Piedmont Natural Gas Reports Second Quarter Results

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Jun 07, 2012, 04:21 ET

CHARLOTTE, N.C., June 7, 2012 /PRNewswire/ -- Piedmont Natural Gas (NYSE: PNY) today announced results for its second fiscal quarter ended April 30, 2012. For the quarter, the Company reported net income of $50.2 million, or $.70 per diluted share, compared to net income of $47.4 million, or $.66 per diluted share for the same period in 2011.

For the six months ended April 30, 2012, net income was $126.4 million and diluted earnings per share were $1.75, compared with net income of $131.8 million and diluted earnings per share of $1.82 for the same period in 2011.

Utility margin decreased by $1.0 million for the second quarter and by $10.8 million for the first six months, primarily due to weather that was 28 and 21 percent warmer than normal, respectively, and 19 and 27 percent warmer than last year, respectively, resulting in lower volume deliveries to weather sensitive retail markets and reduced opportunities in the secondary wholesale markets. These decreases were partially offset by increased margins from power generation customers and by continued customer growth.

Piedmont's chairman, president and chief executive officer, Thomas E. Skains commented on the results, "Our financial results through the first six months of 2012 reflect the challenges posed by substantially warmer than normal weather throughout our service area. At the same time, we are encouraged by our increasing gains in new residential and commercial customers and our efforts to control our costs of operating the business. We are also pleased to initiate our natural gas delivery service to the Progress Energy Wayne County project as scheduled on June 1, 2012."

Customer additions compared to the same period in 2011 increased by 22 percent in the Company's residential market and by 15 percent in our commercial market. Residential gains were driven primarily by additions from new home construction as well as increased activity in residential conversion markets. Growth in the commercial markets was a result of both increased construction activity and customer conversions.

Operations and maintenance expenses increased by $1.6 million for the second quarter and by $8.9 million for the six months ended April 30, 2012, compared to the same periods in 2011. The increase in O&M expenses for both periods is primarily due to expected increases in pension and medical coverage expenses. Pre-tax income from Piedmont's joint ventures was $11.7 million for the second quarter, as compared to $12.4 million for the same period in 2011. Through the first two quarters of 2012, pre-tax income from equity method investments was $17.9 million compared with $20.1 million for the same period in 2011. The decrease is primarily due to reduced customer usage related to warmer weather in the markets served by SouthStar Energy Services.

Utility interest charges for the quarter were $5.7 million compared to $12.9 million for the same period in 2011. The decrease is primarily due to an increase in AFUDC related to the construction of the power generation delivery projects as well as a lower weighted average cost of long-term debt.

Gross utility construction expenditures during the first half of 2012 totaled $220.3 million, an increase of approximately $130.8 million over the same period of 2011. The increase is primarily due to the Company's construction of new transmission and compression facilities to serve new natural gas fired power generation facilities in North Carolina. Piedmont anticipates expenditures of $250 - $270 million, including allowance for funds used during construction (AFUDC), during the current fiscal year for power generation delivery projects.

Company Completes Wayne County Power Generation Delivery Project; Continues Work on Sutton Project

On June 1, 2012, Piedmont Natural Gas completed and placed into service its Wayne County power generation delivery project for Progress Energy. Construction of the 38 mile, 20-inch transmission pipeline and associated compression facilities began in February 2010.

Piedmont also continues to construct transmission and compression facilities for Progress Energy's Sutton Plant site near Wilmington, NC. That project is on track to be put into service by June of 2013. Both the Wayne County and Sutton projects are supported by long-term service agreements with Progress Energy.

Company Announces Quarterly Dividend

At its regular quarterly meeting of the Company's Board of Directors, the Company today announced the declaration of a quarterly dividend on Common Stock of 30 cents per share, payable July 13, 2012, to holders of record at the close of business on June 22, 2012.

Fiscal 2012 Earnings Guidance Reaffirmed at Lower End of Range

As a result of substantially warmer than normal weather during the Company's first and second fiscal quarters, Piedmont Natural Gas reaffirms its fiscal year 2012 earnings guidance of $1.58 to $1.68 per diluted share with emphasis toward the lower end of the range.

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 Friday, June 8 at 2:00 p.m. Eastern Daylight Time, hosted by Chairman, President and CEO Thomas E. Skains. Log onto the web at www.piedmontng.com and click on 'For Investors'. The conference call will be archived on the Presentation page of the website within the 'For Investors' section.

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

Three Months Ended	April 30		% Increase
	2012	2011	(Decrease)
	Unaudited
Operating Revenues	$308,432	$392,567	-21%
Cost of Gas	136,481	219,636	-38%
Margin	171,951	172,931	-1%
Operations and Maintenance Expenses	60,511	58,936	3%
Depreciation	25,269	25,425	-1%
General Taxes	9,299	9,464	-2%
Utility Income Taxes	28,090	26,179	7%
Operating Income	48,782	52,927	-8%
Other Income (Expense), net	7,073	7,344	-4%
Utility Interest Charges	5,663	12,863	-56%
Net Income	50,192	47,408	6%
Average Shares of Common Stock:
Basic	71,731	71,824	-%
Diluted	72,026	72,061	-%
Earnings Per Share of Common Stock:
Basic	$0.70	$0.66	6%
Diluted	$0.70	$0.66	6%
System Throughput - Dekatherms	80,200	65,577	22%
Gas Customers Billed in April	984	978	1%
System Average Degree Days -- Actual	865	1,074	-19%
System Average Degree Days -- Normal	1,194	1,200	-1%
Percent Normal Degree Days	72%	90%	-

Six Months Ended	April 30		% Increase
	2012	2011	(Decrease)
	Unaudited
Operating Revenues	$780,272	$1,044,623	-25%
Cost of Gas	388,085	641,686	-40%
Margin	392,187	402,937	-3%
Operations and Maintenance Expenses	118,908	109,994	8%
Depreciation	51,447	50,472	2%
General Taxes	17,920	20,561	-13%
Utility Income Taxes	75,311	78,114	-4%
Operating Income	128,601	143,796	-11%
Other Income (Expense), net	10,686	11,932	-10%
Utility Interest Charges	12,868	23,880	-46%
Net Income	126,419	131,848	-4%
Average Shares of Common Stock:
Basic	71,931	72,012	-%
Diluted	72,226	72,279	-%
Earnings Per Share of Common Stock:
Basic	$1.76	$1.83	-4%
Diluted	$1.75	$1.82	-4%
System Throughput - Dekatherms	170,429	163,420	4%
Gas Customers Billed in April	984	978	1%
System Average Degree Days -- Actual	2,433	3,352	-27%
System Average Degree Days -- Normal	3,063	3,065	-%
Percent Normal Degree Days	79%	109%	-

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," 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 and industrial utility customers in North Carolina, South Carolina and Tennessee, including 53,000 customers served by municipalities who are wholesale customers. Our subsidiaries are invested in joint venture, energy-related businesses, including unregulated retail natural gas marketing, interstate natural gas storage and intrastate natural gas transportation. More information about Piedmont Natural Gas is available on the Internet at http://www.piedmontng.com.

SOURCE Piedmont Natural Gas