Attached files
| file | filename |
|---|---|
| 8-K - 8-K - UNS Energy Corp | coverpage.htm |
| EX-99.2 - EXHIBIT-99.2 - UNS Energy Corp | ex9926302013.htm |
| EX-99.3 - EX-99.3 - UNS Energy Corp | exhibit993q2webcastslide.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE | July 30, 2013 |
Media Contact: Joseph Barrios, (520) 884-3725 | Page 1 of 8 |
Financial Analyst Contact: Chris Norman, (520) 884-3649 | |
UNS ENERGY REPORTS SECOND QUARTER 2013 EARNINGS
• | UNS Energy’s net income for the second quarter of 2013 was $34.6 million, or $0.83 per diluted share of common stock, compared with net income of $26.3 million, or $0.64 per diluted share in the second quarter of 2012. For the six months ended June 30, 2013, UNS Energy's net income was $46.0 million, or $1.10 per diluted share, compared with net income of $32.7 million, or $0.81 per diluted share, in the same period last year. |
• | UNS Energy’s primary subsidiary, Tucson Electric Power Company (TEP), reported net income of $30.8 million in the second quarter of 2013 compared with net income of $21.9 million in the second quarter of 2012. |
• | UNS Energy's second quarter 2013 net income includes: an $11.0 million reduction to income tax expense related to a regulatory asset that was recorded during the quarter for deferred tax expenses that will be recovered in future periods; and a $3.0 million pre-tax ($1.8 million after-tax) charge to fuel expense related to a one-time credit to retail customers that was approved in TEP's recently completed rate case. |
Tucson, Ariz. – UNS Energy Corporation (NYSE: UNS) today reported second quarter 2013 net income of $34.6 million, or $0.83 per diluted share of common stock, compared with net income of $26.3 million, or $0.64 per diluted share in the same period last year.
“Our second quarter results mark the end of a four and a half year base rate freeze at TEP. The rate freeze, coupled with little to no economic growth, created significant challenges during this period," said Paul Bonavia, UNS Energy's Chairman and Chief Executive Officer. "Our employees responded by consistently controlling costs while improving safety and reliability."
In June, the Arizona Corporation Commission (ACC) approved new rates for TEP that became effective on July 1. The new rates include TEP's first base rate increase since 2008.
"TEP's new retail rates promote rate stability and strengthen TEP's financial position, bolstering our ability to make long-term investments that are in the best interests of our customers," Bonavia said.
Tucson Electric Power
Retail kWh Sales and Revenues
TEP’s retail kWh sales decreased by 1.3 percent in the second quarter, due in part to fewer cooling degree days during the months of April and May compared with last year. The decrease in retail sales volumes led to a $1.1 million, or 0.8 percent, decrease in TEP’s retail margin revenues compared with the second quarter of 2012.
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Other Expenses
TEP’s Base operations and maintenance (O&M) expense was $61.2 million in the second quarter of 2013 compared with $59.5 million in the second quarter of 2012. The increase was due in part to unplanned generating plant maintenance. Base O&M excludes costs directly offset by customer surcharges and third-party reimbursements.
TEP's total interest expense declined by $1.4 million in the second quarter of 2013 primarily due to the expected decline in the balance of capital lease obligations compared with the second quarter of 2012.
Other Items
TEP's second quarter 2013 results of operations include the following items:
• | a $10.8 million tax benefit related to a regulatory asset recorded in June 2013 to recover previously recorded income tax expense through future rates as a result of the 2013 TEP Rate Order; and |
• | a one-time increase to fuel expense of $3 million related to a credit to customers agreed to in TEP's rate case. |
UNS Gas
UNS Gas reported net income of $0.3 million in the second quarter of 2013 compared with no net income or loss in the same period last year.
UNS Electric
UNS Electric reported net income of $3.8 million in the second quarter of 2013 compared with $4.5 million in the second quarter of 2012. The decrease in net income was due in part to the loss of an industrial customer.
Year-to-Date Results
In the first six months of 2013, TEP reported net income of $32.3 million compared with net income of $20.4 million in the same period last year. The increase is related to: cold weather during first quarter weather relative to last year; an increase in long-term wholesale margin revenues due to higher market prices for wholesale power; and the anticipated reduction in capital lease interest expense; partially offset by higher Base O&M related in part to unplanned maintenance on TEP's generating facilities; and an increase in depreciation and amortization expense reflecting TEP's ongoing utility investments. Results in the first six months of 2013 include the credit to fuel expense and the reduction to income tax expense described above.
UNS Gas
UNS Gas reported net income of $7.6 million in the first six months of 2013 compared with net income of $5.4 million in the same period last year. A cold winter and a Base Rate increase effective in May 2012 contributed to the year-over-year increase.
UNS Electric
UNS Electric reported net income of $6.1 million in the first six months of 2013 compared with $7.3 million in the first six months of 2012. The decrease in net income was due in part to the loss of an industrial customer.
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Net Income and Earnings Per Share Summary
2nd Quarter | YTD June 30, | |||||||||||||||
Net Income (Loss) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Millions of Dollars | Millions of Dollars | |||||||||||||||
Tucson Electric Power | $ | 30.8 | $ | 21.9 | $ | 32.3 | $ | 20.4 | ||||||||
UNS Gas | 0.3 | — | 7.6 | 5.4 | ||||||||||||
UNS Electric | 3.8 | 4.5 | 6.1 | 7.3 | ||||||||||||
Other(1) | (0.3 | ) | (0.1 | ) | — | (0.4 | ) | |||||||||
Net Income (Loss) | $ | 34.6 | $ | 26.3 | $ | 46.0 | $ | 32.7 | ||||||||
Avg. Basic Shares Outstanding (millions) | 41.6 | 40.5 | 41.6 | 39.3 | ||||||||||||
Avg. Diluted Shares Outstanding (millions) | 41.9 | 41.6 | 41.9 | 41.6 | ||||||||||||
2nd Quarter | YTD June 30, | |||||||||||||||
Earnings (Loss) Per UNS Energy Share | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Tucson Electric Power | $ | 0.74 | $ | 0.54 | $ | 0.78 | $ | 0.52 | ||||||||
UNS Gas | 0.01 | — | 0.18 | 0.14 | ||||||||||||
UNS Electric | 0.09 | 0.11 | 0.15 | 0.19 | ||||||||||||
Other(1) | (0.01 | ) | — | — | (0.02 | ) | ||||||||||
Net Income per Basic Share | $ | 0.83 | $ | 0.65 | $ | 1.11 | $ | 0.83 | ||||||||
Net Income per Diluted Share | $ | 0.83 | $ | 0.64 | $ | 1.10 | $ | 0.81 | ||||||||
(1) | Includes UNS Energy on a stand-alone basis and results from Millennium Energy Holdings, Inc. and UNS Energy Development, wholly owned subsidiaries of UNS Energy. |
UNS Energy believes the presentation of TEP, UNS Gas and UNS Electric net income or loss on a per basic UNS Energy share basis (which are non-GAAP financial measures) provides useful information to investors by disclosing the results of operations of its business segments on a basis consistent with UNS Energy's reported earnings or losses.
Seasonality of Earnings
The net income and results of operations of TEP as well as of UNS Gas and UNS Electric – operating subsidiaries of UniSource Energy Services (UES) – are seasonal in nature. TEP and UNS Electric typically record the majority of their net income during the second and third quarters when hot weather contributes to higher energy consumption. TEP’s retail rates, which include higher charges for higher levels of energy use, also shift a larger share of the company’s earnings into those periods.
Energy demand from UNS Gas customers typically peaks during the winter. Accordingly, UNS Gas typically records the majority of its net income during the first and fourth quarters.
Conference Call and Webcast
The company will host a conference call on Tuesday, July 30, 2013 at 12 p.m. EDT to discuss the financial results and outlook. To participate in the call, please dial in 5 to 10 minutes prior to the start time. A reference code is not necessary to access the live call.
Dial-in number: (800) 695-3244
The conference call can also be heard live online at uns.com.
A telephone replay will be available for seven days.
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Replay number: (800) 633-8284
Reference code: 21668731
In conjunction with this earnings announcement, UNS Energy has provided information on its performance during the second quarter of 2013. These materials have been filed with the Securities and Exchange Commission and are also available at uns.com. UNS Energy and TEP are providing the address of such website solely for the information of investors and do not intend the address to be an active link. Information contained at such website is not part of the report filed with the SEC by UNS Energy and TEP.
UNS Energy Corporation is a Tucson, Arizona-based company with consolidated assets of approximately $4 billion. UNS Energy's primary subsidiaries include Tucson Electric Power, which serves approximately 408,000 customers in southern Arizona; and UniSource Energy Services, provider of natural gas and electric service for approximately 242,000 customers in northern and southern Arizona. For more information about UNS Energy and its subsidiaries, visit uns.com.
This release contains forward-looking information that involves risks and uncertainties. These risks and uncertainties include, but are not limited to: state and federal regulatory and legislative decisions and actions; regional economic and market conditions, which could affect customer growth and energy usage; weather variations affecting energy usage; the cost of debt and equity capital and access to capital markets; the performance of the stock market and changing interest rate environment, which affect the value of the company’s pension and other retiree benefit plan assets and the related contribution requirements and expense; unexpected increases in O&M expense; resolution of pending litigation matters; changes in accounting standards; changes in critical accounting estimates; changes to long-term contracts; the cost of fuel and power supplies; performance of TEP's generating plants; and other factors listed in UNS Energy's Form 10-K and 10-Q filings with the Securities and Exchange Commission. The preceding factors may cause future results to differ materially from outcomes currently expected by UNS Energy.
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UNS Energy Corporation
Comparative Condensed Consolidated Statements of Income
Three Months Ended | |||||||||||||||
(in thousands of dollars, except per share amounts) | June 30, | Increase / (Decrease) | |||||||||||||
(UNAUDITED) | 2013 | 2012 | Amount | Percent | |||||||||||
Operating Revenues | |||||||||||||||
Electric Retail Sales | $ | 285,419 | $ | 292,071 | $ | (6,652 | ) | (2.3 | ) | ||||||
Electric Wholesale Sales | 30,654 | 25,511 | 5,143 | 20.2 | |||||||||||
Gas Retail Sales | 20,013 | 20,006 | 7 | N/M | |||||||||||
Other Revenues | 29,131 | 26,410 | 2,721 | 10.3 | |||||||||||
Total Operating Revenues | 365,217 | 363,998 | 1,219 | 0.3 | |||||||||||
Operating Expenses | |||||||||||||||
Fuel | 86,459 | 82,325 | 4,134 | 5.0 | |||||||||||
Purchased Energy | 57,796 | 48,203 | 9,593 | 19.9 | |||||||||||
Transmission | 4,521 | 3,412 | 1,109 | 32.5 | |||||||||||
Increase to Reflect PPFAC/PGA Recovery Treatment | 2,074 | 14,215 | (12,141 | ) | (85.4 | ) | |||||||||
Total Fuel and Purchased Energy | 150,850 | 148,155 | 2,695 | 1.8 | |||||||||||
Operations and Maintenance | 95,143 | 90,926 | 4,217 | 4.6 | |||||||||||
Depreciation | 36,671 | 35,190 | 1,481 | 4.2 | |||||||||||
