AGL Resources Reports Second Quarter Earnings.ATLANTA Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. -- AGL Resources AGL Resources, Inc. is a Fortune 1000, Forbes 2000 energy services holding company. Their principal business is distribution of natural gas in Florida, Georgia, Maryland, New Jersey, Tennessee and Virginia, providing gas for more than 2.2 million customers. Inc. (NYSE NYSE See: New York Stock Exchange : ATG ATG antithymocyte globulin. lymphocyte immune globulin (antithymocyte globulin equine, ATG, ATG equine, LIG) Atgam Pharmacologic class: Immunoglobulin Therapeutic class: Immunosuppressant ) today reported second quarter 2005 net income of $24 million compared with $21 million reported for the second quarter of 2004, a $3 million increase. The company's results reflect improved earnings in its Wholesale Services, Distribution Operations and Energy Investments operating segments which were offset slightly by lower earnings in the Retail Energy Operations segment, as well as higher interest expense during the quarter. "The double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. improvement in consolidated earnings in the second quarter should reinforce investor confidence in our commitment to drive performance in base and acquired businesses," said Paula PAULA Possession of Alcohol Under the Legal Age Rosput Reynolds, chairman, president and chief executive officer of AGL Resources. "Even in a shoulder quarter, with relatively more seasonality in our northern utilities, we remain solidly on plan for 2005." The earnings generated $0.31 per basic share ($0.30 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share) for the current quarter compared with $0.34 per basic share ($0.33 per diluted share), reported for the second quarter of 2004. These earnings per share results reflect the seasonality in quarterly earnings contributions inherent in the company's newly-acquired New Jersey and Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). utility operations and the effect of the company's November November: see month. 2004 11-million share equity offering principally to finance various acquisitions. Earnings per share for the quarter are based on weighted average shares outstanding of 77.1 million, while 2004 second quarter earnings per share were based on weighted average shares outstanding of 64.8 million. The company's consolidated earnings before interest and taxes In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.[1] EBIT = Operating Revenue – Operating Expenses + Non-operating Income (EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). ) for the second quarter of 2005 were $64 million, compared with $51 million in the same period last year. QUARTERLY RESULTS BY BUSINESS SEGMENT Distribution Operations The Distribution Operations segment contributed EBIT of $52 million as compared with $49 million in second quarter 2004, a $3 million or 6 percent year-over-year increase. The performance of the NUI (1) (Network User Interface) A user interface for a computer attached to the network. The NUI is designed to work with remote applications and files as easily as local files. utility assets (principally Elizabethtown Elizabethtown, city (1990 pop. 18,167), seat of Hardin co., central Ky.; inc. 1797. Originally developed as a trade center for agriculture, whiskey, and tobacco, the city now manufactures a variety of products. Gas and Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and City Gas) contributed $2 million of the $3 million increased EBIT. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: was $179 million for the quarter, up $39 million or 28 percent from the same period last year, of which $36 million came from the acquired NUI utilities. Atlanta Gas Light Atlanta Gas Light Company (AGLC), commonly known as Atlanta Gas Light, is the largest natural gas wholesaler in the Southeast U.S., and is the AGL in AGL Resources. It was founded in 1856 and is headquartered in Atlanta, as is AGL Resources. contributed the remainder of the operating margin increase as a result of higher revenues from the pipeline replacement program and gas stored for marketers. Customer growth in the Atlanta Gas Light service territory offset the second quarter 2005 $1 million reduction in operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. resulting from the June June: see month. 10, 2005 Settlement Agreement with the Georgia Georgia, country, Asia Georgia (jôr`jə), Georgian Sakartvelo, Rus. Gruziya, officially Republic of Georgia, republic (2005 est. pop. 4,677,000), c.26,900 sq mi (69,700 sq km), in W Transcaucasia. Public Service Commission (GPSC GPSC Georgia Public Service Commission GPSC General Purpose System Console ) resolving Atlanta Gas Light's 2004-2005 rate case. Total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased $36 million or 39 percent as compared to last year, with the addition of the NUI utilities contributing $35 million of the increase. Atlanta Gas Light contributed the remainder of the increase principally as a result of higher depreciation expense. Retail Energy Operations The Retail Energy Operations segment, which is comprised of SouthStar SouthStar (born ca. 1980 in Hawaii as