notes payable 203,915 186,445 Accounts payable 66,165 85,116 Other current liabilities 108,540 92,298 Total current liabilities 386,467 375,315 Deferred income taxes 473,845 466,182 Regulatory liabilities 276,469 274,204 Other liabilities 170,794 173,412 Total other liabilities 921,108 913,798 Long-term debt 1,273,028 1,156,880 Shareholders’ equity 1,270,660 1,207,315 Total Liabilities & Shareholders’ Equity $ 3,851,263 $ 3,653,308 Idaho Power Company Supplemental Operating Statistics Three Months Ended Year to Date September 30, September 30, 2008 2007 2008 2007 Energy Use – MWh Residential 1,244,982 1,300,632 3,930,919 3,831,797 Commercial 1,067,968 1,076,755 2,992,469 2,959,011 Industrial 845,934 869,273 2,523,466 2,575,933 Irrigation 1,138,626 1,042,165 1,836,031 1,862,000 Total General Business 4,297,510 4,288,825 11,282,885 11,228,741 Off-System Sales 497,982 620,255 1,520,369 2,110,459 Total 4,795,492 4,909,080 12,803,254 13,339,200 Revenue ($000′s) Residential $ 90,473 $ 83,066 $ 259,781 $ 224,534 Commercial 59,615 50,481 151,624 126,671 Industrial 34,187 28,875 90,124 74,269 Irrigation 62,364 49,451 101,171 85,863 Total General Business 246,639 211,873 602,700 511,337 Off-System Sales 34,637 34,843 93,640 129,859 Total $ 281,276 $ 246,716 $ 696,340 $ 641,196 Weather Statistics Heating Degree-days 56 100 3,557 3,009 Cooling Degree-days 841 1,001 1,054 1,286 Precipitation (inches) 1.22 0.71 5.36 4.72 Customers — Period End Residential 403,309 398,883 Commercial 63,782 62,209 Industrial 122 127 Irrigation 18,547 18,134 Total 485,760 479,353
IDACORP, Inc.
CONTACT: Lawrence F. Spencer, Director of Investor Relations of IDACORP,Inc., +1-208-388-2664, lspencer@idacorpinc.com
Web site: http://www.idahopower.com/