Amortization | 8,119 | 9,112 | (993 | ) | (10.9 | ) | |||||||||
Taxes Other Than Income Taxes | 13,631 | 12,556 | 1,075 | 8.6 | |||||||||||
Total Operating Expenses | 304,414 | 295,939 | 8,475 | 2.9 | |||||||||||
Operating Income | 60,803 | 68,059 | (7,256 | ) | (10.7 | ) | |||||||||
Other Income (Deductions) | |||||||||||||||
Interest Income | 19 | 383 | (364 | ) | (95.0 | ) | |||||||||
Other Income | 1,734 | 1,333 | 401 | 30.1 | |||||||||||
Other Expense | (713 | ) | (828 | ) | 115 | (13.9 | ) | ||||||||
Total Other Income (Deductions) | 1,040 | 888 | 152 | 17.1 | |||||||||||
Interest Expense | |||||||||||||||
Long-Term Debt | 17,700 | 17,602 | 98 | 0.6 | |||||||||||
Capital Leases | 6,249 | 8,301 | (2,052 | ) | (24.7 | ) | |||||||||
Other Interest Expense, Net of Interest Capitalized | (399 | ) | (340 | ) | (59 | ) | N/M | ||||||||
Total Interest Expense | 23,550 | 25,563 | (2,013 | ) | (7.9 | ) | |||||||||
Income Before Income Taxes | 38,293 | 43,384 | (5,091 | ) | (11.7 | ) | |||||||||
Income Tax Expense | 3,675 | 17,111 | (13,436 | ) | (78.5 | ) | |||||||||
Net Income | 34,618 | 26,273 | 8,345 | 31.8 | |||||||||||
Weighted-Average Shares of Common Stock Outstanding (000) | 41,598 | 40,471 | 1,127 | 2.8 | |||||||||||
Basic Earnings per Share | $ | 0.83 | $ | 0.65 | $ | 0.18 | 27.7 | ||||||||
Diluted Earnings per Share | $ | 0.83 | $ | 0.64 | $ | 0.19 | 29.7 | ||||||||
Dividends Declared per Share | $ | 0.435 | $ | 0.43 | $ | 0.005 | 1.2 | ||||||||
N/M—Not Meaningful
Reclassifications have been made to prior periods to conform to the current period’s presentation.
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UNS Energy Corporation
Comparative Condensed Consolidated Statements of Income
Six Months Ended | |||||||||||||||
(in thousands of dollars, except per share amounts) | June 30, | Increase / (Decrease) | |||||||||||||
(UNAUDITED) | 2013 | 2012 | Amount | Percent | |||||||||||
Operating Revenues | |||||||||||||||
Electric Retail Sales | $ | 506,279 | $ | 497,502 | $ | 8,777 | 1.8 | ||||||||
Electric Wholesale Sales | 65,052 | 59,127 | 5,925 | 10.0 | |||||||||||
Gas Retail Sales | 71,002 | 70,215 | 787 | 1.1 | |||||||||||
Other Revenues | 55,025 | 52,540 | 2,485 | 4.7 | |||||||||||
Total Operating Revenues | 697,358 | 679,384 | 17,974 | 2.6 | |||||||||||
Operating Expenses | |||||||||||||||
Fuel | 168,148 | 153,060 | 15,088 | 9.9 | |||||||||||
Purchased Energy | 121,955 | 107,993 | 13,962 | 12.9 | |||||||||||
Transmission | 7,707 | 6,238 | 1,469 | 23.5 | |||||||||||
Increase (Decrease) to Reflect PPFAC/PGA Recovery Treatment | (3,294 | ) | 11,654 | (14,948 | ) | N/M | |||||||||
Total Fuel and Purchased Energy | 294,516 | 278,945 | 15,571 | 5.6 | |||||||||||
Operations and Maintenance | 185,043 | 185,241 | (198 | ) | (0.1 | ) | |||||||||
Depreciation | 72,970 | 70,174 | 2,796 | 4.0 | |||||||||||
Amortization | 16,408 | 17,776 | (1,368 | ) | (7.7 | ) | |||||||||
Taxes Other Than Income Taxes | 27,723 | 24,794 | 2,929 | 11.8 | |||||||||||
Total Operating Expenses | 596,660 | 576,930 | 19,730 | 3.4 | |||||||||||
Operating Income | 100,698 | 102,454 | (1,756 | ) | (1.7 | ) | |||||||||
Other Income (Deductions) | |||||||||||||||
Interest Income | 28 | 641 | (613 | ) | (95.6 | ) | |||||||||
Other Income | 3,502 | 3,038 | 464 | 15.3 | |||||||||||
Other Expense | (247 | ) | 104 | (351 | ) | N/M | |||||||||
Total Other Income (Deductions) | 3,283 | 3,783 | (500 | ) | (13.2 | ) | |||||||||
