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CH Energy Group Reports 8-Cent Increase in Third-Quarter Earnings

Posted on: Tuesday, 25 October 2005, 15:01 CDT

Earnings per share for the third quarter of 2005 for CH Energy Group, Inc. (NYSE:CHG) were 36 cents per share, versus the 28 cents per share posted during the same quarter of 2004, a nearly 30-percent increase.

The gain resulted from several items, including increased electric delivery revenues resulting from hot summer weather and growth in the number of customers served; higher returns on temporary investments; lower effective tax rates; and improved operating margins within the Company's fuel distribution business subsidiaries, primarily in delivered motor fuels. Quarterly earnings increased despite certain regulatory items such as the expiration of the utility's multi-year auction incentive related to the sale of its former fossil fuel generating units and the recording of an assessment for non-attainment of certain electric reliability standards.

Year-to-date, the Company reports earnings of $2.07, a reduction of 2 cents as compared to the first three quarters of 2004.

"The hot summer clearly played a part in driving this quarter's results," explained Steven V. Lant, Chairman of the Board, President and Chief Executive Officer. "Cooling degree-days, a measure of the need for air conditioning, were 57 percent higher than last year and 55 percent higher than normal. Our customers set five new peak usage records during a summer that is estimated to have been the hottest in 30 years.

"However, some of the other positive factors may prove more sustainable, and we're working to bring those about. We're also working hard to communicate with our customers regarding higher energy supply costs to help them manage higher bills."

Regulated Electric and Gas Business

Central Hudson Gas & Electric Corporation's contribution to third-quarter earnings was 42 cents per share, a decrease of 4 cents from the 46 cents posted during the same period of 2004. However, last year's quarter included 9 cents per share of non-recurring regulatory items.

Lant said that the utility's July 29, 2005, filing of a proposal to increase electric and natural gas delivery rates is proceeding according to its 11-month procedural schedule. Delivery rates last rose for electric customers in 1993 and for natural gas customers in 1991.

Unregulated Fuel Distribution Businesses

The fuel oil distribution businesses of Central Hudson Enterprises Corporation (CHEC) improved by 3 cents for the quarter. The improvement in earnings resulted largely from an increase in margins, primarily in delivered motor fuels, and an increase in service profitability. Rising operating and interest expenses reduced earnings within the business unit, partially offsetting the improvements.

Unregulated - Other Businesses

Holding Company CH Energy Group, Inc. and CHEC partnership investments contributed 9 cents per share to earnings during the third quarter, which was 9 cents greater than the same period of 2004. Lower income taxes and increased earnings on temporary investments were among the factors that contributed favorably during the quarter.

2005 Earnings Projections

Lant reiterated the Company's earlier projection that 2005 consolidated annual earnings would total between $2.55 and $2.75 per share, composed of the following segments: Central Hudson, $2.15 - $2.25; fuel oil distribution businesses, 10-15 cents; and unregulated, other businesses (including Holding Company CH Energy Group, Inc.), 30-35 cents.

About CH Energy Group

With more than 440,000 customers, CH Energy Group, Inc. is a family of companies seizing new opportunities in the energy marketplace through two primary subsidiaries: Central Hudson Gas & Electric Corporation is a regulated transmission and distribution utility serving approximately 358,000 customers in eight counties of New York State's Mid-Hudson River Valley, and delivering natural gas and electricity in a 2,600-square-mile service territory that extends from the suburbs of metropolitan New York City north to the Capital District at Albany. Central Hudson Enterprises Corporation includes business units delivering energy and related services to more than 80,000 customers in eight states and the District of Columbia. Its regional footprint stretches from Connecticut to the Washington, D.C. area, as well as interests in a Lexington, Neb., ethanol plant and two wind power projects.

Conference Call: Mr. Lant will conduct a conference call with analysts and investors to review financial results at 4:00 p.m. (ET) today, Oct. 25, 2005. Dial-in: 1-800-230-1096; Conference Name: "CH Energy Group." A digitized replay of the call will be available from 7:45 (ET) on Oct. 25, 2005, until 11:59 p.m. (ET) on Nov. 1, 2005, by dialing 1-800-475-6701 and entering access code # 798908. In addition, the call will be web cast live and available for approximately 30 days via the Company's Web site at www.CHEnergyGroup.com, where consolidated financial statements may also be found.

