SOURCE: Central Vermont Public Service Corporation

Central Vermont Public Service Corporation

November 08, 2010 16:45 ET

Central Vermont Reports 2010 Third Quarter Earnings

RUTLAND, VT--(Marketwire - November 8, 2010) - Central Vermont Public Service (NYSE: CV)

-- Year-to-date earnings of $15.6 million, or $1.27 per diluted share,
   30 cents lower than 2009

      - $1.2 million increase in operating revenue
      - $2.1 million increase in purchased power expense
      - $1.7 million increase in other operating expenses (includes $3.6
        million regulatory deferral)
      - $2.7 million increase in equity in earnings of affiliates

-- Third-quarter earnings of $10 million, or 79 cents per diluted
   share, 27 cents higher than 2009

      - $3.6 million increase in operating revenue
      - $3.4 million increase in purchased power expense
      - $6.7 million decrease in other operating expenses (includes $3.6
        million regulatory deferral)
      - $1.0 million increase in equity in earnings of affiliates

-- Earnings forecast for 2010 reaffirmed in the range of $1.50 to
   $1.60 per diluted share.

Central Vermont Public Service (NYSE: CV) reported consolidated earnings of $15.6 million, or $1.27 per diluted share of common stock, for the first nine months of 2010, compared to $18.6 million, or $1.57 per diluted share of common stock, for the same period in 2009.

CV reported third-quarter 2010 consolidated earnings of $10 million, or 79 cents per diluted share of common stock, compared to $6.2 million, or 52 cents per diluted share of common stock, for the same period last year.

"We continue to make steady progress on achieving our 2010 earnings guidance," President Bob Young said. "Although we had sustained storm activity throughout the year, unplanned costs of major storms are deferrable under our Alternative Regulation Plan so the impact of storms on earnings for the nine months is tempered. We also saw a resurgence in retail demand in the third quarter due to warmer weather."

"Based on year-to-date performance, we are reaffirming our earnings guidance range of $1.50 to $1.60 per diluted share for the year," Young said.

Year-to-Date 2010 results compared to 2009

Operating revenues increased $1.2 million, including an $11.9 million increase in retail revenues, a $3.5 million increase in provision for rate refund and a $0.5 million increase in other operating revenue, largely offset by a $14.6 million decrease in resale revenue. The increase in retail revenues primarily resulted from a 5.58 percent base rate increase, effective January 1, 2010 and $0.9 million recovery of 2008 major storm costs, in addition to a weather-related resurgence of retail load in the third quarter of 2010. The provision for rate refund is primarily the net deferrals and refunds of over- or under-collections of power, production and transmission costs as required by the power cost adjustment clause within our alternative regulation plan. This increase included the favorable impact of $2.3 million of net deferrals and refunds in 2010 vs. the unfavorable impact of $1.1 million of net deferrals and refunds in 2009. Other operating revenues increased primarily due to higher levels of mutual aid performed for other utilities in 2010 and the sale of renewable energy credits. Resale revenues decreased mostly due to lower 2010 contract prices associated with the sale of our excess energy, and a decrease in volumes sold due to the scheduled refueling outages at the Vermont Yankee plant and Millstone Unit #3.

Purchased power expense increased $2.1 million, including an $8.6 million increase in short-term purchases, due to higher retail load and higher replacement power requirements, largely offset by a $6.1 million decrease in purchases under long-term contracts, due to the extended scheduled refueling outage at the Vermont Yankee plant and lower capacity costs from Hydro-Quebec.

Other operating expenses increased $1.7 million, comprised principally of a $3.1 million increase in service restoration costs from a major storm in February 2010, a $1.1 million increase from a major storm in May 2010, and higher property taxes of $1.5 million. In 2010, $2.5 million of major storm costs was deferred and included in the exogenous deferral described below. Other operating expenses also included a $4.7 million decrease in transmission expenses, resulting from higher NOATT reimbursements, partially offset by higher rates from ISO-NE; lower regulatory amortizations of $1.2 million, mostly from the $3.6 million deferral of 2010 exogenous events recorded in the third quarter, partially offset by a $0.9 million increase for recovery of 2008 major storm costs and other regulatory amortizations; $1 million of lower reserves for uncollectible accounts, primarily due to a customer bankruptcy in 2009 and $1.1 million of higher employee benefit costs. Operating income tax expense increased $0.9 million, mostly as a result of an unfavorable charge of $0.7 million required by the Patient Protection and Affordable Care Act, as modified by the Health Care and Education Reconciliation Act, in the first quarter of 2010. The Act also eliminated the tax deduction in 2010.

Equity in earnings of affiliates increased $2.7 million, principally due to the $20.8 million investment that we made in Transco in December 2009.

