Piedmont Natural Gas Reports Results for Fiscal Year 2015

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Dec 23, 2015, 08:26 ET

CHARLOTTE, N.C., Dec. 23, 2015 /PRNewswire/ -- Piedmont Natural Gas (NYSE: PNY) today announced results for its fiscal year ended October 31, 2015. For the year, the Company reported net income of $137 million, or $1.73 per diluted share, compared with net income of $143.8 million, or $1.84 per diluted share for 2014. Adjusted for merger-related expenses incurred during the Company's fourth quarter, net income and earnings per diluted share were $148 million and $1.87, respectively, increases of 2.9% and 1.6% over the prior year.

Commenting on the Company's fiscal year 2015 results, Piedmont Chairman, President and Chief Executive Officer, Thomas E. Skains said, "We are pleased with our solid financial and operating performance in 2015. During the year, we experienced strong customer growth through the addition of slightly more than 17,000 new customers. This is an increase of approximately 5% compared to our prior year growth rate and reflects an overall customer addition growth rate of 1.7%. We also made investments of approximately $485 million in support of utility customer growth and system infrastructure, integrity management programs, and non-utility joint venture opportunities." Skains continued, "In addition to these results, our customer service performance in 2015 was outstanding and we achieved national recognition in residential customer satisfaction and utility brand trust surveys. As we look ahead to 2016 and the closing of our merger agreement with Duke Energy, we are excited about the future opportunities for our customers and our employees in the new Piedmont Natural Gas."

System throughput in 2015 totaled 471.5 million dekatherms, compared with 410.7 million dekatherms in 2014. The increase was largely due to a 30 percent increase in volumes delivered to power generation customers. Overall, weather during 2015 was 6 percent colder than normal and 3 percent warmer than 2014.

Margin was $727.3 million, an increase of $37.1 million from the prior year. The increase in margin is primarily attributable to integrity management rider rate adjustments in North Carolina and Tennessee as well as customer growth in all three states, partially offset by lower margin sales from secondary market transactions.

Operations and maintenance expenses increased $23.6 million from the previous year to a total of $294.5 million. This includes $15.8 million related to the proposed Duke Energy acquisition, $8.6 million of which is in contract labor and $7.2 million in equity plan accruals from a higher stock price at October 31, 2015. The remaining increase in O&M was primarily due to other additional contract labor, employee benefits, payroll and increased regulatory amortization, partially offset by lower bad debt expense.

Utility interest charges were $68.6 million in 2015 compared to $54.7 million in 2014. The increase was primarily due to an increase in long-term debt outstanding in the current year and a decrease in capitalized interest recorded as income.

Pre-tax income from equity method investments was $34.5 million in 2015 compared with $32.8 million in 2014. The increase was primarily due to higher capitalized interest associated with increased capital expenditures for the Constitution pipeline project, partially offset by a decrease in SouthStar's income from lower value of hedged derivatives and less usage in Georgia and Illinois due to warmer weather, partially offset by favorable margins in Georgia, Illinois and Ohio.

FISCAL 2016 EARNINGS GUIDANCE REAFFIRMED

Piedmont Natural Gas reaffirms its fiscal year 2016 earnings guidance of $1.92 to $2.02 per diluted share before any merger-related expenses.

DIVIDEND

At the Company's regular quarterly meeting of its Board of Directors on December 11, 2015, a quarterly dividend on Common Stock of $.33 cents per share, payable on January 15, 2016 to holders of record at the close of business on December 24, 2015.

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

Twelve Months Ended	October 31						% Increase
	2015			2014			(Decrease)

Operating Revenues	$	1,371,718		$	1,469,988		(7)	%
Cost of Gas	644,424			779,780			(17)	%
Margin	727,294			690,208			5	%
Operations and Maintenance	294,517			270,877			9	%
Depreciation	128,704			118,996			8	%
General Taxes	42,110			37,294			13	%
Utility Income Taxes	76,934			83,176			(8)	%
Operating Income	185,029			179,865			3	%
Other Income (Expense), net	20,613			18,622			11	%
Utility Interest Charges	68,631			54,686			26	%
Net Income	137,011			143,801			(5)	%

Average Shares of Common Stock:
Basic	78,942			77,883			1	%
Diluted	79,231			78,193			1	%
Earnings Per Share of Common Stock:
Basic	$	1.74		$	1.85		(6)	%
Diluted	$	1.73		$	1.84		(6)	%
System Throughput - Dekatherms	471,523			410,702			15	%
Gas Customers Billed in October	1,012			993			2	%
System Average Degree Days Actual	3,449			3,543			(3)	%
System Average Degree Days Normal	3,257			3,265			—	%
Percent Normal Degree Days	106		%	109		%	n/a

Non-GAAP Reconciliation of Merger-Related Expenses $ in thousands

	2015
GAAP net income	$ 137,011
After-tax merger related expenses	$ 10,910

Adjusted net income	$ 147,921
Average basic shares outstanding (in thousands)	78,942
Average diluted shares outstanding (in thousands)	79,231
Adjusted basic EPS	$ 1.87
Adjusted diluted EPS	$ 1.87

Forward-Looking Statements
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 risks and uncertainties that could cause actual results to differ materially from those projected in the statements. Factors that may make the actual results differ materially 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, operational interruptions to our gas distribution and transmission activities, change in number of outstanding shares, cybersecurity breaches or failure of technology systems, inability to complete necessary or desirable pipeline expansion or infrastructure projects, costs of providing pension benefits, 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," "may," "should," "could," "assume," "estimate," "forecast," "future," "indicate," "outlook," "plan," "predict," "seek," "target," "would," "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