Forward-Looking Statements

Statements included in this news release, including its Appendix and the documents incorporated by reference which are not historical in nature, are intended to be, and are hereby identified as, "forward-looking statements" for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may be identified by words including "anticipates,""believes,""projects,""intends,""estimates,""expects,""plans,""assumes,""seeks," and similar expressions. Forward-looking statements including, without limitation, those relating to CH Energy Group, Inc. and its subsidiaries' future business prospects, revenues, proceeds, working capital, liquidity, income and margins, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements, due to several important factors including those identified from time to time in the forward-looking statements. Those factors include, but are not limited to: weather; energy supply and demand; fuel prices; interest rates; potential future acquisitions; developments in the legislative, regulatory and competitive environment; market risks; electric and gas industry restructuring and cost recovery; the ability to obtain adequate and timely rate relief; changes in fuel supply or costs; the success of strategies to satisfy electricity requirements now that Central Hudson's major electric generation assets have been sold; future market prices for energy, capacity, and ancillary services; the outcome of pending litigation and certain environmental matters, particularly the status of inactive hazardous waste disposal sites and waste site remediation requirements; and certain presently unknown or unforeseen factors, including, but not limited to, acts of terrorism. CH Energy Group, Inc. and its subsidiaries undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Given these uncertainties, undue reliance should not be placed on the forward-looking statements. CH Energy Group, Inc. announces the following operating results for the periods indicated: 3 Months Ended September 30 2005 2004 ------ ------ Operating Revenues $227,896,000 $161,872,000 Net Income $5,746,000 $4,451,000 Earnings Per Share - Basic $.36 $.28 Earnings Per Share - Diluted $.36 $.28 Average Shares Outstanding - Basic 15,762,000 15,762,000 Average Shares Outstanding - Diluted 15,769,000 15,770,000 12 Months Ended September 30 2005 2004 ------ ------ Operating Revenues $904,846,000 $778,747,000 Net Income $42,107,000 $44,398,000 Earnings Per Share - Basic $2.67 $2.82 Earnings Per Share - Diluted $2.67 $2.81 Average Shares Outstanding - Basic 15,762,000 15,762,000 Average Shares Outstanding - Diluted 15,768,000 15,771,000

CH ENERGY GROUP, INC. CONSOLIDATED STATEMENT OF INCOME (Unaudited) (Unaudited) 3 Months Ended 12 Months Ended September 30, September 30, ------------------ ------------------ 2005 2004 2005 2004 ------ ------- ------ ------- (Thousands of (Thousands of Dollars) Dollars) Operating Revenues Electric $159,589 $113,122 $493,608 $433,832 Natural Gas 14,115 11,426 137,697 123,225 Competitive Business Subsidiaries 54,192 37,324 273,541 221,690 --------- --------- --------- --------- Total Operating Revenues $227,896 $161,872 $904,846 $778,747 --------- --------- --------- --------- Operating Expenses Operations - Purchased Electricity and Fuel Used in Electric Generation, Purchased Natural Gas, and Purchased Petroleum 162,094 99,574 607,934 480,881 Other Expenses of Operation - Regulated Activities 24,613 24,658 99,802 99,013 Other Expenses of Operation - Comp. Bus. Subsidiaries 12,642 12,027 53,529 54,073 Depreciation and Amortization 9,116 8,627 36,103 34,510 Taxes, Other Than Income Tax 8,578 7,644 33,846 31,365 --------- --------- --------- --------- Total Operating Expenses 217,043 152,530 831,214 699,842 --------- --------- --------- --------- Operating Income $10,853 $9,342 $73,632 $78,905 --------- --------- --------- --------- Other Income Allowance for Equity Funds Used During Construction 31 92 (15) 333 Interest and Investment Income 2,470 1,987 8,647 10,639 Other - Net (658) 1,339 1,542 7,475 --------- --------- --------- --------- Total Other Income 1,843 3,418 10,174 18,447 --------- --------- --------- --------- Interest Charges Interest on Debt 3,421 2,696 13,239 11,285 Other Interest 1,015 1,040 3,683 7,728 Allowance for Borrowed Funds Used During Construction (92) (60) (311) (151) --------- --------- --------- --------- Total Interest Charges 4,344 3,676 16,611 18,862 --------- --------- --------- --------- Income Before Income Taxes and Preferred Dividends of Subsidiary $8,352 $9,084 $67,195 $78,490 Income Taxes 2,364 4,391 24,118 33,122 --------- --------- --------- --------- Income Before Preferred Dividends of Subsidiary $5,988 $4,693 $43,077 $45,368 Cumulative Preferred Stock Dividends of Subsidiary 242 242 970 970 --------- --------- --------- --------- Net Income $5,746 $4,451 $42,107 $44,398 Dividends Declared on Common Stock 8,511 8,511 34,046 34,046 --------- --------- --------- --------- Amount Retained in the Business ($2,765) ($4,060) $8,061 $10,352 ========= ========= ========= ========= Avg. Shares of Common Stock Outstanding - (Basic) (000s) 15,762 15,762 15,762 15,762 Avg. Shares of Common Stock Outstanding - (Diluted) (000s) 15,769 15,770 15,768 15,771 Earnings Per Share - (Basic) $0.36 $0.28 $2.67 $2.82 Earnings Per Share - (Diluted) $0.36 $0.28 $2.67 $2.81 Dividends Declared Per Share $0.54 $0.54 $2.16 $2.16

