- First quarter consolidated GAAP
earnings per share down — $1.13 per share vs. $1.36 per
share
- First quarter non-GAAP operating
earnings per share up — $1.24 per share vs. $1.18 per
share
- Dividend increase of $0.09 per
share, or 5%, to an annualized level of $2.04 per share
WGL Holdings, Inc. (NYSE: WGL):
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 applicable to common stock
determined in accordance with generally accepted accounting
principles in the United States of America (GAAP) for the quarter
ended December 31, 2016, of $58.0 million, or $1.13 per share,
compared to net income applicable to common stock of $68.2 million,
or $1.36 per share, reported for the quarter ended
December 31, 2015.
On a consolidated basis, WGL also uses non-GAAP operating
earnings (loss) to evaluate overall financial performance, and
evaluates segment financial performance based on earnings before
interest and taxes (EBIT) and adjusted EBIT. Operating earnings
(loss) and adjusted EBIT are non-GAAP financial measures, which are
not recognized in accordance with GAAP and should not be viewed as
alternatives to GAAP measures of performance. Both non-GAAP
operating earnings (loss) and adjusted EBIT adjust for the
accounting recognition of certain transactions that are not
representative of the ongoing earnings of the company.
Additionally, we believe that adjusted EBIT enhances the ability to
evaluate segment performance because it excludes interest and
income tax expense, which are affected by corporate-wide strategies
such as capital financing and tax sharing allocations. Refer to
“Reconciliation of Non-GAAP Financial Measures,” attached to this
news release, for a more detailed discussion of management’s use of
these measures and for reconciliations to GAAP financial
measures.
For the quarter ended December 31, 2016, operating earnings
were $63.6 million, or $1.24 per share, an increase of $4.4
million, or $0.06 per share, compared to operating earnings of
$59.2 million, or $1.18 per share, for the same quarter of the
prior fiscal year.
"On January 25, 2017, we announced our agreement to be acquired
by AltaGas, Ltd. (AltaGas)," said Terry D. McCallister, Chairman
and Chief Executive Officer. "Our leadership team and Board of
Directors are convinced that we have found exactly the right
partner in AltaGas, and we believe this combination represents a
great outcome for our shareholders and an excellent opportunity to
drive long-term value well into the future. Together with AltaGas,
we will become stronger and a more diverse company that will open
up new and exciting opportunities to provide value for all of our
stakeholders.
"I am also pleased to announce a 9-cent increase in
our dividend to an annual rate of $2.04 per share. The 5%
increase reflects a dedication to delivering sustainable dividend
growth for investors and a firm commitment to our strategic vision.
This represents 41 consecutive years that we have raised the cash
dividend on our common stock. We have now paid a dividend without
interruption for 166 years, which is one of the longest dividend
payment records on the New York Stock Exchange."
Results by Business
Segment
Regulated Utility
Three Months Ended December 31,
Increase/ (In millions)
2016 2015
(Decrease) EBIT
$ 102.7 $ 99.3 $ 3.4
Adjusted EBIT
$ 91.4 $ 86.6
$ 4.8
The comparisons of EBIT and adjusted EBIT primarily reflect: (i)
increased customer growth; (ii) new base rates in Virginia; (iii)
higher realized margins associated with our asset optimization
program and (iv) higher rate recovery related to our accelerated
pipe replacement programs. These favorable variances were partially
offset by higher depreciation expense related to the growth in our
utility plant and operation and maintenance expenses.
Retail Energy-Marketing
Three Months Ended December 31, Increase/ (In
millions)
2016 2015 (Decrease) EBIT
$ 29.2 $ (0.6 ) $ 29.8 Adjusted EBIT
$ 9.9 $ 5.2 $ 4.7
For the quarter ended December 31, 2016, the EBIT
comparison primarily reflects higher unrealized mark-to-market
valuations on energy-related derivatives.
Additionally, the comparisons in EBIT and adjusted EBIT reflect
higher realized electricity margins due to lower capacity charges
from the regional power grid operator (PJM). Partially offsetting
these favorable margins were lower realized natural gas margins due
to a decrease in portfolio optimization activity and less favorable
margin patterns when compared to the same period in the prior
fiscal year. Despite the decline in natural gas margins, both
retail and wholesale sales volumes were higher compared to the same
period in the prior fiscal year.
Commercial Energy Systems
Three Months Ended December 31, Increase/ (In
millions)
2016 2015 (Decrease) EBIT
$ 4.7 $ 0.9 $ 3.8 Adjusted EBIT
$ 6.1 $ 2.2 $ 3.9
Improvements in EBIT and adjusted EBIT reflect: (i) the growth
in distributed generation assets in service, including increased
solar renewable energy credit sales; (ii) higher income from state
rebate programs and (iii) higher earnings from alternative energy
investments. These improvements were partially offset by lower
revenues from the energy-efficiency contracting business due to the
completion of certain projects and higher operating and
depreciation expenses.
Midstream Energy Services
Three Months Ended December 31, Increase/ (In
millions)
2016 2015 (Decrease) EBIT
$ (28.5 ) $ 20.8 $ (49.3 ) Adjusted
EBIT
$ 9.4 $ 13.1
$ (3.7 )
For the quarter ended December 31, 2016, the decline in
EBIT primarily reflects: (i) lower valuations on our derivative
contracts associated with our long-term transportation strategies;
(ii) lower income related to our pipeline investments; (iii) lower
valuations and realized margins related to storage inventory and
the associated economic hedging transactions and (iv) lower
realized margins on our transportation strategies.
Lower realized margins on our transportation strategies are
primarily a result of losses associated with the index price used
in certain gas purchases from Antero Resources Corporation, which
is the subject of an arbitration proceeding. Losses realized during
the current period were $6.8 million for the quarter ended
December 31, 2016. Accumulated losses from the inception of
the contract are $22.0 million. While these losses may continue in
the near term we do anticipate that they will reverse in future
periods upon completion of the arbitration proceeding. An initial
decision on the arbitration proceedings is scheduled for on or
after February 13, 2017.
The decline in adjusted EBIT for the quarter ended
December 31, 2016, primarily reflects lower income related to
our pipeline investments as well as unfavorable storage spreads
when compared to the same period in the prior fiscal year.
Earnings Outlook
We provide earnings guidance for consolidated non-GAAP operating
earnings. In providing fiscal year 2017 guidance, we note that
there will likely be differences between our reported GAAP earnings
and our non-GAAP operating earnings due to matters such as, but not
limited to, unrealized mark-to-market positions for our
energy-related derivatives and changes in the measured value of our
trading inventory for WGL Midstream. On a year-to-date basis,
non-GAAP operating earnings are higher than GAAP earnings due to
$5.6 million of after-tax non-GAAP adjustments. Non-GAAP
adjustments could change significantly and are subject to swings
from period to period. As a result, WGL management is not able to
reasonably estimate the aggregate impact of these items to derive
GAAP earnings guidance and therefore is not able to provide a
corresponding GAAP equivalent for its non-GAAP operating earnings
guidance.
We are raising our consolidated non-GAAP operating earnings
estimate for fiscal year 2017 in a range of $3.40 per share to
$3.60 per share. The increase in guidance is driven by a change in
assumptions for average diluted shares outstanding from 53.6
million in original guidance to 51.5 million.
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.
Other Information
During the pendency period of the acquisition agreement between
WGL and AltaGas, WGL will not conduct earnings calls. Additional
information regarding financial results and recent regulatory
events can be found in WGL's and Washington Gas' Form 10-Q for the
quarter ended December 31, 2016, as filed with the Securities and
Exchange Commission, and which is also available at www.wglholdings.com.
WGL, headquartered in Washington, D.C., is a leading source for
clean, efficient and diverse energy solutions. With activities and
assets across the U.S., WGL consists of Washington Gas, WGL Energy,
WGL Midstream and Hampshire Gas. WGL provides natural gas,
electricity, green power and energy services, including generation,
storage, transportation, distribution, supply and efficiency. Our
calling as a company is to make energy surprisingly easy for our
employees, our community and all our customers. Whether you are a
homeowner or renter, small business or multinational corporation,
state and local or federal agency, WGL is here to provide Energy
Answers. Ask Us. For more information, visit us at www.wgl.com.
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 non-GAAP financial measures.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in
respect of the proposed merger transaction. WGL Holdings, Inc.
(“WGL”) intends to file with the U.S. Securities and Exchange
Commission (the “SEC”) and mail to its shareholders a proxy
statement in connection with the proposed merger transaction. THE
INVESTORS AND SECURITY HOLDERS OF WGL ARE URGED TO READ THE PROXY
STATEMENT AND ANY OTHER RELEVANT DOCUMENTS WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION about
AltaGas, Ltd. (“AltaGas”), WGL and the proposed merger transaction.
Investors and security holders will be able to obtain these
materials (when they are available) and other documents filed with
the SEC free of charge at the SEC’s website, www.sec.gov. In
addition, a copy of WGL’s proxy statement (when it becomes
available) may be obtained free of charge upon request by
contacting WGL Holdings, Inc., Leslie T. Thornton, Corporate
Secretary, 101 Constitution Avenue N.W., Washington, District of
Columbia, 20080. WGL’s filings with the SEC are also available on
WGL’s website at: http://wglholdings.com/sec.cfm. Investors and
security holders may also read and copy any reports, statements and
other information filed by WGL with the SEC, at the SEC public
reference room at 100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 or visit the SEC’s website
for further information on its public reference room.
Participants in the Solicitation
AltaGas, WGL and certain of their respective directors,
executive officers and other persons may be deemed to be
participants in the solicitation of proxies in respect of the
proposed merger transaction. Information regarding AltaGas’
directors and executive officers is available in AltaGas’
Management Information Circular, filed on March 17, 2016 (in
English and French) with the Canadian Securities Administrators
(the “CSA”) and in AltaGas’ Annual Information Form, filed on March
23, 2016 (in English) and March 24, 2016 (in French) with the
CSA, each of which are available at: www.sedar.com. Information
regarding WGL’s directors and executive officers is available in
WGL’s proxy statement filed with the SEC on December 23, 2016 in
connection with its 2017 annual meeting of shareholders, and its
Annual Report on Form 10-K for the fiscal year ended September 30,
2016, each of which may be obtained from the sources indicated in
Additional Information and Where to Find It. Other information
regarding persons who may be deemed participants in the proxy
solicitation and a description of their direct and indirect
interests (which may be different than those of WGL’s investors and
security holders), by security holdings or otherwise, will be
contained in the proxy statement and other relevant materials filed
or to be filed with the SEC when they become available.
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, dividends and other future
financial business performance, strategies, the outcome of the
arbitration proceeding affecting our midstream energy services
segment, legal developments relating to the Constitution Pipeline,
AltaGas Ltd.’s proposed acquisition of us and other 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, the closing of the AltaGas transaction may not
occur or may be delayed; our stockholders may not approve the
AltaGas transaction; litigation related to the AltaGas transaction
or limitations or restrictions imposed by regulatory authorities
may delay or negatively impact the transaction and there may be a
loss of customers, employees or business partners as a result of
the transaction and the factors discussed under the “Risk Factors”
heading in our most recent annual report on Form 10-K and other
documents that we have filed with, or furnished to, the U.S.
Securities and Exchange Commission.
WGL Holdings, Inc. Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands)
December 31, 2016 September 30, 2016
ASSETS
Property, Plant and Equipment At original cost
$ 5,664,221 $ 5,542,916 Accumulated depreciation and
amortization
(1,440,438 ) (1,415,679 )
Net property, plant and equipment
4,223,783
4,127,237
Current Assets Cash and cash
equivalents
12,884 5,573 Accounts receivable, net
691,117 491,020 Storage gas
208,841 207,132
Derivatives and other
182,368 139,749
Total current assets
1,095,210
843,474
Deferred Charges and Other Assets
1,156,397 1,078,739
Total Assets
$ 6,475,390 $ 6,049,450
CAPITALIZATION AND LIABILITIES Capitalization WGL
Holdings common shareholders’ equity
$ 1,439,465 $
1,375,561 Non-controlling interest
5,205 409 Washington Gas
Light Company preferred stock
28,173
28,173 Total Equity
1,472,843
1,404,143 Long-term debt
1,435,247
1,435,045 Total capitalization
2,908,090 2,839,188
Current
Liabilities Notes payable and project financing
634,392
331,385 Accounts payable and other accrued liabilities
447,467 405,351 Derivatives and other
340,181
290,190 Total current liabilities
1,422,040 1,026,926
Deferred
Credits 2,145,260 2,183,336
Total Capitalization and Liabilities $
6,475,390 $ 6,049,450
WGL Holdings, Inc. Condensed Consolidated Statements of
Income
(Unaudited)
Three Months Ended
December 31, (In thousands, except per share data)
2016 2015
OPERATING REVENUES Utility
$ 327,063 $ 288,153 Non-utility
282,424
325,231
Total Operating Revenues
609,487 613,384
OPERATING EXPENSES
Utility cost of gas
75,500 50,025 Non-utility cost of
energy-related sales
252,886 282,487 Operation and
maintenance
100,717 95,419 Depreciation and amortization
35,283 31,412 General taxes and other assessments
40,388 36,532
Total Operating Expenses
504,774 495,875
OPERATING INCOME
104,713 117,509 Equity in earnings of unconsolidated
affiliates
265 1,263 Other income — net
478 979
Interest expense
16,235 12,760
INCOME BEFORE TAXES 89,221 106,991
INCOME TAX
EXPENSE 33,454 38,490
NET
INCOME $ 55,767 $ 68,501 Less non-controlling
interest
(2,535 ) — Dividends on Washington Gas Light
Company preferred stock
330 330
NET
INCOME APPLICABLE TO COMMON STOCK $ 57,972
$ 68,171
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING Basic
51,172 49,807 Diluted
51,445 50,030
EARNINGS PER AVERAGE COMMON
SHARE Basic
$ 1.13 $ 1.37 Diluted
$
1.13 $ 1.36
The following table reconciles EBIT by
operating segment to net income applicable to common stock.
Three Months Ended
December 31, (In thousands)
2016 2015 EBIT:
Regulated utility
$ 102,717 $ 99,289 Retail
energy-marketing
29,185 (567 ) Commercial energy systems
4,663 943 Midstream energy services
(28,484 )
20,839 Other activities
(1,198 ) (780 ) Intersegment
eliminations
1,108 27 Total
$ 107,991 $ 119,751 Interest expense
16,235
12,760 Income tax expense
33,454 38,490 Dividends on
Washington Gas preferred stock
330 330
Net income applicable to common stock
$
57,972 $ 68,171
WGL
Holdings, Inc. Consolidated Financial and Operating
Statistics
(Unaudited)
FINANCIAL STATISTICS Twelve Months
Ended December 31,
2016 2015 Closing Market Price — end of period
$76.28 $62.99 52-Week Market Price Range
$79.79 -
$58.69 $65.55 - $50.89 Price Earnings Ratio
24.6 23.2
Annualized Dividends Per Share
$1.95 $1.85 Dividend Yield
2.6% 2.9% Return on Average Common Equity
11.5% 10.7%
Total Interest Coverage (times)
5.3 5.1 Book Value Per Share
— end of period
$28.11 $25.87 Common Shares Outstanding —
end of period (thousands)
