Central Vermont Public Service (NYSE: CV)
- 2011 earnings of $21.7 million, or $1.59 per
diluted share, 7 cents lower than 2010, excluding merger-related
costs of $16 million after-tax, or $1.19 per diluted share
- $17.8 million increase in operating
revenues
- $ 5.1 million increase in service restoration
costs (primarily Tropical Storm Irene)
- $ 3.4 million increase in exogenous cost
deferrals (primarily major storms, 2011 vs. 2010)
- $15.3 million increase in transmission
costs
- $ 6.6 million increase in equity in earnings
of affiliates
- $27.0 million in merger-related costs
(includes $19.5 million Fortis termination fee)
- Fourth-quarter earnings of $5.4 million, or 40
cents per diluted share, same as 2010, excluding merger-related
costs of $0.2 million after-tax, or 2 cents per diluted share
- $ 4.7 million increase in operating
revenues
- $ 1.7 million decrease in service restoration
costs
- $ 1.7 million decrease in exogenous cost
deferrals (primarily major storm in December 2010)
- $ 6.6 million increase in transmission
costs
- $ 1.7 million increase in equity in earnings
of affiliates
- $ 0.4 million in merger-related
costs
- Due to pending merger, earnings guidance is
discontinued
Central Vermont Public Service (NYSE: CV) reported consolidated
earnings of $21.7 million or $1.59 per diluted share, excluding
merger-related costs after-tax of $16 million, or $1.19 per diluted
share. Including merger-related costs, earnings were $5.7 million,
or 40 cents per diluted share of common stock, for 2011 compared to
$21 million, or $1.66 per diluted share of common stock, for 2010.
The fourth-quarter earnings were $5.4 million or 40 cents per
diluted share, excluding merger-related costs after-tax of $0.2
million, or 2 cents per diluted share. Including merger-related
costs, earnings were $5.2 million, or 38 cents per common share, 2
cents lower than in 2010.
The $15.3 million reduction in earnings in 2011 was primarily
due to costs associated with the company's pending sale to a
subsidiary of Gaz Métro Limited Partnership, Northern New England
Energy Corporation, which included a $19.5 million termination
payment to Fortis Inc.
"2011 was an extraordinary year for the company not only because
of the sale agreement we entered into but because of the tremendous
job our employees did in responding to the devastation wrought upon
Vermont and our system by tropical storm Irene. I am extremely
proud of the way our employees restored service safely and quickly
after Irene, under very difficult conditions," CVPS President and
CEO Larry Reilly said. "Our 2011 earnings were largely affected by
one-time merger-related costs, but those costs had no impact on our
dividend. Our agreement with Gaz Métro allows us to pay a quarterly
dividend of 23 cents per share until the sale is consummated."
Reilly said the company remained focused on high-quality
customer service and reliability. "We ranked number two among all
utilities in New England and New York in J.D. Power's survey of
overall customer satisfaction last year, and our employees remain
committed to ensuring our customers continue to enjoy the kind of
service and reliability they have come to expect from us, today and
following the sale," Reilly said. "That will be a critical focus as
the closing and merger draw nearer."
2011 results compared to 2010 The
following is a reconciliation of 2011 net earnings, excluding
merger-related costs:
2011
------------------------------------------
Net Income Earnings Per Diluted Share
(in millions)
Net earnings excluding merger-
related expenses $ 21.7 $ 1.59
Merger-related expenses, after-
tax (16.0) (1.19)
------------- --------------------------
Net earnings $ 5.7 $ 0.40
============= ==========================
Operating revenues in 2011 increased $17.8 million, including a
$21.6 million increase in retail revenues, an $8.7 million increase
in the provision for rate refund, partially offset by an $11.8
million decrease in resale revenue, and a $0.7 million decrease in
other operating revenues.
The increase in retail revenues primarily resulted from a 7.46
percent base rate increase, effective January 1, 2011, the
acquisition of the Vermont Marble service territory on September 1,
2011, and higher customer usage due to colder weather in early
2011, partially offset by weaker customer demand in the end of 2011
due to warmer weather and decreased snow-making at ski areas. The
provision for rate refund is the net impact during the year of
collections and refunds of amounts previously deferred, as required
by the power cost adjustment component of our alternative
regulation plan. Resale revenues decreased due to lower contract
prices associated with the sale of our excess energy, and lower
volume available for resale due to higher retail load. Other
operating revenues decreased primarily due to less mutual aid
provided to other utilities in 2011.
Purchased power expense decreased $3.8 million, comprised of a
decrease of $7.7 million from lower capacity costs and lower
volumes from ISO-NE purchases, and a $1 million decrease from lower
deliveries from Hydro-Québec. These decreases were partially offset
by an increase of $3.7 million due to higher output at the Vermont
Yankee plant in 2011 and higher related capacity costs, and an
increase of $0.6 million due to higher market rates from
independent power producers, and an increase of $0.6 million for
energy costs related to the acquisitions of the Vermont Marble and
Readsboro service territories in 2011.
Other operating expenses increased $25.1 million. This included
an increase of $15.3 million in transmission expenses driven by
higher rates from ISO-NE; higher Vermont Transmission Agreement
billings, net of higher NEPOOL Open Access Transmission Tariff
reimbursements; and a $5.1 million increase in service restoration
costs related to Tropical Storm Irene in August 2011, partially
offset by the costs of several major storms in 2010. Also included
were a $2.1 million increase in regulatory amortizations; a $1.8
million increase in bad debt expense, including $1 million from the
recovery of a major telecommunications customer receivable in 2010;
a $1.7 million increase in depreciation expense due to an increase
in utility plant assets, including the acquisition of the Vermont
Marble service territory; a $1.3 million increase in hydro
maintenance costs, and various other items. These increases were
partially offset by a $4.4 million net increase in regulatory
deferrals, primarily caused by exogenous cost deferrals related to
major storms, and tax law changes. We also had a $2.4 million
decrease in operating income tax expense as a result of a lower
level of earnings in 2011.
Equity in earnings of affiliates increased $6.6 million due to
the return on the $34.9 million investment that we made in Transco
in December 2010.
Other, net decreased $1.2 million primarily due to $0.5 million
of lower non-utility earnings, $0.4 million of lower income from
variable life insurance policies, $0.1 million of lower interest
and dividend income and various other items.
Merger-related expenses included in Other Income increased $26
million primarily due to a $19.5 million termination payment to
Fortis, Inc. and $6.5 million of other merger-related costs.
Fourth quarter 2011 results compared to
2010 The following is a reconciliation of fourth quarter 2011
net earnings, excluding merger-related costs:
Fourth Quarter 2011
------------------------------------------
Net Income Earnings Per Diluted Share
(in millions)
Net earnings excluding merger-
related expenses $ 5.4 $ 0.40
Merger-related expenses, after-
tax (0.2) (0.02)
------------- --------------------------
Net earnings $ 5.2 $ 0.38
============= ==========================
Fourth quarter operating revenues increased $4.7 million for
many of the same reasons cited above.
Purchased power expense decreased $2.8 million for many of the
same reasons cited above.
Other operating expenses increased $9.3 million for the same
reasons described above.
Equity in earnings of affiliates increased $1.7 million for the
same reason cited above.
Other, net decreased $0.5 million for the same reasons cited
above.
2010 Common Stock Issuance Earnings per
share for 2011 reflect the impact of shares issued under our
continuous offering equity program. From April to December 2010, CV
sold an aggregate of 1,498,745 shares in open market trading and
direct placements under this program for aggregate gross proceeds
of approximately $30.6 million. The net proceeds of the offering
were used for general corporate purposes.
Earnings Guidance Due to the pending
merger, the company has discontinued earnings guidance.
Webcast CV will host an earnings
teleconference and webcast on March 15, 2012, beginning at 10 a.m.
Eastern Time. At that time, CV President and CEO Larry Reilly and
Chief Financial Officer Pamela Keefe will discuss the company's
financial results and recent developments in the company's planned
sale and merger.
Interested parties may listen to the conference call live on the
Internet by selecting the "CVPS 2011 4th Quarter Earnings
Conference Call" link on the "Investor Relations" section of the
company's website at www.cvps.com. An audio archive of the call
will be available later that day at the same location or by dialing
1-877-660-6853 within the U.S. or internationally by dialing
1-201-612-7415 and entering Account 286 and Conference ID
370724.
About CV CV is Vermont's largest electric
utility, serving more than 160,000 customers statewide. CV's
non-regulated subsidiary, Catamount Resources Corporation, sells
and rents electric water heaters through a subsidiary, SmartEnergy
Water Heating Services.
Form 10-K On Wednesday, March 14, 2012,
the company filed its annual Form 10-K with the Securities and
Exchange Commission. A copy of that report is available on our web
site, www.cvps.com, under the "Investor Relations" section. Please
refer to it for additional information regarding our condensed
consolidated financial statements, results of operations, capital
resources and liquidity.