Interest Expense | |||||||||||||||
Long-Term Debt | 35,954 | 36,737 | (783 | ) | (2.1 | ) | |||||||||
Capital Leases | 12,498 | 16,598 | (4,100 | ) | (24.7 | ) | |||||||||
Other Interest Expense, Net of Interest Capitalized | (1,467 | ) | (166 | ) | (1,301 | ) | N/M | ||||||||
Total Interest Expense | 46,985 | 53,169 | (6,184 | ) | (11.6 | ) | |||||||||
Income Before Income Taxes | 56,996 | 53,068 | 3,928 | 7.4 | |||||||||||
Income Tax Expense | 11,033 | 20,319 | (9,286 | ) | (45.7 | ) | |||||||||
Net Income | 45,963 | 32,749 | 13,214 | 40.3 | |||||||||||
Weighted-Average Shares of Common Stock Outstanding (000) | 41,569 | 39,251 | 2,318 | 5.9 | |||||||||||
Basic Earnings per Share | $ | 1.11 | $ | 0.83 | $ | 0.28 | 33.7 | ||||||||
Diluted Earnings per Share | $ | 1.10 | $ | 0.81 | $ | 0.29 | 35.8 | ||||||||
Dividends Declared per Share | $ | 0.870 | $ | 0.86 | $ | 0.010 | 1.2 | ||||||||
N/M—Not Meaningful
Reclassifications have been made to prior periods to conform to the current period’s presentation.
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TUCSON ELECTRIC POWER COMPANY
Comparative Condensed Consolidated Statements of Income
Three Months Ended | |||||||||||||||
(in thousands of dollars) | June 30, | Increase / (Decrease) | |||||||||||||
(UNAUDITED) | 2013 | 2012 | Amount | Percent | |||||||||||
Operating Revenues | |||||||||||||||
Electric Retail Sales | $ | 243,635 | $ | 247,770 | $ | (4,135 | ) | (1.7 | ) | ||||||
Electric Wholesale Sales | 29,542 | 22,274 | 7,268 | 32.6 | |||||||||||
Other Revenues | 31,086 | 29,375 | 1,711 | 5.8 | |||||||||||
Total Operating Revenues | 304,263 | 299,419 | 4,844 | 1.6 | |||||||||||
Operating Expenses | |||||||||||||||
Fuel | 84,553 | 79,554 | 4,999 | 6.3 | |||||||||||
Purchased Power | 28,410 | 20,862 | 7,548 | 36.2 | |||||||||||
Transmission | 1,730 | 1,401 | 329 | 23.5 | |||||||||||
Increase to Reflect PPFAC Recovery Treatment | 5,274 | 12,811 | (7,537 | ) | (58.8 | ) | |||||||||
Total Fuel and Purchased Energy | 119,967 | 114,628 | 5,339 | 4.7 | |||||||||||
Other Operations and Maintenance | 82,011 | 78,683 | 3,328 | 4.2 | |||||||||||
Depreciation | 28,861 | 27,545 | 1,316 | 4.8 | |||||||||||
Amortization | 9,052 | 10,028 | (976 | ) | (9.7 | ) | |||||||||
Taxes Other Than Income Taxes | 10,939 | 10,324 | 615 | 6.0 | |||||||||||
Total Operating Expenses | 250,830 | 241,208 | 9,622 | 4.0 | |||||||||||
Operating Income | 53,433 | 58,211 | (4,778 | ) | (8.2 | ) | |||||||||
Other Income (Deductions) | |||||||||||||||
Interest Income | 12 | 43 | (31 | ) | (72.1 | ) | |||||||||
Other Income | 1,270 | 1,209 | 61 | 5.0 | |||||||||||
Other Expense | (2,378 | ) | (1,984 | ) | (394 | ) | 19.9 | ||||||||
Total Other Income (Deductions) | (1,096 | ) | (732 | ) | (364 | ) | 49.7 | ||||||||
Interest Expense | |||||||||||||||
Long-Term Debt | 13,991 | 13,378 | 613 | 4.6 | |||||||||||
Capital Leases | 6,249 | 8,301 | (2,052 | ) | (24.7 | ) | |||||||||
Other Interest Expense, Net of Interest Capitalized | (342 | ) | (352 | ) | 10 | N/M | |||||||||
Total Interest Expense | 19,898 | 21,327 | (1,429 | ) | (6.7 | ) | |||||||||
Income Before Income Taxes | 32,439 | 36,152 | (3,713 | ) | (10.3 | ) | |||||||||
Income Tax Expense | 1,652 | 14,242 | (12,590 | ) | (88.4 | ) | |||||||||
Net Income | 30,787 | 21,910 | 8,877 | 40.5 | |||||||||||
N/M—Not Meaningful
Reclassifications have been made to prior periods to conform to the current period’s presentation.
