Piedmont Natural Gas Reports Second Quarter 2015 Results

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Jun 05, 2015, 04:23 ET

CHARLOTTE, N.C., June 5, 2015 /PRNewswire/ -- Piedmont Natural Gas (NYSE: PNY) today announced results for its second fiscal quarter ended April 30, 2015. For the quarter, the Company reported net income of $66.4 million, or $.84 per diluted share, compared to a net income of $62.5 million, or $0.80 per diluted share for the same period in 2014.

For the six months ended April 30, 2015, net income was $159.4 million and diluted earnings per share were $2.02, compared with net income of $160.1 million and diluted earnings per share of $2.06 for the same period in 2014.

Margin for the quarter was $225.6 million, an increase of $14.1 million from the prior year's quarter. The increase is primarily due to integrity management rider (IMR) rate adjustments in Tennessee and North Carolina, customer growth in all three states and higher margin sales and volumes in secondary market activity. Margin for the six months ended April 30, 2015 was $495.7 million, an increase of $22.7 million from the prior year period. The increase is primarily attributable to the 2014 general rate case in North Carolina, IMR rate adjustments in Tennessee and North Carolina and customer growth in all three states, partially offset by lower secondary market margin sales and lower industrial customer margin from changes in cost allocation and rate design under the North Carolina general rate case.

Operations and maintenance expenses totaled $71.4 million during the second quarter of 2015, an increase of $1.2 million from the second quarter of 2014. Operations and maintenance expenses totaled $137.6 million during the six months ended April 30, 2015, an increase of $6.7 million from the same period in 2014. The increase for O&M expenses for the quarter is primarily due to higher employee benefit expenses and the increase for the six month period is primarily due to increased contract labor, higher employee benefits, and approved regulatory asset amortizations.

Pre-tax income from Piedmont's joint ventures increased 10.3% for the quarter compared to same period in 2014 primarily due to an increase in Constitution Pipeline's income from higher capitalized interest associated with greater capital expenditures for the project. Pre-tax income from Piedmont's joint ventures decreased 0.8% for the six month period primarily due to a decrease in SouthStar Energy's income from decreases in the value of hedged derivatives, partially offset by an increase in Constitution Pipeline's income from higher capitalized interest associated with increased capital expenditures for the project.

Utility interest charges for the quarter were $18.1 million compared to $12 million for the same period in 2014. Utility interest charges for the six month period were $35.8 million compared to $22.6 million for the same period in 2014. The increase in utility interest charges for both periods is primarily due to a decrease in the allowance for funds used during construction (AFUDC) as a result of lower utility project construction expenditures compared to prior periods, an increase in interest expense on long-term debt primarily due to higher amounts of debt outstanding in 2015, and an increase in interest expense on higher amounts due to customers in 2015.

DIVIDEND DECLARED

At the Company's regular quarterly meeting of its Board of Directors held today, a quarterly dividend on Common Stock of 33 cents per share was declared, payable on July 15, 2015 to holders of record at the close of business on June 24, 2015.

FISCAL 2015 EARNINGS GUIDANCE REAFFIRMED

Piedmont Natural Gas reaffirms its fiscal year 2015 earnings guidance of $1.82 to $1.92 per diluted share.

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 Monday, June 8, 2015 at 9:30 a.m. Eastern Daylight 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 and degree days)

Three Months Ended		April 30						% Increase (Decrease)
		2015			2014
	(Unaudited)
Operating Revenues		$	424,924		$	462,247		(8)%
Cost of Gas		199,303			250,724			(21)%
Margin		225,621			211,523			7	%
Operations and Maintenance Expenses		71,424			70,193			2	%
Depreciation		31,689			28,344			12	%
General Taxes		10,976			9,497			16	%
Utility Income Taxes		36,409			36,190			1	%
Operating Income		75,123			67,299			12	%
Other Income (Expense), net		9,360			7,268			29	%
Utility Interest Charges		18,081			12,027			50	%
Net Income		66,402			62,540			6	%

Average Shares of Common Stock:
Basic		78,818			77,982			1	%
Diluted		79,115			78,291			1	%

Earnings Per Share of Common Stock:
Basic		$	0.84		$	0.80		5	%
Diluted		$	0.84		$	0.80		5	%

System Throughput - Dekatherms		125,132			103,222			21	%
Gas Customers Billed in April		1,028			1,014			1	%
System Average Degree Days – Actual		1,322			1,294			2	%
System Average Degree Days – Normal		1,176			1,178			—	%
Percent Normal Degree Days		12		%	10		%	n/a

Six Months Ended		April 30						% Increase (Decrease)
		2015			2014

Operating Revenues		$	1,032,196		$	1,119,980		(8)%
Cost of Gas		536,505			646,945			(17)%
Margin		495,691			473,035			5	%
Operations and Maintenance Expenses		137,574			130,832			5	%
Depreciation		63,583			57,987			10	%
General Taxes		20,972			18,606			13	%
Utility Income Taxes		92,680			95,992			(3)%
Operating Income		180,882			169,618			7	%
Other Income (Expense), net		14,291			13,123			9	%
Utility Interest Charges		35,793			22,629			58	%
Net Income		159,380			160,112			—	%

Average Shares of Common Stock:
Basic		78,717			77,477			2	%
Diluted		79,048			77,802			2	%

Earnings Per Share of Common Stock:
Basic		$	2.02		$	2.07		(2)%
Diluted		2.02			$	2.06		(2)%

System Throughput - Dekatherms		265,920			240,361			11	%
Gas Customers Billed in April		1,028			1,014			1	%
System Average Degree Days - Actual		3,267			3,358			(3)%
System Average Degree Days - Normal		3,015			3,021			—	%
Percent Normal Degree Days		8		%	11		%	n/a

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