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Avista Corp. Reports Operating Results (10-Q)

November 04, 2011 | About:
10qk

10qk

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Avista Corp. (AVA) filed Quarterly Report for the period ended 2011-09-30.

Avista Corp. has a market cap of $1.44 billion; its shares were traded at around $24.88 with a P/E ratio of 13.9 and P/S ratio of 1. The dividend yield of Avista Corp. stocks is 4.4%. Avista Corp. had an annual average earning growth of 1.7% over the past 10 years.

Highlight of Business Operations:

Avista Utilities operating revenues decreased $29.5 million and resource costs decreased $29.7 million, which resulted in an increase of $0.2 million in gross margin. The gross margin on electric sales decreased $0.4 million and the gross margin on natural gas sales increased $0.6 million. For the three months ended September 30, 2011, we recognized a benefit of $1.0 million under the ERM in Washington. For the three months ended September 30, 2010, power supply costs were $3.8 million below the level included in base retail rates in Washington.

Avista Utilities operating revenues decreased $21.1 million and resource costs decreased $53.6 million, which resulted in an increase of $32.5 million in gross margin. The gross margin on electric sales increased $16.6 million and the gross margin on natural gas sales increased $15.8 million. The increase in electric gross margin was due to colder weather during the heating season that increased retail loads, power supply costs below the amount included in base retail rates (due to improved hydroelectric generation and lower purchased power and fuel costs) and general rate increases. For the nine months ended September 30, 2011, we recognized a benefit of $5.7 million under the ERM in Washington. For the nine months ended September 30, 2010, power supply costs were $1.0 million below the level included in base retail rates in Washington. The increase in our natural gas gross margin was primarily due to colder weather that increased retail loads and partially due to general rate increases.

Ecovas net income attributable to Avista Corp. was $3.5 million for the three months ended September 30, 2011 compared to $2.9 million for the three months ended September 30, 2010. Operating revenues increased $6.7 million and total operating expenses increased $6.1 million. The increase in net income attributable to Avista Corp. and operating revenues was primarily due to strong growth in energy management services, moderate growth in expense management, as well as the acquisition of Loyalton effective December 31, 2010. The increase in operating expenses primarily reflects increased costs necessary for current and future business growth and the acquisition of Loyalton. In the third quarter of 2011, we recorded an adjustment for state sales taxes, which had a positive impact on net income of $0.7 million. Results for the third quarter of 2010 were positively impacted $0.5 million for a business and occupation tax refund. As of September 30, 2011, Ecova had 533 customers representing 369,000 billed sites in North America. In the three months ended September 30, 2011, Ecova managed bills totaling $4.8 billion, a decrease of $60 million, or 1 percent, as compared to the three months ended September 30, 2010.

The net loss from these operations was $0.1 million for the nine months ended September 30, 2011 and 2010. Operating revenues decreased $16.9 million and total operating expenses decreased $17.2 million. The decrease in operating revenues and operating expenses was primarily due to the assignment of the Lancaster PPA to Avista Corp. in December 2010. Earnings from METALfx increased to $1.1 million for the nine months ended September 30, 2011 compared to $0.6 million for the nine months ended September 30, 2010. Losses on investments were $0.6 million for 2011 compared to losses of $0.8 million for 2010.

Financing Activities Net cash used in financing activities was $64.0 million for the nine months ended September 30, 2011 compared to $29.7 million for the nine months ended September 30, 2010. During the nine months ended September 30, 2011, our short-term borrowings decreased $13.5 million. Cash dividends paid increased to $47.7 million (or 82.5 cents per share) for the nine months ended September 30, 2011 from $41.4 million (or 75 cents per share) for the nine months ended September 30, 2010. We issued $21.2 million of common stock during the nine months ended September 30, 2011, including $15.8 million under a sales agency agreement. In September 2011, we cash settled interest rate swap agreements for $10.6 million related to the pricing of $85.0 million of long-term debt (the issuance will occur in December 2011).

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