GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Avista Corp. Reports Operating Results (10-Q)

August 07, 2012 | About:
10qk

10qk

18 followers
Avista Corp. (AVA) filed Quarterly Report for the period ended 2012-06-30.

Avista Corp has a market cap of $1.63 billion; its shares were traded at around $26.58 with a P/E ratio of 17 and P/S ratio of 1. The dividend yield of Avista Corp stocks is 4.2%. Avista Corp had an annual average earning growth of 2.1% over the past 10 years.

Highlight of Business Operations:

Utility revenues decreased $26.7 million, after elimination of intracompany revenues of $12.4 million in the second quarter of 2012 and $23.8 million in the second quarter of 2011. Including intracompany revenues, electric revenues decreased $6.4 million and natural gas revenues decreased $31.6 million. Retail electric revenues decreased $2.9 million due to a decrease in volumes sold primarily caused by warmer weather during the second quarter of 2012 compared to 2011, partially offset by general rate increases. In addition to warmer weather, retail sales volumes declined due in part to the continued weak economy and lower usage at certain industrial customers. Sales of fuel decreased $10.6 million (reflecting decreased sales of natural gas fuel not used in generation). These decreases in retail electric revenues and sales of fuel were partially offset by an increase in wholesale electric revenues of $6.5 million (primarily due to an increase in volumes sold). Retail natural gas revenues decreased $11.2 million due to a decrease in volumes caused by warmer weather, and wholesale natural gas revenues decreased $20.5 million (due to a decrease in wholesale prices, partially offset by an increase in wholesale volumes).

Utility revenues decreased $58.9 million, after elimination of intracompany revenues of $40.0 million for the six months ended June 30, 2012 and $40.8 million for the six months ended June 30, 2011. Including intracompany revenues, electric revenues decreased $22.3 million and natural gas revenues decreased $37.4 million. Retail electric revenues decreased $6.3 million due to a decrease in volumes sold primarily caused by warmer weather during the six months ended June 30, 2012 compared to 2011, partially offset by general rate increases. In addition to warmer weather, retail sales volumes declined due in part to the continued weak economy and lower usage at certain industrial customers. Sales of fuel decreased $29.9 million (reflecting higher usage of our thermal generating plants and decreased sales of natural gas fuel not used in generation). These decreases in retail electric revenues and sales of fuel were partially offset by an increase in wholesale electric revenues of $12.5 million (due to an increase in volumes, partially offset by a decrease in wholesale prices). Retail natural gas revenues decreased $15.6 million due to a decrease in volumes caused by warmer weather, while wholesale natural gas revenues decreased $21.2 million (due to a decrease in wholesale prices, partially offset by an increase is wholesale volumes).

Avista Utilities operating revenues decreased $58.9 million and resource costs decreased $56.9 million, which resulted in a decrease of $2.0 million in gross margin. The gross margin on electric sales decreased $0.4 million and the gross margin on natural gas sales decreased $1.6 million. The decrease in electric and natural gas gross margin was primarily due to warmer weather that reduced retail loads, partially offset by general rate increases. In addition to warmer weather, electric gross margin decreased due in part to the continued weak economy and lower usage at certain industrial customers. For the six months ended June 30, 2012, we recognized a benefit of $5.1 million under the ERM in Washington compared to $4.7 million for the six months ended June 30, 2011.

Ecovas net income attributable to Avista Corp. was $1.1 million for the three months ended June 30, 2012 compared to net income of $1.8 million for the three months ended June 30, 2011. Operating revenues increased $10.3 million and total operating expenses increased $12.0 million. The increase in operating revenues was primarily due to the acquisitions of Prenova effective November 30, 2011 and LPB effective January 31, 2012, which added $6.4 million to operating revenues for the second quarter of 2012. The increase in total operating expenses primarily reflects increased costs necessary to support ongoing and future business growth, as well as to support the increased revenue volume obtained through the acquisitions. Ecova experienced increases in employee costs, facilities costs, information technology costs and professional fees. Depreciation and amortization increased $1.7 million due to intangibles recorded in connection with the acquisitions. As of June 30, 2012, Ecova had 736 expense management customers representing 602,000 billed sites in North America. In the second quarter of 2012, Ecova managed bills totaling $4.6 billion, a decrease of $0.1 billion as compared to the second quarter of 2011. This decrease was due to a decrease in the average value of each bill (due in part to a decline in natural gas prices), partially offset by an increase in accounts managed.

Ecovas net income attributable to Avista Corp. was $0.3 million for the six months ended June 30, 2012 compared to net income of $3.5 million for the six months ended June 30, 2011. Operating revenues increased $18.1 million and total operating expenses increased $25.0 million. The increase in operating revenues was primarily due to the acquisitions of Prenova effective November 30, 2011 and LPB effective January 31, 2012, which added $11.6 million to operating revenues for the six months ended June 30, 2012. The increase in total operating expenses primarily reflects increased costs necessary to support ongoing and future business growth, as well as to support the increased revenue volume obtained through the acquisitions. Ecova experienced increases in employee costs, facilities costs, information technology costs and professional fees. In addition, Ecova incurred $1.5 million in transaction and integration costs, and $0.3 million paid for the early termination of an earn-out contract. Depreciation and amortization increased $2.9 million due to intangibles recorded in connection with the acquisitions. In the first half of 2012, Ecova managed bills totaling $9.0 billion, a decrease of $0.5 billion as compared to the first half of 2011. This decrease was due to a decrease in the average value of each bill (due in part to a decline in natural gas prices), partially offset by an increase in accounts managed.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 2.0/5 (2 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide