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VECTREN CORPORATION | ||
(Exact name of registrant as specified in its charter) | ||
Commission File No. | Registrant, State of Incorporation, Address, and Telephone Number | I.R.S Employer Identification No. |
1-15467 | Vectren Corporation | 35-2086905 |
(An Indiana Corporation) | ||
One Vectren Square, | ||
Evansville, Indiana 47708 | ||
(812) 491-4000 | ||
1-16739 | Vectren Utility Holdings, Inc. | 35-2104850 |
(An Indiana Corporation) | ||
One Vectren Square, | ||
Evansville, Indiana 47708 | ||
(812) 491-4000 | ||
Former name or address, if changed since last report: | ||
N/A |
Exhibit Number | Description | |
99.1 | Press Release - Vectren Corporation 2017 Results Hit Target, 2018 Earnings Guidance Initiated, Long-Term Growth Targets Affirmed | |
99.2 | Supporting Financial Statements and Schedules | |
99.3 | Reconciliation GAAP to Non-GAAP | |
99.4 | Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995 |
VECTREN CORPORATION VECTREN UTILITY HOLDINGS, INC. | |||
February 21, 2018 | |||
By: /s/ M. Susan Hardwick | |||
M. Susan Hardwick | |||
Executive Vice President and Chief Financial Officer |
Exhibit Number | Description | |
99.1 | ||
99.2 | ||
99.3 | ||
99.4 |
• | Utility Group earnings were $175.8 million, or $2.12 per share, in 2017, compared to $173.6 million, or $2.10 per share, in 2016. Fourth quarter results for the Utility Group were earnings of $53.6 million, or $0.65 per share in 2017, compared to $51.3 million, or $0.62 per share, in 2016. Favorable Utility Group results for the quarter and year were driven largely by the continued investment in the gas infrastructure investment programs in both Indiana and Ohio. Results also reflect the expected decrease in usage of a large electric customer that completed its transition to |
• | Nonutility Group earnings were $41.1 million, or $0.49 per share, in 2017, compared to $36.9 million, or $0.44 per share, in 2016. Fourth quarter 2017 earnings from the Nonutility Group were $8.1 million, or $0.10 per share, compared to $18.7 million, or $0.23 per share, in 2016. Results for the year improved due to strong performance at Infrastructure Services, reflecting the large Ohio pipeline project that was substantially complete by Sept. 2017, as well as other transmission pipeline projects as compared to 2016. Fourth quarter 2017 results were lower than 2016 due to a large transmission pipeline project in the second half of 2016 and the expiration of Section 179D tax deductions that allowed for federal tax deductions related to energy efficiency savings. |
• | Results in 2017 reflect the impact of the Tax Cuts and Jobs Act of 2017, specifically the revaluation of deferred income taxes reflecting the reduction in the federal corporate tax rate to 21 percent from 35 percent. The Utility Group rate-regulated amounts are reflected as a regulatory liability at Dec. 31, 2017 as those amounts will be reflected as lower customer rates. The Nonutility Group and the Utility Group’s non-rate-regulated amounts totaling $45.3 million, or $0.55 per share, are reflected as a reduction in income tax expense in the fourth quarter and the annual 2017 results. Also reflected in the 2017 results is a nonrecurring charge to other operating expense totaling $69.7 million, or $0.55 per share, for the multi-year funding of the Vectren Foundation, a 501(c)(3) charitable organization. |
• | Earlier today, the company filed its generation transition plan with the Indiana Utility Regulatory Commission (IURC), seeking authority to build an approximate 800-900 megawatt combined cycle natural gas turbine to be completed in 2023. |
• | Consolidated EPS growth of 6-8 percent |
• | Dividend growth of 6-8 percent, aligned with consolidated EPS growth |
• | Consolidated payout ratio of 60-65 percent |
• | Utility EPS growth of 5-7 percent |
• | Utility payout of 70 percent, which will fund 85-90 percent of the external dividend |
(millions) | Quarter | Year | ||||||
2016 Gas Utility Earnings | $ | 30.1 | $ | 76.1 | ||||
Gas Infrastructure replacement programs | 1.2 | 10.3 | ||||||
Large customer margin | 0.3 | 3.2 | ||||||
All other | 0.8 | (1.4 | ) | |||||
2.3 | 12.1 | |||||||
2017 Gas Utility Earnings | $ | 32.4 | $ | 88.2 | ||||
(millions) | Quarter | Year | ||||||
2016 Electric Utility Earnings | $ | 17.7 | $ | 84.7 | ||||
Weather impact on small customer usage | 0.5 | (3.3 | ) | |||||
Large customer margin reduction from customer co-generation | (2.7 | ) | (11.5 | ) | ||||
Other customer usage | (0.5 | ) | 1.2 | |||||
Power plant maintenance expense | 1.8 | 2.6 | ||||||
All other | 1.6 | 1.5 | ||||||
0.7 | (9.5 | ) | ||||||
2017 Electric Utility Earnings | $ | 18.4 | $ | 75.2 | ||||
• | Factors affecting utility operations such as unfavorable or unusual weather conditions; catastrophic weather-related damage; unusual maintenance or repairs; unanticipated changes to coal and natural gas costs; unanticipated changes to gas transportation and storage costs, or availability due to higher demand, shortages, transportation problems or other developments; environmental or pipeline incidents; transmission or distribution incidents; unanticipated changes to electric energy supply costs, or availability due to demand, shortages, transmission problems or other developments; or electric transmission or gas pipeline system constraints. |
• | New or proposed legislation, litigation and government regulation or other actions, such as changes in, rescission of or additions to tax laws or rates, pipeline safety regulation and environmental laws and regulations, including laws governing air emissions, carbon, waste water discharges and the handling and disposal of coal combustion residuals that could impact the continued operation, and/or cost recovery of generation plant costs and related assets. Compliance with respect to these regulations could substantially change the operation and nature of the company’s utility operations. |
• | Catastrophic events such as fires, earthquakes, explosions, floods, ice storms, tornadoes, terrorist acts, physical attacks, cyber attacks, or other similar occurrences could adversely affect the company's facilities, operations, financial condition, results of operations, and reputation. |
• | Increased competition in the energy industry, including the effects of industry restructuring, unbundling, and other sources of energy. |
• | Approval and timely recovery of new capital investments related to the electric generation transition plan, including timely approval to build and own generation, ability to meet capacity requirements, ability to procure resources needed to build new generation at a reasonable cost, ability to appropriately estimate costs of new generation, the effects of construction delays and cost overruns, ability to fully recover the investments made in retiring portions of the current generation fleet, scarcity of resources and labor, and workforce retention, development and training. |
• | Regulatory factors such as uncertainty surrounding the composition of state regulatory commissions, adverse regulatory changes, unanticipated changes in rate-setting policies or procedures, recovery of investments and costs made under regulation, interpretation of regulatory-related legislation by the IURC and/or PUCO and appellate courts that review decisions issued by the agencies, and the frequency and timing of rate increases. |
• | Financial, regulatory or accounting principles or policies imposed by the Financial Accounting Standards Board; the Securities and Exchange Commission; the Federal Energy Regulatory Commission; state public utility commissions; state entities which regulate electric and natural gas transmission and distribution, natural gas gathering and processing, electric power supply; and similar entities with regulatory oversight. |
• | Economic conditions including the effects of inflation, commodity prices, and monetary fluctuations. |
• | Economic conditions, including increased potential for lower levels of economic activity; uncertainty regarding energy prices and the capital and commodity markets; volatile changes in the demand for natural gas, electricity, and other nonutility products and services; economic impacts of changes in business strategy on both gas and electric large customers; lower residential and commercial customer counts; variance from normal population growth and changes in customer mix; higher operating expenses; and reductions in the value of investments. |
