News Column

WGL Holdings, Inc. Reports Third Quarter Fiscal Year 2014 Financial Results; Raises Fiscal Year 2014 Non-GAAP Guidance

August 22, 2014



By a News Reporter-Staff News Editor at Energy Weekly News -- WGL Holdings, Inc. (NYSE: WGL): Consolidated Results WGL Holdings, Inc. (NYSE: WGL), the parent company of Washington Gas Light Company (Washington Gas) and other energy-related subsidiaries, reported a net loss determined in accordance with generally accepted accounting principles in the United States of America (GAAP) for the quarter ended June 30, 2014, of $(11.9) million, or $(0.23) per share, compared to a net loss of $(10.0) million, or $(0.19) per share, reported for the quarter ended June 30, 2013.

For the first nine months of fiscal year 2014, we reported net income determined in accordance with GAAP of $67.9 million, or $1.31 per share, compared to net income of $131.9 million, or $2.55 per share, reported for the comparative period of fiscal year 2013. Our operations are seasonal and, accordingly, our operating results for the three and nine months ended June 30, 2014, are not indicative of the results expected for the 12 months ending September 30, 2014.

Financial performance is also evaluated based on non-GAAP operating earnings (loss). Non-GAAP operating earnings (loss) adjusts for the effects of applying GAAP to certain transactions or classes of transactions that are not representative of the ongoing operating earnings of the company. Refer to "Use of Non-GAAP Operating Earnings (Loss)" and supporting reconciliations attached to this news release for a detailed discussion of management's use of non-GAAP operating earnings, as well as reconciliations of net income determined in accordance with GAAP to non-GAAP operating earnings (loss) for both our consolidated and segment results.

For the quarter ended June 30, 2014, non-GAAP operating earnings were $0.8 million, or $0.02 per share, an increase of $2.4 million, or $0.05 per share, over non-GAAP operating losses of $(1.6) million, or $(0.03) per share, for the same quarter of the prior fiscal year. For the nine months ended June 30, 2014, non-GAAP operating earnings were $147.8 million, or $2.85 per share, compared to non-GAAP operating earnings of $148.0 million, or $2.86 per share, for the same period of the prior fiscal year.

"I am happy to announce strong third quarter results driven by our Regulated Utility and Commercial Energy Systems segments," said Terry McCallister, Chairman and Chief Executive Officer. "Both businesses showed earnings improvements in the third quarter compared to the prior year. Our Regulated Utility segment is performing extremely well and is benefiting from robust customer growth, the implementation of accelerated pipeline replacement programs and the impact from recent rate cases. The Commercial Energy Systems segment is experiencing earnings growth in both distributed generation and in partnerships such as American Solar Direct, reflecting our continued investments in clean energy assets. We are well positioned to exceed our original performance targets for the year."

"Based on our year-to-date performance and expectations for the fourth quarter, we are raising our non-GAAP earnings per share guidance by $0.15." Third Quarter Results by Business Segment Regulated Utility Segment For the quarter ended June 30, 2014, our regulated utility segment reported a net loss of $(0.3) million, or $(0.01) per share, an increase of $4.0 million, or $0.07 per share, over a net loss of $(4.3) million, or $(0.08) per share, reported for the same quarter of the prior fiscal year. After adjustments, non-GAAP operating earnings for the regulated utility segment were $0.7 million, or $0.01 per share, for the quarter ended June 30, 2014, an increase of $3.8 million, or $0.07 per share, over non-GAAP operating losses of $(3.1) million, or $(0.06) per share, for the same quarter of the prior fiscal year.

For the nine months ended June 30, 2014, our regulated utility segment reported net income of $87.9 million, or $1.69 per share, compared to net income of $111.5 million, or $2.15 per share, reported for the nine months ended June 30, 2013. After adjustments, non-GAAP operating earnings for the regulated utility segment were $144.1 million, or $2.78 per share, for the nine months ended June 30, 2014, an increase of $22.1 million, or $0.42 per share, over non-GAAP operating earnings of $122.0 million, or $2.36 per share, for the same period of the prior fiscal year.

