Piedmont's business is seasonal; therefore, it typically sustains losses during the summer months.
Piedmont added 2,670 new customers in Q3, which is a 19 percent addition over Q3/2011. It added 8700 new customers for the year, a 21 percent gain in customers. Piedmont believes the growth in customers reflects an improvement in new construction markets in its service territory. The growth may also reflect the competitive pricing of natural gas versus other fuels. The company anticipates modest customer growth going forward.
Piedmont finished its first 4 power generation delivery projects for Duke Energy. It is now focusing on the fifth project for the Duke Sutton facility. That project remains on schedule for the targeted in-service date of June 2013, all major material has been received for the project, and Piedmont broke ground last quarter. About 98 percent of the right-of-way has been acquired and 40 percent of the pipeline has been completed.
Piedmont increased its current forecast for utility CapEx for fiscal years 2013 and 2014 due to the execution of its transmission and distribution integrity programs for pipeline safety and integrity. Piedmont will need to retrofit some existing pipelines, and replace older transmission lines and upgrade them with new lines. It is also upgrading its LNG plants and enhancing infrastructure for reliability and growth.
Piedmont currently has about 100 trucks in its 900 truck fleet that run on compressed natural gas (CNG) and it expects to raise that number to 300 over the next few years. It will need to build additional infrastructure at its existing resource center to refuel those vehicles. It currently has 6 CNG refueling stations and will build 4 more in the next year, which will be open to the public. 300 vehicles now refuel at its 6 open CNG stations. It does not plan to target residential customers, but will allow anyone to purchase fuel at its pumps. The current price of natural gas is approximately $2 per gasoline gallon equivalent. The conversion cost for a vehicle is around $5,000 to $7,000.
Financials.
Margin in Q3 was $86.5 million, an increase of $2.5 million. Margin increased because of customer growth, an increase in rates in Tennessee, increased contribution from power generation and industrial customers, and increased wholesale marketing activity. Not all of the increase in power generation was from Wayne County coming online, although Wayne County was involved in 2 months of the quarter.
O&M expenses during Q3 were $59 million, an increase of $6 million from the same period last year. The increased expenses were due to higher incentive accruals, increased contract labor for integrity and safety programs, and higher pension and medical expense. Piedmont believes there will continue to be higher pension expenses due to low interest rates and wage/compensation pressure.
Income from joint ventures during Q3 was $3 million, an increase of $1 million. The increase is due to an increased contribution from SouthStar primarily resulting form lower gas costs and increased contributions from Cardinal Pipeline as a result of the expansion related to the Wayne County power generation delivery project.
Net loss in Q3 was $.06/share versus a loss of $.12/share a year ago. EPS guidance for full year 2012 is $1.58 to $1.68 per share. Although in the previous two quarters, Piedmont believed earnings would come in at the lower end of the range due to the unseasonably warm weather, the company now believes earnings will be in the middle of the range. It believes earnings will be higher than earlier predicted due to the favorable outcome from the Tennessee rate case, better-than-expected debt financing terms and prudent O&M expense control.
The transcript of the earnings conference call can be found on Seeking Alpha at the following link:
http://seekingalpha.com/article/857281-piedmont-natural-gas-management-discusses-q3-2012-results-earnings-call-transcript?page=3&p=qanda&l=last
Copyright 2012 Jaygo's Earnings Conference Call Summaries
This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Pingates
No comments:
Post a Comment