Reconciliation of Earnings Per Diluted
Share
Twelve Months Fourth Quarter
2011 vs. 2010 2011 vs. 2010
-------------- ---------------
2010 Earnings per diluted share $ 1.66 $ 0.40
Major Year-over-Year Effects on Earnings:
Higher operating revenue - retail sales
volume 0.15 0.09
Merger-related fees (1.19) (0.02)
Recovery of uncollectible accounts in
2010 (0.05) (0.05)
Variable life insurance (0.03) 0.00
Other (includes impact of additional
common shares, income tax adjustments,
and various items) (0.14) (0.04)
-------------- ---------------
2011 Earnings per diluted share $ 0.40 $ 0.38
============== ===============
Forward-Looking Statements Statements
contained in this press release that are not historical fact are
forward-looking statements intended to qualify for the safe-harbors
from the liability established by the Private Securities Litigation
Reform Act of 1995. Statements made that are not historical facts
are forward-looking and, accordingly, involve estimates,
assumptions, risks and uncertainties that could cause actual
results or outcomes to differ materially from those expressed in
the forward-looking statements. Actual results will depend, among
other things, upon the actions of regulators, performance of the
Vermont Yankee nuclear power plant, effects of and changes in
weather and economic conditions, volatility in wholesale electric
markets, volatility in the financial markets, and our ability to
maintain our current credit ratings. These and other risk factors
are detailed in CV's Securities and Exchange Commission filings. CV
cannot predict the outcome of any of these matters; accordingly,
there can be no assurance that such indicated results will be
realized. Readers are cautioned not to place undue reliance on
these forward-looking statements that speak only as of the date of
this press release. CV does not undertake any obligation to
publicly release any revision to these forward-looking statements
to reflect events or circumstances after the date of this press
release.
Central Vermont Public Service Corporation - Consolidated
Earnings Release
(dollars in thousands, except per share amounts)
Three months ended Twelve months ended
December 31 December 31
Condensed Income
statement 2011 2010 2011 2010
----------- ----------- ----------- -----------
Operating revenues:
Retail sales $ 82,474 $ 76,993 $ 316,013 $ 294,406
Resale sales 3,773 11,335 26,185 37,957
Provision for rate
refund 221 (5,942) 5,097 (3,598)
Other 3,862 3,203 12,439 13,160
----------- ----------- ----------- -----------
Total operating revenues 90,330 85,589 359,734 341,925
----------- ----------- ----------- -----------
Operating expenses:
Purchased power -
affiliates and other 37,966 40,736 156,959 160,774
Other operating
expenses 47,562 38,294 181,255 156,151
Income tax expense 1,029 2,091 5,167 7,545
----------- ----------- ----------- -----------
Total operating
expense 86,557 81,121 343,381 324,470
----------- ----------- ----------- -----------
Utility operating income 3,773 4,468 16,353 17,455
----------- ----------- ----------- -----------
Other income:
Equity in earnings of
affiliates 6,984 5,241 27,733 21,098
Other, net 242 744 (109) 1,078
Merger-related
expenses (30) 0 (25,977) 0
Income tax (expense)
benefit (2,260) (2,183) 1,356 (7,117)
----------- ----------- ----------- -----------
Total other income 4,936 3,802 3,003 15,059
----------- ----------- ----------- -----------
Interest expense 3,520 2,953 13,652 11,560
------------------------------------- -----------
Net income 5,189 5,317 5,704 20,954
Dividends declared on
preferred stock 92 92 368 368
----------- ----------- ----------- -----------
Earnings available for
common stock $ 5,097 $ 5,225 $ 5,336 $ 20,586
=========== =========== =========== ===========
Per common share data
Earnings per share of
common stock - basic $ 0.38 $ 0.40 $ 0.40 $ 1.66
Earnings per share of
common stock - diluted $ 0.38 $ 0.40 $ 0.40 $ 1.66
Average shares of common
stock outstanding -
basic 13,439,379 13,144,056 13,404,909 12,370,486
Average shares of common
stock outstanding -
diluted 13,526,992 13,194,390 13,487,608 12,405,866
Dividends declared per
share of common stock $ 0.00 $ 0.00 $ 0.92 $ 0.92
Dividends paid per share
of common stock $ 0.23 $ 0.23 $ 0.92 $ 0.92
Supplemental financial
statement data
Balance sheet
Investments in
affiliates $ 179,974 $ 171,514
Total assets $ 776,265 $ 710,746
Common stock equity $ 268,154 $ 272,728
Long-term debt
(excluding current
portions) $ 240,578 $ 188,300
Cash Flows
Cash and cash
equivalents at
beginning of period $ 2,676 $ 2,069
Cash provided by
operating activities 45,713 53,527
Cash used for
investing activities (53,401) (91,405)
Cash provided by
financing activities 6,746 38,485
----------- ----------- ----------- -----------
Cash and cash
equivalents at end of
period $ 1,734 $ 2,676
=========== =========== =========== ===========
Refer to our 2011 Form 10-K for additional information
Media Inquiries: Steve Costello Director of Public Affairs (802)
747-5427 e-mail: Email Contact (802) 742-3062 (pager) Contact:
Pamela Keefe Senior Vice President, Chief Financial Officer and
Treasurer (802) 747-5435 e-mail: Email Contact For questions after
April 1, 2012 contact: Edmund Ryan Acting Chief Financial Officer
and Treasurer (802) 747-5422 e-mail: Email Contact
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