Avista Corp. (NYSE: AVA) today reported net income attributable to
Avista Corp. of $41.9 million, or $0.73 per diluted share, for the
first quarter of 2011, compared to $28.8 million, or $0.52 per
diluted share, for the first quarter of 2010.
"We had a very good first quarter, and we are off to a great
start for the year. The increase in our consolidated earnings was
primarily due to an increase in earnings at Avista Utilities
because weather in the first quarter of this year was significantly
colder and wetter than in the first quarter of 2010, which was one
of the warmest January to March periods on record in our service
territory," said Avista Chairman, President and Chief Executive
Officer Scott L. Morris.
"Weather conditions in the first quarter of 2011 were slightly
colder than average with precipitation, snowpack and streamflows
well above average. This resulted in a significant increase in
retail loads and hydroelectric generation as compared to the prior
year, which increased operating revenues and reduced our power
supply costs. Retail loads for the first quarter of 2011 were
slightly higher than our expectations. In addition, we have
improved our recovery of utility operating costs and capital
investments through general rate increases that have gone into
effect in each of our jurisdictions since last October.
"We remain focused on increasing efficiencies in our operations
to manage our costs while offering a number of services and options
to assist customers with managing their energy usage and bills.
"Although our first quarter results reflect a significant
improvement over last year, on an annual basis we are still not
earning the return authorized by state utility commissions in each
jurisdiction due to a continuing lag in the recovery of capital
investments and increasing operating costs. We plan to file a
general rate case in Washington in the second quarter of 2011, and
we continue to evaluate rate case plans in Idaho.
"We are pleased that both Moody's and Standard & Poor's
recently upgraded our credit ratings. This is another sign of the
progress we have made in strengthening our financial condition.
This lowers our current and future interest costs, benefiting both
shareholders and customers.
"We are confirming our 2011 earnings guidance with an
expectation that we will be at the high end of the range. However,
it is early in the year, and there are many variables that can
impact our results such as precipitation and temperatures for the
remainder of the year," Morris said.
Summary Results: Avista Corp.'s results for the first quarter of
2011 as compared to the first quarter of 2010 are presented in the
table below:
($ in thousands, except per-share data) Q1 2011 Q1 2010
---------- ---------
Operating Revenues $ 476,586 $ 456,415
---------- ---------
Income from Operations $ 84,825 $ 67,824
---------- ---------
Net Income attributable to Avista Corporation $ 41,918 $ 28,810
---------- ---------
Net Income (Loss) attributable to Avista
Corporation by Business Segment:
Avista Utilities $ 40,117 $ 27,776
---------- ---------
Advantage IQ $ 1,707 $ 1,447
---------- ---------
Other $ 94 $ (413)
---------- ---------
Earnings (Loss) per diluted share by Business
Segment attributable to Avista Corporation:
Avista Utilities $ 0.70 $ 0.50
---------- ---------
Advantage IQ $ 0.03 $ 0.03
---------- ---------
Other $ -- $ (0.01)
---------- ---------
Total earnings per diluted share attributable to
Avista Corporation $ 0.73 $ 0.52
---------- ---------
Net income for Avista Utilities for the first quarter of 2011
was positively impacted by an increase in gross margin (operating
revenues less resource costs). This increase was primarily due to
colder weather and power supply costs that were below the amount
included in base retail rates in Washington, as well as general
rate increases. The increase in gross margin was partially offset
by an increase in other operating expenses, depreciation and
amortization, and taxes other than income taxes.
The increase in net income for Advantage IQ for the first
quarter of 2011 was primarily due to strong growth from energy
management services, moderate growth from expense management
services, as well as the acquisition of The Loyalton Group
(Loyalton) effective December 31, 2010.
The improved results from the other businesses were due in part
to increased net income at METALfx and a net gain on investments of
$0.1 million for the first quarter of 2011 compared to a net loss
of $0.6 million for the first quarter of 2010.
Avista Utilities: Operating revenues increased $14.1 million and
resource costs decreased $11.5 million, which resulted in an
increase of $25.6 million in gross margin. The gross margin on
electric sales increased $14.5 million and the gross margin on
natural gas sales increased $11.1 million. The increase in electric
gross margin was due to colder weather that increased retail loads,
general rate increases and power supply costs below the amount
included in base retail rates. During the first quarter of 2011, we
recognized a benefit of $4.9 million under the Energy Recovery
Mechanism (ERM) in Washington compared to an expense of $1.2
million for the first quarter of 2010. The increase in our natural
gas gross margin was primarily due to colder weather that increased
retail loads and partially due to general rate increases.