• | Volatile natural gas and coal commodity prices and the potential impact on customer consumption, uncollectible accounts expense, unaccounted for gas and interest expense. |
• | Volatile oil prices and the potential impact on customer consumption and price of other fuel commodities. |
• | Direct or indirect effects on the company’s business, financial condition, liquidity and results of operations resulting from changes in credit ratings, changes in interest rates, and/or changes in market perceptions of the utility industry and other energy-related industries. |
• | The performance of projects undertaken by the company’s nonutility businesses and the success of efforts to realize value from, invest in and develop new opportunities, including but not limited to, the company’s Infrastructure Services, Energy Services, and remaining ProLiance Holdings assets. |
• | Factors affecting Infrastructure Services, including the level of success in bidding contracts; fluctuations in volume and mix of contracted work; mix of projects received under blanket contracts; unanticipated cost increases in completion of the contracted work; funding requirements associated with multiemployer pension and benefit plans; changes in legislation and regulations impacting the industries in which the customers served operate; the effects of weather; failure to properly estimate the cost to construct projects; the ability to attract and retain qualified employees in a fast growing market where skills are critical; cancellation and/or reductions in the scope of projects by customers; credit worthiness of customers; ability to obtain materials and equipment required to perform services; and changing market conditions, including changes in the market prices of oil and natural gas that would affect the demand for infrastructure construction. |
• | Factors affecting Energy Services, including unanticipated cost increases in completion of the contracted work; changes in legislation and regulations impacting the industries in which the customers served operate; changes in economic influences impacting customers served; failure to properly estimate the cost to construct projects; risks associated with projects owned or operated; failure to appropriately design, construct, or operate projects; the ability to attract and retain qualified employees; cancellation and/or reductions in the scope of projects by customers; changes in the timing of being awarded projects; credit worthiness of customers; lower energy prices negatively impacting the economics of performance contracting business; and changing market conditions. |
• | Employee or contractor workforce factors including changes in key executives, collective bargaining agreements with union employees, aging workforce issues, work stoppages, or pandemic illness. |
• | Risks associated with material business transactions such as acquisitions and divestitures, including, without limitation, legal and regulatory delays; the related time and costs of implementing such transactions; integrating operations as part of these transactions; and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions. |
• | Costs, fines, penalties and other effects of legal and administrative proceedings, settlements, investigations, claims, including, but not limited to, such matters involving compliance with federal and state laws and interpretations of these laws. |
VECTREN CORPORATION | ||||||||||||||||
AND SUBSIDIARY COMPANIES | ||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(Unaudited - in millions, except per share amounts) | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
OPERATING REVENUES: | ||||||||||||||||
Gas utility | $ | 255.5 | $ | 240.9 | $ | 812.7 | $ | 771.7 | ||||||||
Electric utility | 136.6 | 142.5 | 569.6 | 605.8 | ||||||||||||
Nonutility | 318.9 | 315.6 | 1,275.0 | 1,070.8 | ||||||||||||
Total operating revenues | 711.0 | 699.0 | 2,657.3 | 2,448.3 | ||||||||||||
OPERATING EXPENSES: | ||||||||||||||||
Cost of gas sold | 97.4 | 92.1 | 271.5 | 266.7 | ||||||||||||
Cost of fuel and purchased power | 43.0 | 43.4 | 171.8 | 183.6 | ||||||||||||
Cost of nonutility revenues | 125.8 | 114.8 | 444.2 | 363.4 | ||||||||||||
Other operating | 320.6 | 245.3 | 1,115.9 | 932.2 | ||||||||||||
Depreciation and amortization | 70.6 | 66.6 | 276.2 | 260.0 | ||||||||||||