For both the three and nine months ended June 30, 2014, higher non-GAAP operating earnings reflect: higher revenues from customer growth; new base rates in the District of Columbia and Maryland; an increase in realized margins associated with our asset optimization program; rate recovery related to accelerated pipeline replacement programs and a decrease in the effective tax rate. Partially offsetting these favorable variances were higher depreciation expenses due to the growth in our investment in utility plant and operating expenses for the year-to-date only. Retail Energy-Marketing Segment For the quarter ended June 30, 2014, the retail energy-marketing segment reported $25,000 in net income compared to a net loss of $(4.2) million, or $(0.08) per share, reported for the same quarter of the prior fiscal year. Non-GAAP operating earnings for the retail energy-marketing segment were $2.0 million, or $0.04 per share, for the quarter ended June 30, 2014, compared to non-GAAP operating earnings of $6.2 million, or $0.12 per share, for the same quarter of the prior fiscal year.

For the nine months ended June 30, 2014, the retail energy-marketing segment reported net income of $3.4 million, or $0.07 per share, compared to net income of $30.5 million, or $0.59 per share, reported for the same period of the prior fiscal year. Non-GAAP operating losses for the retail energy-marketing segment were $(0.8) million, or $(0.02) per share, for the nine months ended June 30, 2014, compared to non-GAAP operating earnings of $29.9 million, or $0.58 per share, for the same period of the prior fiscal year.

For both the three and nine months ended June 30, 2014, non-GAAP operating earnings reflect lower realized electric margins due to fluctuations in commodity prices and higher capacity and ancillary charges from the regional power grid operator (PJM). The price movements were primarily the result of colder than normal weather that occurred throughout January 2014. Partially offsetting the electric margins were higher natural gas margins. Realized natural gas margins increased due to higher margins on portfolio optimization activity and higher sales volumes related to spot sales to interruptible customers. The quarterly pattern of margin recognition that the retail energy-marketing segment realizes varies from year to year. Commercial Energy Systems Segment For the quarter ended June 30, 2014, the commercial energy systems segment reported net income of $3.7 million, or $0.07 per share, an increase of $3.4 million, or $0.07 per share, over net income of $0.3 million for the same quarter of the prior fiscal year. For the nine months ended June 30, 2014, the commercial energy systems segment reported net income of $5.2 million, or $0.10 per share, an increase of $3.3 million, or $0.06 per share, over net income of $1.9 million, or $0.04 per share, for the same period of the prior fiscal year. Net income for both the three and nine months ended June 30, 2014, increased due to higher solar renewable credits (SRECs) and solar generation revenue from commercial solar assets, as well earnings growth in the American Solar Direct venture. There were no non-GAAP adjustments for this segment for any of the periods presented.

WGL also reported that it has been cooperating in an investigation by the U.S. Department of Justice into certain American Recovery and Reinvestment Act projects in which its non-utility subsidiary, Washington Gas Energy Systems, Inc., participated as subcontractor to a prime contractor under the Small Business Administration's 8(a) Business Development Program. WGL believes that it is probable it will ultimately incur a loss in connection with this matter, but it cannot estimate either the timing or amount of loss. We do not expect that the resolution of this matter will have a material adverse effect on WGL's business, financial condition or cash flow, although the resolution of the matter in any particular period could have a material adverse effect on our results of operations for that particular period. For more information on this matter, please refer to Part II, Item 1, Legal Proceedings, of our Quarterly Report on Form 10-Q. Midstream Energy Services Segment For the quarter ended June 30, 2014, the midstream energy services segment reported a net loss of $(10.5) million, or $(0.20) per share, compared to net income of $1.1 million, or $0.02 per share, for the same quarter of the prior fiscal year. Non-GAAP operating losses for the midstream energy services segment were $(2.4) million, or $(0.05) per share, compared to non-GAAP operating losses of $(2.9) million, or $(0.06) per share, for the same period of the prior fiscal year.

Keywords for this news article include: Energy, Marketing, Oil & Gas, Advertising, Natural Gas, WGL Holdings Inc.

Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2014, NewsRx LLC


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Energy Weekly News


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters