|
April 30, 2008 at 12:00 AM EDT
WGL Holdings, Inc., Reports Significant Increase in Second Quarter Fiscal Year 2008 Earnings and Raises Earnings Guidance
WASHINGTON, Apr 30, 2008 (BUSINESS WIRE) -- Consolidated Results WGL Holdings, Inc. (NYSE: WGL), the parent company of Washington Gas Light Company (Washington Gas) and other energy-related subsidiaries, today reported net income determined in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP) for the quarter ended March 31, 2008, of $81.0 million, or $1.63 per share, an increase of $17.6 million, or $0.34 per share, over net income of $63.4 million, or $1.29 per share, reported for the second quarter of fiscal year 2007. "This second consecutive fiscal quarter of sharply improved results further demonstrates our progress in achieving our strategic objectives and reinforces our outlook for an excellent year," said James H. DeGraffenreidt, Jr., chairman and chief executive officer of WGL Holdings. "A supportive regulatory framework that rewards shareholders and customers, the expansion of our asset optimization program, customer growth and strong unregulated margins will continue to drive fiscal year 2008 and long-term earnings growth." For the first six months of fiscal year 2008, we reported net income determined in accordance with GAAP of $128.2 million, or $2.58 per share, an increase of $19.7 million, or 0.37 per share, over net income of $108.5 million, or $2.21 per share, reported for the comparative period of fiscal year 2007. Our operations are seasonal and, accordingly, our operating results for the three and six months ended March 31, 2008, are not indicative of the results expected for the twelve months ending September 30, 2008. Financial performance is evaluated based on non-GAAP operating earnings (loss). Non-GAAP operating earnings (loss) excludes the effects of: (i) warmer-than-normal/colder-than-normal weather for our regulated utility segment; (ii) certain unusual transactions and (iii) unrealized mark-to-market gains (losses) on energy-related derivatives. 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 this non-GAAP financial measure, 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 second quarter of fiscal year 2008, our non-GAAP operating earnings were $1.66 per share, an increase of $0.40 per share over non-GAAP operating earnings of $1.26 per share for the same quarter of the prior fiscal year. For the six months ended March 31, 2008, our non-GAAP operating earnings were $2.61 per share, an increase of $0.45 per share over non-GAAP operating earnings of $2.16 per share for the same period of the prior fiscal year. Second Quarter and Year-to-Date Results by Business Segment Regulated Utility Segment Our regulated utility segment reported net income determined in accordance with GAAP of $78.0 million, or $1.57 per share, for the second quarter of fiscal year 2008, an increase of $12.4 million, or $0.24 per share, over net income of $65.6 million, or $1.33 per share for the same quarter of the preceding fiscal year. For the six months ended March 31, 2008, our regulated utility segment reported net income determined in accordance with GAAP of $122.2 million, or $2.46 per share, an increase of $13.6 million, or $0.25 per share, over net income of $108.6 million, or $2.21 per share, reported for the same period of the prior fiscal year. For the second quarter of fiscal year 2008, non-GAAP operating earnings for the regulated utility segment were $1.59 per share, an increase of $0.26 per share, over non-GAAP operating earnings of $1.33 for the same period of the prior fiscal year. Non-GAAP operating earnings for the regulated utility segment were $2.47 per share for the first six months of fiscal year 2008, a $0.31 per share increase over non-GAAP operating earnings of $2.16 per share for the same period last year. For both the three and six months comparisons, the increase in non-GAAP operating earnings is primarily due to: (i) the implementation of new rates in Virginia on February 13, 2007, in Maryland on November 27, 2007, and in the District of Columbia on December 31, 2007; (ii) an increase in realized margins from our asset optimization program; (iii) the favorable effects of changes in natural gas consumption patterns due to shifts in weather patterns and other factors and (iv) the addition of over 8,700 active customer meters since March 31, 2007. The increase in non-GAAP operating earnings for both periods in fiscal year 2008 is partially offset by the effect of our Earnings Sharing Mechanism in Virginia. The six month comparison also includes partial offsets related to higher uncollectible accounts expense primarily due to an adjustment to the accumulated reserve made in the prior period as well as higher property taxes in Virginia in the current period. Retail Energy-Marketing Segment The retail energy-marketing segment reported net income determined in accordance with GAAP of $3.6 million, or $0.07 per share, for the quarter ended March 31, 2008, an increase of $5.2 million, or $0.10 per share, over a net loss of $(1.6) million, or $(0.03) per share, reported for the same quarter of fiscal year 2007. For the first six months of fiscal year 2008, the retail energy marketing segment reported net income determined in accordance with GAAP of $6.8 million, or $0.14 per share, an increase of $5.7 million, or $0.12 per share, over net income of $1.1 million, or $0.02 per share, reported for the first six months of fiscal year 2007. Non-GAAP operating earnings for the retail energy-marketing segment were $0.07 per share for the second quarter ended March 31, 2008, a $0.12 per share improvement over a non-GAAP operating loss of $(0.05) per share for the same quarter of the prior fiscal year. For the first six months of fiscal year 2008, non-GAAP operating earnings were $0.16 per share, a $0.13 per share improvement over non-GAAP operating earnings of $0.03 per share for the same period of the prior year. Both the quarter and year-to-date improvements in non-GAAP operating earnings reflect higher margins per therm sold for natural gas, partially offset by lower margins from electric sales. Earnings Outlook We are updating our GAAP earnings estimate for the full fiscal year 2008 to a range of $2.34 to $2.44 per share. This estimate includes projected full fiscal year 2008 earnings from our regulated utility segment in a range of $2.07 per share to $2.13 per share and projected full fiscal year 2008 earnings from our unregulated business segments in a range of $0.27 per share to $0.31 per share. We are also raising our consolidated earnings estimate for the full fiscal year 2008 based on non-GAAP operating earnings to a range of $2.38 per share to $2.48 per share. This estimate includes projected full fiscal year 2008 non-GAAP operating earnings from our regulated utility segment in a range of $2.07 per share to $2.13 per share, and projected full fiscal year 2008 non-GAAP operating earnings from our unregulated business segments in a range of $0.31 per share to $0.35 per share. Refer to the "Reconciliation of GAAP Earnings Guidance to Non-GAAP Earnings Guidance" attached to this press release for a reconciliation of our GAAP earnings per share estimate to our estimate based on non-GAAP operating earnings per share. We assume no obligation to update this guidance. The absence of any statement by us in the future should not be presumed to represent an affirmation of this earnings guidance. For the assumptions underlying this guidance, please refer to the slides accompanying our Webcast that will be posted to the WGL Holdings Web site, www.wglholdings.com. Other Information We will hold a conference call at 10:30 a.m. Eastern time on May 1, 2008, to discuss our second quarter financial results. The live conference call will be available to the public via a link located on the WGL Holdings Web site, www.wglholdings.com. To hear the live Webcast, click on the "Webcast" link located on the home page of the referenced site. The Webcast and related slides will be archived on the WGL Holdings Web site through June 1, 2008. Headquartered in Washington, D.C., WGL Holdings has three operating segments: (i) the regulated utility segment which primarily consists of Washington Gas, a natural gas utility that serves over one million customers throughout metropolitan Washington, D.C., and the surrounding region; (ii) the retail-energy marketing segment which consists of Washington Gas Energy Services, Inc., a third-party marketer that competitively sells natural gas and electricity and (iii) the heating, ventilating and air conditioning (HVAC) segment, which consists of Washington Gas Energy Systems, Inc., a provider of design-build energy efficiency solutions to government and commercial clients. Additional information about WGL Holdings is available on our Web site. Unless otherwise noted, earnings per share amounts are presented on a diluted basis, and are based on weighted average common and common equivalent shares outstanding. Please see the attached comparative statements for additional information on our operating results. Also attached to this news release are reconciliations of net income determined in accordance with GAAP to non-GAAP operating earnings (loss) for both our consolidated and segment results as well as reconciliations of our GAAP earnings guidance to our non-GAAP earnings guidance. Forward-Looking Statements This news release and other statements by us include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the outlook for earnings, revenues and other future financial business performance or strategies and expectations. Forward-looking statements are typically identified by words such as, but not limited to, "estimates," "expects," "anticipates," "intends," "believes," "plans," and similar expressions, or future or conditional verbs such as "will," "should," "would," and "could." Although we believe such forward-looking statements are based on reasonable assumptions, we cannot give assurance that every objective will be achieved. Forward-looking statements speak only as of today, and we assume no duty to update them. Factors that could cause actual results to differ materially from those expressed or implied include, but are not limited to, general economic conditions and the factors discussed under the "Risk Factors" heading in our most recent annual report on Form 10-K and other documents filed with or furnished to the Securities and Exchange Commission.
WGL Holdings, Inc.
Consolidated Statements of Income
For Periods Ended March 31, 2008 and 2007
(Unaudited)
----------------------------------------------------------------------
Three Months Ended Six Months Ended
March 31, March 31,
----------------------------------------------------------------------
(In thousands, except
per share data) 2008 2007 2008 2007
----------------------------------------------------------------------
OPERATING REVENUES
Utility $ 671,391 $ 699,058 $1,133,341 $1,130,079
Non-utility 348,646 420,845 638,322 722,786
----------------------------------------------------------------------
Total Operating
Revenues 1,020,037 1,119,903 1,771,663 1,852,865
----------------------------------------------------------------------
OPERATING EXPENSES
Utility cost of gas 410,778 450,201 676,579 698,877
Non-utility cost of
energy-related
sales 333,936 415,004 609,479 704,847
Operation and
maintenance 70,836 77,373 139,685 139,978
Depreciation and
amortization 23,345 24,575 47,600 43,215
General taxes and
other assessments 36,133 36,834 63,376 62,280
----------------------------------------------------------------------
Total Operating
Expenses 875,028 1,003,987 1,536,719 1,649,197
----------------------------------------------------------------------
OPERATING INCOME 145,009 115,916 234,944 203,668
Other Income
(Expenses)--Net 560 717 1,148 545
Interest Expense
Interest on long-
term debt 9,976 10,042 19,956 20,050
Other - net 1,977 2,579 4,734 5,783
----------------------------------------------------------------------
Total Interest
Expense 11,953 12,621 24,690 25,833
Dividends on
Washington Gas
preferred stock 330 330 660 660
----------------------------------------------------------------------
INCOME BEFORE INCOME
TAXES 133,286 103,682 210,742 177,720
INCOME TAX EXPENSE 52,248 40,307 82,507 69,247
----------------------------------------------------------------------
NET INCOME APPLICABLE
TO COMMON STOCK $ 81,038 $ 63,375 $ 128,235 $ 108,473
======================================================================
AVERAGE COMMON SHARES
OUTSTANDING
Basic 49,462 49,163 49,437 49,066
Diluted 49,781 49,267 49,711 49,190
======================================================================
EARNINGS PER AVERAGE
COMMON SHARE
Basic 1.64 1.29 2.59 2.21
Diluted 1.63 1.29 2.58 2.21
======================================================================
Net Income (Loss) Applicable To Common Stock--By Segment ($000):
Regulated utility $ 77,972 $ 65,625 $ 122,174 $ 108,620
----------------------------------------------------------------------
Non-utility
operations:
Retail energy-
marketing 3,556 (1,589) 6,837 1,087
HVAC 251 41 524 138
----------------------------------------------------------------------
Total major non-
utility 3,807 (1,548) 7,361 1,225
Other activities (741) (702) (1,300) (1,372)
----------------------------------------------------------------------
Total non-utility 3,066 (2,250) 6,061 (147)
----------------------------------------------------------------------
NET INCOME APPLICABLE
TO COMMON STOCK $ 81,038 $ 63,375 $ 128,235 $ 108,473
======================================================================
WGL Holdings, Inc.
Consolidated Balance Sheets
March 31, 2008
(Unaudited)
----------------------------------------------------------------------
March 31, September 30,
(In thousands) 2008 2007
----------------------------------------------------------------------
ASSETS
Property, Plant and Equipment
At original cost $3,109,430 $ 3,072,935
Accumulated depreciation and amortization (940,704) (922,494)
----------------------------------------------------------------------
Net property, plant and equipment 2,168,726 2,150,441
----------------------------------------------------------------------
Current Assets
Cash and cash equivalents 18,495 4,870
Accounts receivable, net 553,922 192,021
Storage gas--at cost (first-in, first-
out) 84,646 294,889
Other 64,848 81,945
----------------------------------------------------------------------
Total current assets 721,911 573,725
----------------------------------------------------------------------
Deferred Charges and Other Assets 334,136 322,195
----------------------------------------------------------------------
Total Assets $3,224,773 $ 3,046,361
======================================================================
CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholders' equity $1,078,372 $ 980,767
Washington Gas Light Company preferred
stock 28,173 28,173
Long-term debt 597,432 616,419
----------------------------------------------------------------------
Total capitalization 1,703,977 1,625,359
----------------------------------------------------------------------
Current Liabilities
Notes payable and current maturities of
long-term debt 144,963 205,341
Accounts payable and other accrued
liabilities 291,446 216,861
Other 192,576 134,854
----------------------------------------------------------------------
Total current liabilities 628,985 557,056
----------------------------------------------------------------------
Deferred Credits 891,811 863,946
----------------------------------------------------------------------
Total Capitalization and Liabilities $3,224,773 $ 3,046,361
======================================================================
WGL Holdings, Inc.
Consolidated Financial and Operating Statistics
For Periods Ended March 31, 2008 and 2007
(Unaudited)
FINANCIAL STATISTICS
----------------------------------------------------------------------
Twelve Months Ended
March 31,
----------------------------------------------------------------------
2008 2007
----------------------------------------------------------------------
Closing Market Price--end of period $32.06 $31.98
52-Week Market Price Range $35.91-$29.79 $33.55-$27.04
Price Earnings Ratio 12.4 16.5
Annualized Dividends Per Share $1.42 $1.37
Dividend Yield 4.4% 4.3%
Return on Average Common Equity 12.2% 9.6%
Total Interest Coverage (times) (1) 5.3 4.3
Book Value Per Share--end of period $21.80 $20.49
Common Shares Outstanding--end of period
(thousands) 49,467 49,191
======================================================================
(1) Calculated using income from continuing operations.
UTILITY GAS STATISTICS
----------------------------------------------------------------------
Three Months Ended Six Months Ended
March 31, March 31,
----------------------------------------------------------------------
(In thousands) 2008 2007 2008 2007
----------------------------------------------------------------------
Operating Revenues
Gas Sold and Delivered
Residential - Firm $ 468,251 $ 490,098 $ 772,651 $ 771,584
Commercial and
Industrial - Firm 121,813 131,384 209,482 211,604
Commercial and
Industrial -
Interruptible 2,860 1,859 5,158 4,107
Electric Generation 275 275 542 550
----------------------------------------------------------------------
593,199 623,616 987,833 987,845
----------------------------------------------------------------------
Gas Delivered for
Others
Firm 56,028 53,515 96,423 97,580
Interruptible 15,982 17,811 28,821 31,101
Electric Generation 72 75 162 132
----------------------------------------------------------------------
72,082 71,401 125,406 128,813
----------------------------------------------------------------------
665,281 695,017 1,113,239 1,116,658
Other 6,110 4,041 20,102 13,421
----------------------------------------------------------------------
Total $ 671,391 $ 699,058 $1,133,341 $1,130,079
======================================================================
----------------------------------------------------------------------
Three Months Ended Six Months Ended
March 31, March 31,
----------------------------------------------------------------------
(In thousands of therms) 2008 2007 2008 2007
----------------------------------------------------------------------
Gas Sales and
Deliveries
Gas Sold and Delivered
Residential - Firm 314,357 337,446 513,339 520,230
Commercial and
Industrial - Firm 86,634 94,881 149,267 152,610
Commercial and
Industrial -
Interruptible 2,212 1,334 4,059 3,202
----------------------------------------------------------------------
403,203 433,661 666,665 676,042
----------------------------------------------------------------------
Gas Delivered for
Others
Firm 184,707 192,046 318,815 316,139
Interruptible 86,323 90,601 160,664 167,394
Electric Generation 14,761 17,002 35,030 27,113
----------------------------------------------------------------------
285,791 299,649 514,509 510,646
----------------------------------------------------------------------
Total 688,994 733,310 1,181,174 1,186,688
======================================================================
WASHINGTON GAS ENERGY SERVICES
----------------------------------------------------------------------
Natural Gas Sales
Therm Sales (thousands
of therms) 254,375 316,035 450,849 520,647
Number of Customers
(end of period) 140,700 140,700 140,700 140,700
----------------------------------------------------------------------
Electricity Sales
Electricity Sales
(thousands of kWhs) 871,604 1,007,252 1,771,073 1,906,981
Number of Accounts
(end of period) 68,300 69,600 68,300 69,600
======================================================================
UTILITY GAS PURCHASED EXPENSE
(excluding off system) 103.03 104.54 102.19 104.40
(cents) (cents) (cents) (cents)
======================================================================
HEATING DEGREE DAYS
----------------------------------------------------------------------
Actual 1,944 2,231 3,185 3,539
Normal 2,115 2,127 3,471 3,491
Percent Colder (Warmer)
than Normal (8.1)% 4.9% (8.2)% 1.4%
======================================================================
Number of Active
Customer Meters (end
of period) 1,061,484 1,052,774 1,061,484 1,052,774
======================================================================
UTILITY GAS STATISTICS
--------------------------------------------------
Twelve Months Ended
March 31,
--------------------------------------------------
(In thousands) 2008 2007
--------------------------------------------------
Operating Revenues
Gas Sold and Delivered
Residential - Firm $ 988,476 $ 946,124
Commercial and
Industrial - Firm 276,827 270,691
Commercial and
Industrial -
Interruptible 7,669 7,356
Electric Generation 1,100 1,099
--------------------------------------------------
1,274,072 1,225,270
--------------------------------------------------
Gas Delivered for Others
Firm 138,518 137,470
Interruptible 47,244 47,325
Electric Generation 323 271
--------------------------------------------------
186,085 185,066
--------------------------------------------------
1,460,157 1,410,336
Other 40,379 35,260
--------------------------------------------------
Total $1,500,536 $1,445,596
==================================================
--------------------------------------------------
Twelve Months Ended
March 31,
--------------------------------------------------
(In thousands of therms) 2008 2007
--------------------------------------------------
Gas Sales and Deliveries
Gas Sold and Delivered
Residential - Firm 641,810 621,865
Commercial and
Industrial - Firm 200,619 199,767
Commercial and
Industrial -
Interruptible 6,132 6,117
--------------------------------------------------
848,561 827,749
--------------------------------------------------
Gas Delivered for Others
Firm 436,096 420,917
Interruptible 260,575 260,245
Electric Generation 119,867 109,569
--------------------------------------------------
816,538 790,731
--------------------------------------------------
Total 1,665,099 1,618,480
==================================================
WASHINGTON GAS ENERGY SERVICES
--------------------------------------------------
Natural Gas Sales
Therm Sales (thousands
of therms) 655,667 716,553
Number of Customers (end
of period) 140,700 140,700
--------------------------------------------------
Electricity Sales
Electricity Sales
(thousands of kWhs) 3,807,936 3,400,483
Number of Accounts (end
of period) 68,300 69,600
==================================================
UTILITY GAS PURCHASED EXPENSE
(excluding off system) 101.30 101.29
(cents) (cents)
==================================================
HEATING DEGREE DAYS
--------------------------------------------------
Actual 3,601 3,816
Normal 3,795 3,813
Percent Colder (Warmer)
than Normal (5.1)% 0.1%
==================================================
Number of Active Customer
Meters (end of period) 1,061,484 1,052,774
==================================================
WGL Holdings, Inc. (Regulated Utility Segment)
For Periods Ended March 31, 2008 and 2007
(Unaudited)
Statements of Income
----------------------------------------------------------------------
Three Months Ended Six Months Ended
March 31, March 31,
----------------------------------------------------------------------
(In thousands) 2008 2007 2008 2007
----------------------------------------------------------------------
Operating Revenues $ 677,749 $707,662 $1,142,177 $1,141,012
----------------------------------------------------------------------
Operating Expenses:
Cost of gas 417,136 458,805 685,415 709,810
Operation 51,560 60,015 102,427 106,603
Maintenance 11,431 10,054 21,941 19,519
Depreciation and
amortization 23,134 24,339 47,180 42,890
General taxes and other
assessments:
Revenue taxes 21,593 22,833 37,046 38,110
Other 13,514 12,995 24,396 22,270
--------------------------------------- ------------------------------
Total operating
expenses 538,368 589,041 918,405 939,202
----------------------------------------------------------------------
Operating income 139,381 118,621 223,772 201,810
Other income (expenses) -
net 428 311 964 180
Interest expense 11,362 11,171 23,513 23,145
Dividends on Washington Gas
preferred stock 330 330 660 660
Income taxes 50,145 41,806 78,389 69,565
----------------------------------------------------------------------
Net income $ 77,972 $ 65,625 $ 122,174 $ 108,620
======================================================================
Utility Net Revenues ($000) (1)
Operating revenues $ 677,749 $707,662 $1,142,177 $1,141,012
Less: Cost of gas 417,136 458,805 685,415 709,810
Revenue taxes 21,593 22,833 37,046 38,110
----------------------------------------------------------------------
Utility net revenues $ 239,020 $226,024 $ 419,716 $ 393,092
======================================================================
(1) We analyze the operating results of our regulated utility segment
based on utility net revenues. Washington Gas Light Company
includes the cost of the natural gas commodity and revenue taxes
(comprised principally of gross receipts taxes) in its rates
charged to customers as reflected in operating revenues.
Accordingly, changes in the cost of gas and revenue taxes
associated with sales made to customers have no direct effect on
the net revenues or net income of the regulated utility segment.
WGL HOLDINGS, INC.
USE OF NON-GAAP OPERATING EARNINGS (LOSS)
(Unaudited)
The attached reconciliations are provided to clearly identify
adjustments made to net income calculated in accordance with
Generally Accepted Accounting Principles in the United States of
America (GAAP) to derive non-GAAP operating earnings (loss).
Management believes non-GAAP operating earnings (loss) provides a
more meaningful representation of our earnings from ongoing
operations by excluding the effects of: (i) warmer-than-
normal/colder-than-normal weather for our regulated utility segment;
(ii) certain unusual transactions and (iii) unrealized mark-to-market
gains and losses from energy-related derivatives. This presentation
facilitates analysis by providing a consistent and comparable measure
to help management, investors and analysts better understand and
evaluate our operating results and performance trends. Additionally,
we use this non-GAAP measure to report to the board of directors,
evaluate management's performance and for incentive compensation
purposes.
We exclude from non-GAAP operating earnings (loss) the effects of
warmer-than-normal/colder-than-normal weather to "normalize" weather
for our regulated utility segment. Utilization of normal weather is
an industry standard, and it is our practice to evaluate our rate-
regulated revenues by utilizing normal weather and to provide
estimates and guidance on the basis of normal weather. Additionally,
we exclude unrealized mark-to-market adjustments for our energy-
related derivatives to provide a more transparent and accurate view
of the ongoing financial results of our operations. When these
derivatives settle, the economic impact is reflected in our non-GAAP
operating results, as we are only removing the interim unrealized
mark-to-market amounts which are ultimately reversed when the
derivatives are settled. These non-GAAP adjustments also assist both
management and investors in analyzing period-to-period comparisons.
There are limits in using non-GAAP operating earnings (loss) to
analyze our results, as they are not prepared in accordance with GAAP
and may be different from non-GAAP financial measures used by other
companies. In addition, using non-GAAP operating earnings (loss) per
share to analyze our earnings may have limited value as it excludes
certain items that may have a material impact on our reported
financial results. We compensate for these limitations by providing
investors with the attached reconciliations to net income, the most
directly comparable GAAP financial measure.
WGL HOLDINGS, INC. (Consolidating by Segment)
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP OPERATING EARNINGS (LOSS)
(Unaudited)
----------------------------------------------------------------------
Six Months Ended March 31, 2008
----------------------------------------------------------------------
(In thousands, Retail
except per share Regulated Energy- Other
data) Utility Marketing HVAC Activities* Consolidated
----------------------------------------------------------------------
GAAP net income $122,174 $ 6,837 $ 524 $ (1,300) $ 128,235
Adjusted for
(items shown
after-tax):
Reversal of costs
related to
business process
outsourcing (a) (1,139) - - - (1,139)
Unrealized mark-
to-market loss
on energy-
related
derivatives (b) 3,062 1,046 - - 4,108
Other regulatory
adjustments (c) (1,242) - - - (1,242)
----------------------------------------------------------------------
Non-GAAP
operating
earnings (loss) $122,855 $ 7,883 $ 524 $ (1,300) $ 129,962
======================================================================
GAAP diluted
earnings (loss)
per average
common share
(49,711 shares) $ 2.46 $ 0.14 $0.01 $ (0.03) $ 2.58
Per share effect
of non-GAAP
adjustments 0.01 0.02 - - 0.03
----------------------------------------------------------------------
Non-GAAP
operating
earnings (loss)
per share $ 2.47 $ 0.16 $0.01 $ (0.03) $ 2.61
======================================================================
Six Months Ended March 31, 2007
----------------------------------------------------------------------
(In thousands, Retail
except per share Regulated Energy- Other
data) Utility Marketing HVAC Activities* Consolidated
----------------------------------------------------------------------
GAAP net income $108,620 $ 1,087 $ 138 $ (1,372) $ 108,473
Adjusted for
(items shown
after-tax):
Colder-than-
normal weather
(d) (1,173) - - - (1,173)
Retroactive
depreciation
expense
adjustment (e) (2,400) - - - (2,400)
Unrealized mark-
to-market loss
on energy-
related
derivatives (b) 1,035 434 - - 1,469
----------------------------------------------------------------------
Non-GAAP
operating
earnings (loss) $106,082 $ 1,521 $ 138 $ (1,372) $ 106,369
======================================================================
GAAP diluted
earnings (loss)
per average
common share
(49,190 shares) $ 2.21 $ 0.02 $ - $ (0.02) $ 2.21
Per share effect
of non-GAAP
adjustments (0.05) 0.01 - (0.01) (0.05)
----------------------------------------------------------------------
Non-GAAP
operating
earnings (loss)
per share $ 2.16 $ 0.03 $ - $ (0.03) $ 2.16
======================================================================
Quarter Ended March 31, 2008
----------------------------------------------------------------------
(In thousands, Retail
except per share Regulated Energy- Other
data) Utility Marketing HVAC Activities* Consolidated
----------------------------------------------------------------------
GAAP net income $ 77,972 $ 3,556 $ 251 $ (741) $ 81,038
Adjusted for
(items shown
after-tax):
Unrealized mark-
to-market loss
on energy-
related