CH ENERGY GROUP, INC. CONSOLIDATED BALANCE SHEET Sept. 30, Dec. 31, 2005(1) 2004(2) ---------------------- ASSETS (Thousands of Dollars) UTILITY PLANT Utility Plant $1,047,270 $1,021,912 Less Accumulated Depreciation 330,285 315,691 ---------------------- 716,985 706,221 Construction Work in Progress 51,898 38,846 ---------------------- Net Utility Plant 768,883 745,067 ---------------------- OTHER PROPERTY AND PLANT & EQUIPMENT 23,245 23,139 ---------------------- CURRENT ASSETS Cash and Cash Equivalents 100,647 119,117 Accounts Receivable from Customers 80,523 65,239 Materials & Supplies 31,189 21,459 Fair Value of Derivative Instruments 8,724 - Regulatory Assets 16,440 17,454 Special Deposits and Prepayments 23,567 20,767 Accumulated Deferred Income Tax 12,056 9,454 Other 11,117 13,678 ---------------------- 284,263 267,168 ---------------------- DEFERRED CHARGES AND OTHER ASSETS 268,531 252,433 ---------------------- TOTAL $1,344,922 $1,287,807 ====================== CAPITALIZATION and LIABILITIES CAPITALIZATION Common Equity (3) $500,980 $493,465 Cumulative Preferred Stock: Not subject to mandatory redemption 21,027 21,030 Long-term Debt 319,885 319,883 ---------------------- 841,892 834,378 ---------------------- CURRENT LIABILITIES Notes Payable 44,000 12,000 Accounts Payable 36,636 43,418 Accrued Interest 2,544 4,629 Dividends Payable 8,754 8,754 Regulatory Liabilities 8,525 - Fair Value of Derivative Instruments - 906 Other 37,224 31,795 ---------------------- 137,683 101,502 ---------------------- DEFERRED CREDITS AND OTHER LIABILITIES 236,470 231,152 ---------------------- ACCUMULATED DEFERRED INCOME TAX (NET) 128,877 120,775 ---------------------- TOTAL $1,344,922 $1,287,807 ====================== (1) Unaudited. (2) Subject to explanations contained in the Annual Report of the Company for 2004. (3) Shares outstanding at September 30, 2005 = 15,762,000. Shares outstanding at December 31, 2004 = 15,762,000.

Selected Financial Information ------------------------------ 3 Months Ended September 30, ------------------------------ % 2005 2004 Variation ------ ------ --------- CENTRAL HUDSON GAS & ELECTRIC CORP. -------------------------------------- Sales of Electricity (Mwh): * Residential 620,983 512,087 21 Commercial 570,337 521,484 9 Industrial 397,462 402,458 (1) Other 8,137 8,109 - ---------- --------- ------ Total Own Territory 1,596,919 1,444,138 11 ========= ========== ====== Sales of Gas (Mcf.): * Residential 314,514 311,763 1 Commercial 579,035 578,972 - Industrial 53,188 65,608 (19) Other 1,242 332 274 ---------- --------- ------ Total Firm Sales 947,979 956,675 (1) Interruptible Sales 546,668 649,733 (16) ---------- --------- ------ Total Own Territory 1,494,647 1,606,408 (7) ========= ========== ====== * Includes volumes related to Electric or Gas Energy Delivery Services. Electric Cooling Degree Days: Billing Cycle 777 494 57 Normal Billing Cycle 502 502 - Actual in Period 788 474 66 Electric Heating Degree Days: Billing Cycle 88 89 (1) Normal Biling Cycle 146 146 - Actual in Period 40 66 (39) Gas Heating Degree Days: Billing Cycle 118 101 17 Normal Biling Cycle 125 125 - Actual in Period 46 82 (44) Electric Output For Own Territory (Mwh.): Generated 19,524 41,292 (53) Purchased 1,625,400 1,414,351 15 --------- ---------- ------ Total 1,644,924 1,455,643 13 ========= ========== ====== Gas Send-out Firm Customers (Mcf.) 592,325 610,012 (3) ========= ========== ====== CH ENERGY GROUP, INC. --------------------- Earnings Per Share - (Basic) $0.36 $0.28 29 Dividends Declared Per Share $0.54 $0.54 - 12 Months Ended September 30, ------------------------------ % 2005 2004 Variation ------ ------ --------- CENTRAL HUDSON GAS & ELECTRIC CORP. -------------------------------------- Sales of Electricity (Mwh): * Residential 2,137,762 1,997,159 7 Commercial 2,030,702 1,968,276 3 Industrial 1,486,899 1,468,560 1 Other 37,169 37,355 - ---------- --------- ------ Total Own Territory 5,692,532 5,471,350 4 ========= ========= ====== Sales of Gas (Mcf.): * Residential 5,293,528 5,275,233 - Commercial 6,383,646 6,281,447 2 Industrial 550,156 575,860 (4) Other 26,257 25,436 3 ----------- --------- ------ Total Firm Sales 12,253,587 12,157,976 1 Interruptible Sales 3,568,797 3,454,726 3 ----------- --------- ------ Total Own Territory 15,822,384 15,612,702 1 ========== ========== ======= * Includes volumes related to Electric or Gas Energy Delivery Services. Electric Cooling Degree Days: Billing Cycle 932 680 37 Normal Billing Cycle 659 659 - Actual in Period 1,028 673 53 Electric Heating Degree Days: Billing Cycle 6,120 6,004 2 Normal Biling Cycle 6,320 6,320 - Actual in Period 6,105 5,987 2 Gas Heating Degree Days: Billing Cycle 6,074 5,986 1 Normal Biling Cycle 6,210 6,210 - Actual in Period 6,054 5,975 1 Electric Output For Own Territory (Mwh.): Generated 128,037 180,279 (29) Purchased 5,847,672 5,550,215 5 ----------- --------- ------- Total 5,975,709 5,730,494 4 =========== ========= ======== Gas Send-out Firm Customers (Mcf.) 9,814,935 9,940,073 (1) =========== ========= ======== CH ENERGY GROUP, INC. --------------------- Earnings Per Share - (Basic) $2.67 $2.82 (5) Dividends Declared Per Share $2.16 $2.16 - Sept. 30, Dec. 31, % 2005 2004 Variation ------ ------ --------- Book Value Per Share $31.78 $31.31 2 Retained Earnings (000s) $194,857 $187,772 4 Common Equity Ratio (%) 56.6% 58.3% (3)

CH ENERGY GROUP, INC Selected Financial Indices 12 Months Ended September 30, 2005 vs. Calendar Year 2004 12 Months Calendar Ended Year Sept. 30,2005 2004 -------------- --------- Earnings Per Share - (Basic) $2.67 $2.69 Earned Return on Common Equity (Per Books) 8.37% 8.52% Pretax Coverage of Total Interest Charges, excluding AFDC 4.30 x 4.34 x Dividends Declared $2.16 $2.16 Pay-out Ratio 80.9% 80.3% Percent of Cash Construction Expenditures Financed from Internal Funds 68.8% 100.0% Common Equity Ratio 56.6% 58.3% Retained Earnings ($000) $194,857 $187,772 Book Value Per Share (End of Period) $31.78 $31.31