Intracompany revenues and resource costs of $17.0 million
represent purchases and sales of natural gas between our natural
gas distribution operations and our electric generation operations
(as fuel for our generation plants).
Electric revenues increased $19.7 million. Retail electric
revenues increased by $25.2 million, and sales of fuel increased by
$22.3 million, while wholesale electric revenues decreased by $27.5
million.
Retail electric revenues increased due to an increase in use per
customer as a result of colder weather and the impact of general
rate increases. Residential electric use per customer increased 11
percent and commercial use per customer increased 3 percent
compared to the first quarter of 2010.
Wholesale electric revenues decreased due to a decrease in sales
volumes and sales prices. The decrease in sales volumes was
primarily due to decreased wholesale power optimization and higher
than expected retail sales caused by colder weather.
When electric wholesale market prices are below the cost of
operating our natural gas-fired thermal generating units, we sell
the natural gas purchased for generation in the wholesale market as
sales of fuel. Sales of fuel increased due to an increase in
thermal generation resource optimization and lower usage of our
thermal generation plants. This was due in part to increased
hydroelectric generation.
Natural gas revenues increased $11.4 million. Retail natural gas
revenues increased by $28.1 million, while wholesale natural gas
revenues decreased by $17.1 million.
The increase in retail natural gas revenues was due to an
increase in volumes and higher retail rates. We sold more retail
natural gas in the first quarter of 2011 as compared to the first
quarter of 2010 primarily due to colder weather. Residential
natural gas use per customer increased 20 percent and commercial
use per customer increased 22 percent compared to the first quarter
of 2010. The increase in retail rates reflects purchased gas
adjustments, as well as general rate increases.
The decrease in our wholesale natural gas revenues reflects a
decrease in prices and volumes. Wholesale sales reflect the sale of
natural gas in excess of load requirements as part of the natural
gas procurement and resource optimization process. Additionally, we
engage in optimization of available interstate pipeline
transportation and storage capacity through wholesale purchases and
sales of natural gas. With higher retail loads in 2011 as compared
to 2010, we had less opportunity to optimize transportation
resources. Differences between revenues and costs from sales of
resources in excess of retail load requirements and from resource
optimization are accounted for through the PGA mechanisms.
Advantage IQ: Advantage IQ's revenues for the first quarter of
2011 increased 22 percent as compared to the first quarter of 2010
and totaled $29.2 million. The increase in revenues was primarily
due to strong growth from energy management services, moderate
growth from expense management services, and the acquisition of
Loyalton.
In the first quarter of 2011, Advantage IQ managed bills
totaling $4.8 billion, an increase of $0.7 billion, or 18 percent,
as compared to the first quarter of 2010. The increase was due to
an increase in both the average value of each bill processed and
the number of accounts managed. Advantage IQ had a 6 percent
increase in the number of accounts managed for the first quarter of
2011.
In April 2011, Advantage IQ entered into a new $40 million
three-year committed line of credit agreement that replaced its $15
million committed credit agreement that had an expiration date of
May 2011.
Other Businesses: Operating revenues decreased $5.3 million and
operating expenses decreased $5.7 million for the other businesses.
The decrease in operating revenues and operating expenses was
primarily due to the assignment of the Lancaster power purchase
agreement to Avista Corp. in December 2010. The improvement in
results for these businesses was due in part to increased earnings
at METALfx, which had net income of $0.3 million for the first
quarter of 2011 compared to close to break-even for the first
quarter of 2010.
Liquidity and Capital Resources: In February 2011, we entered
into a new committed line of credit in the total amount of $400
million with an expiration date of February 2015 that replaced our
$320 million and $75 million committed lines of credit that had an
expiration date of April 5, 2011. As of March 31, 2011, we had $313
million of available liquidity under our committed line of
credit.
Subject to market conditions, we are planning to cause the
redemption of $83.7 million of Pollution Control Bonds and the
refunding thereof with new bond issues in 2011. We are currently
the holder of all bonds to be redeemed and refunded and,
accordingly, would receive the redemption proceeds.
We are party to a sales agency agreement under which we sell
shares of our common stock from time to time. In the first quarter
of 2011, we sold 255,000 shares for a total of $5.8 million. As of
March 31, 2011, we had 0.8 million shares available to be issued
under this agreement.
We expect to issue up to $25 million of common stock in 2011
(including first quarter issuances) in order to maintain our
capital structure at an appropriate level for our business.
Utility capital expenditures were $50 million for the first
quarter of 2011. We expect utility capital expenditures to be about
$250 million for the full year of 2011. Actual capital expenditures
may vary from our estimates due to factors such as changes in
business conditions, construction schedules and environmental
requirements.
Earnings Guidance and Outlook
Based on our results for the first quarter, which were above our
expectations, and our forecast for the remainder of the year, we
are expecting to be at the high end of our consolidated and utility
earnings guidance range. It is important to note that we are still
early in the year. We expect consolidated earnings to be in the
range of $1.60 to $1.80 per diluted share for 2011.
We expect Avista Utilities to contribute in the range of $1.47
to $1.62 per diluted share for 2011. We expect our 2011 utility
earnings growth to be limited by several factors including: slow
load growth due to economic conditions; continued lag in the
recovery of our operating expenses and capital investments; and
increased operating and maintenance costs, including generation
plant major maintenance expenses, and pension and medical costs.
Our range for Avista Utilities encompasses expected variability in
power supply costs and the application of the ERM to that power
supply cost variability. The midpoint of our utility guidance range
does not include any benefit or expense under the ERM. However, we
are expecting a benefit under the ERM in 2011 within the 90 percent
customer/10 percent company sharing band based on actual results
for the first quarter and our forecast for the remainder of the
year. The forecast of our position in the ERM can vary
significantly due to a variety of factors including the level of
hydroelectric generation and retail loads, as well as changes in
purchased power and natural gas fuel prices. Our outlook for Avista
Utilities assumes, among other variables, normal precipitation and
temperatures for the remainder of 2011.
We expect Advantage IQ to contribute in the range of $0.13 to
$0.16 per diluted share for 2011 and the other businesses to be
between break-even and a contribution of $0.02 per diluted
share.
NOTE: We will host a conference call with financial analysts and
investors on May 6, 2011, at 10:30 a.m. ET to discuss this news
release. The call is available at (866) 783-2141, Pass code:
47720905. A simultaneous webcast of the call is available on our
website, www.avistacorp.com. A replay of the conference call will
be available through May 13, 2011. Call (888) 286-8010, Pass code
78542679, to listen to the replay.
Avista Corp. is an energy company involved in the production,
transmission and distribution of energy as well as other
energy-related businesses. Avista Utilities is our operating
division that provides electric service to 358,000 customers and
natural gas to 319,000 customers. Our service territory covers
30,000 square miles in eastern Washington, northern Idaho and parts
of southern and eastern Oregon, with a population of 1.5 million.
Avista's primary, non-regulated subsidiary is Advantage IQ. Our
stock is traded under the ticker symbol "AVA." For more information
about Avista, please visit www.avistacorp.com.
Avista Corp. and the Avista Corp. logo are trademarks of Avista
Corporation.
The attached condensed consolidated statements of income,
condensed consolidated balance sheets, and financial and operating
highlights are integral parts of this earnings release.
This news release contains forward-looking statements, including
statements regarding our current expectations for future financial
performance and cash flows, capital expenditures, financing plans,
our current plans or objectives for future operations and other
factors, which may affect the company in the future. Such
statements are subject to a variety of risks, uncertainties and
other factors, most of which are beyond our control and many of
which could have significant impact on our operations, results of
operations, financial condition or cash flows and could cause
actual results to differ materially from those anticipated in such
statements.
The following are among the important factors that could cause
actual results to differ materially from the forward-looking
statements: weather conditions (temperatures and precipitation
levels) and their effects on energy demand and electric generation,
including the effect of precipitation and temperatures on the
availability of hydroelectric resources, the effect of temperatures
on customer demand, and similar impacts on supply and demand in the
wholesale energy markets; the effect of state and federal
regulatory decisions on our ability to recover costs and earn a
reasonable return including, but not limited to, the disallowance
of costs and investments, and delay in the recovery of capital
investments and operating costs; changes in wholesale energy prices
that can affect, among other things, the cash requirements to
purchase electricity and natural gas, the value received for sales
in the wholesale energy market, the necessity to request changes in
rates that are subject to regulatory approval, collateral required
of us by counterparties on wholesale energy transactions and credit
risk to us from such transactions, and the market value of
derivative assets and liabilities; global financial and economic
conditions (including the impact on capital markets) and their
effect on our ability to obtain funding at a reasonable cost; our
ability to obtain financing through the issuance of debt and/or
equity securities, which can be affected by various factors
including our credit ratings, interest rates and other capital
market conditions; economic conditions in our service areas,
including the effect on the demand for, and customers' payment for,
our utility services; the potential effects of legislation or
administrative rulemaking, including the possible adoption of
national or state laws requiring our resources to meet certain
standards and placing restrictions on greenhouse gas emissions to
mitigate concerns over global climate changes; changes in actuarial
assumptions, interest rates and the actual return on plan assets
for our pension plan, which can affect future funding obligations,
pension expense and pension plan liabilities; volatility and
illiquidity in wholesale energy markets, including the availability
of willing buyers and sellers, and prices of purchased energy and
demand for energy sales; unplanned outages at any of our generating
facilities or the inability of facilities to operate as intended;
the outcome of pending regulatory and legal proceedings arising out
of the "western energy crisis" of 2000 and 2001, and including
possible refunds; the outcome of legal proceedings and other
contingencies; changes in, and compliance with, environmental and
endangered species laws, regulations, decisions and policies,
including present and potential environmental remediation costs;
wholesale and retail competition including, but not limited to,
alternative energy sources, suppliers and delivery arrangements;
the ability to comply with the terms of the licenses for our
hydroelectric generating facilities at cost-effective levels;
natural disasters that can disrupt energy generation, transmission
and distribution, as well as the availability and costs of
materials, equipment, supplies and support services; explosions,
fires, accidents, or mechanical breakdowns that may occur while
operating and maintaining our generation, transmission and
distribution systems; blackouts or disruptions of interconnected
transmission systems; disruption to information systems, automated
controls and other technologies that we rely on for operations,
communications and customer service; the potential for terrorist
attacks, cyber security attacks or other malicious acts, that cause
damage to our utility assets, as well as the national economy in
general; including the impact of acts of terrorism, cyber security
attacks or vandalism that damage or disrupt information technology
systems; delays or changes in construction costs, and/or our
ability to obtain required permits and materials for present or
prospective facilities; changes in the long-term climate of the
Pacific Northwest, which can affect, among other things, customer
demand patterns and the volume and timing of streamflows to our
hydroelectric resources; changes in industrial, commercial and
residential growth and demographic patterns in our service
territory or the loss of significant customers; the loss of key
suppliers for materials or services; default or nonperformance on
the part of any parties from which we purchase and/or sell capacity
or energy; deterioration in the creditworthiness of our customers
and counterparties; the effect of any potential decline in our
credit ratings, including impeded access to capital markets, higher
interest costs, and certain covenants with ratings triggers in our
financing arrangements and wholesale energy contracts; increasing
health care costs and the resulting effect on health insurance
provided to our employees and retirees; increasing costs of
insurance, more restricted coverage terms and our ability to obtain
insurance; work force issues, including changes in collective
bargaining unit agreements, strikes, work stoppages or the loss of
key executives, availability of workers in a variety of skill
areas, and our ability to recruit and retain employees; the
potential effects of negative publicity regarding business
practices, whether true or not, which could result in, among other
things, costly litigation and a decline in our common stock price;
changes in technologies, possibly making some of the current
technology obsolete; changes in tax rates and/or policies; and
changes in our strategic business plans, which may be affected by
any or all of the foregoing, including the entry into new
businesses and/or the exit from existing businesses.
For a further discussion of these factors and other important
factors, please refer to our Annual Report on Form 10-K for the
year ended Dec. 31, 2010. The forward-looking statements contained
in this news release speak only as of the date hereof. We undertake
no obligation to update any forward-looking statement or statements
to reflect events or circumstances that occur after the date on
which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it
is not possible for management to predict all of such factors, nor
can it assess the impact of each such factor on our business or the
extent to which any such factor, or combination of factors, may
cause actual results to differ materially from those contained in
any forward-looking statement.
