Cascade Natural Gas Corporation Announces Second Quarter Earnings.SEATTLE Seattle (sēăt`əl), city (1990 pop. 516,259), seat of King co., W Wash., built on seven hills, between Elliott Bay of Puget Sound and Lake Washington; inc. 1869. -- Cascade A connected series of devices or images. It often implies that the second and subsequent device takes over after the previous one is used up. For example, cascading tapes in a dual-tape backup system means the second tape is written after the first one is full. Natural Gas Corporation (NYSE NYSE See: New York Stock Exchange :CGC CGC Canine Good Citizen (AKC Dog Title) CGC Commission Géologique du Canada (Geological Survey of Canada) CGC Confédération Générale des Cadres (French labor union) ) reported earnings of $9.0 million, or $0.78 per share, for the fiscal second quarter ended March 31, 2006, compared to $7.4 million, or $0.65 per share, for the second quarter ended March 31, 2005. Earnings for the six-month period were $17.0 million, or $1.49 per share, compared to $14.0 million, or $1.24 per share, for the six months ended March 31, 2005. These reported earnings represent 22% improvements for both the quarter and the six-month periods. Financial and Operating Highlights Operating Margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: Second quarter total operating margin (revenue minus gas cost and revenue taxes) increased $2.4 million compared to the quarter ended March 31, 2005. Residential and commercial margins increased by $2.7 million for the quarter. Customer growth at 4.5% contributed $1.1 million to margins and higher average consumption contributed $544,000. Slightly colder weather drove the increased consumption. Reductions in incurred gas costs under our Oregon Oregon, city, United States Oregon, city (1990 pop. 18,334), Lucas co., NW Ohio, a suburb adjacent to Toledo, on Lake Erie; inc. 1958. It is a port with railroad-owned and -operated docks. The city has industries producing oil, chemicals, and metal products. tariff tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic contributed another $1.6 million and miscellaneous services added $221,000. These benefits to margin were partially offset by changes to the Company's Oregon purchased gas adjustment filing (PGA (1) (Professional Graphics Adapter) An early IBM PC display standard for 3D processing with 640x480x256 resolution. It was not widely used. (2) (Programmable Gate Array) See gate array and FPGA. ) last fall, which has the effect of reallocating certain demand charge recoveries within each fiscal year. For the second quarter, this change reduced the reported margin by $696,000 when compared to the same quarter in fiscal 2005, but it is not expected to impact full-year earnings. Margins from sales to electric generation plants were $745,000 higher for the quarter as the result of a settlement for early termination of a sales agreement. Industrial operating margins were flat from the same period in the prior year, when mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. (M-to-M) derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. valuation adjustments are excluded. No M-to-M adjustment was recorded in the second quarter of fiscal 2006 as compared to a positive adjustment of $549,000 in the same period in the prior year. Prior year fiscal second quarter operating margins benefited from a $525,000 accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. reversal in connection with the determination that no earnings sharing would be required in Oregon related to fiscal 2004. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. operating margin increased $4.3 million. Primary contributors were residential and commercial customer growth adding $2.1 million and higher consumption per customer adding another $2.1 million. Average consumption was 5.1% higher for the period primarily due to colder weather than last year. Reductions in incurred Oregon gas cost of $948,000, $1.0 million in electric generation customer settlements and $374,000 of increased services revenue further contributed to the improvement. Offsetting these items were $1.2 million resulting from the Oregon PGA changes, year-to-year changes in M-to-M valuations of $460,000 and the $525,000 Oregon earnings sharing accrual reversal in fiscal 2005. Cost of Operations Cost of operations (operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. , depreciation and amortization, and property and miscellaneous taxes) is down by $185,000, compared to the second quarter of fiscal year 2005. Management initiatives resulted in $1.8 million in reduced quarterly operating costs operating costs npl → gastos mpl operacionales . Last fall's reduction in force, combined with other reduction opportunities, a continued focus on managing overtime and last year's one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. executive transition costs resulted in reduced direct-labor spending of $1.1 million. Outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. our retiree medical obligations to an insurance company contributed toward the $462,000 in reduced benefit costs. Another $206,000 in year-to-year cost reductions was achieved in various corporate and administrative areas. These cost savings are offset by a $518,000 reduction in capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. costs, incentive compensation accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. of $1.4 million and $155,000 of increased depreciation and amortization. Bad debt expense was $327,000 lower, primarily due to unusual