SEMCO ENERGY Reports First Quarter 2001 Earnings

Apr 27, 2001, 01:00 ET from SEMCO ENERGY, Inc.

    PORT HURON, Mich., April 27 /PRNewswire/ -- SEMCO ENERGY (NYSE:   SEN) today
 reported net income of $9.1 million or $0.48 per share for the first quarter
 of 2001, compared to net income of $12.0 million or $0.67 per share during the
 first quarter of last year.
     William L. Johnson, Chairman, President and Chief Executive Officer said,
 "Warmer than normal weather, primarily in Alaska, had a significant impact on
 earnings.  Had temperatures for the period been normal, we would have reported
 earnings of approximately $0.60 per share for the first quarter of 2001.
 Unless temperatures during the fourth quarter are significantly colder than
 normal, it is not likely that the impact of weather during the first quarter
 will be reversed during the rest of the year."
     Also contributing to the decrease in earnings was an increase in the
 seasonal loss from the Company's expanding engineering and construction
 business.  Johnson explained that the underground construction business
 typically generates losses during the first half of the year due to weather
 restrictions, and earns most of its income during the summer and fall months.
 As the Company expands its engineering and construction business, the seasonal
 losses and profits become proportionally larger.  As a result, the seasonal
 first quarter losses of this business segment will generally increase each
 year as the business grows.  Delays in starting certain projects due to deep
 ground frost and other events added to this year's larger loss.  Johnson also
 said, "We believe the Engineering and Construction business will have a
 productive summer and fall season and finish 2001 with strong operating
 results despite the slow start during the first quarter.  Operating revenues
 during 2001 for this business are expected to increase 12 percent from the
 $125.8 million in revenues reported in 2000.  So far in 2001, we already have
 contracts with customers that should generate revenues equal to nearly 90
 percent of the revenues earned in 2000 and there are numerous other projects
 on which we are bidding."
     Results for the first quarter of 2001 also include an increase in
 financing costs of approximately $1.7 million after tax.  The increase was due
 in part to higher financing costs for the long-term debt and securities issued
 to refinance the short-term bridge loan utilized to finance the acquisition of
 ENSTAR, the Company's Alaska gas distribution operation.  Also, results for
 the first quarter of 2000 included $1.4 million of non-recurring income (or
 $0.08 per share) from terminated interest rate swaps.
     Net income for the 12 months ended March 31, 2001 was $13.8 million or
 $0.73 per share, compared to $19.3 million or $1.08 per share, for the 12
 months ended March 31, 2000.  On a weather-normalized basis, net income would
 have been $17.3 million, or $0.91 per share, for the 12 months ended March 31,
 2001, compared to $25.0 million or $1.40 per share for the same period ended
 March 31, 2000.  The results for the 12 months ended March 31, 2000 are not
 truly comparable since ENSTAR's results included in this earlier period
 reflect only the heating season from November 1, 1999, the date ENSTAR was
 acquired, through March 2000.
 
     BUSINESS SEGMENT RESULTS
     GAS DISTRIBUTION
     The Gas Distribution business reported operating income of $28.0 million
 for the first quarter of 2001 compared to $28.7 million for the first quarter
 of 2000.  The decrease in operating income is attributed primarily to higher
 gas costs, associated with the sale of the gas commodity, and lower
 transportation fees, offset partially by higher revenues from continued
 customer growth.  The Company expects to add approximately 10,000 customers in
 2001 to the current customer base of 367,000, representing an increase of
 approximately 2.7 percent.
     Temperatures in Michigan and Alaska combined for the first quarter of 2001
 were approximately 7 percent warmer than normal compared to approximately 11
 percent warmer than normal during the first quarter of 2000.  Temperatures in
 Alaska during the first quarter of 2001 were nearly 15 percent warmer than
 normal, making it one of the warmest winters of the past century in Anchorage.
 
     ENGINEERING AND CONSTRUCTION SERVICES
     The Engineering and Construction (E & C) business reported an operating
 loss of $2.8 million for the first quarter of 2001, compared to a $2.2 million
 operating loss during the first quarter of 2000.  The Company's E & C business
 typically incurs seasonal operating losses during the winter months because
 underground construction is generally inhibited by weather.  The increased
 operating loss in 2001 is attributable in part to more restrictive frost
 conditions in certain regions of the Midwest and other delays in starting
 various projects.  In addition, first quarter 2000 results included profits
 from two large telecommunications projects.
 
     INFORMATION TECHNOLOGY SERVICES
     This quarter is the first time the Company is reporting its Information
 Technology (IT) Services business as a separate business segment.  This
 business, under the Aretech Information Services name, began operations in May
 of 2000 and provides IT infrastructure outsourcing services, ASP services and
 other IT services with a focus on mid-range computers, particularly the AS 400
 platform.  Aretech also is an Internet service provider (ISP) and currently
 has approximately 1,200 ISP customers.  Revenues and operating income for the
 first quarter of 2001 were $2.2 million and $.2 million, respectively.  The
 Company anticipates adding more customers this year and potentially reaching
 revenues in excess of $10 million for 2001.
 
     PROPANE, PIPELINES AND STORAGE
     The Propane, Pipelines and Storage business reported operating income of
 $.7 million for the first quarter of 2001, compared to $.5 million for the
 first quarter of 2000.  The increase in operating income is due primarily to
 higher margins for the propane business and a reduction in operating expenses.
 
     CAPITAL INVESTMENTS
     For the first quarter of 2001, the Company had capital expenditures for
 property additions of $12.3 million compared to $9.1 million for the first
 quarter of 2000.  There were no capital expenditures for business acquisitions
 during the first quarter of 2000 or 2001.
 
     SEMCO ENERGY, Inc. is a diversified energy and infrastructure company that
 distributes natural gas to more than 367,000 customers in Michigan and Alaska.
 It also owns and operates businesses involved in natural gas engineering and
 quality assurance services, pipeline construction services, propane
 distribution, intrastate pipelines and natural gas storage in various regions
 of the United States.  In addition, it provides information technology and
 outsourcing services, specializing in the mid-range computer market.
 
                                 SEMCO ENERGY, INC.
                        News Release Statistics (Unaudited)
                      (in thousands, except per share amounts)
 
 
                                        Three Months Ended  Twelve Months Ended
                                             March 31,           March 31,
                                          2001      2000      2001      2000
 
     Financial Summary
 
       Operating Revenues               $151,927  $130,302  $444,218  $331,184
 
       Operating Expenses                126,948   104,033   380,249   280,373
 
       Operating Income                   24,979    26,269    63,969    50,811
 
       Other Income and (Deductions)
         Interest Expense                 (8,009)   (8,696)  (34,227)  (25,376)
         Other                               878     1,060     2,776     3,316
           Total Other Income and
            (Deductions)                  (7,131)   (7,636)  (31,451)  (22,060)
 
       Income Taxes                        6,642     6,639    11,608     9,501
 
       Income before Dividends on Trust
        Preferred Securities              11,206    11,994    20,910    19,250
 
       Dividends on Trust Preferred
        Securities, Net of Income Taxes    2,150         -     7,155         -
 
       Net Income (loss) Available to
        Common Shareholders               $9,056   $11,994   $13,755   $19,250
 
       Net Income (Loss) - Weather
        Normalized                       $11,288   $14,726   $17,250   $24,955
 
       Earnings Per Share
         Basic                             $0.50     $0.67     $0.76     $1.08
         Diluted                           $0.48     $0.67     $0.73     $1.08
 
       Earnings Per Share - Weather
        Normalized
         Basic                             $0.63     $0.82     $0.96     $1.40
         Diluted                           $0.60     $0.82     $0.91     $1.40
 
       Cash Dividends Per Share (a)       $0.210    $0.205    $0.840    $0.868
 
       Average Number Of Common Shares
        Outstanding
         Basic                            18,057    17,917    18,034    17,815
         Diluted                          18,857    17,917    18,854    17,831
 
       Return on Average Common
        Shareholders' Equity:
         As Reported                                             9.4%     13.2%
         Weather Normalized                                     11.8%     17.1%
 
     (a)  The twelve months ended March 31, 2000 include a special one-time
 dividend of $0.05 per share paid in May 1999.
 