CH Energy Group Segment Information - 12 Months Ended September 30, 2005 Regulated Unregulated ------------------ ----------------- ($000s Except Earnings Per Natural Fuel Oil Share) Electric Gas Distribution Other Elim(s). Total ------------- ------------------ ----------------- ------ -------- Revenues from external customers $ 493,608 $137,697 $272,645 $ 896 - $904,846 Intersegment revenues 12 285 - - ($297) - ------------------ ----------------- ------ -------- Total Revenues $ 493,620 $137,982 $272,645 $ 896 ($297) $904,846 Earnings before income taxes $ 43,262 $ 15,145 $ 3,728 $ 4,090 - $ 66,225 Net Income $ 25,773 $ 8,877 $ 2,240 $ 5,217 - $ 42,107 Earnings per share (basic) $ 1.64 $ 0.56 $0.14 $ 0.33(1) - $ 2.67 Segment Assets @ 9/30/05 $ 813,140 $276,182 $138,089 $118,288 ($777)$1,344,922 (1) The amount of Unregulated EPS attributable to CHEC's other business activities was $0.02 per share, with the balance of $0.31 relating to Energy Group, the holding company. The financial results for Energy Group reflect lower income taxes, including adjustments relating to the completion of a tax audit for 2001and our adjustments for 2004 and the 2005 tax accruals. Also reflected in Energy Group's results are investment and business development activities.

CH Energy Group Segment Information - 12 Months Ended September 30, 2004 Regulated Unregulated ------------------ ----------------- ($000s Except Earnings Per Natural Fuel Oil Share) Electric Gas Distribution Other Elim(s). Total ------------ ------------------ ----------------- ------ -------- Revenues from external customers $ 433,832 $123,225 $220,551 $ 1,139 - $778,747 Intersegment revenues 11 305 - - ($316) - ------------------ ----------------- ------ -------- Total Revenues $ 433,843 $123,530 $220,551 $ 1,139 ($316) $778,747 Earnings before income taxes $ 52,436 $ 17,478 $ 4,971 $ 2,635 - $ 77,520 Net Income $ 30,429 $ 9,217 $ 3,003 $ 1,749 - $ 44,398 Earnings per share (basic) $ 1.93 $ 0.59 $ 0.19 $ 0.11(1) - $ 2.82 Segment Assets @ 9/30/04 $ 779,236 $228,579 $132,491 $129,273($1,305)$1,268,274 (1) The amount of Unregulated EPS attributable to CHEC's other business activities was $0.04 per share, with the balance of $.07 per share resulting primarily from investment and business development activities.

CH Energy Group Segment Information - Quarter Ended September 30, 2005 Regulated Unregulated ------------------ ----------------- ($000s Except Earnings Per Natural Fuel Oil Share) Electric Gas Distribution Other Elim(s). Total ------------ ------------------ ----------------- ------ -------- Revenues from external customers $ 159,589 $ 14,115 $ 54,008 $ 184 - $227,896 Intersegment revenues 3 14 - - ($17) - ------------------ ----------------- ------ -------- Total Revenues $ 159,592 $ 14,129 $ 54,008 $ 184 ($17) $227,896 Earnings before income taxes $ 13,084 ($1,957) ($3,967)$ 950 - $ 8,110 Net Income $ 7,750 ($1,107) ($2,381)$ 1,484 - $ 5,746 Earnings per share (basic) $ 0.49 ($0.07) ($0.15)$ 0.09(1) - $ 0.36 Segment Assets @ 9/30/05 $ 813,140 $276,182 $138,089 $118,288 ($777)$1,344,922 (1) Reflects Energy Group earnings attributable to lower income taxes and investment and business development activities. The lower income taxes resulted from our adjustments for 2004 taxes and the 2005 accrual.

CH Energy Group Segment Information - Quarter Ended September 30, 2004 Regulated Unregulated ------------------ ------------------- ($000s Except Earnings Per Natural Fuel Oil Share) Electric Gas Distribution Other Elim(s). Total ------------- ------------------ ----------------- ------ -------- Revenues from external customers $ 113,122 $ 11,426 $ 37,085 $ 239 - $161,872 Intersegment revenues 3 3 - - ($6) - ------------------ ----------------- ------ -------- Total Revenues $ 113,125 $ 11,429 $ 37,085 $ 239 ($6) $161,872 Earnings before income taxes $ 14,988 ($1,505) ($4,885)$ 244 - $ 8,842 Net Income $ 8,399 ($1,074) ($2,933)$ 59 - $ 4,451 Earnings per share (basic) $ 0.53 ($0.07) ($0.19)$ 0.01(1) - $ 0.28 Segment Assets @ 9/30/04 $ 779,236 $228,579 $132,491 $129,273($1,305)$1,268,274 (1) Attributable to Energy Group's investment and business development activities.

Source: Business Wire

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