commercial account write-offs last year. In addition, property tax expense declined by $74,000, due to reduced tax rates. Year-to-date cost of operations was down $725,000 reflecting management initiatives delivering $3.6 million in direct labor, benefits and other overhead spending reductions. Reductions in bad-debt expense of $147,000 were due to prior year write offs. Incentive compensation accruals of $2.1 million, reflecting the 22% earnings improvement, reduced capitalized operating costs of $727,000, and increased depreciation of $364,000 partially offset these savings. Capital Spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. and Funding of Operations Capital spending during the quarter was $3.8 million compared to $7.8 million in the second quarter of fiscal year 2005. Part of the difference was due to $678,000 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc specific one-time system reinforcement reinforcement /re·in·force·ment/ (-in-fors´ment) in behavioral science, the presentation of a stimulus following a response that increases the frequency of subsequent responses, whether positive to desirable events, or projects in the second quarter of fiscal year 2005. The remaining reduction is primarily attributable to the investment evaluation process implemented in the first quarter to assure that all capital spending provides an adequate return or is required for safety or regulatory compliance. Year-to-date capital spending is down to $7.3 million from $15.5 million when compared to fiscal year 2005. Part of the difference was due to $2.0 million of one-time specific system reinforcement expenditures and $1.0 million relating to the completed AMR (1) (Adaptive Multi-Rate) A variable rate speech codec selected by the 3GPP for the 3G evolution of the GSM cellphone system (WCDMA). Using the Algebraic CELP (ACELP) compression technology, AMR provides toll quality sound at transmission rates from 4.75 to 12. and call center centralization cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. projects in the first half of fiscal year 2005. The remainder reflects Cascade's new investment evaluation process. Our current expectation is that we will end the year below our fiscal 2006 capital budget of $22.0 million. We have adequate liquidity and borrowing lines to meet our anticipated needs, and estimate that cash flow will be sufficient to support operations, fund capital spending and pay dividends at their current level. Other Items Management is expecting earnings for fiscal year 2006 to be in the range of $1.02 to $1.10. Our outlook assumes average weather for the rest of the fiscal year. The Company previously announced its declaration of a regular quarterly cash dividend of $0.24 per common share, payable May 15 to shareholders of record at April 28, 2006. The Company entered into a three-year agreement, commencing April 1, with the union representing its field operations personnel as previously disclosed in its April 17, 2006, 8-K filing. The Company previously announced that its Board of Directors had engaged J. P. Morgan Morgan, American family of financiers and philanthropists. Junius Spencer Morgan, 1813–90, b. West Springfield, Mass., prospered at investment banking. Securities, Inc. to assist the Company in evaluating strategic alternatives to enhance shareholder value. In conjunction with this review, the Company filed a rate case, including its Conservation Alliance Plan (decoupling Decoupling The occurrence of returns on asset classes diverging from their normal pattern of correlation. Notes: Take for example stock and corporate bond returns, which normally rise and fall together. ), on February 14 with the Washington Utilities and Transportation Commission The Washington Utilities and Transportation Commission (UTC) is a three-member board appointed by the Governor of Washington and confirmed by the Washington State Senate to six year terms. and expects to receive a final decision no later than January 2007. On April 19, the Oregon Public Utility Commission approved the Company's Conservation Alliance Plan for its Oregon customers. In addition, the Company is considering other strategic alternatives, including a possible business combination. The Company plans to make no further announcement until its evaluation of strategic alternatives is concluded. Live Web-cast The Company will host a live web-cast to discuss the quarterly results April 27 at 10:30 a.m. Pacific Daylight Time or 1:30 p.m. Eastern Daylight Time. To listen to the call, log on to our web site, cngc.com and select "Investors," then click the live web-cast icon. Cascade Natural Gas Corporation is a local distribution company providing natural gas service to approximately 235,000 residential, commercial, and large industrial customers in the states of Washington and Oregon. 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. The Company's discussion in this report, or in any information incorporated herein by reference, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. All statements, other than statements of historical facts, are forward-looking statements, including statements concerning plans, objectives, goals, strategies, and future events or performance. The disclaimers under the caption "Forward-Looking Statements," included in the Company's Quarterly Report on Form 10-Q Form 10-Q See 10-Q. filed on February 8, 2006, for the quarter ended December 31, 2005, apply in their entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. to all forward-looking statements contained in this report.