 
 
                                 SEMCO ENERGY, INC.
                        News Release Statistics (Unaudited)
                  (dollars in thousands, except per share amounts)
 
 
                                     Three Months Ended   Twelve Months Ended
                                         March 31,             March 31,
                                      2001       2000       2001       2000
 
     Business Segment Information
 
       Operating Revenues
         Gas Distribution            $130,969   $111,688   $327,132  $251,539
         Engineering and
          Construction                 20,079     20,103    125,862    85,456
         Information Technology
          Services                      2,210          -      7,394         -
         Propane, Pipelines and
          Storage                       2,749      2,061      7,637     6,400
         Corporate and Other (b)       (4,079)    (3,550)   (23,807)  (12,211)
           Total Operating Revenues  $151,927   $130,302   $444,218  $331,184
 
       Operating Income (Loss)
         Gas Distribution             $27,959    $28,659    $62,176   $50,925
         Engineering and
          Construction                 (2,760)    (2,207)     3,149       684
         Information Technology
          Services                        152          -        633         -
         Propane, Pipelines and
          Storage                         736        473      1,794     2,017
         Corporate and Other (b)       (1,108)      (656)    (3,783)   (2,815)
           Total Operating Income     $24,979    $26,269    $63,969   $50,811
 
     Operating Statistics
 
       Gas Distribution:
         Volumes Sold (MMcf)           26,955     23,248     64,760    46,618
         Volumes Transported
          (MMcf)                       12,572     16,010     45,268    39,134
         Number of Customers at End
          of Period                   369,110    359,913    369,110   359,913
         Weather Statistics:
           Degree Days                  3,215      3,140      7,370     6,551
           Percent Colder (Warmer)
            Than Normal                  (7.3)%    (10.6)%     (4.2)%   (10.7)%
           Weather related Increase
            (Decrease) From Normal:
             Net Income (in
              thousands)              $(2,210)   $(2,700)   $(3,445)   $(5,550)
             Earnings Per Share -
              Basic                    $(0.13)    $(0.15)    $(0.20)    $(0.31)
             Earnings Per Share -
              Diluted                  $(0.12)    $(0.15)    $(0.18)    $(0.31)
 
       Engineering and
        Construction:
         Billed Engineering Hours      32,000     94,000    230,000    356,000
         Feet of Pipe and Cable
          Installed                   930,000    997,000  7,895,000  6,508,000
 
       Propane Distribution:
         Volumes Sold (Gallons)     1,677,000  1,673,000  4,495,000  4,361,000
         Weather related Increase
          (Decrease) From Normal:
           Net Income (in
            thousands)                   $(22)      $(32)      $(50)     $(155)
           Earnings Per Share -
            Basic and Diluted              $-         $-         $-     $(0.01)
 
     (b)  Includes intercompany eliminations.
 
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SOURCE SEMCO ENERGY, Inc.
    PORT HURON, Mich., April 27 /PRNewswire/ -- SEMCO ENERGY (NYSE:   SEN) today
 reported net income of $9.1 million or $0.48 per share for the first quarter
 of 2001, compared to net income of $12.0 million or $0.67 per share during the
 first quarter of last year.
     William L. Johnson, Chairman, President and Chief Executive Officer said,
 "Warmer than normal weather, primarily in Alaska, had a significant impact on
 earnings.  Had temperatures for the period been normal, we would have reported
 earnings of approximately $0.60 per share for the first quarter of 2001.
 Unless temperatures during the fourth quarter are significantly colder than
 normal, it is not likely that the impact of weather during the first quarter
 will be reversed during the rest of the year."
     Also contributing to the decrease in earnings was an increase in the
 seasonal loss from the Company's expanding engineering and construction
 business.  Johnson explained that the underground construction business
 typically generates losses during the first half of the year due to weather
 restrictions, and earns most of its income during the summer and fall months.
 As the Company expands its engineering and construction business, the seasonal
 losses and profits become proportionally larger.  As a result, the seasonal
 first quarter losses of this business segment will generally increase each
 year as the business grows.  Delays in starting certain projects due to deep
 ground frost and other events added to this year's larger loss.  Johnson also
 said, "We believe the Engineering and Construction business will have a
 productive summer and fall season and finish 2001 with strong operating
 results despite the slow start during the first quarter.  Operating revenues
 during 2001 for this business are expected to increase 12 percent from the
 $125.8 million in revenues reported in 2000.  So far in 2001, we already have
 contracts with customers that should generate revenues equal to nearly 90
 percent of the revenues earned in 2000 and there are numerous other projects
 on which we are bidding."
     Results for the first quarter of 2001 also include an increase in
 financing costs of approximately $1.7 million after tax.  The increase was due
 in part to higher financing costs for the long-term debt and securities issued
 to refinance the short-term bridge loan utilized to finance the acquisition of
 ENSTAR, the Company's Alaska gas distribution operation.  Also, results for
 the first quarter of 2000 included $1.4 million of non-recurring income (or
 $0.08 per share) from terminated interest rate swaps.
     Net income for the 12 months ended March 31, 2001 was $13.8 million or
 $0.73 per share, compared to $19.3 million or $1.08 per share, for the 12
 months ended March 31, 2000.  On a weather-normalized basis, net income would
 have been $17.3 million, or $0.91 per share, for the 12 months ended March 31,
 2001, compared to $25.0 million or $1.40 per share for the same period ended
 March 31, 2000.  The results for the 12 months ended March 31, 2000 are not
 truly comparable since ENSTAR's results included in this earlier period
 reflect only the heating season from November 1, 1999, the date ENSTAR was
 acquired, through March 2000.
 