derivatives (b) 1,419 76 - - 1,495
----------------------------------------------------------------------
Non-GAAP
operating
earnings (loss) $ 79,391 $ 3,632 $ 251 $ (741) $ 82,533
======================================================================
GAAP diluted
earnings (loss)
per average
common share
(49,781 shares) $ 1.57 $ 0.07 $0.01 $ (0.02) $ 1.63
Per share effect
of non-GAAP
adjustments 0.02 - - 0.01 0.03
----------------------------------------------------------------------
Non-GAAP
operating
earnings (loss)
per share $ 1.59 $ 0.07 $0.01 $ (0.01) $ 1.66
======================================================================
Quarter Ended March 31, 2007
----------------------------------------------------------------------
(In thousands, Retail
except per share Regulated Energy- Other
data) Utility Marketing HVAC Activities* Consolidated
----------------------------------------------------------------------
GAAP net income $ 65,625 $ (1,589) $ 41 $ (702) $ 63,375
Adjusted for
(items shown
after-tax):
Colder-than-
normal weather
(d) (1,173) - - - (1,173)
Unrealized mark-
to-market loss
(gain) on
energy-related
derivatives (b) 1,104 (994) - - 110
----------------------------------------------------------------------
Non-GAAP
operating
earnings (loss) $ 65,556 $ (2,583) $ 41 $ (702) $ 62,312
======================================================================
GAAP diluted
earnings (loss)
per average
common share
(49,267 shares) $ 1.33 $ (0.03) $ - $ (0.01) $ 1.29
Per share effect
of non-GAAP
adjustments - (0.02) - (0.01) (0.03)
----------------------------------------------------------------------
Non-GAAP
operating
earnings (loss)
per share $ 1.33 $ (0.05) $ - $ (0.02) $ 1.26
======================================================================
Footnotes ---------------------------------------------------------------------- * Per share amounts for "Other Activities" may include adjustments for rounding (Footnote references are described below)
WGL HOLDINGS, INC. (Consolidated by Quarter)
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP OPERATING EARNINGS (LOSS)
(Unaudited)
----------------------------------------------------------------------
Fiscal Year 2008
----------------------------------------------------------------------
Quarterly Period Ended (f)
----------------------------------------------------------------------
(In thousands, except Year-To-
per share data) Dec. 31 Mar. 31 Jun. 30 Sept. 30 Date
----------------------------------------------------------------------
GAAP net income $47,197 $81,038 $ 128,235
Adjusted for (items
shown after-tax):
Reversal of costs
related to business
process outsourcing
(a) (1,139) - (1,139)
Unrealized mark-to-
market loss on
energy-related
derivatives (b) 2,613 1,495 4,108
Other regulatory
adjustments (c) (1,242) - (1,242)
----------------------------------------------------------------------
Non-GAAP operating
earnings $47,429 $82,533 $ 129,962
======================================================================
Diluted average common
shares outstanding 49,645 49,781 49,711
======================================================================
GAAP diluted earnings
per average common
share $ 0.95 $ 1.63 $ 2.58
Per share effect of
non-GAAP adjustments 0.01 0.03 0.03
----------------------------------------------------------------------
Non-GAAP operating
earnings per share $ 0.96 $ 1.66 $ 2.61
======================================================================
Fiscal Year 2007
----------------------------------------------------------------------
Quarterly Period Ended (f)
----------------------------------------------------------------------
(In thousands, except Year-To-
per share data) Dec. 31 Mar. 31 Jun. 30 Sept. 30 Date
----------------------------------------------------------------------
GAAP net income $45,098 $63,375 $ 108,473
Adjusted for (items
shown after-tax):
Colder-than-normal
weather (d) - (1,173) (1,173)
Retroactive
depreciation expense
adjustment (e) (2,400) - (2,400)
Unrealized mark-to-
market loss on
energy-related
derivatives (b) 1,359 110 1,469
----------------------------------------------------------------------
Non-GAAP operating
earnings $44,057 $62,312 $ 106,369
======================================================================
Diluted average common
shares outstanding 49,130 49,267 49,190
======================================================================
GAAP diluted earnings
per average common
share $ 0.92 $ 1.29 $ 2.21
----------------------------------------------------------------------
Per share effect of
non-GAAP adjustments (0.02) (0.03) (0.05)
----------------------------------------------------------------------
Non-GAAP operating
earnings per share $ 0.90 $ 1.26 $ 2.16
======================================================================
Footnotes:
----------------------------------------------------------------------
(a) Represents the reversal of expenses that were incurred in prior
fiscal years for initial implementation costs allocable to the
District of Columbia associated with our business process
outsourcing plan. These costs were recorded to a regulatory asset
in the first quarter of fiscal year 2008 upon approval of 10-year
amortization accounting by the District of Columbia Public
Service Commission in a December 28, 2007 Final Order.
(b) Represents the change in the unrealized mark-to-market positions
of our energy-related derivatives that were recorded to income
during the period. For the regulated utility segment, to the
extent that our unrealized mark-to-market gains and losses are
not shared with customers, these amounts are recorded directly to
income. All unrealized mark-to-market gains and losses for the
retail-energy marketing segment are recorded directly to income.
(c) Represents favorable regulatory adjustments made during the first
quarter of fiscal year 2008 applicable to prior fiscal years due
to revised treatment for hexane costs in Maryland and certain
shared revenues in the District of Columbia.
(d) This adjustment is for our regulated utility segment only. Weather
was 8.1 percent colder than normal during the quarter ended March
31, 2007. There were no adjustments for weather in the first
quarter of fiscal year 2007.
(e) Represents an adjustment that reduced depreciation expense
applicable to the period from January 1, 2006, through September
30, 2006. This adjustment was recorded in the first quarter of
fiscal year 2007 upon approval of new depreciation rates by the
staff of the Virginia State Corporation Commission.
(f) Quarterly earnings per share may not sum to year-to-date or annual
earnings per share as quarterly calculations are based on
weighted average common and common equivalent shares outstanding,
which may vary for each of those periods.
WGL HOLDINGS, INC.
RECONCILIATION OF GAAP EARNINGS GUIDANCE TO
NON-GAAP EARNINGS GUIDANCE
FISCAL YEAR ENDING SEPTEMBER 30, 2008
Consolidated
----------------------------------------------------------------------
Low High
----------------------------------------------------------------------
GAAP Earnings Guidance Range $ 2.34 $ 2.44
Adjusted for:
Reversal of costs related to business process
outsourcing (a) (0.02) (0.02)
Unrealized mark-to-market loss on energy-related
derivatives (b) 0.09 0.09
Other regulatory adjustments (c) (0.02) (0.02)
Other adjustment (d) (0.01) (0.01)
----------------------------------------------------------------------
Non-GAAP Earnings Guidance Range $ 2.38 $ 2.48
======================================================================
Regulated Utility Segment
----------------------------------------------------------------------
Low High
----------------------------------------------------------------------
GAAP Earnings Guidance Range $ 2.07 $ 2.13
Adjusted for:
Reversal of costs related to business process
outsourcing (a) (0.02) (0.02)
Unrealized mark-to-market loss on energy-related
derivatives (b) 0.05 0.05
Other regulatory adjustments (c) (0.02) (0.02)
Other adjustment (d) (0.01) (0.01)
----------------------------------------------------------------------
Non-GAAP Earnings Guidance Range $ 2.07 $ 2.13
======================================================================
Unregulated Business Segments
----------------------------------------------------------------------
Low High
----------------------------------------------------------------------
GAAP Earnings Guidance Range $ 0.27 $ 0.31
Adjusted for:
Unrealized mark-to-market loss on energy-related
derivatives (b) 0.04 0.04
----------------------------------------------------------------------
Non-GAAP Earnings Guidance Range $ 0.31 $ 0.35
======================================================================
Footnotes:
----------------------------------------------------------------------
(a) Represents the reversal of expenses that were incurred in prior
fiscal years for initial implementation costs allocable to the
District of Columbia associated with our business process
outsourcing plan. These expenses were reversed in the first
quarter of fiscal year 2008 due to the approval of 10-year
amortization accounting by the District of Columbia Public
Service Commission in a December 28, 2007 Final Order.
(b) Represents the estimated reversal of certain of our existing
unrealized mark-to-market positions related to our energy
derivatives that will be recorded to income during fiscal year
2008. For the regulated utility segment, to the extent that our
unrealized mark-to-market gains and losses are not shared with
customers, these amounts are recorded directly to income. All
unrealized mark-to-market gains and losses for the retail-energy
marketing segment are recorded directly to income.
(c) Represents favorable regulatory adjustments made during the first
quarter of fiscal year 2008 applicable to prior fiscal years due
to revised treatment for hexane costs in Maryland and certain
shared revenues in the District of Columbia.
(d) Adjustment due to rounding differences in per share amounts.
SOURCE: WGL Holdings, Inc. WGL Holdings, Inc. News Media Eric Grant, 202-624-6091 or Financial Community Melissa E. Adams, 202-624-6410 Copyright Business Wire 2008 News Provided by COMTEX |
