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Nicor Inc. has added a
news release to its Investor Relations website.
Title: Nicor Announces 2007 Preliminary
Earnings and 2008 Annual Outlook
Date: 2/22/2008 6:00:01
AM
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of our news releases, please click here
NAPERVILLE, Ill., Feb 22, 2008 (BUSINESS
WIRE) -- Nicor Inc. (NYSE: GAS) today reported twelve months ended December
31, 2007, preliminary net income, operating income and diluted earnings per
common share of $135.2 million, $206.5 million and $2.99, respectively. This
compares to net income, operating income and diluted earnings per common
share for the same period in 2006 of $128.3 million, $202.5 million and
$2.87, respectively.
Both twelve-month
periods were impacted by noteworthy items. Twelve-month results for 2007
included a first quarter reduction to the company's previously established
reserve for its mercury inspection and repair program, and mercury-related
cost recoveries, which aggregated approximately $8 million pretax ($.11 per
share after-tax). Absent the impact of these items, 2007 twelve-month
results would have been approximately $2.88 per share. Twelve-month results
for 2006 included the effects of a first quarter pretax cost recovery
associated with the company's mercury inspection and repair program of $3.8
million ($.05 per share after-tax) and a second quarter charge associated
with a United States Securities and Exchange Commission (SEC) inquiry of
$10 million ($.22 per share and non-deductible for tax purposes). Absent
the impact of these items, 2006 twelve-month results would have been $3.04
per share.
Earnings for the 2007
twelve-month period, compared to 2006, reflect the effects of the
aforementioned mercury items and the absence of last year's charge
associated with the SEC inquiry. 2007 earnings for the twelve-month period
also reflect higher operating results in the company's gas distribution
business (before consideration of the mercury items) and other
energy-related ventures, offset by lower operating results in the company's
shipping business, lower corporate income (before consideration of the 2006
charge associated with the SEC inquiry) and lower income from equity
investments. The twelve-month period comparisons were also impacted by
lower interest expense and higher average common shares outstanding in
2007.
"I am pleased with
our 2007 performance," said Russ M. Strobel, Nicor's chairman,
president and chief executive officer. "Our gas distribution business
delivered solid financial results in the face of an increasingly difficult
economic and cost environment. Our shipping business experienced its second
highest level of operating income in its history and a record level of net
income in 2007. Our other energy-related ventures also produced their
second consecutive year of record results. Looking ahead, however,
consolidated 2008 financial results are expected to be significantly
impacted by lower operating results at Nicor Gas due to continued demand
weakness and operating cost pressures. Nicor Gas has consistently been a
low-cost provider, but we are simply not earning our allowed rate of
return. As a result, we are evaluating the need to file for rate relief
with the Illinois Commerce Commission. Our residential customers benefit
from delivery rates that are approximately 40 percent lower than average
Illinois rates. Any rate relief we seek would continue Nicor Gas' long
tradition of being a low-cost, high-value provider."
For the fourth quarter
2007, preliminary net income, operating income and diluted earnings per
common share were $55.5 million, $77.2 million and $1.22, respectively. This
compares to net income, operating income and diluted earnings per common
share for the same period in 2006 of $58.3 million, $91.0 million and
$1.29, respectively.
Earnings for the 2007
fourth quarter, compared to 2006, reflect lower operating results in the
company's gas distribution and other energy-related ventures and lower
corporate operating income, partially offset by higher operating results in
the company's shipping business. The fourth quarter comparisons were also
impacted by lower interest expense in 2007.
Details regarding 2007
twelve-months-ended and fourth quarter preliminary financial results
compared to 2006 follow:
-- For the twelve
months ended December 31, 2007 gas distribution operating income increased
to $128.7 million from $123.9 million in 2006. The year-to-date period
reflected:
- The positive effect of higher mercury-related benefits compared to last year ($4.4 million). - The positive impact of increased natural gas deliveries due to colder weather compared to last year (approximately $17 million). - Partially offsetting these positive factors were lower average distribution rates (approximately $6 million, including the negative impact of about $2 million attributable to the Illinois Commerce Commission's (ICC) rate order rehearing decision that went into effect in April 2006); higher depreciation expense ($5.5 million); the impact of customer interest (approximately $2 million); higher operating and maintenance costs ($1.3 million) due to increased bad debt expense, partially offset by decreased storage-related natural gas costs and natural gas and fuel costs to operate company equipment and facilities; and lower gains on property sales ($1.3 million).
-- For the 2007 fourth quarter, gas distribution operating income
decreased to $40.4 million from $43.7 million in 2006. The quarter
reflected:
- The negative impact of decreased natural gas deliveries unrelated to weather compared to last year (approximately $7 million); and higher depreciation expense ($1.4 million). - Partially offsetting these negative factors was the positive impact of increased natural gas deliveries due to colder weather compared to last year (approximately $5 million).
-- For the twelve-months-ended December 31, 2007, shipping operating
income decreased to $45.4 million from $47.5 million in 2006 due to higher
operating costs; offset in part by increased revenues (resulting from
higher volumes shipped). Increased operating costs for the 2007
twelve-month-ended period, compared to 2006, were due primarily to higher
transportation-related costs including fuel. For the 2007 fourth quarter,
shipping operating income increased to $18.5 million from $18.0 million in
2006 due primarily to lower operating costs. Operating revenues for the
2007 fourth quarter, compared to 2006, were essentially unchanged as the
impact of higher average rates, were largely offset by lower volumes.
Decreased operating costs for the 2007 fourth quarter, compared to 2006,
were due primarily to lower repair and maintenance costs, cargo claims and
general administrative expenses; partially offset by higher
transportation-related costs, including fuel.
-- For the twelve-months-ended December 31, 2007, other energy-related
ventures operating income increased to $34.0 million compared to $26.6
million in 2006 due to higher operating results in the company's retail
energy-related products and services businesses and wholesale natural gas
marketing business. For the 2007 fourth quarter, other energy ventures
operating income decreased to $18.2 million from $25.9 million in 2006 due
primarily to lower operating results in the company's wholesale natural gas
marketing business, partially offset by improved operating results in the
company's retail energy-related products and services businesses.
Improved 2007 twelve-month ended and fourth quarter operating results,
as compared to 2006, in the company's retail energy-related products and
services businesses were due to improved margins associated with customer
contracts.
Improved 2007 twelve-month-ended operating results, as compared to 2006,
in the company's wholesale natural gas marketing business was due primarily
to the favorable costing of physical sales activity and improved results
from risk management activities associated with hedging the product risks
of the utility-bill management contracts offered by the company's retail
energy-related products and services businesses, partially offset by lower
positive fair value adjustments on derivative instruments used to hedge
purchases and sales of natural gas inventory. Lower 2007 fourth quarter
operating results, as compared to 2006, in the company's wholesale natural
gas marketing business was due to less favorable costing of physical sales
activity, unfavorable fair value adjustments related to derivative
instruments used to hedge purchases and sales of natural gas inventory and
lower results from risk management activities associated with hedging the
product risks of the utility-bill management contracts offered by the
company's retail energy-related products and services businesses.
The company uses derivative instruments to economically hedge purchases
and sales of natural gas inventory. Such derivative instruments are used to
mitigate commodity price risk in order to substantially lock-in the profit
margin that will ultimately be realized from the withdrawal and sale of
natural gas in storage. Earnings at the wholesale natural gas marketing
business can be subject to volatility as the fair value of derivatives
change, even when the underlying expected profit margin is largely
unchanged. The volatility resulting from these adjustments can be
significant from period to period.
-- Corporate operating results for the 2007 twelve-month ended period,
compared to 2006, reflect the absence of the previously discussed $10
million charge relating to the SEC inquiry (non-deductible for tax
purposes); the absence of an insurance recovery of $5.2 million pretax
recognized in the 2006 third quarter related to previously incurred legal
expenses; and a less favorable weather-related impact associated with
certain of the company's retail utility-bill management products of $0.2
million pretax, compared to the favorable weather impact on such businesses
in 2006 of $9.5 million pretax. Corporate 2007 fourth quarter results,
compared to 2006, reflect the absence of any weather-related impact
associated with certain of the company's retail utility-bill management
products, compared to the favorable weather impact on such businesses in
2006 of $3.2 million pretax. Under terms of a corporate swap agreement,
benefits or costs resulting from variances in normal weather associated
with retail energy-related products are recorded primarily in corporate
operating results.
-- Twelve-month 2007 financial results, compared to 2006, reflect lower
pretax equity investment income due primarily to the absence of a gain of
$2.4 million pretax on a sale of an equity investment interest in the 2006
third quarter and the related equity investment income prior to the date of
sale of $1.4 million pretax.
-- Twelve-month and fourth quarter 2007 financial results were also
favorably impacted by lower interest expense resulting primarily from a
reduction of interest expense of approximately $9.6 million pretax related
to a settlement with the Internal Revenue Service (IRS) related to the
timing of certain deductions taken as part of a change in accounting method
on the company's 2002 tax return.
-- Effective January 2006, the company reorganized certain of its
shipping and related operations. This reorganization allows the company to
take advantage of certain provisions of the American Jobs Creation Act of
2004 that provide the opportunity for tax savings subsequent to the date of
the reorganization. In connection with these activities, the full year 2006
reflected a net income tax benefit of $5.2 million from the elimination of
certain deferred taxes. In 2006, the company incurred $4.7 million in
income tax expense associated with these activities.
2008 Earnings Outlook
The company also announced that its estimate for 2008 diluted earnings
per common share is in the range of $2.20 to $2.40. Consistent with prior
guidance, the annual outlook excludes, among other things, any future
impacts associated with the Illinois Commerce Commission's (ICC)
Performance-Based Rate plan/Purchased Gas Adjustment review, other
contingencies, or changes in tax law. The company also indicated that its
estimate does not reflect the additional variability in earnings due to
fair value accounting adjustments in its businesses and other impacts that
could occur because of future volatility in the natural gas markets. While
these items could materially affect 2008 earnings, they are not currently
estimable. The company's 2008 estimate assumes normal weather for the
remainder of the year.
The company's annual earnings outlook for 2008 compared to 2007,
excluding the mercury-related reserve adjustment and cost recoveries is
based on lower expected results in each of the company's business segments.
The company also expects 2008 results will be impacted by higher net
interest expense resulting primarily from the absence of the positive
impact in 2007 from the settlement of certain income tax matters with the
IRS.
The most significant decline in the company's earnings outlook is
projected in the company's gas distribution business resulting from the
impact of higher operating and maintenance, depreciation and interest
costs. The company is under-recovering its allowed costs of delivery
service, and, as a result, is currently evaluating the need for a general
rate filing with the ICC. In the case of a general rate filing, the ICC
normally has 11 months to complete its review.
The company will provide updates to its annual earnings outlook only as
part of its quarterly and annual earnings releases.
Conference Call
As previously announced the company will hold a conference call to discuss
its twelve-months-ended and fourth quarter 2007 financial results, and 2008
outlook. The conference call will be this morning, Friday, February 22,
2008 at 8:30 a.m. central, 9:30 a.m. eastern time. To hear the conference
call live, please log on to Nicor's corporate Web site at www.nicor.com,
choose "Investor" and then select the webcast icon on the
Overview page. A replay of the call will be available until 10:30 a.m.
central time, Friday, March 7, 2008. To access the recording, call (888)
286-8010, or (617) 801-6888 for callers outside the United States, and
enter reservation number 27917567. The call will also be archived on
Nicor's corporate website for 90 days.
Nicor Inc. (NYSE: GAS) is a holding company and is a member of the
Standard & Poor's 500 Index. Its primary business is Nicor Gas, one of
the nation's largest natural gas distribution companies. Nicor owns
Tropical Shipping, a containerized shipping business serving the Caribbean
region and the Bahamas. In addition, the company owns and has an equity
interest in several energy-related businesses. For more information, visit
the Nicor Web site at www.nicor.com.
Caution Concerning Forward-Looking Statements
This document includes certain forward-looking statements about the
expectations of Nicor and its subsidiaries and affiliates. Although Nicor
believes these statements are based on reasonable assumptions, actual
results may vary materially from stated expectations. Such forward-looking
statements may be identified by the use of forward-looking words or phrases
such as "anticipate," "believe," "expect,"
"intend," "may," "planned,"
"potential," "should," "will,"
"would," "project," "estimate,"
"ultimate," or similar phrases. Actual results may differ
materially from those indicated in the company's forward-looking statements
due to the direct or indirect effects of legal contingencies (including
litigation) and the resolution of those issues, including the effects of an
ICC review, and undue reliance should not be placed on such statements.
Other factors that could cause materially different results include, but
are not limited to, weather conditions; natural disasters; natural gas and
other fuel prices; fair value accounting adjustments; inventory valuation;
health care costs; insurance costs or recoveries; legal costs; borrowing
needs; interest rates; credit conditions; economic and market conditions;
accidents, leaks, equipment failures, service interruptions, environmental
pollution, and other operating risks; tourism and construction in the
Bahamas and Caribbean region; energy conservation; legislative and
regulatory actions; tax rulings or audit results; asset sales; significant
unplanned capital needs; future mercury-related charges or credits; changes
in accounting principles, interpretations, methods, judgments or estimates;
performance of major customers, transporters, suppliers and contractors;
labor relations; and acts of terrorism.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
release. Nicor undertakes no obligation to publicly release any revision to
these forward-looking statements to reflect events or circumstances after
the date of this release.
Nicor Inc. PRELIMINARY CONSOLIDATED STATEMENTS OF OPERATIONS ---------------------------------------------------------------------- Unaudited (millions, except per share data) Three months ended Twelve months ended December 31 December 31 ------------------- ------------------- 2007 2006 2007 2006 --------- --------- --------- --------- Operating revenues $919.5 $838.2 $3,176.3 $2,960.0 --------- --------- --------- --------- Operating expenses Gas distribution Cost of gas 558.1 484.9 1,906.5 1,743.7 Operating and maintenance 68.3 68.6 269.8 268.5 Depreciation 41.2 39.8 165.6 160.1 Taxes, other than income taxes 40.8 39.8 166.9 163.0 Mercury-related recoveries, net - - (8.0) (3.6) Property sale gains - (.1) (2.0) (3.3) Shipping 91.8 92.2 358.5 350.8 Other energy ventures 67.3 54.9 210.5 189.3 Litigation charges - - - 10.0 Other corporate expenses and eliminations (25.2) (32.9) (98.0) (121.0) --------- --------- --------- --------- Total operating expenses 842.3 747.2 2,969.8 2,757.5 --------- --------- --------- --------- Operating income 77.2 91.0 206.5 202.5 Interest expense, net of amounts capitalized 3.6 13.6 37.9 49.1 Equity investment income, net 1.9 1.9 6.3 11.1 Interest income 1.7 1.1 8.8 9.0 Other income, net .4 .2 .6 .6 --------- --------- --------- --------- Income before income taxes 77.6 80.6 184.3 174.1 Income tax expense, net of benefits 22.1 22.3 49.1 45.8 --------- --------- --------- --------- Net income $55.5 $58.3 $135.2 $128.3 ========= ========= ========= ========= Average shares of common stock outstanding Basic 45.2 44.9 45.2 44.6 Diluted 45.3 45.0 45.3 44.7 Earnings per average share of common stock Basic $1.23 $1.30 $2.99 $2.88 Diluted $1.22 $1.29 $2.99 $2.87 Nicor Inc. PRELIMINARY FINANCIAL HIGHLIGHTS ---------------------------------------------------------------------- Unaudited (millions, except per share data) Three months ended Twelve months ended December 31 December 31 ------------------- ------------------- 2007 2006 2007 2006 --------- --------- --------- --------- Operating revenues Gas distribution $748.8 $676.7 $2,627.5 $2,452.3 Shipping 110.3 110.2 403.9 398.3 Other energy ventures 85.5 80.8 244.5 215.9 Corporate and eliminations (25.1) (29.5) (99.6) (106.5) --------- --------- --------- --------- $919.5 $838.2 $3,176.3 $2,960.0 ========= ========= ========= ========= Operating income (loss) Gas distribution $40.4 $43.7 $128.7 $123.9 Shipping 18.5 18.0 45.4 47.5 Other energy ventures 18.2 25.9 34.0 26.6 Corporate and eliminations .1 3.4 (1.6) 4.5 --------- --------- --------- --------- $77.2 $91.0 $206.5 $202.5 ========= ========= ========= ========= Net income $55.5 $58.3 $135.2 $128.3 Average shares of common stock outstanding Basic 45.2 44.9 45.2 44.6 Diluted 45.3 45.0 45.3 44.7 Earnings per average share of common stock Basic $1.23 $1.30 $2.99 $2.88 Diluted $1.22 $1.29 $2.99 $2.87 Nicor Inc. Gas Distribution Unaudited Three months ended Twelve months ended December 31 December 31 ------------------- ------------------- 2007 2006 2007 2006 --------- --------- --------- --------- Operating revenues (millions) Sales - Residential $523.8 $463.6 $1,791.4 $1,671.1 Commercial 120.7 98.7 426.2 373.9 Industrial 12.8 10.9 47.6 42.8 --------- --------- --------- --------- 657.3 573.2 2,265.2 2,087.8 --------- --------- --------- --------- Transportation - Residential 9.7 10.1 31.1 32.0 Commercial 23.0 26.6 76.7 82.1 Industrial 9.0 9.8 37.5 41.0 Other .6 2.1 10.6 3.7 --------- --------- --------- --------- 42.3 48.6 155.9 158.8 --------- --------- --------- --------- Other revenues - Revenue taxes 35.7 36.2 149.6 147.7 Environmental cost recovery 2.9 4.4 10.9 11.6 Chicago Hub 5.8 12.5 19.0 26.4 Other 4.8 1.8 26.9 20.0 --------- --------- --------- --------- 49.2 54.9 206.4 205.7 --------- --------- --------- --------- $748.8 $676.7 $2,627.5 $2,452.3 ========= ========= ========= ========= Deliveries (Bcf) Sales - Residential 64.6 64.3 201.8 185.9 Commercial 14.8 13.9 48.7 41.8 Industrial 1.7 1.6 5.7 5.0 --------- --------- --------- --------- 81.1 79.8 256.2 232.7 --------- --------- --------- --------- Transportation - Residential 6.9 6.2 19.7 17.0 Commercial 26.8 25.8 84.6 80.4 Industrial 27.8 28.6 107.8 108.6 --------- --------- --------- --------- 61.5 60.6 212.1 206.0 --------- --------- --------- --------- 142.6 140.4 468.3 438.7 ========= ========= ========= ========= Degree days 2,057 1,873 5,756 5,174 Warmer than normal Degree days (16) (200) (74) (656) Percent (1) (1) (10) (1) (11) Average gas cost per Mcf sold $6.83 $6.02 $7.36 $7.44 Customers at December 31 (thousands) (2) Sales - Residential 1,789 1,807 Commercial 128 123 Industrial 7 7 --------- --------- 1,924 1,937 --------- --------- Transportation - Residential 191 166 Commercial 54 57 Industrial 5 6 --------- --------- 250 229 --------- --------- 2,174 2,166 ========= ========= (1) Normal weather for Nicor Gas' service territory, for the purposes of this report, is considered to be 5,830 degree days per year. (2) The company redefined the customer count methodology in 2006 in conjunction with its new customer care and billing system. Nicor Inc. Shipping Unaudited Three months ended Twelve months ended December 31 December 31 ------------------- ------------------- 2007 2006 2007 2006 --------- --------- --------- --------- Operating revenues (millions) $110.3 $110.2 $403.9 $398.3 Operating income (millions) $18.5 $18.0 $45.4 $47.5 Twenty-foot equivalent units (TEU) shipped (thousands) 54.4 55.8 206.6 203.1 Revenue per TEU $2,027 $1,975 $1,955 $1,961 Ports served 26 27 Vessels operated 19 18
SOURCE: Nicor Inc.
Nicor Inc. Mark Knox, re: N-990 630 388-2529 or Media Contact: Richard Caragol 630 388-2686 |