     BUSINESS SEGMENT RESULTS
     GAS DISTRIBUTION
     The Gas Distribution business reported operating income of $28.0 million
 for the first quarter of 2001 compared to $28.7 million for the first quarter
 of 2000.  The decrease in operating income is attributed primarily to higher
 gas costs, associated with the sale of the gas commodity, and lower
 transportation fees, offset partially by higher revenues from continued
 customer growth.  The Company expects to add approximately 10,000 customers in
 2001 to the current customer base of 367,000, representing an increase of
 approximately 2.7 percent.
     Temperatures in Michigan and Alaska combined for the first quarter of 2001
 were approximately 7 percent warmer than normal compared to approximately 11
 percent warmer than normal during the first quarter of 2000.  Temperatures in
 Alaska during the first quarter of 2001 were nearly 15 percent warmer than
 normal, making it one of the warmest winters of the past century in Anchorage.
 
     ENGINEERING AND CONSTRUCTION SERVICES
     The Engineering and Construction (E & C) business reported an operating
 loss of $2.8 million for the first quarter of 2001, compared to a $2.2 million
 operating loss during the first quarter of 2000.  The Company's E & C business
 typically incurs seasonal operating losses during the winter months because
 underground construction is generally inhibited by weather.  The increased
 operating loss in 2001 is attributable in part to more restrictive frost
 conditions in certain regions of the Midwest and other delays in starting
 various projects.  In addition, first quarter 2000 results included profits
 from two large telecommunications projects.
 
     INFORMATION TECHNOLOGY SERVICES
     This quarter is the first time the Company is reporting its Information
 Technology (IT) Services business as a separate business segment.  This
 business, under the Aretech Information Services name, began operations in May
 of 2000 and provides IT infrastructure outsourcing services, ASP services and
 other IT services with a focus on mid-range computers, particularly the AS 400
 platform.  Aretech also is an Internet service provider (ISP) and currently
 has approximately 1,200 ISP customers.  Revenues and operating income for the
 first quarter of 2001 were $2.2 million and $.2 million, respectively.  The
 Company anticipates adding more customers this year and potentially reaching
 revenues in excess of $10 million for 2001.
 
     PROPANE, PIPELINES AND STORAGE
     The Propane, Pipelines and Storage business reported operating income of
 $.7 million for the first quarter of 2001, compared to $.5 million for the
 first quarter of 2000.  The increase in operating income is due primarily to
 higher margins for the propane business and a reduction in operating expenses.
 
     CAPITAL INVESTMENTS
     For the first quarter of 2001, the Company had capital expenditures for
 property additions of $12.3 million compared to $9.1 million for the first
 quarter of 2000.  There were no capital expenditures for business acquisitions
 during the first quarter of 2000 or 2001.
 
     SEMCO ENERGY, Inc. is a diversified energy and infrastructure company that
 distributes natural gas to more than 367,000 customers in Michigan and Alaska.
 It also owns and operates businesses involved in natural gas engineering and
 quality assurance services, pipeline construction services, propane
 distribution, intrastate pipelines and natural gas storage in various regions
 of the United States.  In addition, it provides information technology and
 outsourcing services, specializing in the mid-range computer market.
 
                                 SEMCO ENERGY, INC.
                        News Release Statistics (Unaudited)
                      (in thousands, except per share amounts)
 
 
                                        Three Months Ended  Twelve Months Ended
                                             March 31,           March 31,
                                          2001      2000      2001      2000
 
     Financial Summary
 
       Operating Revenues               $151,927  $130,302  $444,218  $331,184
 
       Operating Expenses                126,948   104,033   380,249   280,373
 
       Operating Income                   24,979    26,269    63,969    50,811
 
       Other Income and (Deductions)
         Interest Expense                 (8,009)   (8,696)  (34,227)  (25,376)
         Other                               878     1,060     2,776     3,316
           Total Other Income and
            (Deductions)                  (7,131)   (7,636)  (31,451)  (22,060)
 
       Income Taxes                        6,642     6,639    11,608     9,501
 
       Income before Dividends on Trust
        Preferred Securities              11,206    11,994    20,910    19,250
 
       Dividends on Trust Preferred
        Securities, Net of Income Taxes    2,150         -     7,155         -
 
       Net Income (loss) Available to
        Common Shareholders               $9,056   $11,994   $13,755   $19,250
 
       Net Income (Loss) - Weather
        Normalized                       $11,288   $14,726   $17,250   $24,955
 
       Earnings Per Share
         Basic                             $0.50     $0.67     $0.76     $1.08
         Diluted                           $0.48     $0.67     $0.73     $1.08
 
       Earnings Per Share - Weather
        Normalized
         Basic                             $0.63     $0.82     $0.96     $1.40
         Diluted                           $0.60     $0.82     $0.91     $1.40
 
       Cash Dividends Per Share (a)       $0.210    $0.205    $0.840    $0.868
 
       Average Number Of Common Shares
        Outstanding
         Basic                            18,057    17,917    18,034    17,815
         Diluted                          18,857    17,917    18,854    17,831
 
       Return on Average Common
        Shareholders' Equity:
         As Reported                                             9.4%     13.2%
         Weather Normalized                                     11.8%     17.1%
 
     (a)  The twelve months ended March 31, 2000 include a special one-time
 dividend of $0.05 per share paid in May 1999.
 
 
 
                                 SEMCO ENERGY, INC.
                        News Release Statistics (Unaudited)
                  (dollars in thousands, except per share amounts)
 
 
                                     Three Months Ended   Twelve Months Ended
                                         March 31,             March 31,
                                      2001       2000       2001       2000
 
     Business Segment Information
 
       Operating Revenues
         Gas Distribution            $130,969   $111,688   $327,132  $251,539
         Engineering and
          Construction                 20,079     20,103    125,862    85,456
         Information Technology
          Services                      2,210          -      7,394         -
         Propane, Pipelines and
          Storage                       2,749      2,061      7,637     6,400
         Corporate and Other (b)       (4,079)    (3,550)   (23,807)  (12,211)
           Total Operating Revenues  $151,927   $130,302   $444,218  $331,184
 
       Operating Income (Loss)
         Gas Distribution             $27,959    $28,659    $62,176   $50,925
         Engineering and
          Construction                 (2,760)    (2,207)     3,149       684
         Information Technology
          Services                        152          -        633         -
         Propane, Pipelines and
          Storage                         736        473      1,794     2,017
         Corporate and Other (b)       (1,108)      (656)    (3,783)   (2,815)
           Total Operating Income     $24,979    $26,269    $63,969   $50,811
 
     Operating Statistics
 
       Gas Distribution:
         Volumes Sold (MMcf)           26,955     23,248     64,760    46,618
         Volumes Transported
          (MMcf)                       12,572     16,010     45,268    39,134
         Number of Customers at End
          of Period                   369,110    359,913    369,110   359,913
         Weather Statistics:
           Degree Days                  3,215      3,140      7,370     6,551
           Percent Colder (Warmer)
            Than Normal                  (7.3)%    (10.6)%     (4.2)%   (10.7)%
           Weather related Increase
            (Decrease) From Normal:
             Net Income (in
              thousands)              $(2,210)   $(2,700)   $(3,445)   $(5,550)
             Earnings Per Share -
              Basic                    $(0.13)    $(0.15)    $(0.20)    $(0.31)
             Earnings Per Share -
              Diluted                  $(0.12)    $(0.15)    $(0.18)    $(0.31)
 
       Engineering and
        Construction:
         Billed Engineering Hours      32,000     94,000    230,000    356,000
         Feet of Pipe and Cable
          Installed                   930,000    997,000  7,895,000  6,508,000
 
       Propane Distribution:
         Volumes Sold (Gallons)     1,677,000  1,673,000  4,495,000  4,361,000
         Weather related Increase
          (Decrease) From Normal:
           Net Income (in
            thousands)                   $(22)      $(32)      $(50)     $(155)
           Earnings Per Share -
            Basic and Diluted              $-         $-         $-     $(0.01)
 
     (b)  Includes intercompany eliminations.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X31295016
 
 SOURCE  SEMCO ENERGY, Inc.