WGL Holdings, Inc. Logo

Print Print page   E-mail E-mail page   PDF Download PDF
« Previous Release | Next Release »



WGL Holdings, Inc. Reports Increased First Quarter Earnings and Raises Fiscal Year 2005 Earnings Guidance

WASHINGTON, Feb. 3 /PRNewswire-FirstCall/ -- WGL Holdings, Inc. (NYSE: WGL) (the Company), the parent company of Washington Gas Light Company and other energy-related subsidiaries, today reported net income of $43.1 million, or $0.88 per share, for the three months ended December 31, 2004, the first quarter of its fiscal year 2005. This represents a $3.6 million, or $0.07 per share, increase over net income reported of $39.5 million, or $0.81 per share, for the three months ended December 31, 2003. Unless otherwise noted, earnings per share amounts are presented in this news release on a diluted basis, and are based on weighted average common and common equivalent shares outstanding.

Excluding the effects of unique transactions described below, the Company's consolidated earnings from normal operations for the first quarter of fiscal year 2005 were $0.88 per share, a $0.03 per share increase over earnings from normal operations of $0.85 per share reported for the same quarter of fiscal year 2004. While there were no unique transactions in the current quarter, earnings from normal operations for the first quarter of fiscal year 2004 exclude the effect of additional depreciation expense unrelated to that period of $3.5 million (pre-tax), or $0.04 per share, that was recorded in connection with a Virginia rate order. The $0.03 per share increase in earnings from normal operations for the current quarter was due primarily to customer growth, the impact of favorable regulatory decisions and reduced income tax expense, partially offset by the impact of lower natural gas deliveries and lower earnings from the Company's non-utility operations. The Company reviews its financial results from normal operations (based on normal weather, and uninfluenced by unique transactions) to monitor its progress towards achieving its five-year financial objectives. A reconciliation of the Company's earnings per share reported in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP) to earnings per share from normal operations is attached to this press release.

Commenting on first quarter results and the outlook for the year, WGL Holdings' Chairman and CEO James H. DeGraffenreidt, Jr. said, "Our strong first quarter earnings resulted from continued customer growth and our success in implementing new utility rates that more accurately reflect our cost of providing safe and reliable service." DeGraffenreidt added, "We are poised to deliver strong financial results in fiscal year 2005 as we capitalize on the growth of our region and opportunities to operate our businesses more efficiently."

Three Months Ended December 31, 2004

Regulated Utility Operations

The operating results of the Company's regulated utility segment are the primary influence on overall consolidated operating results. For the first three months of fiscal year 2005, the regulated utility segment reported net income of $39.8 million, or $0.81 per share, an increase of $5.1 million, or $0.10 per share, over net income of $34.7 million, or $0.71 per share, reported for the same quarter of the prior fiscal year. The effect of the additional depreciation expense of $3.5 million (pre-tax) recorded in the first quarter of fiscal year 2004, as previously discussed, improved the comparison of results for the first quarter of fiscal year 2005 to the results for the same quarter of the prior fiscal year by $0.04 per share.

Net utility revenues increased $478,000 during the first quarter of fiscal year 2005 when compared to the same quarter of the prior fiscal year. This increase primarily was attributable to the addition of 27,874 active customer meters, an increase of 2.8 percent, from the end of the same quarter of the prior fiscal year. The 2005 first quarter also benefited $0.03 per share from realizing a full quarter's effect of favorable changes in rates charged to customers that were implemented in Maryland on November 6, 2003 and the District of Columbia on November 24, 2003.

The regulated utility's operations are weather sensitive, with a significant portion of its revenue coming from deliveries of natural gas to residential and commercial heating customers. Weather, when measured by heating degree days, was approximately two percent colder than normal for the first quarter of both fiscal years 2005 and 2004. Although heating degree days were essentially unchanged this first quarter when compared to the same quarter of the prior fiscal year, total gas deliveries to firm customers fell 7.5 million therms, or two percent, to 394.5 million therms during the current quarter. Due to the relatively small number of normal heating degree days that occur in the initial part of the Company's first fiscal quarter, actual degree days during this period may not correlate closely with total gas deliveries. The decline in total gas deliveries that occurred during the current quarter, net of increased deliveries due to customer growth, reduced net income for the first quarter of fiscal year 2005 by an estimated $1 million, or $0.02 per share.

First quarter 2005 earnings for the regulated utility segment reflect a one percent increase in operation and maintenance expenses of $790,000, reducing earnings per share by $0.01 per share when compared to the first quarter of fiscal year 2004. Higher employee benefit costs were mostly offset by reduced labor costs due to nine percent fewer employees.

The regulated utility segment benefited during the current quarter from reduced income taxes due to a lower effective federal income tax rate (primarily attributable to a non-taxable benefit of a Medicare prescription drug subsidy), lower general taxes and lower financing costs. Together these items contributed an additional $0.06 per share of increased earnings for this segment.

Non-Utility Operations

The Company's non-utility operations reported net income of $3.3 million, or $0.07 per share, for the three months ended December 31, 2004, as compared to net income of $4.9 million, or $0.10 per share, reported for the same three-month period of the prior fiscal year. The retail energy-marketing segment reported net income of $4.1 million, or $0.09 per share, for the current three-month period, compared to $4.8 million, or $0.10 per share, reported for the same three-month period of the prior fiscal year. The decline in year-over-year earnings primarily reflects lower gross margins from the sale of natural gas that resulted largely from the volatility in the price of natural gas during the current quarter, which necessitated mark-to-market accounting adjustments on certain contracts used to hedge this segment's supply risks. Electric sales volumes for the current quarter were lower than the comparable quarter of the prior fiscal year due to increased competition from other retail energy-marketers, as well as from below-market utility rates, that reduced sales to large commercial and governmental customers. The lower electric sales volumes in the current quarter were substantially offset by a higher electric margin per kilowatt-hour sold. The Company believes there may be future opportunities to rebuild the electric customer base as utility service offerings are periodically reset to market rates.

The Company's commercial heating, ventilating and air conditioning (HVAC) segment reported a net loss of $432,000 or $0.01 per share, for the first quarter of fiscal year 2005, relatively unchanged from the net loss of $498,000, or $0.01 per share, reported for the same quarter of the prior fiscal year.

Earnings Outlook

The Company raised its consolidated earnings estimate for the full fiscal year 2005 to a range of $1.83 to $1.93 per share, from its previous guidance of $1.79 to $1.89 per share. This updated estimate includes an increase in projected earnings from its unregulated businesses to a range of $0.09 to $0.13 per share, from the previous range of $0.04 to $0.08 per share. The annual guidance for the consolidated entity includes estimated earnings for the second quarter of fiscal year 2005 of $1.40 to $1.46 per share, which reflects projected earnings from the Company's unregulated businesses of $0.01 to $0.03 per share. This guidance includes the estimated effect of actual weather through January 31, 2005 and assumes normal weather thereafter. These estimates also assume no effect that may result from performing earnings tests pursuant to a December 18, 2003 rate order issued by the State Corporation Commission of Virginia, and exclude the effect of unusual items that could arise in the future.

Other Information

The Company will hold a conference call at 10:30 a.m. Eastern time on February 4, 2005, to discuss its first quarter financial results. The live conference call will be available to the public via a link located on the WGL Holdings Web site, http://www.wglholdings.com. To hear the live Webcast, click on the Live Webcast icon located on the home page of the referenced site. The Webcast will be archived for replay on the WGL Holdings Web site through March 4, 2005.

Headquartered in Washington, D.C., WGL Holdings is the parent company of Washington Gas Light Company, a natural gas utility that serves approximately one million customers throughout metropolitan Washington, D.C., and the surrounding region. In addition, it holds a group of energy-related retail businesses that focus primarily on retail energy-marketing and commercial heating, ventilating and air conditioning services.

Additional information about WGL Holdings is available on its Web site, http://www.wglholdings.com.

Note: This news release and other statements by the Company 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 the Company believes such forward-looking statements are based on reasonable assumptions, it cannot give assurance that every objective will be achieved. Forward-looking statements speak only as of today, and the Company assumes no duty to update them.

As previously disclosed in the Company's filings with the Securities and Exchange Commission, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: variations in weather conditions from normal levels; changes in economic, competitive, political and regulatory conditions and developments; changes in capital and energy commodity market conditions; changes in credit ratings of debt securities of WGL Holdings, Inc. or Washington Gas Light Company that may affect access to capital or the cost of debt; changes in credit market conditions and creditworthiness of customers and suppliers; changes in relevant laws and regulations, including tax, environmental and employment laws and regulations; legislative, regulatory and judicial mandates and decisions; timing and success of business and product development efforts; technological improvements; the pace of deregulation efforts and the availability of other competitive alternatives; terrorist activities; and other uncertainties. The outcome of negotiations and discussions the Company may hold with other parties from time to time regarding utility and energy- related investments and strategic transactions that are both recurring and non-recurring may also affect future performance. For a further discussion of the risks and uncertainties, see the Company's most recent annual report on Form 10-K filed with the Securities and Exchange Commission.

    Please see the following comparative statements for additional
information.  Also attached is a reconciliation of the Company's earnings per
share reported in accordance with GAAP to earnings per share from normal
operations.



                              WGL Holdings, Inc.
                      Consolidated Statements of Income
                 For Periods Ended December 31, 2004 and 2003
                                 (Unaudited)


                                  Three Months Ended    Twelve Months Ended
                                    December 31,           December 31,
    (In thousands, except per
    share data)                   2004       2003        2004         2003

    UTILITY OPERATIONS
      Operating Revenues       $408,951   $375,314   $1,301,585   $1,301,378
        Less:  Cost of gas      228,611    198,778      698,801      702,803
               Revenue taxes     17,095     13,769       53,405       44,448
         Utility Net Revenues   163,245    162,767      549,379      554,127

      Other Operating Expenses
        Operation and
         maintenance             55,998     55,208      227,541      216,330
        Depreciation and
         amortization            22,196     25,205       88,501       89,139
        General taxes             9,057      9,871       35,730       38,104
        Income taxes             24,037     24,758       57,742       65,491
         Utility Other
          Operating Expenses    111,288    115,042      409,514      409,064
         Utility Operating
          Income                 51,957     47,725      139,865      145,063

    NON-UTILITY OPERATIONS
     Operating Revenues
      Retail energy-marketing   205,288    202,258      792,889      754,548
      Heating, ventilating and
       air conditioning (HVAC)    9,518      7,534       32,107       32,465
      Other non-utility
       activities                   294        183        1,784        1,124
         Total Non-Utility
          Operating Revenues    215,100    209,975      826,780      788,137

     Operating Expenses
      Non-utility operating
       expenses                 209,326    202,792      822,706      785,217
      Income tax expense
       (benefit)                  2,239      2,524        1,890         (500)
         Total Non-Utility
          Operating Expenses    211,565    205,316      824,596      784,717
         Non-Utility Operating
          Income                  3,535      4,659        2,184        3,420

    TOTAL OPERATING INCOME       55,492     52,384      142,049      148,483
    Other Income (Expenses) --
     Net                           (999)      (920)       3,082         (827)

    INCOME BEFORE INTEREST
     EXPENSE                     54,493     51,464      145,131      147,656
    Interest expense             11,031     11,591       43,585       46,073
    Dividends on Washington
     Gas preferred stock            330        330        1,320        1,320
    NET INCOME                  $43,132    $39,543     $100,226     $100,263

    AVERAGE COMMON SHARES
     OUTSTANDING
             Basic               48,669     48,624       48,653       48,599
             Diluted             48,936     48,812       48,879       48,780

    EARNINGS PER AVERAGE
     COMMON SHARE
             Basic                $0.89      $0.81        $2.06        $2.06
             Diluted              $0.88      $0.81        $2.05        $2.06



         Net Income Applicable To Common Stock -- By Segment ($000):

    Regulated utility                    $39,803  $34,679   $94,075   $96,804

    Non-utility operations:
      Retail energy-marketing              4,108    4,810     7,578     4,254
      Commercial HVAC                       (432)    (498)   (5,330)   (1,297)
        Total major non-utility            3,676    4,312     2,248     2,957
      Other, principally non-utility
       activities                           (347)     552     3,903       502
         Total non-utility                 3,329    4,864     6,151     3,459
    NET INCOME                           $43,132  $39,543  $100,226  $100,263



                              WGL Holdings, Inc.
                         Consolidated Balance Sheets
                          December 31, 2004 and 2003
                                 (Unaudited)

                                                         December 31,
    (In thousands)                                 2004              2003

    ASSETS
    Property, Plant and Equipment
       At original cost                         $2,690,018        $2,583,543
       Accumulated depreciation and
        amortization                              (767,771)         (707,263)
          Net property, plant and equipment      1,922,247         1,876,280

    Current Assets
       Cash and cash equivalents                    10,725             9,252
       Accounts receivable, net                    374,120           390,312
       Storage gas -- at cost (first-in,
        first-out)                                 198,673           144,595
       Other                                        47,659            46,887
          Total current assets                     631,177           591,046
    Deferred Charges and Other Assets              216,487           192,626
          Total Assets                          $2,769,911        $2,659,952


    CAPITALIZATION AND LIABILITIES
    Capitalization
       Common shareholders' equity                $881,344          $842,740
       Washington Gas Light Company
        preferred stock                             28,173            28,173
       Long-term debt                              573,721           637,610
          Total capitalization                   1,483,238         1,508,523

    Current Liabilities
       Notes payable and current maturities
        of long-term debt                          221,181           198,444
       Accounts payable                            236,516           218,054
       Other                                       169,497           135,343
          Total current liabilities                627,194           551,841
    Deferred Credits                               659,479           599,588
          Total Capitalization and Liabilities  $2,769,911        $2,659,952



                              WGL Holdings, Inc.
               Consolidated Financial and Operating Statistics
                 For Periods Ended December 31, 2004 and 2003
                                 (Unaudited)

    COMMON STOCK DATA
                                December 31, 2004               52 Week
                                  Closing Price               Price Range

                                      $30.84                $31.43 - $26.66

                                 Earnings Per Share
                                 Twelve Months Ended          Annualized
                                    December 31,         P/E   Dividend  Yield
                                 2004         2003

    Basic                       $2.06        $2.06      15.0    $1.30     4.2%
    Diluted                     $2.05        $2.06



    FINANCIAL STATISTICS
                                                  Twelve Months Ended
                                         December 31,             December 31,
                                            2004                       2003

    Return on Average Common Equity         11.6 %                     12.2 %
    Total Interest Coverage  (times)         4.6                        4.6
    Book Value Per Share (end of period)  $18.11                     $17.33
    Common Shares Outstanding -- end of
     period (thousands)                   48,674                     48,634



    UTILITY GAS STATISTICS
                            Three Months Ended         Twelve Months Ended
                               December 31,                December 31,
    (In thousands)          2004         2003           2004         2003

    Operating Revenues
      Gas Sold and
       Delivered
        Residential --
         Firm             $252,237     $237,677      $807,559      $758,555
        Commercial and
         Industrial --
         Firm               90,634       72,776       263,100       246,480
        Commercial and
         Industrial --
         Interruptible       2,342        2,793         7,127         9,680
        Electric Generation    275          142         1,100           967
                           345,488      313,388     1,078,886     1,015,682
      Gas Delivered for
       Others
        Firm                43,357       45,369       148,536       157,074
        Interruptible       10,020       10,339        33,754        31,594
        Electric Generation     54           79           253           342
                            53,431       55,787       182,543       189,010
                           398,919      369,175     1,261,429     1,204,692
      Other                 10,032        6,139        40,156        96,686
         Total            $408,951     $375,314    $1,301,585    $1,301,378



                             Three Months Ended        Twelve Months Ended
                                December 31,               December 31,
    (In thousands of
     therms)                 2004         2003          2004          2003

    Gas Sales and
     Deliveries
      Gas Sold and
       Delivered
        Residential --
         Firm              183,626      197,387       615,967       630,706
        Commercial and
         Industrial --
         Firm               73,188       69,256       230,339       233,700
        Commercial and
         Industrial --
         Interruptible       2,156        3,022         6,760        10,698
                           258,970      269,665       853,066       875,104
      Gas Delivered for
       Others
        Firm               137,719      135,424       456,844       476,498
        Interruptible       77,498       81,894       264,087       256,669
        Electric Generation  9,307       10,568        39,791        55,390
                           224,524      227,886       760,722       788,557
          Total            483,494      497,551     1,613,788     1,663,661

    WASHINGTON GAS
     ENERGY SERVICES
      Natural Gas Sales
       Therm Sales
        (thousands of
         therms)           204,364      207,770       713,171       710,765

       Number of
        Customers
        (end of period)    147,100      155,500       147,100       155,500

      Electricity Sales
       Electricity Sales
        (thousands of
         kWhs)             776,828    1,714,115     5,721,639     7,339,594

       Number of Accounts
        (end of period)     41,600       61,000        41,600        61,000

    UTILITY GAS
     PURCHASED EXPENSE
     (excluding off
      system)                88.57 c      71.66 c       80.97 c       72.94 c

    HEATING DEGREE DAYS
      Actual                 1,389        1,388         4,025         4,295
      Normal                 1,359        1,362         3,789         3,803
     Percent Colder
      than Normal              2.2 %        1.9 %         6.2 %        12.9 %

     Number of Active
      Customer Meters
      (end of period)    1,006,227      978,353     1,006,227       978,353



            RECONCILIATION OF REPORTED GAAP EARNINGS PER SHARE AND
                         ADJUSTED EARNINGS PER SHARE
                                 (Unaudited)

                               February 3, 2005

The reconciliation below is provided to demonstrate management's utilization of historical earnings per share, as derived in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), and adjusted earnings per share from normal operations, a non-GAAP measure. This reconciliation is provided to more clearly identify the Company's results from normal operations and identify certain unique transactions that are not expected to repeat. This information should assist investors and analysts to track progress towards achieving the Company's five- year objectives, which are based on normal weather and uninfluenced by single, one-time, non-repeating transactions.

Utilization of normal weather is an industry standard, and it is Company practice to provide estimates and guidance on the basis of normal weather. Actual performance and results may vary from normal weather projections, and the Company consistently identifies and explains this variation to assist users in the analysis of actual results versus the guidance. There may be other uses for the data, and the Company does not imply that this is the only use or the best use of this data for purposes of this analysis.

            Reconciliation of Reported GAAP Earnings Per Share to
              Adjusted Earnings Per Share from Normal Operations
                         Fiscal Year 2005 By Quarter


                                          Actual Fiscal Year 2005 Results
                                                   Quarter Ended
                                                                       Year-
                                          Dec.  Mar.    Jun.  Sept.     To-
                                           31    31      30    30      Date

    GAAP diluted earnings per share      $0.88                         $0.88
    Adjustments                              -                             -

    Adjusted diluted earnings per
     share from normal operations        $0.88                         $0.88

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 shares outstanding which may vary for each of those periods.


            Reconciliation of Reported GAAP Earnings Per Share to
              Adjusted Earnings Per Share from Normal Operations
                         Fiscal Year 2004 By Quarter


                                          Actual Fiscal Year 2004 Results
                                                   Quarter Ended
                                                                       Year-
                                          Dec.  Mar.    Jun.  Sept.     To-
                                           31    31      30    30      Date

    GAAP diluted earnings per share      $0.81                         $0.81
    Adjustments:

    Retroactive depreciation related
     to the period from 1/02 - 11/02,
     per Virginia rate order              0.04                          0.04

    Adjusted diluted earnings per
     share from normal operations        $0.85                         $0.85

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 shares outstanding which may vary for each of those periods.

SOURCE  WGL Holdings, Inc.
    -0-                             02/03/2005
    /CONTACT:  News Media: Tim Sargeant, +1-202-624-6043, pager:
+1-202-825-7051, or Financial Community: Melissa E. Adams, +1-202-624-6410,
both of WGL Holdings, Inc./
    /Web site:  http://www.wglholdings.com /
    (WGL)

CO:  WGL Holdings, Inc.; Washington Gas Light Company
ST:  District of Columbia
IN:  OIL UTI
SU:  ERN ERP CCA

MV-JA
-- DCTH018 --
6595 02/03/2005 18:19 EST http://www.prnewswire.com
  
  
  

Close window | Back to top