Winter Chill Drives DTE Energy Earnings Beat

Zacks

DTE Energy Company (DTE) reported first quarter 2014 operating earnings per share of $1.69, beating the Zacks Consensus Estimate of $1.41 by 19.8%. The bottom line also jumped 26.1% year over year from $1.34 per share.

The year-over-year improvement reflects increased weather-induced sales.

Total Revenue

Total revenue at DTE Energy jumped 56.2% year over year to $3.93 billion. With this the company surpassed the Zacks Consensus Estimate of $2.6.billion by 50.8%.

The company sold 11,999 Gigawatt hours of electricity, up 2% year over year. Gas sales touched 131,618 million cubic feet, an increase of 18% from the year-ago period.

Segmental Highlights

DTE Electric: Segment earnings were $136.0 million or 77 cents per share, up from $115.0 million or 66 cents per share in the prior-year quarter.

DTE Gas: Segment earnings were $129.0 million or 73 cents per share compared with $96.0 million or 55 cents per share in the first quarter of 2013.

Non-Utility Operations

Gas Storage and Pipelines: The segment generated a profit of $21.0 million or 12 cents per share, up from $17.0 million or 10 cents per share in the year-ago quarter.

Power and Industrial Projects: The segment posted a profit of $15.0 million or approximately 8 cents per share, up from $12.0 million or 7 cents per share.

Energy Trading: The segment posted a profit of $8.0 million or 5 cent per share versus a profit of $7.0 million or 4 cents per share in the prior-year period.

Corporate and Other: Loss in the quarter was $9.0 million or 6 cents per share versus a loss of $13.0 million or 8 cents per share a year ago.

Operating Update

Operation and maintenance expenses rose 14.4% year over year to $841.0 million.  

Total operating expenses escalated 60.0% year over year to $3.37 billion. This was primarily due to higher Fuel, Purchased Power and Gas expenses compared to the previous year.

Higher expenses however failed to dent the company’s net profits. Operating income in the reported quarter climbed a sharp 36.6% year over year to $560.0 million on the back of robust sales.

Financial Update

As of Mar 31, 2014, cash and cash equivalents were $98.0 million, up from $52 million as of Dec 31, 2013.

At the end of first quarter 2014, long-term debt, net of current portion, was $6.9 billion versus $7.2 billion at year-end 2013.

Net operating cash flow in first quarter 2014 was $532.0 million versus $597.0 million in first quarter 2013.

During the quarter the company utilized $166 million to repurchase shares and pay dividends.

Guidance

DTE Energy reiterated its earnings per share guidance for 2014 in the range of $4.20−$4.40.

Upcoming Release

Edison International (EIX) is slated to release its first-quarter 2014 earnings before the market open on Apr 29. The Zacks Consensus Estimate is 82 cents.

Avista Corp. (AVA) is slated to release its first-quarter 2014 earnings before the market open on May 7. The Zacks Consensus Estimate is 77 cents.

Ameren Corporation (AEE) is slated to release its first-quarter 2014 earnings before the market open on May 8. The Zacks Consensus Estimate is 32 cents.

Our Take

DTE Energy delivered another earnings surprise, thanks to a harsh winter driving energy demand in its service territories.

DTE Energy has plans to invest $2.33 billion in 2014, surpassing the 2013 level by 22.6%. We believe that the improving Michigan economy and DTE Energy’s consistent investments in developing its infrastructure will help it to sustain the solid run.

DTE Energy currently holds a Zacks Rank # 3 (Hold).

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