Other income, net decreased $1.2 million, largely due to changes in the cash surrender value of variable life insurance policies included in our Rabbi Trust.

Third quarter 2010 results compared to 2009

Third quarter operating revenues increased $3.6 million for many of the same reasons described above.

Purchased power expense increased $3.4 million over the same period last year. Short-term purchases increased $4 million due to higher retail load and higher replacement power requirements at higher market prices, and purchases under long-term contracts increased $0.3 million due to higher costs from Vermont Yankee. Purchases from independent power producers decreased $0.9 million due to lower output, partially offset by higher average prices.

Other operating expenses decreased $6.7 million, due to the $3.6 million deferral of 2010 exogenous events and for the same reasons described above.

Equity in earnings of affiliates increased $1 million for the same reasons described above.

Other income, net decreased $0.3 million for the same reasons described above.

2010 Common Stock Issuance

On January 15, 2010, we filed a Prospectus Supplement with the SEC, noting that we entered into an equity distribution agreement that allowed us to issue up to $45 million of common equity under an at-the-market ("ATM") continuous offering program.

Earnings per share for 2010 reflect the impact of our ATM program. From April to September 2010, CV issued 848,057 shares, yielding net proceeds of approximately $17.1 million. The net proceeds of the offering were used for general corporate purposes, including capital expenditures and working capital requirements. The common stock issuance decreased per-diluted-share earnings by 3 cents for the first nine months of 2010 and by 5 cents for the third quarter of 2010. We expect to raise $30 million under this program in 2010.

2010 Earnings Guidance

CV reiterates that it expects annual 2010 earnings to be in the range of $1.50 to $1.60 per diluted share. As part of the alternative regulation plan base rate filing approved by the Vermont Public Service Board last winter, the company's allowed rate of return on its Vermont regulatory business is 9.59 percent for 2010, down from 9.77 percent for 2009. Earnings guidance for 2011 will be released in the first quarter of 2011.

Webcast

CV will host an earnings teleconference and webcast on November 9, 2010, beginning at 2 p.m. Eastern Time. At that time, CV President and CEO Robert Young and CV Chief Financial Officer Pamela Keefe will discuss the company's financial results, as well as progress made toward achieving the company's long-term strategy.

Interested parties may listen to the conference call live on the Internet by selecting the "CVPS Qtr 3 2010 Earnings Call" link on the "Investor Relations" section of the company's website at www.cvps.com. An audio archive of the call will be available later that day at the same location or by dialing 1-877-660-6853 within the U.S. or internationally by dialing 1-201-612-7415 and entering Account 286 and Conference ID 357298.

About CV

CV is Vermont's largest electric utility, serving approximately 159,000 customers statewide. CV's non-regulated subsidiary, Catamount Resources Corporation, sells and rents electric water heaters through a subsidiary, SmartEnergy Water Heating Services.

Form 10-Q

On Monday, November 8, 2010, the company filed its quarterly 2010 Form 10-Q with the Securities and Exchange Commission. A copy of that report is available on our web site, www.cvps.com, under the "Investor Relations" section. Please refer to it for additional information regarding our condensed consolidated financial statements, results of operations, capital resources and liquidity.

Reconciliation of Earnings Per Diluted Share

                                                      First Nine   Third
                                                        Months    Quarter
                                                       2010 vs.   2010 vs.
                                                         2009      2009
                                                      ---------  ---------
2009 Earnings per diluted share                       $    1.57  $    0.52

Year-over-Year Effects on Earnings:
  Higher maintenance expenses                             (0.25)      0.00
  Higher other operating expenses (primarily
   regulatory amortizations)                              (0.21)     (0.02)
  Higher purchased power expense                          (0.11)     (0.17)
  Higher taxes other than income                          (0.09)     (0.03)
  Lower other income, net                                 (0.08)     (0.02)
  Health Care Reform/Medicare Part D - Income tax
   impact                                                 (0.06)      0.00
  Common stock issuance (April to September 2010) -
   848,057 additional shares                              (0.03)     (0.05)
  Lower transmission expenses                              0.23       0.23
  Regulatory deferral - exogenous costs                    0.18       0.18
  Higher equity in earnings of affiliates                  0.13       0.06
  Higher operating revenues                                0.06       0.18
  Other (various items)                                   (0.07)     (0.09)
                                                      ---------  ---------
2010 Earnings per diluted share                       $    1.27  $    0.79
                                                      =========  =========

Note: For presentation purposes in the table above, the additional average
shares from the 2010 stock issuance were excluded from the 12,545,987
average shares of common stock - diluted for the third quarter and the
12,140,191 average shares of common stock - diluted for the first nine
months, in order to compute the individual EPS variances and to provide
comparable information for 2010 vs. 2009. The additional shares were
included in the total EPS calculations.