Taxes other than income taxes | 16.8 | 16.1 | 59.3 | 60.9 | ||||||||||||
Total operating expenses | 674.2 | 578.3 | 2,338.9 | 2,066.8 | ||||||||||||
OPERATING INCOME | 36.8 | 120.7 | 318.4 | 381.5 | ||||||||||||
OTHER INCOME: | ||||||||||||||||
Equity in earning (losses) of unconsolidated affiliates | (0.1 | ) | — | (1.1 | ) | (0.2 | ) | |||||||||
Other income - net | 7.6 | 6.8 | 32.8 | 28.7 | ||||||||||||
Total other income | 7.5 | 6.8 | 31.7 | 28.5 | ||||||||||||
INTEREST EXPENSE | 22.8 | 21.2 | 87.7 | 85.5 | ||||||||||||
INCOME BEFORE INCOME TAXES | 21.5 | 106.3 | 262.4 | 324.5 | ||||||||||||
INCOME TAXES | (39.7 | ) | 36.7 | 46.4 | 112.9 | |||||||||||
NET INCOME | $ | 61.2 | $ | 69.6 | $ | 216.0 | $ | 211.6 | ||||||||
WEIGHTED AVERAGE AND DILUTED COMMON SHARES | ||||||||||||||||
OUTSTANDING | 83.0 | 82.9 | 83.0 | 82.8 | ||||||||||||
BASIC AND DILUTED EARNINGS PER SHARE OF COMMON STOCK | $ | 0.74 | $ | 0.84 | $ | 2.60 | $ | 2.55 | ||||||||
VECTREN UTILITY HOLDINGS | ||||||||||||||||
AND SUBSIDIARY COMPANIES | ||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(Unaudited - in millions) | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
OPERATING REVENUES: | ||||||||||||||||
Gas utility | $ | 255.5 | $ | 240.9 | $ | 812.7 | $ | 771.7 | ||||||||
Electric utility | 136.6 | 142.5 | 569.6 | 605.8 | ||||||||||||
Other | — | 0.1 | 0.3 | 0.3 | ||||||||||||
Total operating revenues | 392.1 | 383.5 | 1,382.6 | 1,377.8 | ||||||||||||
OPERATING EXPENSES: | ||||||||||||||||
Cost of gas sold | 97.4 | 92.1 | 271.5 | 266.7 | ||||||||||||
Cost of fuel and purchased power | 43.0 | 43.4 | 171.8 | 183.6 | ||||||||||||
Other operating | 118.3 | 82.8 | 370.4 | 333.6 | ||||||||||||
Depreciation and amortization | 60.1 | 56.3 | 234.5 | 219.1 | ||||||||||||
Taxes other than income taxes | 15.8 | 15.4 | 55.9 | 58.3 | ||||||||||||
Total operating expenses | 334.6 | 290.0 | 1,104.1 | 1,061.3 | ||||||||||||
OPERATING INCOME | 57.5 | 93.5 | 278.5 | 316.5 | ||||||||||||
OTHER INCOME - NET | 7.4 | 6.4 | 30.6 | 26.3 | ||||||||||||
INTEREST EXPENSE | 19.1 | 17.5 | 72.6 | 69.7 | ||||||||||||
INCOME BEFORE INCOME TAXES | 45.8 | 82.4 | 236.5 | 273.1 | ||||||||||||
INCOME TAXES | (7.8 | ) | 31.1 | 60.7 | 99.5 | |||||||||||
NET INCOME | $ | 53.6 | $ | 51.3 | $ | 175.8 | $ | 173.6 | ||||||||
VECTREN CORPORATION | ||||||||
AND SUBSIDIARY COMPANIES | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(Unaudited - in millions) | ||||||||
December 31, | December 31, | |||||||
2017 | 2016 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash & cash equivalents | $ | 16.6 | $ | 68.6 | ||||
Accounts receivable - less reserves of $5.1 & | ||||||||
$6.0, respectively | 262.9 | 225.3 | ||||||
Accrued unbilled revenues | 207.1 | 172.4 | ||||||
Inventories | 126.6 | 129.9 | ||||||
Recoverable fuel & natural gas costs | 19.2 | 29.9 | ||||||
Prepayments & other current assets | 47.0 | 52.7 | ||||||
Total current assets | 679.4 | 678.8 | ||||||
Utility Plant | ||||||||
Original cost | 7,015.4 | 6,545.4 | ||||||
Less: accumulated depreciation & amortization | 2,738.7 | 2,562.5 | ||||||
Net utility plant | 4,276.7 | 3,982.9 | ||||||
Investments in unconsolidated affiliates | 19.7 | 20.4 | ||||||
Other utility & corporate investments | 43.7 | 34.1 | ||||||
Other nonutility investments | 9.6 | 16.1 | ||||||
Nonutility plant - net | 464.1 | 423.9 | ||||||
Goodwill | 293.5 | 293.5 | ||||||
Regulatory assets | 416.8 | 308.8 | ||||||
Other assets | 35.8 | 42.2 | ||||||
TOTAL ASSETS | $ | 6,239.3 | $ | 5,800.7 | ||||
LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 366.2 | $ | 302.2 | ||||
Accrued liabilities | 222.3 | 207.7 | ||||||
Short-term borrowings | 249.5 | 194.4 | ||||||
Current maturities of long-term debt | 100.0 | 124.1 | ||||||
Total current liabilities | 938.0 | 828.4 | ||||||
Long-term Debt - Net of Current Maturities | 1,738.7 | 1,589.9 | ||||||
Deferred Credits & Other Liabilities | ||||||||
Deferred income taxes | 491.3 | 905.7 | ||||||
Regulatory liabilities | 937.2 | 453.7 | ||||||
Deferred credits & other liabilities | 284.8 | 254.9 | ||||||
Total deferred credits & other liabilities | 1,713.3 | 1,614.3 | ||||||
Common Shareholders' Equity | ||||||||
Common stock (no par value) – issued & outstanding | ||||||||
83.0 and 82.9 shares, respectively | 736.9 | 729.8 | ||||||
Retained earnings | 1,113.7 | 1,039.6 | ||||||
Accumulated other comprehensive (loss) | (1.3 | ) | (1.3 | ) | ||||
Total common shareholders' equity | 1,849.3 | 1,768.1 | ||||||
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | $ | 6,239.3 | $ | 5,800.7 | ||||
VECTREN CORPORATION | ||||||||
AND SUBSIDIARY COMPANIES | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Millions - Unaudited) | ||||||||
Twelve Months Ended | ||||||||
December 31, | ||||||||
2017 | 2016 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 216.0 | $ | 211.6 | ||||
Adjustments to reconcile net income to cash from operating activities: | ||||||||
Depreciation & amortization | 276.2 | 260.0 | ||||||
Deferred income taxes & investment tax credits | 19.0 | 100.1 | ||||||
Provision for uncollectible accounts | 5.9 | 6.9 | ||||||
Expense portion of pension & postretirement benefit cost | 5.4 | 3.6 | ||||||
Other non-cash items - net | 12.9 | 7.8 | ||||||
Changes in working capital accounts: | ||||||||
Accounts receivable & accrued unbilled revenues | (80.9 | ) | (39.6 | ) | ||||
Inventories | 3.3 | 3.9 | ||||||
Recoverable/refundable fuel & natural gas costs | 10.7 | (37.8 | ) | |||||
Prepayments & other current assets | 5.7 | 22.9 | ||||||
Accounts payable, including to affiliated companies | 65.9 | 40.7 | ||||||
Accrued liabilities | 15.6 | 22.7 | ||||||
Employer contributions to pension & postretirement plans | (4.6 | ) | (19.6 | ) | ||||
Changes in noncurrent assets | (40.6 | ) | (44.0 | ) | ||||
Changes in noncurrent liabilities | (11.7 | ) | (15.1 | ) | ||||
Net cash from operating activities | 498.8 | 524.1 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from: | ||||||||
Long-term debt, net of issuance costs | 198.5 | — | ||||||
Dividend reinvestment plan & other common stock issuances | 6.3 | 6.3 | ||||||
Requirements for: | ||||||||
Dividends on common stock | (141.9 | ) | (134.2 | ) | ||||
Retirement of long-term debt | (75.0 | ) | (73.0 | ) | ||||
Net change in short-term borrowings | 55.1 | 179.9 | ||||||
Net cash from financing activities | 43.0 | (21.0 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Proceeds from sale of assets and other collections | 11.3 | 33.0 | ||||||
Requirements for: | ||||||||
Capital expenditures, excluding AFUDC equity | (602.6 | ) | (542.0 | ) | ||||
Other costs | (3.4 | ) | (5.2 | ) | ||||
Changes in restricted cash | 0.9 | 5.0 | ||||||
Net cash from investing activities | (593.8 | ) | (509.2 | ) | ||||
Net change in cash & cash equivalents | (52.0 | ) | (6.1 | ) | ||||
Cash & cash equivalents at beginning of period | 68.6 | 74.7 | ||||||
Cash & cash equivalents at end of period | $ | 16.6 | $ | 68.6 | ||||
VECTREN CORPORATION | ||||||||||||||||
AND SUBSIDIARY COMPANIES | ||||||||||||||||
HIGHLIGHTS | ||||||||||||||||
(Unaudited - in millions, except per share amounts) | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
REPORTED EARNINGS: | ||||||||||||||||
Utility Group | ||||||||||||||||
Gas Utility Services * | $ | 59.7 | $ | 30.1 | $ | 115.5 | $ | 76.1 | ||||||||
Electric Utility Services | 18.4 | 17.7 | 75.2 | 84.7 | ||||||||||||
Other Operations ** | (24.5 | ) | 3.5 | (14.9 | ) | 12.8 | ||||||||||
Total Utility Group | 53.6 | 51.3 | 175.8 | 173.6 | ||||||||||||
Nonutility Group | ||||||||||||||||
Infrastructure Services | 3.7 | 15.1 | 32.3 | 25.0 | ||||||||||||
Energy Services | 5.9 | 3.8 | 10.7 | 12.5 | ||||||||||||
Other Businesses | (1.5 | ) | (0.2 | ) | (1.9 | ) | (0.6 | ) | ||||||||
Nonutility Group | 8.1 | 18.7 | 41.1 | 36.9 | ||||||||||||
Corporate and Other | (0.5 | ) | (0.4 | ) | (0.9 | ) | 1.1 | |||||||||
Vectren Consolidated | $ | 61.2 | $ | 69.6 | $ | 216.0 | $ | 211.6 | ||||||||
EARNINGS PER SHARE: | ||||||||||||||||
Utility Group | $ | 0.65 | $ | 0.62 | $ | 2.12 | $ | 2.10 | ||||||||
Nonutility Group | 0.10 | 0.23 | 0.49 | 0.44 | ||||||||||||
Corporate and Other | (0.01 | ) | (0.01 | ) | (0.01 | ) | 0.01 | |||||||||
Reported EPS | $ | 0.74 | $ | 0.84 | $ | 2.60 | $ | 2.55 | ||||||||
* Gas Utility Services - The quarter and annual periods in 2017 reflect a $27.3 million reduction in income tax expense as a result of the revaluation of deferred income taxes at December 31, 2017, related to acquisition goodwill for the Ohio operations that is not being recovered in rates. This revaluation of deferred income taxes results from the federal tax reform outlined in the Tax Cuts and Jobs Act of 2017. | ||||||||||||||||
** Other Operations - The quarter and annual periods in 2017 reflect a charge totaling $27.3 million to fund the Vectren Foundation. | ||||||||||||||||
VECTREN CORPORATION | ||||||||||||||||
AND SUBSIDIARY COMPANIES | ||||||||||||||||
SELECTED GAS DISTRIBUTION | ||||||||||||||||
OPERATING STATISTICS | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
GAS UTILITY (Millions): | ||||||||||||||||
Residential Margin | $ | 92.4 | $ | 88.1 | $ | 323.8 | $ | 303.4 | ||||||||
Commercial Margin | 26.8 | 25.4 | 88.5 | 82.5 | ||||||||||||
Industrial Margin | 20.9 | 19.9 | 73.9 | 67.1 | ||||||||||||
Other Margin | 2.0 | 1.7 | 8.4 | 7.4 | ||||||||||||
Regulatory Expense Recovery Mechanisms | 16.0 | 13.7 | 46.6 | 44.6 | ||||||||||||
Total Gas Utility Margin | 158.1 | 148.8 | 541.2 | 505.0 | ||||||||||||
Cost of Gas Sold | 97.4 | 92.1 | 271.5 | 266.7 | ||||||||||||
Total Gas Utility Revenue | $ | 255.5 | $ | 240.9 | $ | 812.7 | $ | 771.7 | ||||||||
GAS SOLD & TRANSPORTED (MMDth): | ||||||||||||||||
Residential | 26.0 | 22.1 | 66.5 | 66.6 | ||||||||||||
Commercial | 11.8 | 9.9 | 30.6 | 30.6 | ||||||||||||
Industrial | 35.0 | 33.2 | 122.2 | 127.0 | ||||||||||||
72.8 | 65.2 | 219.3 | 224.2 | |||||||||||||
AVERAGE GAS CUSTOMERS | ||||||||||||||||
Residential | 937,696 | 929,128 | 934,813 | 927,050 | ||||||||||||
Commercial | 85,563 | 85,103 | 85,479 | 85,190 | ||||||||||||
Industrial | 1,744 | 1,734 | 1,742 | 1,729 | ||||||||||||
1,025,003 | 1,015,965 | 1,022,034 | 1,013,969 | |||||||||||||
WEATHER AS A PERCENT OF NORMAL (ANNUALIZED): | ||||||||||||||||
Heating Degree Days (Ohio) | 101 | % | 96 | % | 90 | % | 93 | % | ||||||||
Heating Degree Days (Indiana) | 100 | % | 94 | % | 80 | % | 84 | % |
VECTREN CORPORATION | ||||||||||||||||
AND SUBSIDIARY COMPANIES | ||||||||||||||||
SELECTED ELECTRIC | ||||||||||||||||
OPERATING STATISTICS | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
ELECTRIC UTILITY (Millions): | ||||||||||||||||
Residential Margin | $ | 32.3 | $ | 32.1 | $ | 148.6 | $ | 153.6 | ||||||||
Commercial Margin | 25.5 | 26.2 | 106.3 | 107.6 | ||||||||||||
Industrial Margin | 23.7 | 27.3 | 96.9 | 112.1 | ||||||||||||
Other Margin | 2.9 | 3.2 | 5.6 | 5.8 | ||||||||||||
Regulatory Expense Recovery Mechanisms | 1.5 | 2.1 | 9.6 | 13.7 | ||||||||||||
Wholesale and Transmission | 7.7 | 8.2 | 30.8 | 29.4 | ||||||||||||
Total Electric Utility Margin | 93.6 | 99.1 | 397.8 | 422.2 | ||||||||||||
Cost of Fuel & Purchased Power | 43.0 | 43.4 | 171.8 | 183.6 | ||||||||||||
Total Electric Utility Revenue | $ | 136.6 | $ | 142.5 | $ | 569.6 | $ | 605.8 | ||||||||
ELECTRICITY SOLD (GWh): | ||||||||||||||||
Residential | 296.2 | 294.0 | 1,362.5 | 1,424.5 | ||||||||||||
Commercial | 299.8 | 312.4 | 1,276.3 | 1,304.5 | ||||||||||||
Industrial | 495.8 | 612.3 | 2,096.5 | 2,722.3 | ||||||||||||
Other Sales - Street Lighting | 6.3 | 6.3 | 22.3 | 22.9 | ||||||||||||
Total Retail | 1,098.1 | 1,225.0 | 4,757.6 | 5,474.2 | ||||||||||||
Wholesale | 167.4 | 98.8 | 463.2 | 136.1 | ||||||||||||
1,265.5 | 1,323.8 | 5,220.8 | 5,610.3 | |||||||||||||
AVERAGE ELECTRIC CUSTOMERS | ||||||||||||||||
Residential | 126,758 | 125,911 | 126,443 | 125,662 | ||||||||||||
Commercial | 18,675 | 18,607 | 18,648 | 18,551 | ||||||||||||
Industrial | 112 | 113 | 112 | 113 | ||||||||||||
Other | 40 | 39 | 40 | 39 | ||||||||||||
145,585 | 144,670 | 145,243 | 144,365 | |||||||||||||
WEATHER AS A PERCENT OF NORMAL (ANNUALIZED): | ||||||||||||||||
Cooling Degree Days (Indiana) | 103 | % | 106 | % | 111 | % | 125 | % | ||||||||
Heating Degree Days (Indiana) | 100 | % | 94 | % | 80 | % | 84 | % |
VECTREN CORPORATION | ||||||||||||||
AND SUBSIDIARY COMPANIES | ||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES | ||||||||||||||
(Unaudited - in millions, except per share amounts) | ||||||||||||||
Twelve Months Ended December 31, 2017 | ||||||||||||||
(In millions, except EPS) | GAAP Measure | Deferred Tax Revaluation (Gain) / Loss | Operating Expense Charge | Non-GAAP Measure | ||||||||||
Consolidated | ||||||||||||||
Net Income | $ | 216.0 | $ | (45.3 | ) | $ | 45.3 | $ | 216.0 | |||||
Basic EPS | $ | 2.60 | $ | (0.55 | ) | $ | 0.55 | $ | 2.60 | |||||
Utility Group | ||||||||||||||
Net Income | $ | 175.8 | $ | (23.2 | ) | $ | 23.2 | $ | 175.8 | |||||
Basic EPS | $ | 2.12 | $ | (0.28 | ) | $ | 0.28 | $ | 2.12 | |||||
Utility Group Segments | ||||||||||||||
Gas Utility - Net Income | $ | 115.5 | $ | (27.3 | ) | — | $ | 88.2 | ||||||
Electric Utility - Net Income | $ | 75.2 | — | — | $ | 75.2 | ||||||||
Other Utility Operations - Net Income | $ | (14.9 | ) | $ | 4.1 | $ | 23.2 | $ | 12.4 | |||||
Nonutility Group | ||||||||||||||
Net Income | $ | 41.1 | $ | (22.3 | ) | $ | 22.1 | $ | 40.9 | |||||
Basic EPS | $ | 0.49 | $ | (0.27 | ) | $ | 0.27 | $ | 0.49 | |||||
Corp & Other | ||||||||||||||
Net Income | $ | (0.9 | ) | $ | 0.2 | — | $ | (0.7 | ) | |||||
Basic EPS | $ | (0.01 | ) | — | — | $ | (0.01 | ) | ||||||
Other Operating Expense | ||||||||||||||
Consolidated | $ | 1,115.9 | — | $ | (69.7 | ) | $ | 1,046.2 | ||||||
Utility Group | $ | 370.4 | — | $ | (35.7 | ) | $ | 334.70 | ||||||
Income Tax Expense | ||||||||||||||
Consolidated | $ | 46.4 | $ | 45.3 | $ | 24.4 | $ | 116.1 | ||||||
Utility Group | $ | 60.7 | $ | 23.2 | $ | 12.5 | $ | 96.4 | ||||||
Nonutility Group | $ | (13.5 | ) | $ | 22.3 | $ | 11.9 | $ | 20.7 | |||||
Corp & Other | $ | (0.8 | ) | $ | (0.2 | ) | — | $ | (1.0 | ) |
• | Factors affecting utility operations such as unfavorable or unusual weather conditions; catastrophic weather-related damage; unusual maintenance or repairs; unanticipated changes to coal and natural gas costs; unanticipated changes to gas transportation and storage costs, or availability due to higher demand, shortages, transportation problems or other developments; environmental or pipeline incidents; transmission or distribution incidents; unanticipated changes to electric energy supply costs, or availability due to demand, shortages, transmission problems or other developments; or electric transmission or gas pipeline system constraints. |
• | New or proposed legislation, litigation and government regulation or other actions, such as changes in, rescission of or additions to tax laws or rates, pipeline safety regulation and environmental laws and regulations, including laws governing air emissions, carbon, waste water discharges and the handling and disposal of coal combustion residuals that could impact the continued operation, and/or cost recovery of generation plant costs and related assets. Compliance with respect to these regulations could substantially change the operation and nature of the Company’s utility operations. |
• | Catastrophic events such as fires, earthquakes, explosions, floods, ice storms, tornadoes, terrorist acts, physical attacks, cyber attacks, or other similar occurrences could adversely affect the Company's facilities, operations, financial condition, results of operations, and reputation. |
• | Approval and timely recovery of new capital investments related to the electric generation transition plan, discussed further herein, including timely approval to build and own generation, ability to meet capacity requirements, ability to procure resources needed to build new generation at a reasonable cost, ability to appropriately estimate costs of new generation, the effects of construction delays and cost overruns, ability to fully recover the investments made in retiring portions of the current generation fleet, scarcity of resources and labor, and workforce retention, development and training. |
• | Increased competition in the energy industry, including the effects of industry restructuring, unbundling, and other sources of energy. |
• | Regulatory factors such as uncertainty surrounding the composition of state regulatory commissions, adverse regulatory changes, unanticipated changes in rate-setting policies or procedures, recovery of investments and costs made under regulation, interpretation of regulatory-related legislation by the IURC and/or PUCO and appellate courts that review decisions issued by the agencies, and the frequency and timing of rate increases. |
• | Financial, regulatory or accounting principles or policies imposed by the Financial Accounting Standards Board; the Securities and Exchange Commission; the Federal Energy Regulatory Commission; state public utility commissions; state entities which regulate electric and natural gas transmission and distribution, natural gas gathering and processing, electric power supply; and similar entities with regulatory oversight. |