51,211 49,833
UTILITY GAS STATISTICS
Three Months Ended Twelve Months Ended
December 31, December 31, (In
thousands)
2016 2015
2016
2015
Operating Revenues Gas Sold and Delivered
Residential — Firm
$ 204,348 $ 167,689
$
652,041 $ 740,621 Commercial and Industrial — Firm
45,299 36,609
145,396 168,129 Commercial and
Industrial — Interruptible
553 518
2,217 2,378
Electric Generation
275 275
1,100 1,100
250,475 205,091
800,754 912,228 Gas Delivered for
Others Firm
56,075 61,903
200,880 210,986
Interruptible
14,770 11,505
49,566 50,246 Electric
Generation
99 176
778 597
70,944
73,584
251,224
261,829
321,419 278,675
1,051,978
1,174,057 Other
5,644 9,478
31,049 35,428
Total $ 327,063 $
288,153
$ 1,083,027 $
1,209,485
Three Months
Ended Twelve Months Ended December
31, December 31, (In thousands of therms)
2016 2015
2016 2015
Gas Sales
and Deliveries Gas Sold and Delivered Residential — Firm
207,482 152,924
645,183 670,740 Commercial and
Industrial — Firm
57,721 44,892
180,661 183,257
Commercial and Industrial — Interruptible
814
720
2,865 1,736
266,017 198,536
828,709 855,733 Gas
Delivered for Others Firm
161,582 133,278
529,333
531,397 Interruptible
64,163 62,535
240,642 245,139
Electric Generation
23,599
43,225
271,627 196,032
249,344 239,038
1,041,602 972,568
Total
515,361 437,574
1,870,311 1,828,301
Utility Gas
Purchase Expense (excluding asset optimization)
35.14
¢
36.26
¢
35.15
¢
50.91
¢
HEATING DEGREE DAYS Actual
1,196 956
3,581
3,630 Normal
1,318 1,331
3,717 3,746 Percent Colder
(Warmer) than Normal
(9.3
)%
(28.2 )%
(3.7 )% (3.1 )%
Average Active Customer Meters 1,148,917
1,135,765
1,145,572
1,133,059
WGL ENERGY SERVICES
Natural Gas Sales Therm Sales
(thousands of therms)
220,500 189,500
781,600 701,500
Number of Customers (end of period)
126,400
141,300
126,400
141,300
Electricity Sales Electricity Sales
(thousands of kWhs)
3,103,200 2,926,400
13,267,400
12,314,900 Number of Accounts (end of period)
122,600
135,000
122,600
135,000
WGL ENERGY SYSTEMS Megawatts in
service
176 119
202 119 Megawatt hours generated
44,274 33,448
220,280 137,271
WGL Holdings, Inc.Reconciliation of
Non-GAAP Financial Measures(Unaudited)
The tables below reconcile operating earnings (loss) on a
consolidated basis to GAAP net income (loss) applicable to common
stock and adjusted EBIT on a segment basis to EBIT. Management
believes that operating earnings (loss) and adjusted EBIT provide a
meaningful representation of our earnings from ongoing operations
on a consolidated and segment basis, respectively. These measures
facilitate analysis by providing consistent and comparable measures
to help management, investors and analysts better understand and
evaluate our operating results and performance trends, and assist
in analyzing period-to-period comparisons. Additionally, we use
these non-GAAP measures to report to the board of directors and to
evaluate management’s performance.
To derive our non-GAAP measures, we adjust for the accounting
recognition of certain transactions (non-GAAP adjustments) based on
at least one of the following criteria:
- To better match the accounting
recognition of transactions with their economics;
- To better align with regulatory
view/recognition;
- To eliminate the effects of:i.
Significant out of period adjustments;ii. Other significant items
that may obscure historical earnings comparisons and are not
indicative of performance trends; andiii. For adjusted EBIT, other
items which may obscure segment comparisons.
There are limits in using operating earnings (loss) and adjusted
EBIT to analyze our consolidated and segment results, respectively,
as they are not prepared in accordance with GAAP and may be
different than non-GAAP financial measures used by other companies.
In addition, using operating earnings (loss) and adjusted EBIT to
analyze our results may have limited value as they exclude 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 the most directly comparable
GAAP financial measures.
The following tables represent the reconciliation of non-GAAP
operating earnings to GAAP net income (loss) applicable to common
stock (consolidated by quarter):
Fiscal Year 2017 Quarterly Period
Ended* (In thousands, except per share data) Dec. 31
Mar. 31 Jun. 30 Sept. 30 Fiscal Year Operating
earnings
$ 63,606
$ 63,606 Non-GAAP adjustments**
(9,102
) (9,102 ) Income tax effect of non-GAAP
adjustments***
3,468
3,468 Net income
applicable to common stock
$ 57,972
$
57,972 Diluted average common shares outstanding
51,445
51,445 Operating earnings per share
$ 1.24 $ 1.24 Per share effect of
non-GAAP adjustments
(0.11 )
(0.11 ) Diluted
earnings per average common share
$ 1.13
$
1.13 Fiscal Year 2016 Quarterly Period
Ended* (In thousands, except per share data) Dec. 31
Mar. 31 Jun. 30 Sept. 30 Fiscal Year Operating
earnings $ 59,205 $ 59,205 Non-GAAP adjustments** 13,312 13,312
Income tax effect of non-GAAP adjustments*** (4,346 )
(4,346 ) Net income
applicable to common stock $ 68,171
$ 68,171 Diluted average
common shares outstanding 50,030
50,030 Operating earnings per
share $ 1.18 $ 1.18 Per share effect of non-GAAP adjustments
0.18 0.18
Diluted earnings per average common share $ 1.36
$ 1.36
* 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.
** Refer to the reconciliations of
adjusted EBIT to EBIT below for further details on our non-GAAP
adjustments.
*** Non-GAAP adjustments are presented on
a gross basis and the income tax effects of those adjustments are
presented separately. The income tax effects of non-GAAP
adjustments, both current and deferred, are calculated at the
individual company level based on the applicable composite tax rate
for each period presented, with the exception of transactions not
subject to income taxes. Additionally, the income tax effect of
non-GAAP adjustments includes investment tax credits related to
distributed generation assets.
WGL Holdings, Inc. (Consolidated by
Quarter)Reconciliation of Non-GAAP Financial
Measures(Unaudited)
The following tables summarize non-GAAP adjustments by operating
segment and present a reconciliation of adjusted EBIT to EBIT. EBIT
is defined as earnings before interest and taxes from continuing
operations. Items we do not include in EBIT are interest expense,
inter-company financing activity, dividends on Washington Gas
preferred stock, and income taxes.