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TUCSON ELECTRIC POWER COMPANY
Comparative Condensed Consolidated Statements of Income
Six Months Ended | |||||||||||||||
(in thousands of dollars) | June 30, | Increase / (Decrease) | |||||||||||||
(UNAUDITED) | 2013 | 2012 | Amount | Percent | |||||||||||
Operating Revenues | |||||||||||||||
Electric Retail Sales | $ | 428,515 | $ | 414,101 | $ | 14,414 | 3.5 | ||||||||
Electric Wholesale Sales | 63,940 | 52,040 | 11,900 | 22.9 | |||||||||||
Other Revenues | 59,559 | 57,256 | 2,303 | 4.0 | |||||||||||
Total Operating Revenues | 552,014 | 523,397 | 28,617 | 5.5 | |||||||||||
Operating Expenses | |||||||||||||||
Fuel | 165,351 | 149,528 | 15,823 | 10.6 | |||||||||||
Purchased Power | 47,338 | 34,488 | 12,850 | 37.3 | |||||||||||
Transmission | 2,595 | 2,363 | 232 | 9.8 | |||||||||||
Increase to Reflect PPFAC Recovery Treatment | 2,914 | 5,125 | (2,211 | ) | (43.1 | ) | |||||||||
Total Fuel and Purchased Energy | 218,198 | 191,504 | 26,694 | 13.9 | |||||||||||
Other Operations and Maintenance | 159,835 | 161,149 | (1,314 | ) | (0.8 | ) | |||||||||
Depreciation | 57,418 | 55,012 | 2,406 | 4.4 | |||||||||||
Amortization | 18,275 | 19,620 | (1,345 | ) | (6.9 | ) | |||||||||
Taxes Other Than Income Taxes | 22,108 | 20,009 | 2,099 | 10.5 | |||||||||||
Total Operating Expenses | 475,834 | 447,294 | 28,540 | 6.4 | |||||||||||
Operating Income | 76,180 | 76,103 | 77 | 0.1 | |||||||||||
Other Income (Deductions) | |||||||||||||||
Interest Income | 8 | 69 | (61 | ) | (88.4 | ) | |||||||||
Other Income | 2,438 | 2,286 | 152 | 6.6 | |||||||||||
Other Expense | (3,584 | ) | (2,087 | ) | (1,497 | ) | 71.7 | ||||||||
Total Other Income (Deductions) | (1,138 | ) | 268 | (1,406 | ) | N/M | |||||||||
Interest Expense | |||||||||||||||
Long-Term Debt | 28,564 | 27,294 | 1,270 | 4.7 | |||||||||||
Capital Leases | 12,498 | 16,598 | (4,100 | ) | (24.7 | ) | |||||||||
Other Interest Expense, Net of Interest Capitalized | (1,195 | ) | (243 | ) | (952 | ) | N/M | ||||||||
Total Interest Expense | 39,867 | 43,649 | (3,782 | ) | (8.7 | ) | |||||||||
Income Before Income Taxes | 35,175 | 32,722 | 2,453 | 7.5 | |||||||||||
Income Tax Expense | 2,909 | 12,273 | (9,364 | ) | (76.3 | ) | |||||||||
Net Income | 32,266 | 20,449 | 11,817 | 57.8 | |||||||||||
N/M—Not Meaningful
Reclassifications have been made to prior periods to conform to the current period’s presentation.
8