AVISTA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in Thousands except Per Share Amounts)
First Quarter
--------------------
2011 2010
--------- ---------
Operating revenues $ 476,586 $ 456,415
--------- ---------
Operating expenses:
Utility resource costs 248,121 259,567
Other operating expenses 90,928 81,707
Depreciation and amortization 27,719 26,146
Utility taxes other than income taxes 24,993 21,171
--------- ---------
Total operating expenses 391,761 388,591
--------- ---------
Income from operations 84,825 67,824
Interest expense, net of capitalized interest (18,153) (18,941)
Other expense - net (632) (1,699)
--------- ---------
Income before income taxes 66,040 47,184
Income tax expense 23,637 17,867
--------- ---------
Net income 42,403 29,317
Less: Net income attributable to noncontrolling
interests (485) (507)
--------- ---------
Net income attributable to Avista Corporation $ 41,918 $ 28,810
========= =========
Weighted-average common shares outstanding
(thousands), basic 57,342 54,869
Weighted-average common shares outstanding
(thousands), diluted 57,414 55,115
Earnings per common share attributable to Avista
Corporation:
Basic $ 0.73 $ 0.53
========= =========
Diluted $ 0.73 $ 0.52
========= =========
Dividends paid per common share $ 0.275 $ 0.25
========= =========
Issued May 6, 2011
AVISTA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)
March 31, December 31,
2011 2010
----------- -----------
Assets
Cash and cash equivalents $ 61,837 $ 69,413
Accounts and notes receivable 218,436 230,229
Other current assets 184,886 279,923
Total net utility property 2,731,143 2,714,237
Other non-current assets 203,620 195,793
Regulatory assets for deferred income taxes 88,667 90,025
Regulatory assets for pensions and other
postretirement benefits 176,382 178,985
Other regulatory assets 107,107 112,830
Non-current utility energy commodity derivative
assets 17,789 15,261
Power deferrals 10,283 18,305
Other deferred charges 23,635 35,094
----------- -----------
Total Assets $ 3,823,785 $ 3,940,095
=========== ===========
Liabilities and Equity
Accounts payable $ 150,648 $ 171,707
Current portion of long-term debt 360 358
Current portion of nonrecourse long-term debt
of Spokane Energy 12,754 12,463
Short-term borrowings 65,000 110,000
Other current liabilities 225,353 284,647
Long-term debt 1,101,814 1,101,499
Nonrecourse long-term debt of Spokane Energy 43,164 46,471
Long-term debt to affiliated trusts 51,547 51,547
Regulatory liability for utility plant
retirement costs 224,403 223,131
Pensions and other postretirement benefits 157,698 161,189
Deferred income taxes 492,295 495,474
Other non-current liabilities and deferred
credits 96,125 109,703
----------- -----------
Total Liabilities 2,621,161 2,768,189
----------- -----------
Redeemable Noncontrolling Interests 42,817 46,722
Equity
Avista Corporation Stockholders' Equity:
Common stock - net (57,622,218 and 57,119,723
outstanding shares) 833,617 827,592
Retained earnings and accumulated other
comprehensive loss 326,762 298,192
----------- -----------
Total Avista Corporation Stockholders'
Equity 1,160,379 1,125,784
Noncontrolling interests (572) (600)
----------- -----------
Total Equity 1,159,807 1,125,184
----------- -----------
Total Liabilities and Equity $ 3,823,785 $ 3,940,095
=========== ===========
Issued May 6, 2011
AVISTA CORPORATION
FINANCIAL AND OPERATING HIGHLIGHTS (UNAUDITED)
(Dollars in Thousands)
First Quarter
--------------------
2011 2010
---------- ---------
Avista Utilities
Retail electric revenues $ 204,642 $ 179,491
Retail kWh sales (in millions) 2,471 2,285
Retail electric customers at end of period 358,357 356,073
Wholesale electric revenues $ 19,051 $ 46,562
Wholesale kWh sales (in millions) 596 919
Sales of fuel $ 44,372 $ 22,112
Other electric revenues $ 3,887 $ 4,092
Retail natural gas revenues $ 133,872 $ 105,766
Wholesale natural gas revenues $ 45,022 $ 62,118
Transportation and other natural gas revenues $ 4,337 $ 3,890
Total therms delivered (in thousands) 298,266 277,190
Retail natural gas customers at end of period 318,826 316,446
Intracompany revenues $ 17,036 -
Income from operations (pre-tax) $ 79,499 $ 63,214
Net income attributable to Avista Corporation $ 40,117 $ 27,776
Advantage IQ
Revenues $ 29,158 $ 23,942
Income from operations (pre-tax) $ 3,486 $ 3,161
Net income attributable to Avista Corporation $ 1,707 $ 1,447
Other
Revenues $ 9,731 $ 15,074
Income from operations (pre-tax) $ 1,840 $ 1,449
Net income (loss) attributable to Avista
Corporation $ 94 $ (413)
Issued May 6, 2011
Contact: Media: Jessie Wuerst (509) 495-8578 Email Contact
Investors: Jason Lang (509) 495-2930 Email Contact Avista 24/7
Media Access (509) 495-4174
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