Robert Campman) is an Asian American hip-hop artist who is best known for his music in the hip-hop duo Smilez and Southstar based in Orlando, Florida. Southstar is Chinese/Filipino-American. Energy Services, is a new operating segment established in the first quarter of 2005. Previously, SouthStar was included in the Energy Investments operating segment. AGL Resources added this new operating segment in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the requirements of Statement of Financial Accounting Standard No 131, Disclosures about Segments of an Enterprise and Related Information, in order to provide more transparency (1) The quality of being able to see through a material. The terms transparency and translucency are often used synonymously; however, transparent would technically mean "seeing through clear glass," while translucent would mean "seeing through frosted glass." See alpha blending. and visibility into the results and operations of SouthStar, as well as the results and operations of those businesses comprising the Energy Investments segment, including Jefferson Jefferson, uninc. city (1990 pop. 25,782), Fairfax co., N Va. It is a residential suburb of Washington, D.C. Island Storage & Hub (Jefferson Island) and Pivotal Propane of Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). . Retail Energy Operations contributed EBIT of $6 million in second quarter 2005 as compared to $7 million in the comparable prior year quarter, a decrease of $1 million or 14 percent. The decreased EBIT was primarily the result of higher operating expenses of $1 million due to increased marketing activities related to customer acquisition and care. Operating margin for SouthStar was flat for the second quarter 2005 as compared to last year. Greater retail spreads on natural gas sold were offset by lower revenues due to lower usage in 2005 compared to 2004 as a result of warmer than normal weather in 2005 and decreased late payment fees resulting from an increase in the minimum balance (from $10 to $30) on which SouthStar is allowed to charge a late fee in accordance with new GPSC regulations. Wholesale Services The Wholesale Services segment contributed $2 million in EBIT for the second quarter as compared to a prior year EBIT loss of $5 million. The $7 million quarter-over-quarter EBIT improvement was driven primarily by a $9 million increase in operating margin offset by increased operating expenses of $2 million. The improvement in operating margin in the 2005 quarter was a result of operating margin being flat in the second quarter of 2004 due to lower volatility and fewer storage arbitrage arbitrage: see foreign exchange. arbitrage Business operation involving the purchase of foreign currency, gold, financial securities, or commodities in one market and their almost simultaneous sale in another market, in order to profit from price opportunities for Sequent (Sequent Computer Systems, Inc., Beaverton, OR, www.sequent.com) A computer company founded in 1983 by 17 ex-employees of Intel that specialized in multiprocessing systems for the client/server environment. Energy Management (Sequent) as compared to a more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. pricing and a more volatile natural gas market in the current quarter. The improved natural gas market conditions in the second quarter of 2005 led to increased operating margin associated with affiliated asset management and origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real activities, including the recognition of unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. on financial instruments utilized to lock-in (standard) lock-in - When an existing standard becomes almost impossible to supersede because of the cost or logistical difficulties involved in convincing all its users to switch something different and, typically, incompatible. operating margins on natural gas inventory held in storage. Operating expenses increased during the current quarter as compared to last year as a result of higher payroll and related benefit costs due to increased headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. and as a result of higher depreciation expense due to the implementation of Sequent's new Energy Trading and Risk Management system that was not in-service in-service In-service training adjective Referring to any form of on-the-job training noun In-service training of an employee in the second quarter of last year. Energy Investments The Energy Investments segment contributed EBIT of $5 million for the second quarter of 2005 compared with $2 million in the second quarter of 2004, a $3 million increase driven by $4 million in EBIT contributions from the 2004 acquisitions of Jefferson Island and the NUI assets of Saltville Gas Storage Company and Virginia Gas Company, as well as contributions from Pivotal Propane of Virginia which became operational in April 2005. AGL (programming) AGL - (Atelier de Genie Logiciel) French for IPSE. Networks also contributed a $2 million increase in EBIT due to improved operating margins. These year-over-year EBIT improvements were offset by $3 million in prior year gains that did not occur this year related to the sale of a residential and