DPL Inc. (DPL, Financial) filed Quarterly Report for the period ended 2011-03-31.
Dpl Inc. has a market cap of $3.56 billion; its shares were traded at around $30.35 with a P/E ratio of 12.1 and P/S ratio of 1.9. The dividend yield of Dpl Inc. stocks is 4.4%. Dpl Inc. had an annual average earning growth of 1.2% over the past 10 years.
The Merger Agreement also includes certain provisions whereby we have agreed to use our commercially reasonable efforts to replace DP&Ls existing $220.0 million revolving credit facility with a new facility that has a term of at least three years and in an amount equal to or greater than the current principal amount and generally on the same terms. We have also agreed to use our commercially reasonable efforts, prior to the maturity date, to refinance the approximately $297.4 million principal amount of our 6.875% debt that is due in September 2011 and raise an additional principal amount of $125.0 million generally on the same terms and with a maturity of no less than five years.
On February 28, 2011, DPLER purchased MC Squared, a Chicago-based retail electricity supplier, for approximately $8.2 million. MC Squared serves approximately 2,000 customers in Northern Illinois and for the year ended December 31, 2010, it sold approximately 648 million kWh of power, generating revenues of approximately $46 million. The purchase of MC Squared is expected to complement DPLERs existing Ohio retail market activity and to provide a platform for expansion into other attractive markets.
On February 23, 2011, DPL acquired $122.0 million of outstanding DPL Capital Trust II 8.125% trust preferred securities from a third party. As a result of this transaction, DPL recorded a net loss on the reacquisition of the securities in the amount of approximately $15.3 million ($10.1 million net of tax) in the first quarter of 2011. Interest savings from the redemption of these securities are expected to be approximately $8.4 million ($5.6 million net of tax) for the remainder of 2011. DPL financed this transaction using a combination of cash on hand, drawings from its revolving credit facilities as well as proceeds from the sale of some of its short-term investments.
The PJM RPM capacity base residual auction for the 2013/2014 period cleared at a per megawatt price of $28/day for our RTO area. The per megawatt prices for the periods 2012/2013, 2011/2012 and 2010/2011 were $16/day, $110/day and $174/day, respectively, based on previous auctions. Future RPM auction results will be dependent not only on the overall supply and demand of generation and load, but may also be impacted by congestion as well as PJMs business rules relating to bidding for demand response and energy efficiency resources in the RPM capacity auctions. The SSO retail costs and revenues are included in the RPM rider therefore increases in customer switching causes more of the RPM capacity costs and revenues to be excluded from the RPM rider calculation. We cannot predict the outcome of future auctions or customer switching but based on actual results attained in 2010, we estimate that a hypothetical increase or decrease of $10 in the capacity auction price would result in an annual impact to net income of approximately $4.4 million and $3.2 million for DPL and DP&L, respectively. These estimates do not, however, take into consideration the other factors that may affect the impact of capacity revenues and costs on net income such as the levels of customer switching, our generation capacity, the levels of wholesale revenues and our retail customer load. These estimates are discussed further within Commodity Pricing Risk under the Market Risk section of this Management Discussion & Analysis.
For the three months ended March 31, 2011, Net income for DPL was $43.5 million, or $0.38 per share, compared to Net income of $71.0 million, or $0.61 per share, for the same period in 2010. All EPS amounts are on a diluted share basis. As discussed more fully below, the key drivers of the results during the three-month period ended March 31, 2011 compared to the similar period of the prior year comprise the following:
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Dpl Inc. has a market cap of $3.56 billion; its shares were traded at around $30.35 with a P/E ratio of 12.1 and P/S ratio of 1.9. The dividend yield of Dpl Inc. stocks is 4.4%. Dpl Inc. had an annual average earning growth of 1.2% over the past 10 years.
Highlight of Business Operations:
On April 19, 2011, DPL and The AES Corporation, a Delaware corporation (AES), entered into an Agreement and Plan of Merger (the Merger Agreement) whereby AES will acquire DPL for $30 per share in a cash transaction valued at approximately $3.5 billion plus the assumption of $1.2 billion of debt and preferred stock. Upon closing, DPL will become a wholly-owned subsidiary of AES.The Merger Agreement also includes certain provisions whereby we have agreed to use our commercially reasonable efforts to replace DP&Ls existing $220.0 million revolving credit facility with a new facility that has a term of at least three years and in an amount equal to or greater than the current principal amount and generally on the same terms. We have also agreed to use our commercially reasonable efforts, prior to the maturity date, to refinance the approximately $297.4 million principal amount of our 6.875% debt that is due in September 2011 and raise an additional principal amount of $125.0 million generally on the same terms and with a maturity of no less than five years.
On February 28, 2011, DPLER purchased MC Squared, a Chicago-based retail electricity supplier, for approximately $8.2 million. MC Squared serves approximately 2,000 customers in Northern Illinois and for the year ended December 31, 2010, it sold approximately 648 million kWh of power, generating revenues of approximately $46 million. The purchase of MC Squared is expected to complement DPLERs existing Ohio retail market activity and to provide a platform for expansion into other attractive markets.
On February 23, 2011, DPL acquired $122.0 million of outstanding DPL Capital Trust II 8.125% trust preferred securities from a third party. As a result of this transaction, DPL recorded a net loss on the reacquisition of the securities in the amount of approximately $15.3 million ($10.1 million net of tax) in the first quarter of 2011. Interest savings from the redemption of these securities are expected to be approximately $8.4 million ($5.6 million net of tax) for the remainder of 2011. DPL financed this transaction using a combination of cash on hand, drawings from its revolving credit facilities as well as proceeds from the sale of some of its short-term investments.
The PJM RPM capacity base residual auction for the 2013/2014 period cleared at a per megawatt price of $28/day for our RTO area. The per megawatt prices for the periods 2012/2013, 2011/2012 and 2010/2011 were $16/day, $110/day and $174/day, respectively, based on previous auctions. Future RPM auction results will be dependent not only on the overall supply and demand of generation and load, but may also be impacted by congestion as well as PJMs business rules relating to bidding for demand response and energy efficiency resources in the RPM capacity auctions. The SSO retail costs and revenues are included in the RPM rider therefore increases in customer switching causes more of the RPM capacity costs and revenues to be excluded from the RPM rider calculation. We cannot predict the outcome of future auctions or customer switching but based on actual results attained in 2010, we estimate that a hypothetical increase or decrease of $10 in the capacity auction price would result in an annual impact to net income of approximately $4.4 million and $3.2 million for DPL and DP&L, respectively. These estimates do not, however, take into consideration the other factors that may affect the impact of capacity revenues and costs on net income such as the levels of customer switching, our generation capacity, the levels of wholesale revenues and our retail customer load. These estimates are discussed further within Commodity Pricing Risk under the Market Risk section of this Management Discussion & Analysis.
For the three months ended March 31, 2011, Net income for DPL was $43.5 million, or $0.38 per share, compared to Net income of $71.0 million, or $0.61 per share, for the same period in 2010. All EPS amounts are on a diluted share basis. As discussed more fully below, the key drivers of the results during the three-month period ended March 31, 2011 compared to the similar period of the prior year comprise the following:
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