Three Months Ended December 31, 2016
Retail Commercial Midstream
Regulated Energy- Energy Energy Other
(In thousands)
Utility Marketing Systems Services
Activities(g)
Eliminations(h)
Total Adjusted EBIT
$ 91,380
$ 9,895 $ 6,072
$ 9,439 $
(1,198 ) $ 1,505
$ 117,093 Non-GAAP adjustments: Unrealized
mark-to-market valuations on energy-related derivatives(a)
15,436 19,290 — (9,677 )
— (397 ) 24,652 Storage optimization
program(b)
(664 ) — — — —
— (664 ) DC weather impact(c)
(3,435
) — — — — — (3,435
) Distributed generation asset related investment tax
credits(d)
— — (1,409 ) —
— — (1,409 ) Change in measured value
of inventory(e)
— — — (21,468 )
— — (21,468 ) Losses associated with
Antero contract(f) — — —
(6,778 ) — —
(6,778 ) Total non-GAAP adjustments
$ 11,337 $ 19,290
$ (1,409 ) $
(37,923 ) $ —
$ (397 ) $ (9,102
) EBIT
$ 102,717 $
29,185 $ 4,663
$ (28,484 ) $ (1,198
) $ 1,108 $
107,991
Three Months Ended December 31, 2015 Retail Commercial Midstream
Regulated Energy- Energy Energy Other
(In thousands)
Utility Marketing Systems Services
Activities(g)
Eliminations Total Adjusted EBIT $ 86,623
$ 5,245 $ 2,195 $ 13,129
$ (780 ) $ 27 $ 106,439
Non-GAAP adjustments: Unrealized mark-to-market valuations on
energy-related derivatives(a) 19,423 (5,812 ) — 10,836 — — 24,447
Storage optimization program (b) 475 — — — — — 475 DC weather
impact(c) (7,232 ) — — — — — (7,232 ) Distributed generation asset
related investment tax credits(d) — — (1,252 ) — — — (1,252 )
Change in measured value of inventory(e) — —
— (3,126 ) — —
(3,126 ) Total non-GAAP adjustments $ 12,666
$ (5,812 ) $ (1,252 ) $ 7,710
$ — $ — $ 13,312 EBIT
$ 99,289 $ (567 ) $ 943 $
20,839 $ (780 ) $ 27 $ 119,751
Footnotes:
(a)
Adjustments to eliminate unrealized
mark-to-market gains (losses) for our energy-related derivatives
for our regulated utility and retail energy-marketing operations as
well as certain derivatives related to the optimization of
transportation capacity for the midstream energy services segment.
With the exception of certain transactions related to the
optimization of system capacity assets as discussed in footnote (b)
below, when these derivatives settle, the realized economic impact
is reflected in our non-GAAP results, as we are only removing
interim unrealized mark-to-market amounts.
(b)
Adjustments to shift the timing of storage
optimization margins for the regulated utility segment from the
periods recognized for GAAP purposes to the periods in which such
margins are recognized for regulatory sharing purposes. In
addition, lower-of-cost or market adjustments related to system and
non-system storage optimization are eliminated for non-GAAP
reporting because the margins will be recognized for regulatory
purposes when the withdrawals are made at the unadjusted historical
cost of storage inventory.
(c)
Eliminates the estimated financial effects
of warm or cold weather in the District of Columbia, as measured
consistent with our regulatory tariff. Washington Gas has
regulatory weather protection mechanisms in Maryland and Virginia
designed to neutralize the estimated financial effects of weather.
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.
(d)
To reclassify the amortization of deferred
investment tax credits from income taxes to operating income for
the commercial energy systems segment. These credits are a key
component of the operating success of this segment and therefore
are included within adjusted EBIT to help management and investors
better assess the segment's performance.
(e)
For our midstream energy services segment,
adjustments to reflect storage inventory at market or at a value
based on the price used to value the physical forward sales
contract that is economically hedging the storage inventory.
Adjusting our storage optimization inventory in this fashion better
aligns the settlement of both our physical and financial
transactions and allows investors and management to better analyze
the results of our non-utility asset optimization strategies.
Additionally, this adjustment also includes the net effect of
certain sharing mechanisms on the difference between the changes in
our non-GAAP storage inventory valuations and the unrealized gains
and losses on derivatives not subject to non-GAAP adjustments.
(f)
Adjustment to eliminate losses associated
with the index price used in certain gas purchases from Antero,
which are the subject of arbitration. These losses are expected to
reverse in future periods upon completion of the arbitration
proceedings.
(g)
Activities and transactions that are not
significant enough on a standalone basis to warrant treatment as an
operating segment and that do not fit into one of our four
operating segments.
(h)
Activities and transactions between
segments that are eliminated in consolidation.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170208006365/en/
WGL Holdings, Inc.News
MediaBernie Tylor,
202-624-6778orFinancial
CommunityDouglas Bonawitz, 202-624-6129
Wgl (NYSE:WGL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Wgl (NYSE:WGL)
Historical Stock Chart
From Apr 2023 to Apr 2024