retail development located in Savannah, Georgia Savannah is a city located in (and the county seat of) Chatham County, Georgia (USA). The city's population was 128,500 in 2005, according to the most recent U.S. Census estimate. Savannah was the first colonial and state capital of Georgia. and the sale of the company's remaining investment units in Heritage Propane. INTEREST EXPENSE AND INCOME TAXES Interest expense for the second quarter of 2005 was $26 million, compared with $16 million in the second quarter of 2004. The $10 million, or 63 percent, increase reflects $8 million of additional interest expense associated with the NUI and Jefferson Island acquisition debt and $2 million from higher short-term interest rates Short-term interest rates Interest rates on loan contracts-or debt instruments such as Treasury bills, bank certificates of deposit or commerical paper-having maturities of less than one year. Often called money market rates. . Average debt outstanding for the second quarter of 2005 was $1.7 billion, a $0.6 billion increase over the prior year quarter's average outstanding debt of $1.1 billion. The company's debt-to-capitalization ratio as of June 30, 2005, was 55 percent, slightly up from the 53 percent as of June 30, 2004, but down from 58 percent as of December December: see month. 31, 2004. Second quarter 2005 income taxes of $14 million were essentially flat as compared to the second quarter of 2004. YEAR-TO-DATE Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. RESULTS For the six months ended June 30, 2005, net income was $112 million, or $1.45 per basic share ($1.44 per diluted share), compared with $87 million, or $1.35 per basic share ($1.33 per diluted share), an increase of $25 million or 29 percent. Weighted average shares outstanding for the six months ended June 30, 2005, were 77.0 million, up 19 percent from the 64.7 million in the prior-year period, as a result of the company's 11 million share equity offering in November 2004 and an additional 1.3 million shares related to the exercise of stock options. Operating margins increased $139 million or 33 percent for the six months ended June 30, 2005, from $423 million in the prior year to $562 million in 2005. The increase resulted primarily from the 2004 acquisitions of NUI and Jefferson Island and improved margins from Retail Energy Operations, Energy Investments and Distribution Operations due to higher pipeline replacement revenue and additional carrying costs Carrying costs Costs that increase with increases in the level of investment in current assets. charged to the retail marketers in Georgia for volumes of gas in storage. Operating margins for the six months ended June 30, 2005 at Wholesale Services were relatively flat as compared to last year. Consolidated EBIT for the six months ended June 30, 2005, was $233 million, up $59 million or 34 percent from the previous year, of which $44 million relates to EBIT contributions from the acquisitions of NUI and Jefferson Island. The increase also reflects improved contributions from Distribution Operations, Retail Energy Operations, Energy Investments and Corporate. Wholesale Services' EBIT decreased slightly primarily due to increased operating expenses. 2005 EARNINGS OUTLOOK AGL Resources provided 2005 earnings guidance in the range of $2.25 to $2.35 per share on January January: see month. 28, 2005, and later reaffirmed the guidance on June 10, 2005. Based on year-to-date earnings and a continued positive outlook for positive results across the business, AGL Resources again reaffirms the previously provided 2005 earnings guidance. Earnings Conference Call Webcast: The AGL Resources second quarter 2005 earnings conference call and webcast, scheduled for Friday, July 29, at 10:30 a.m. (EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ), can be accessed via the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the AGL Resources website at www.aglresources.com. The webcast replay of the call will be available on the website through the close of business on Friday, August 5. The telephone replay of the call can be accessed by dialing (888) 286-8010, using passcode 20535798. International callers should dial (617) 801-6888, and use the same passcode. About AGL Resources AGL Resources (NYSE: ATG), an Atlanta-based energy services holding company, serves 2.3 million customers in six states through its utility subsidiaries - Atlanta Gas Light, Elizabethtown Gas in New Jersey, Virginia Natural Gas, Florida City Gas, Chattanooga Gas, and Elkton Gas in Maryland. A Fortune 1000 company that ranks number 46 in the Fortune gas and electric utilities sector, AGL Resources reported 2004 revenue of $1.8 billion and net income of $153 million. The company also owns Houston-based Sequent Energy Management, an asset manager serving natural gas wholesale customers throughout the East and Midwest. As a 70 percent owner in the SouthStar partnership, AGL Resources markets natural gas to customers in Georgia under the Georgia Natural Gas brand. AGL Networks, the company's telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. subsidiary, owns and operates fiber optic networks in Atlanta and Phoenix. The company also owns and operates Jefferson Island Storage & Hub, a high-deliverability natural gas storage facility near the Henry Hub Henry Hub is the pricing point for natural gas futures contracts traded on the New York Mercantile Exchange (NYMEX). It is a point on the natural gas pipeline system in Erath, Louisiana. It is owned by Sabine Pipe Line LLC. in Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. . For more information, visit www.aglresources.com.Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain expectations and projections regarding our future performance referenced in this press release are forward-looking statements. Forward-looking statements involve matters that are not historical facts and because these statements involve anticipated events or conditions, forward-looking statements often include words such as "anticipate," "assume," "can," "could," "estimate," "expect," "forecast,""future," "indicate," "intend," "may," "plan," "predict," "project," "seek," "should," "target," "will," "would," or similar expressions. Our expectations are not guarantees and are based on currently available competitive, financial and economic data along with our operating plans. While we believe our expectations are reasonable in view of the currently available information, our expectations are subject to future events, risks and uncertainties, and there are several factors - many beyond our control - that could cause results to differ significantly from our expectations. Such events, risks and uncertainties include, but are not limited to, changes in price, supply and demand for natural gas and related products, impact of changes in state and federal legislation and regulation, actions taken by government agencies on rates and other matters, concentration of credit risk, utility and energy industry consolidation, impact of acquisitions and divestitures, direct or indirect effects on AGL Resources' business, financial condition or liquidity resulting from a change in our credit ratings or the credit ratings of our counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. or competitors, interest rate fluctuations, financial market conditions and general economic conditions, uncertainties about environmental issues and the related impact of such issues, impacts of changes in weather upon the temperature-sensitive temperature-sensitive living organisms that are sensitive to air temperatures outside of a narrow range, e.g. virus vaccine that does not replicate at deep body temperature, but does replicate in the respiratory tract. portions of the business, acts of war Tom Clancy's Op-Center: Acts of War is a technothriller by Jeff Rovin Plot introduction The mobile Regional Operations Center (ROC) in Turkey investigates a dam blown up by Kurdish terrorists. or terrorism, and other factors which are listed in greater detail in our filings with the Securities and Exchange Commission, which we incorporate by reference in this press release. Forward-looking statements are only as of the date they are made, and we do not undertake any obligation to update these statements to reflect subsequent changes. Supplemental Information Company management evaluates segment financial performance based on earnings before interest and taxes (EBIT), which includes the effects of corporate expense allocations. EBIT is a non-GAAP (accounting principles generally accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, ) financial measure. Items that are not included in EBIT are financing costs, including debt and interest expense, income taxes and the cumulative effect of changes in accounting principles. The company evaluates each of these items on a consolidated level and believes EBIT is a useful measurement of our performance because it provides information that can be used to evaluate the effectiveness of our businesses from an operational perspective, exclusive of the costs to finance those activities and exclusive of income taxes, neither of which is directly relevant to the efficiency of those operations. Operating margin is a non-GAAP measure calculated as revenues minus cost of gas, excluding operation and maintenance expense, depreciation and amortization, and taxes other than income taxes. These items are included in the company's calculation of operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. . The company believes operating margin is a better indicator than operating revenues of the contribution resulting from customer growth, since cost of gas is generally passed directly through to customers. EBIT and operating margin should not be considered as alternatives to, or more meaningful indicators of, the company's operating performance than operating income or net income as determined in accordance with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . In addition, the company's EBIT or operating margin may not be comparable to similarly titled measures of another company. Reconciliation of non-GAAP financial measures referenced in this press release and otherwise in the earnings conference call and webcast is attached to this press release and is available on the company's website at www.aglresources.com under the Investor Relations section.
AGL Resources Inc.
Condensed Statements of Consolidated Income
For the Three and Six Months Ended
June 30, 2005 and 2004
(In millions, except per share amounts)
Three Months
----------------------------------
6/30/2005 6/30/2004 Fav/(Unfav)
---------- ---------- -----------
Operating Revenues $ 431 $ 294 $ 137
Cost of Gas 209 129 (80)
Operation and Maintenance Expenses 113 81 (32)
Depreciation and Amortization 33 24 (9)
Taxes Other Than Income 10 7 (3)
---------- ---------- -----------
Total Operating Expenses 365 241 (124)
---------- ---------- -----------
Operating Income 66 53 13
Other Income (Loss) 1 1 -
Minority Interest (3) (3) -
---------- ---------- -----------
Earnings Before Interest & Taxes 64 51 13
Interest Expense 26 16 (10)
---------- ---------- -----------
Earnings Before Income Taxes 38 35 3
Income Taxes 14 14 -
---------- ---------- -----------
Net Income $ 24 $ 21 $ 3
========== ========== ==========
Earnings Per Common Share
Basic $ 0.31 $ 0.34 $ (0.03)
Diluted $ 0.30 $ 0.33 $ (0.03)
Shares Outstanding
Basic 77.1 64.8 12.3
Diluted 77.8 65.6 12.2
Six Months
----------------------------------
6/30/2005 6/30/2004 Fav/(Unfav)
---------- ---------- -----------
Operating Revenues $1,343 $945 $398
Cost of Gas 781 522 (259)
Operation and Maintenance Expenses 228 174 (54)
Depreciation and Amortization 66 48 (18)
Taxes Other Than Income 21 15 (6)
---------- ---------- -----------
Total Operating Expenses 1,096 759 (337)
---------- ---------- -----------
Operating Income 247 186 61
Other Income (Loss) 2 2 -
Minority Interest (16) (14) (2)
---------- ---------- -----------
Earnings Before Interest & Taxes 233 174 59
Interest Expense 52 32 (20)
---------- ---------- -----------
Earnings Before Income Taxes 181 142 39
Income Taxes 69 55 (14)
---------- ---------- -----------
Net Income $112 $87 $25
========== ========== ===========
Earnings Per Common Share
Basic $1.45 $1.35 $0.10
Diluted $1.44 $1.33 $0.11
Shares Outstanding
Basic 77.0 64.7 12.3
Diluted 77.7 65.5 12.2
AGL Resources Inc.
EBIT Schedule
For the Three and Six Months Ended
June 30, 2005 and 2004
(In millions, except per share amounts)
Three Months
----------------------------------
6/30/2005 6/30/2004 Fav/(Unfav)
---------- ---------- -----------
Distribution Operations $ 52 $ 49 $ 3
Retail Energy Operations 6 7 (1)
Wholesale Services 2 (5) 7
Energy Investments 5 2 3
Corporate (1) (2) 1
---------- ---------- ----------
Consolidated EBIT 64 51 13
---------- ---------- ----------
Interest Expense 26 16 (10)
Income Taxes 14 14 -
---------- ---------- ----------
Net Income $ 24 $ 21 $ 3
========== ========== ==========
Earnings per Common Share
Basic $ 0.31 $ 0.34 $ (0.03)
========== ========== ==========
Diluted $ 0.30 $ 0.33 $ (0.03)
========== ========== ==========
Six Months
----------------------------------
6/30/2005 6/30/2004 Fav/(Unfav)
---------- ---------- -----------
Distribution Operations $ 175 $ 131 $ 44
Retail Energy Operations 46 39 7
Wholesale Services 6 7 (1)
Energy Investments 10 2 8
Corporate (4) (5) 1
---------- ---------- ----------
Consolidated EBIT 233 174 59
---------- ---------- ----------
Interest Expense 52 32 (20)
Income Taxes 69 55 (14)
---------- ---------- ----------
Net Income $ 112 $ 87 $ 25
========== ========== ==========
Earnings per Common Share
Basic $ 1.45 $ 1.35 $ 0.10
========== ========== ==========
Diluted $ 1.44 $ 1.33 $ 0.11
========== ========== ==========
AGL Resources Inc.
Reconciliation of Operating Margin to Operating Revenues
For the Three and Six Months Ended
June 30, 2005 and 2004
(In millions, except per share amounts)
Three Months
----------------------------------
6/30/2005 6/30/2004 Fav/(Unfav)
---------- ---------- -----------
Operating Revenues $ 431 $ 294 $ 137
Cost of Gas 209 129 (80)
---------- ---------- -----------
Operating Margin $ 222 $ 165 $ 57
========== ========== ==========
Six Months
----------------------------------
6/30/2005 6/30/2004 Fav/(Unfav)
---------- ---------- -----------
Operating Revenues $ 1,343 $ 945 $ 398
Cost of Gas 781 522 (259)
----------------------------------
Operating Margin $ 562 $ 423 $ 139
========== ========== ==========
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion