TECO Energy Earnings Surpass Estimate
Energy utility TECO Energy Inc. (TE) announced fist-quarter 2013 operating earnings of 19 cents per share, 11.8% higher than the Zacks Consensus Estimate of 17 cents. However, earnings were 9.5% lower than the year-ago figure.
Total Revenue
Total revenue at TECO Energy at the end of the first quarter was $661.1 million marginally ahead of the Zacks Consensus Estimate of $659 million.
However, the total revenue was 5.1% lower than the year-ago figure. The year-over-year decline was due to lower contribution from Unregulated and Regulated Electric and Gas segments.
Highlights of the Release
The company saw a 4.3% year-over-year decrease in total expenses during the quarter, which was due to an 11.1% decline in fuel prices, 48.2% decline in purchased power costs and an 8.1% fall in mining related costs.
Operating income in the reported quarter was $104.1 million, down 9.3% from the year- ago quarter.
Interest expenses declined 11.5% year over year to $43 million. The reductions in interest expense were primarily due to lower long-term debt interest rates and a lower interest rate on customer deposits.
Net income from continuing operations in the reported quarter was $41.2 million, down 7.6% from the year-ago quarter. Net income for the first quarter was $41.5 million, which included an income of $0.3 million related to the TECO Guatemala sale transaction.
Financial Update
The company continues to have a strong cash balance. Cash and cash equivalents of the company as of Mar 31, 2013 were $212.9 million, up from $200.5 million as of Dec 31, 2012.
Capital expenditure of the company in the reported quarter was $103.1 million, down from $117.4 million spent in the first quarter of 2012.
Long-term debt of the company as of Mar 31, 2013 was $2.97 billion, unaltered from the 2012 year end level.
Guidance
TECO Energy maintained its 2013 earnings per share expectation in a range of 90 cents to $1.00.
Peoples Gas expects to earn above the mid-point of its allowed return on equity (:ROE) range of 9.75% to 11.75%. The segment expects to benefit from moderate customer growth and cost management initiatives.
Tampa Electric is expected to expand its customer base by 1.2% in 2013 but sales growth is expected to be lower than increase in customer count. This is primarily due to lower average customer usage.
Other Company Releases
CMS Energy Corp. (CMS) reported earnings of 53 cents per share in the first quarter of 2013, surpassing the Zacks Consensus Estimate of 46 cents by 15.22%
Northwestern Corporation (NWE) announced first-quarter 2013 operating earnings of $1.01 per share, 8.6% above the Zacks Consensus Estimate of 93 cents.
Public Service Enterprise Group Inc. or PSEG (PEG) reported first quarter 2013 earnings of 85 cents per share, beating the Zacks Consensus Estimate of 74 cents by 14.9%.
Our View
TECO Energy started 2013 on a positive note by surpassing our expectation. In the reported quarter, Tampa Electric and People Gas recorded a respective customer growth of 1.4% and 1.3% year over year. Despite an increase in customer count, operating revenues from both Tampa Electric and People Gas in the reported quarter fell 4.6% and 9.8%, respectively. The decline was mainly due to lower average customer usage.
The current economic trend in TECO Energy’s service territories is encouraging. If the company can maintain its customer growth trend, it could have a positive impact on its top line in the upcoming quarters.
Based in Tampa, Fla., TECO Energy is involved in the generation, purchase, transmission, distribution, and sale of electricity in the state. TECO Energy currently has a Zacks Rank #3 (Hold).
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