Forward-Looking Statements

Statements contained in this press release that are not historical fact are forward-looking statements intended to qualify for the safe-harbors from the liability established by the Private Securities Litigation Reform Act of 1995. Statements made that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Actual results will depend, among other things, upon the actions of regulators, performance of the Vermont Yankee nuclear power plant, effects of and changes in weather and economic conditions, volatility in wholesale electric markets, volatility in the financial markets, and our ability to maintain our current credit ratings. These and other risk factors are detailed in CV's Securities and Exchange Commission filings. CV cannot predict the outcome of any of these matters; accordingly, there can be no assurance that such indicated results will be realized. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this press release. CV does not undertake any obligation to publicly release any revision to these forward-looking statements to reflect events or circumstances after the date of this press release.

        Central Vermont Public Service Corporation - Consolidated
                             Earnings Release
             (dollars in thousands, except per share amounts)

                              Three Months Ended      Nine Months Ended
                                 September 30            September 30
Condensed income statement     2010        2009        2010        2009
                            ----------  ----------  ----------  ----------
Operating revenues:
  Retail sales              $   73,766  $   68,067  $  217,413  $  205,532
  Resale sales                   8,299      10,188      26,622      41,252
  Provision for rate refund         18         (27)      2,344      (1,128)
  Other                          3,309       3,563       9,957       9,489
                            ----------  ----------  ----------  ----------
Total operating revenues        85,392      81,791     256,336     255,145
                            ----------  ----------  ----------  ----------

Operating expenses:
  Purchased power -
   affiliates and other         41,109      37,676     120,038     117,891
  Other operating expenses      31,247      37,994     117,857     116,111
  Income tax (benefit)
   expense                       4,407         905       5,454       4,541
                            ----------  ----------  ----------  ----------
Total operating expense         76,763      76,575     243,349     238,543
                            ----------  ----------  ----------  ----------
Utility operating income         8,629       5,216      12,987      16,602
                            ----------  ----------  ----------  ----------

Other income:
  Equity in earnings of
   affiliates                    5,347       4,320      15,857      13,196
  Other, net                       491         774         334       1,508
  Income tax expense            (1,631)     (1,186)     (4,934)     (4,008)
                            ----------  ----------  ----------  ----------
  Total other income             4,207       3,908      11,257      10,696
                            ----------  ----------  ----------  ----------

Interest expense                 2,846       2,924       8,607       8,729
                            ----------  ----------  ----------  ----------
Net income                       9,990       6,200      15,637      18,569
Dividends declared on
 preferred stock                    92          92         276         276
                            ----------  ----------  ----------  ----------
Earnings available for
 common stock               $    9,898  $    6,108  $   15,361  $   18,293
                            ==========  ==========  ==========  ==========

Per common share data
Earnings per share of
 common stock - basic       $     0.79  $     0.52  $     1.27  $     1.57
Earnings per share of
 common stock - diluted     $     0.79  $     0.52  $     1.27  $     1.57
Average shares of common
 stock outstanding - basic  12,516,488  11,679,133  12,109,796  11,647,626
Average shares of common
 stock outstanding -
 diluted                    12,545,987  11,717,218  12,140,191  11,685,795

Dividends declared per
 share of common stock      $     0.23  $     0.23  $     0.92  $     0.92
Dividends paid per share of
 common stock               $     0.23  $     0.23  $     0.69  $     0.69

Supplemental financial
 statement data
Balance sheet
  Investments in affiliates                         $  134,802  $  107,459
  Total assets                                      $  646,297  $  622,108
  Common stock equity                               $  253,966  $  228,619
  Long-term debt (excluding
   current portions)                                $  158,300  $  178,300
Cash Flows
  Cash and cash equivalents
   at beginning of period                           $    2,069  $    6,722
  Cash provided by
   operating activities                                 38,042      33,326
  Cash used for investing
   activities                                          (21,623)    (21,970)
  Cash provided by
   financing activities                                (14,543)     (7,802)
  Cash and cash equivalents
   at end of period                                 $    3,945  $   10,276
                                                    ==========  ==========

Refer to our third-quarter 2010 Form 10-Q for additional information

Contact Information

  • Media Inquiries:
    Steve Costello
    Director of Public Affairs
    (802) 747-5427
    e-mail: Email Contact
    (802) 742-3062 (pager)

    Contact:
    Pamela Keefe
    Senior Vice President, Chief Financial Officer and Treasurer
    (802) 747-5435
    e-mail: Email Contact