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Nicor Inc. has added a
news release to its Investor Relations website.
Title: Nicor Announces 2008 Preliminary
First Quarter Earnings and Affirms 2008 Annual Outlook
Date: 5/1/2008 6:00:00
AM
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NAPERVILLE,
Ill.--(BUSINESS WIRE)--May 1, 2008--Nicor Inc. (NYSE:
GAS) today reported
first-quarter 2008 preliminary net income,
operating income and diluted
earnings per common share of $41.4
million, $63.2 million and $.91,
respectively. This compares to net
income, operating income and
diluted earnings per common share for the
first quarter period in 2007 of
$47.2 million, $76.6 million and
$1.04, respectively.
The first quarter 2007
results included a reduction to the
company's previously established
reserve for its mercury inspection
and repair program and
mercury-related cost recoveries aggregating
approximately $8 million pretax
($.11 per share after-tax). Absent the
impact of these items, 2007
first quarter results would have been
approximately $.93 per share.
Earnings for the 2008
first quarter, compared to 2007, reflect the
absence of the aforementioned
mercury items. Earnings for the 2008
first
quarter also reflect lower operating results in the company's
gas
distribution business and shipping business and lower corporate
operating
income, partially offset by improved results in the
company's
other energy-related businesses and lower interest expense.
"First quarter
consolidated financial results were generally in
line
with our earlier expectations," said Russ M. Strobel, Nicor's
chairman,
president and chief executive officer. "Our gas distribution
business
continues to be pressured by higher operating costs, and as a
result,
we have filed for rate relief with the Illinois Commerce
Commission.
Our shipping business experienced lower than expected
results
due to increasing fuel costs and economic and competitive
pressures
on volumes shipped. Our other energy-related businesses
produced
solid results for the quarter that were in-line with our
earlier
expectations."
Details regarding 2008
first-quarter preliminary financial results
compared
to 2007 follow:
-- For the 2008 first quarter, gas
distribution operating income
decreased to $62.3 million from $70.9 million in 2007. The
quarter reflected:
- The absence of mercury-related recoveries recorded last year ($8.0 million). - Higher operating and maintenance costs ($8.9 million) due primarily to increased bad debt expense; and higher depreciation expense ($1.3 million). - Partially offsetting these negative factors was the positive impact of increased natural gas deliveries due to colder weather in 2008 (approximately $7 million); and the impact of customer interest (approximately $2 million). -- For the 2008 first quarter, shipping operating income decreased to $3.9 million from $9.9 million in 2007 due to decreased revenues attributable to lower volumes shipped, partially offset by higher rates; and higher operating costs. Increased operating costs for the 2008 first quarter, compared to 2007, were due primarily to higher fuel costs. -- For the 2008 first quarter, other energy ventures operating income increased to $1.0 million from an operating loss of $2.7 million in 2007 due to improved operating results in the company's retail energy-related products and services businesses; partially offset by lower operating results in the company's wholesale natural gas marketing business.
Higher 2008 first
quarter operating results in the company's
retail
energy-related products and services businesses, as compared to
2007,
were due to lower operating costs, partially offset by lower
revenues.
Lower operating costs were due primarily to lower average
utility-bill
management contract volumes and lower average costs
associated
with customer contracts. Lower revenues were due to lower
average
utility-bill management contract volumes.
Lower 2008 first quarter
operating results, as compared to 2007,
in
the company's wholesale natural gas marketing business were due
primarily
to unfavorable valuations of derivative instruments used to
hedge
purchases and sales of natural gas inventory.
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 2008 first quarter results included a negative weather-related impact associated with certain of the company's retail utility-bill management products of $3.8 million pretax, compared to a negative weather impact in the 2007 first quarter of $0.6 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. -- For the 2008 first quarter, net interest costs decreased to $10.6 million, compared to $13.8 million in 2007 due to lower estimated interest on tax-related matters, lower average interest rates and lower average borrowing levels. Other Significant Events
As previously announced
in a separate press release dated Tuesday,
April
29, 2008, the company's gas distribution business, Nicor Gas,
filed
with the Illinois Commerce Commission (ICC) for an overall
increase
in business and residential rates of $140.3 million to
recover
the rising costs of operating its distribution system and
increased
capital investments. The company is seeking a rate of return
on
rate base of 9.21%, which reflects an 11.05% cost of common equity.
According
to the regulatory laws of the State of Illinois, the ICC
normally
has eleven months to complete its review of the company's
filing
and to issue its order.
2008 Earnings Outlook
The company also
affirmed its estimate for 2008 diluted earnings
per
common share in the range of $2.20 to $2.40, which remains
unchanged
from earlier guidance for 2008 provided in the company's
earnings
release on February 22, 2008 associated with 2007 year-end
results.
Consistent with prior guidance, the annual outlook excludes,
among
other things, any future impacts associated with the ICC's
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 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 first quarter 2008 financial results and 2008 outlook. The
conference
call will be this morning, Thursday, May 1, 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,
Thursday, May 15, 2008. To access the recording, call (888)
286-8010,
or (617) 801-6888 for callers outside the United States, and
enter
reservation number 26890541. 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 March 31 -------------------- 2008 2007 --------- ---------- Operating revenues $1,595.7 $ 1,334.7 --------- ---------- Operating expenses Gas distribution Cost of gas 1,186.7 948.4 Operating and maintenance 88.6 79.7 Depreciation 42.8 41.5 Taxes, other than income taxes 83.8 75.9 Mercury-related recoveries, net - (8.0) Shipping 93.8 89.2 Other energy ventures 69.2 79.3 Other corporate expenses and eliminations (32.4) (47.9) --------- ---------- Total operating expenses 1,532.5 1,258.1 --------- ---------- Operating income 63.2 76.6 Interest expense, net of amounts capitalized 10.6 13.8 Equity investment income, net 1.5 .8 Interest income 1.3 1.6 Other income, net - .2 --------- ---------- Income before income taxes 55.4 65.4 Income tax expense 14.0 18.2 --------- ---------- Net income $ 41.4 $ 47.2 ========= ========== Average shares of common stock outstanding Basic 45.3 45.0 Diluted 45.3 45.2 Earnings per average share of common stock Basic $ .92 $ 1.05 Diluted $ .91 $ 1.04 Nicor Inc. PRELIMINARY FINANCIAL HIGHLIGHTS ------------------------------------------------ Unaudited (millions, except per share data) Three months ended March 31 -------------------- 2008 2007 --------- ---------- Operating revenues Gas distribution $1,464.2 $ 1,208.4 Shipping 97.7 99.1 Other energy ventures 70.2 76.6 Corporate and eliminations (36.4) (49.4) --------- ---------- $1,595.7 $ 1,334.7 ========= ========== Operating income (loss) Gas distribution $ 62.3 $ 70.9 Shipping 3.9 9.9 Other energy ventures 1.0 (2.7) Corporate and eliminations (4.0) (1.5) --------- ---------- $ 63.2 $ 76.6 ========= ========== Net income $ 41.4 $ 47.2 Average shares of common stock outstanding Basic 45.3 45.0 Diluted 45.3 45.2 Earnings per average share of common stock Basic $ .92 $ 1.05 Diluted $ .91 $ 1.04 Nicor Inc. Gas Distribution Unaudited Three months ended March 31 -------------------- 2008 2007 --------- ---------- Operating revenues (millions) Sales - Residential $1,013.2 $ 837.8 Commercial 249.7 195.2 Industrial 31.0 23.8 --------- ---------- 1,293.9 1,056.8 --------- ---------- Transportation - Residential 13.2 9.6 Commercial 31.2 28.9 Industrial 11.8 11.3 Other 17.2 8.0 --------- ---------- 73.4 57.8 --------- ---------- Other revenues - Revenue taxes 80.3 72.3 Environmental cost recovery 5.0 5.5 Chicago Hub 3.4 7.5 Other 8.2 8.5 --------- ---------- 96.9 93.8 --------- ---------- $1,464.2 $ 1,208.4 ========= ========== Deliveries (Bcf) Sales - Residential 104.2 99.8 Commercial 25.8 23.3 Industrial 3.3 3.0 --------- ---------- 133.3 126.1 --------- ---------- Transportation - Residential 11.7 9.3 Commercial 40.5 36.8 Industrial 32.3 32.8 --------- ---------- 84.5 78.9 --------- ---------- 217.8 205.0 ========= ========== Degree days 3,272 3,018 Colder than normal Degree days 272 18 Percent (1) 9 1 Average gas cost per Mcf sold $ 8.86 $ 7.41 Customers at March 31 (thousands) Sales - Residential 1,789 1,810 Commercial 130 126 Industrial 8 7 --------- ---------- 1,927 1,943 --------- ---------- Transportation - Residential 197 167 Commercial 53 56 Industrial 6 6 --------- ---------- 256 229 --------- ---------- 2,183 2,172 ========= ========== (1) Normal weather for Nicor Gas' service territory, for the purposes of this report, is considered to be 5,830 degree days per year. Nicor Inc. Shipping Unaudited Three months ended March 31 -------------------- 2008 2007 --------- ---------- Operating revenues (millions) $ 97.7 $ 99.1 Operating income (millions) $ 3.9 $ 9.9 Twenty-foot equivalent units (TEU) shipped (thousands) 48.0 50.9 Revenue per TEU $ 2,037 $ 1,949 Ports served 26 27 Vessels operated 18 19 CONTACT: Nicor Inc. Mark Knox, re: N-997 630 388-2529 or Media Contact: Richard Caragol 630 388-2686 SOURCE: Nicor Inc. |