Piedmont Natural Gas Reports Third Quarter 2014 Results

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Sep 05, 2014, 04:23 ET

CHARLOTTE, N.C., Sept. 5, 2014 /PRNewswire/ -- Piedmont Natural Gas (NYSE: PNY) today announced results for its third fiscal quarter ended July 31, 2014. For the quarter, the Company reported a seasonal loss of $7.3 million, or $.09 per diluted share, compared to a loss of $2.3 million, or $.03 per diluted share for the same period in 2013. For the nine months ended July 31, 2014, net income was $152.8 million and diluted earnings per share were $1.96, compared with net income of $139.4 million and diluted earnings per share of $1.86 for the same period in 2013.

Margin for the quarter was $104.8 million, an increase of $7.8 million from the prior year's quarter. Margin for the nine months ended July 31, 2014 was $577.9 million, an increase of $65.4 million from the prior year period. The increase in margin is primarily attributable to customer growth, regulatory rate adjustments and increased transportation services in the power generation markets, and in the nine-month period, supplemented by higher margin sales from secondary market activity related to colder-than-normal weather and increased wholesale market volatility and increased volume deliveries in the retail markets due to colder weather.

Operations and maintenance expenses totaled $68.6 million during the third quarter of 2014, an increase of $5.7 million from the third quarter of 2013. Operations and maintenance expenses totaled $199.4 million during the nine months ended July 31, 2014, an increase of $15.6 million from the same period in 2013. The increase in O&M expenses for both periods is due to increases in payroll primarily from additional employees and incentive accruals, contract labor, approved amortization of regulatory assets and a higher level of bad debt from colder weather and higher customer consumption this past winter.

Pre-tax income from Piedmont's energy-related joint ventures increased 38% for the quarter and 26% percent for the year-to-date compared to the same period in 2013 primarily due to improved performance at SouthStar Energy from the expansion into the unregulated retail markets in Illinois, partially offset by higher operating and general and administrative expenses.

Utility interest charges for the quarter were $13.1 million compared to $5.7 million for the same period in 2013. Utility interest charges for the nine months ended July 31, 2014 were $35.8 million compared to $13.5 million for the same period in 2013. The increase is primarily due to an increase in interest expense on long-term debt primarily due to higher amounts outstanding this year, a decrease in AFUDC as a result of lower utility project construction expenditures compared to the prior year and an increase in interest expense on amounts due to customers.

Company Announces Quarterly Dividend

At its regular quarterly meeting of the Company's Board of Directors, the Board of Directors today announced the declaration of a quarterly dividend on Common Stock of 32 cents per share, payable on October 15, 2014 to holders of record at the close of business on September 24, 2014.

Fiscal 2014 Earnings Guidance Reaffirmed

Piedmont Natural Gas reaffirms its revised fiscal year 2014 earnings guidance of $1.80 to $1.90 per diluted share, with emphasis at the upper end of the range.

Conference Call

In conjunction with the third-quarter earnings release, you are invited to listen to the conference call that will broadcast live over the Internet on Monday, September 8, 2014 at 10 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.

Summary of Operations
(in thousands except per share amounts

Three Months Ended	July 31				% Increase (Decrease)
	2014		2013

Operating Revenues	$	164,187	$	162,943	1%
Cost of Gas	59,340		65,943		(10)%
Margin	104,847		97,000		8%
Operations and Maintenance Expenses	68,605		62,950		9%
Depreciation	29,960		28,599		5%
General Taxes	9,352		8,307		13%
Utility Income Taxes	(6,324)		(3,447)		(83)%
Operating Income	3,254		591		451%
Other Income (Expense), net	2,527		2,819		(10)%
Utility Interest Charges	13,125		5,703		130%
Net Income	(7,344)		(2,293)		(220)%

Average Shares of Common Stock:
Basic	78,185		75,774		3%
Diluted	78,185		75,774		3%
Earnings Per Share of Common Stock:
Basic	$	(0.09)	$	(0.03)	200%
Diluted	$	(0.09)	$	(0.03)	200%
System Throughput - Dekatherms	86,767		83,112		4%
Gas Customers Billed in July	998,850		985,034		1%
System Average Degree Days - Actual	33		77		(57)%
System Average Degree Days - Normal	49		49		—%
Percent Normal Degree Days	(33)%		57%		n/a

Nine Months Ended	July 31				% Increase (Decrease)
	2014		2013

Operating Revenues	$	1,284,167	$	1,078,229	19%
Cost of Gas	706,285		565,749		25%
Margin	577,882		512,480		13%
Operations and Maintenance Expenses	199,437		183,869		8%
Depreciation	87,947		82,168		7%
General Taxes	27,958		26,903		4%
Utility Income Taxes	89,668		81,232		10%
Operating Income	172,872		138,308		25%
Other Income (Expense), net	15,650		14,594		7%
Utility Interest Charges	35,754		13,482		165%
Net Income	152,768		139,420		10%

Average Shares of Common Stock:
Basic	77,715		74,521		4%
Diluted	78,027		74,987		4%
Earnings Per Share of Common Stock:
Basic	$	1.97	$	1.87	5%
Diluted	1.96		$	1.86	5%
System Throughput - Dekatherms	327,128		299,943		9%
Gas Customers Billed in July	998,850		985,034		1%
System Average Degree Days - Actual	3,391		3,186		6%
System Average Degree Days - Normal	3,070		3,078		—%
Percent Normal Degree Days	10%		4%		n/a

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 place undue reliance on these forward-looking statements when making investment decisions. The words "expect," "believe," "project," "anticipate," "intend," "should," "could," "assume," "can," "estimate," "forecast," "future," "indicate," "outlook," "plan," "predict," "seek," "target," "would," "may," "guidance," 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, industrial and power generation customers in portions of North Carolina, South Carolina and Tennessee, including customers served by municipalities who are wholesale customers. Our subsidiaries are invested in joint venture, energy-related businesses, including unregulated retail natural gas marketing, regulated interstate natural gas transportation and storage, and regulated intrastate natural gas transportation businesses. More information about Piedmont Natural Gas is available on the Internet at http://www.piedmontng.com/.

SOURCE Piedmont Natural Gas