Piedmont Natural Gas Reports Second Quarter Results

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Jun 08, 2010, 05:22 ET

CHARLOTTE, N.C., June 8 /PRNewswire-FirstCall/ -- Charlotte-based Piedmont Natural Gas (NYSE: PNY) today announced results for its second quarter ended April 30, 2010. For the quarter, the Company's net income was $46.8 million and diluted earnings per share were $0.65 compared with net income of $53.5 million and diluted earnings per share of $0.73 for the same period in 2009.

For the six months ended April 30, 2010, net income was $160.6 million and diluted earnings per share were $2.20, compared with net income of $134.4 million and diluted earnings per share of $1.83 for the same period in 2009. Results for the six months ended April 30, 2010 include the gain on Piedmont's sale of one-half of its 30 percent ownership interest in SouthStar Energy Services (SouthStar) to AGL Resources (AGLR) on January 1, 2010 for $57.5 million. The after-tax gain on the transaction was $30.2 million or $.41 per diluted share for the six months. Piedmont retains a 15 percent ownership and earnings interest in SouthStar from and after January 1.

Utility margin decreased by $1.3 million for the second quarter, primarily due to period to period changes in adjustments to regulatory gas cost accounts, partially offset by higher margins from increased volumes delivered to industrial customers. Margin increased by $1 million for the six months ended April 30, 2010, primarily due to increased volumes delivered to industrial customers and residential customer growth.

Operations and maintenance expenses increased by $4.2 million for the second quarter and by $5.5 million for the six months ended April 30, 2010, compared to the same periods in 2009. The increase in O&M expenses for both periods was primarily due to increases in payroll expense and, in the case of the second quarter, higher pension expense.

Pre-tax income from equity method investments was $13.3 million for the three months ended April 30, 2010, as compared with $17.8 million for the same period in 2009. For the six months ended April 30, pre-tax income from equity method investments was $25.1 million compared with $27.6 million for the same period in 2009. The decrease in both periods was primarily due to a decrease in earnings from SouthStar due to our lower 15% ownership interest as discussed above.

FISCAL 2010 EARNINGS GUIDANCE REAFFIRMED

Piedmont Natural Gas reaffirms its fiscal year 2010 earnings guidance of $1.90 to $2.00 per diluted share. The Company's fiscal year 2010 guidance includes the gain in the first quarter from its sale of one-half of its ownership interest in SouthStar to AGLR, forecasted gross customer additions of 1.0 to 1.2 percent in the Company's utility service areas and forecasted 2010 utility capital expenditures of $224 million, including ongoing pipeline infrastructure expansions to serve new power generation customers in North Carolina.

Commenting on the Company's results and earnings guidance, Piedmont Natural Gas Chairman, President and Chief Executive Officer Thomas E. Skains said, "Our operating performance through the first two quarters of the year is going according to plan and we are pleased to reaffirm our earnings guidance for fiscal year 2010. Even in a soft new construction market, we continue to add new residential, commercial and industrial customers to our distribution systems and are now focused as well on a growing natural gas power generation market in North Carolina. We continue to maintain our emphasis on quality customer service and business process improvements. We believe these strategies will deliver long-term value to our shareholders."

CONFERENCE CALL

In conjunction with the second-quarter earnings release, you are invited to listen to the conference call that will broadcast live over the Internet on Wednesday, June 9 at 11:00 a.m. Eastern Time, hosted by Chairman, President and CEO Thomas E. Skains. Log onto the web at www.piedmontng.com and click on Investor Relations, then on Presentations. The conference call will be archived on the Presentation page of the website within the Investor Relations section.

Piedmont Natural Gas
Summary of Operations
(in thousands except per share amounts and degree days)

Three Months Ended	April 30		% Increase
	2010	2009	(Decrease)
	Unaudited
Operating Revenues	$472,846	$455,432	4%
Cost of Gas	304,168	285,479	7%
Margin	168,678	169,953	-1%
Operations and Maintenance Expenses	57,503	53,352	8%
Depreciation	24,483	24,306	1%
General Taxes	8,758	8,657	1%
Utility Income Taxes	25,709	28,287	-9%
Operating Income	52,225	55,351	-6%
Other Income (Expense), net	7,611	10,086	-25%
Utility Interest Charges	13,011	11,912	9%
Net Income	46,825	53,525	-13%
Average Shares of Common Stock:
Basic	71,788	73,239	-2%
Diluted	72,118	73,514	-2%
Earnings Per Share of Common Stock:
Basic	$0.65	$0.73	-11%
Diluted	$0.65	$0.73	-11%
System Throughput - Dekatherms	66,687	57,453	16%
Gas Customers Billed in April	972	965	1%
System Average Degree Days -- Actual	1,319	1,204	10%
System Average Degree Days -- Normal	1,207	1,212	-%
Percent Normal Degree Days	109%	99%	-

Six Months Ended	April 30		% Increase
	2010	2009	(Decrease)
	Unaudited
Operating Revenues	$1,146,582	$1,235,076	-7%
Cost of Gas	754,962	844,440	-11%
Margin	391,620	390,636	-%
Operations and Maintenance Expenses	109,542	104,077	5%
Depreciation	48,838	48,448	1%
General Taxes	17,343	17,394	-%
Utility Income Taxes	75,871	77,235	-2%
Operating Income	140,026	143,482	-2%
Other Income (Expense), net	44,863	15,844	183%
Utility Interest Charges	24,315	24,925	-2%
Net Income	160,574	134,401	20%
Average Shares of Common Stock:
Basic	72,492	73,280	-1%
Diluted	72,842	73,582	-1%
Earnings Per Share of Common Stock:
Basic	$2.22	$1.83	21%
Diluted	$2.20	$1.83	20%
System Throughput - Dekatherms	151,409	133,984	13%
Gas Customers Billed in April	972	965	1%
System Average Degree Days -- Actual	3,369	3,148	7%
System Average Degree Days -- Normal	3,065	3,068	-%
Percent Normal Degree Days	110%	103%	-

Forward-looking Statement

This press release contains forward-looking statements. These statements are based on management's current expectations and information currently available and are believed to be reasonable and are made in good faith. However, the forward-looking statements are subject to future events, risks, uncertainties and other factors that could cause actual results to differ materially from those projected in the statements. Factors that may make the actual results differ from anticipated results include, but are not limited to, weather conditions, rate of customer growth, the cost and availability of natural gas, competition from other energy providers, new legislation and regulations and application of existing laws and regulations, economic and capital market conditions, the cost and availability of labor and materials and other uncertainties, all of which are difficult to predict and some of which are beyond our control. For these reasons, you should not rely on these forward-looking statements when making investment decisions. The words "expect," "believe," "project," "anticipate," "intend," "should," "could," "will," "assume," "can," "estimate," "forecast," "future," "indicate," "outlook," "plan," "predict," "seek," "target," "would," and variations of such words and similar expressions are intended to identify forward-looking statements. Forward-looking statements are only as of the date they are made and we do not undertake any obligation to update publicly any forward-looking statement, either as a result of new information, future events or otherwise. More information about the risks and uncertainties relating to these forward-looking statements may be found in Piedmont's latest Forms 10-K and 10-Q, which are available on the SEC's website at http://www.sec.gov.

About Piedmont Natural Gas

Piedmont Natural Gas is an energy services company primarily engaged in the distribution of natural gas to more than one million residential, commercial and industrial utility customers in North Carolina, South Carolina and Tennessee, including 52,000 customers served by municipalities who are wholesale customers. Our subsidiaries are invested in joint venture, energy-related businesses, including unregulated retail natural gas marketing, interstate natural gas storage and intrastate natural gas transportation. More information about Piedmont Natural Gas is available on the Internet at http://www.piedmontng.com.

SOURCE Piedmont Natural Gas