• | Economic conditions including the effects of inflation, commodity prices, and monetary fluctuations. |
• | Economic conditions, including increased potential for lower levels of economic activity; uncertainty regarding energy prices and the capital and commodity markets; volatile changes in the demand for natural gas, electricity, and other nonutility products and services; economic impacts of changes in business strategy on both gas and electric large customers; lower residential and commercial customer counts; variance from normal population growth and changes in customer mix; higher operating expenses; and reductions in the value of investments. |
• | Volatile natural gas and coal commodity prices and the potential impact on customer consumption, uncollectible accounts expense, unaccounted for gas and interest expense. |
• | Volatile oil prices and the potential impact on customer consumption and price of other fuel commodities. |
• | Direct or indirect effects on the Company’s business, financial condition, liquidity and results of operations resulting from changes in credit ratings, changes in interest rates, and/or changes in market perceptions of the utility industry and other energy-related industries. |
• | The performance of projects undertaken by the Company’s nonutility businesses and the success of efforts to realize value from, invest in and develop new opportunities, including but not limited to, the Company’s Infrastructure Services, Energy Services, and remaining ProLiance Holdings assets. |
• | Factors affecting Infrastructure Services, including the level of success in bidding contracts; fluctuations in volume and mix of contracted work; mix of projects received under blanket contracts; unanticipated cost increases in completion of the contracted work; funding requirements associated with multiemployer pension and benefit plans; changes in legislation and regulations impacting the industries in which the customers served operate; the effects of weather; failure to properly estimate the cost to construct projects; the ability to attract and retain qualified employees in a fast growing market where skills are critical; cancellation and/or reductions in the scope of projects by customers; credit worthiness of customers; ability to obtain materials and equipment required to perform services; and changing market conditions, including changes in the market prices of oil and natural gas that would affect the demand for infrastructure construction. |
• | Factors affecting Energy Services, including unanticipated cost increases in completion of the contracted work; changes in legislation and regulations impacting the industries in which the customers served operate; changes in economic influences impacting customers served; failure to properly estimate the cost to construct projects; risks associated with projects owned or operated; failure to appropriately design, construct, or operate projects; the ability to attract and retain qualified employees; cancellation and/or reductions in the scope of projects by customers; changes in the timing of being awarded projects; credit worthiness of customers; lower energy prices negatively impacting the economics of performance contracting business; and changing market conditions. |
• | Employee or contractor workforce factors including changes in key executives, collective bargaining agreements with union employees, aging workforce issues, work stoppages, or pandemic illness. |
• | Risks associated with material business transactions such as acquisitions and divestitures, including, without limitation, legal and regulatory delays; the related time and costs of implementing such transactions; integrating operations as part of these transactions; and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions. |
• | Costs, fines, penalties and other effects of legal and administrative proceedings, settlements, investigations, claims, including, but not limited to, such matters involving compliance with federal and state laws and interpretations of these laws. |
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