Cascade Natural Gas Corporation
Financial Highlights - (Thousands, except per share amounts)
Second Quarter Fiscal 2006
Fiscal Year 2006
--------------------------------------------
Three Months Ended
---------------------------------- Year
to
Dec 31 Mar 31 Jun 30 Sep 30 Date
--------- --------- ------- ------ ---------
Revenues $158,632 $162,796 $321,428
Operating Margin 30,791 33,231 64,022
Cost of Operations 15,042 16,060 31,103
-------- -------- ------- ------ --------
Operating Income (Loss) 15,749 17,171 - - 32,919
Interest and Other 2,972 2,884 5,855
Income Taxes 4,737 5,301 10,038
-------- -------- ------- ------ --------
Net Income (Loss) $ 8,040 $ 8,986 $ 17,026
Common Shares
Outstanding:
End of Period 11,439 11,471 11,471
Average 11,428 11,455 11,441
Earnings (Loss) Per Share
Basic and diluted $ 0.70 $ 0.78 $ 1.49
Dividends Paid per share $ 0.24 $ 0.24 $ 0.48
Capital Expenditures
(net) $ 3,756 $ 4,306 $ 8,062
Book Value Per Share $ 10.88 $ 11.40 $ 11.40
Market Closing Price $ 19.51 $ 19.70 $ 19.70
Active Customers (End of
Period) 235 238 238
Gas Deliveries (Therms):
Residential & Commercial 95,682 97,231 192,913
Industrial & Other 230,396 211,874 442,270
Degree Days
5-Year Average 2,106 2,299 4,405
Actual 2,250 2,269 4,519
Colder (warmer) than
5-year avg. 7% (1%) 3%
Colder (warmer) than
prior year 16% 2% 8%
Fiscal Year 2005
---------------------------------------------
Three Months Ended
------------------------------------ Year Year
ended to Date
Dec 31 Mar 31 Jun 30 Sep 30 Sep 30 Mar 31
-------- --------- -------- ------- -------- ---------
Revenues $104,613 $117,711 $56,315 $47,861 $326,500 $222,324
Operating
Margin 28,922 30,842 17,674 14,277 91,715 59,764
Cost of
Operations 15,584 16,245 16,412 17,042 65,283 31,829
-------- -------- -------- -------- -------- --------
Operating
Income (Loss) 13,338 14,597 1,262 (2,765) 26,432 27,935
Interest and
Other 2,894 2,976 2,891 2,792 11,553 5,870
Income Taxes 3,812 4,269 (502) (1,947) 5,632 8,081
-------- -------- -------- -------- -------- --------
Net Income
(Loss) $ 6,632 $ 7,352 $(1,127) $(3,610)$ 9,247 $ 13,984
Common
Shares
Outstanding:
End of Period 11,292 11,338 11,384 11,413 11,413 11,338
Average 11,279 11,312 11,367 11,396 11,339 11,296
Earnings (Loss)
Per Share
Basic and
diluted $ 0.59 $ 0.65 $(0.10) $ (0.32)$ 0.82 $ 1.24
Dividends Paid
per share $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.96 $ 0.48
Capital
Expenditures
(net) $ 7,770 $ 7,759 $6,038 $ 6,444 $ 28,011 $ 15,529
Book Value Per
Share $ 10.89 $ 11.32 $10.99 $ 10.39 $ 10.39 $ 11.32
Market Closing
Price $ 21.20 $ 19.96 $20.50 $ 21.77 $ 21.77 $ 19.96
Active
Customers (End
of Period) 225 228 225 227 227 228
Gas
Deliveries
(Therms):
Residential &
Commercial 82,643 92,637 39,632 22,843 237,755 175,280
Industrial &
Other 227,779 228,890 176,178 211,305 844,152 456,669
Degree Days
5-Year Average 2,091 2,271 806 212 5,380 4,362
Actual 1,945 2,230 769 226 5,170 4,175
Colder (warmer)
than 5-year
avg. (7%) (2%) (5%) 7% (4%) (4%)
Colder (warmer)
than prior
year (8%) (1%) 16% 15% (1%) (4%)
|
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion