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News Release

TECO Energy Reports Second Quarter Earnings of $.39 per Share

TAMPA, July 15, 1999

TECO Energy, Inc. (NYSE/TE) today reported second quarter earnings of $.39 per share compared with last year’s second quarter earnings of $.44 per share. Net income for the quarter was $51.9 million, compared with $57.9 million for the same period last year.

Year-to-date net income was $100.6 million, excluding gains from discontinued operations of $.6 million. Net income for the same period last year, excluding a $22.2 million after-tax gain from discontinued operations and one-time after-tax charges of $16.8 million, was $105.5 million. Net income including one-time charges and discontinued operations was $101.2 million for the first six months of 1999, compared with $110.9 million for the same period last year.

Robert D. Fagan, TECO Energy’s new President and Chief Executive Officer said, "Our reported results are not what we want to see, but looking at next year and beyond we are on track to return TECO to its accustomed role of generating superior earnings growth. My commitment is to make this happen."

Chief Financial Officer Gordon L. Gillette said, "Considering the negative effects of weather this year on several of our companies, we don’t expect 1999 earnings to show growth over last year. However, results in the second half of the year will likely show improvement relative to last year, particularly at Tampa Electric."

Segment Operating Results

Tampa Electric reported second quarter operating income of $68.1 million and revenues of $304.3 million compared with $80.2 million and $320.9 million, respectively, for the same period last year. Lower retail and off-system sales in the quarter were a result of milder-than-normal weather, which was in contrast to 1998’s exceptionally hot spring when record demand levels were experienced. In addition, quarterly revenue comparisons reflect recognition of $11.1 million of previously deferred revenues in 1998 (partially offset by a temporary base rate reduction of $5.1 million) that were not available in 1999 under the current regulatory agreement. Customer growth remained strong at 2.5 percent for the quarter.

Tampa Electric’s year-to-date operating income was $123.3 million compared with $136.4 million last year, excluding a one-time pretax charge of $9.6 million last year reflecting the cost of mitigating the effect of a Florida Public Service Commission ruling that separated certain wholesale power sales contracts from retail revenues through 1999. Revenues were $565.2 million compared with $594.3 million last year, which included recognition in 1998 of previously deferred revenues of $19.8 million, partially offset by a temporary base rate reduction of $9.5 million. Customer growth of 2.5 percent was insufficient to offset the effects of the mild weather. The company expects to offset the impact of the unfavorable weather during the first half of the year through continued strong customer growth and expense control in the second half of the year.

Peoples Gas System reported operating income of $8.6 million and revenues of $56.7 million for the quarter compared with operating income of $4.7 million and revenues of $57.9 million last year. Commercial therm sales were two percent over last year, reflecting customer growth of nearly 3.5 percent. Residential customer growth also was strong at 2.7 percent, but residential therm sales were below last year, due to milder-than-normal weather in 1999’s second quarter. Operations and maintenance expenses were lower in 1999 due to substantial cost reductions from last year’s restructuring.

Year-to-date results at Peoples Gas System were 16 percent higher with operating income of $23.3 million compared with $20.1 million last year. While mild winter weather led to lower revenues year-to-date, $127.8 million compared with $138.6 million last year, commercial and residential customer growth were both 2.9 percent.

TECO Transport reported operating income of $12.0 million and revenues of $60.8 million in the second quarter, compared with operating income of $9.4 million and revenues of $55.9 million last year. Year-to-date, operating income was $23.3 million and revenues were $118.4 million, compared with $18.6 million and $110.4 million in 1998. Results at TECO Transport reflected a strong increase in grain shipments and higher northbound volumes, partially offset by lower movements to Tampa Electric in response to reduced electric demand. In 1998, delays and temporary tow restrictions associated with flooding along the river system last spring unfavorably affected earnings. Weakness in the export coal and petroleum coke markets continued in the second quarter of 1999 and will likely continue in the second half of the year. Further, the effects of the mild weather to date on coal requirements at Tampa Electric as well as other utilities will have an unfavorable impact on transportation volumes during the second half of the year.

TECO Power Services’ operating income for the quarter was $3.6 million compared with $3.1 million last year, and revenues were $28.9 million compared with last year’s $25.0 million. Year-to-date operating income was $8.4 million, up 27 percent from last year’s $6.6 million, with revenues of $52.7 million and $43.9 million. Improvements for the quarter and year-to-date periods reflected higher earnings from the company’s Alborada Power Station in Guatemala; capitalization of interest during construction on the company’s equity investment in the San Jose Power Station; and contributions from the company’s recent growth initiatives.

TECO Coal achieved second quarter operating income of $5.0 million, unchanged from 1998’s second quarter, with revenues of $59.3 million compared with $54.4 million last year. Year-to-date operating income was $10.2 million on revenues of $112.4 million compared with operating income of $9.4 million on revenues of $111.1 million in 1998. Operating income for 1998 excluded a one-time pretax charge of $13.6 million for asset valuation adjustments. Operating income in 1999 reflected higher third-party coal sales and continued improvements in unit production costs, offset by lower revenues from planned reductions in Tampa Electric volumes. Although year-to-date results are in line with last year, the planned reduction in Tampa Electric volumes will likely yield results for the full year slightly below 1998.
TECO Energy’s other diversified companies recorded operating income of $4.6 million for the second quarter on revenues of $23.7 million. This compares with operating income of $9.6 million and revenues of $27.8 million for the same period last year. Year-to-date operating income and revenues were $10.6 million and $47.5 million, compared with $18.7 million and $57.2 million last year. Prior year operating income excluded a one-time pretax charge of $2.7 million at TeCom. TECO Coalbed Methane results were lower for the quarter by $2.9 million and for the six-month period by $4.7 million, resulting from a seven percent decline in production along with lower gas prices which reflected the impact of mild weather year-to-date. Results at Peoples Gas Company, the propane business, were slightly below last year, reflecting lower propane volumes because of warmer weather. Operating income at TeCom was lower as a result of the amortization of capitalized development costs, which began in late 1998.
TECO Energy is a diversified energy-related holding company headquartered in Tampa. Its principal businesses are Tampa Electric, Peoples Gas System, TECO Transport, TECO Coal, TECO Coalbed Methane, TECO Power Services, Peoples Gas Company, and Bosek, Gibson and Associates.
This press release contains forward-looking statements, which are subject to the inherent uncertainties in predicting future results and conditions. Certain factors that could cause actual results to differ materially from those projected in these forward-looking statements include the following: general economic conditions, particularly those in Tampa Electric’s service area affecting energy sales; weather variations affecting energy sales and operating costs; potential competitive changes in the electric and gas industries, particularly in the area of retail competition; regulatory actions affecting Tampa Electric and Peoples Gas System; commodity price changes affecting the competitive positions of Tampa Electric and the Peoples Gas companies as well as the margins at TECO Coalbed Methane and TECO Coal; and changes in and compliance with environmental regulations that may impose additional costs or curtail some activities. These factors are discussed more fully under "Investment Considerations" in the company’s Annual Report on Form 10-K for the year ended December 31, 1998, and reference is made thereto.
Summary information (as of June 30):

 
Three
months

ended

Six
months

ended

Twelve
months

ended

(millions except per share amounts)
1999 
1998
1999 
1998 
1999 
1998 
Revenues
$ 491.7 
$ 490.6 
$938.1
$958.4 
$1,938.1
$1,909.3 
Net income from continuing operations (after one-time charges)
$ 51.9 
$ 57.9
$ 100.6
$ 88.7 
$ 212.3
$ 198.9
Net income (loss) from discontinued operations
--
--
--
--
--
(6.5)
Gain (loss) on disposal of discontinued operations
--
--
.6
22.2
(15.5)
19.2
Net income
$ 51.9
$ 57.9
$ 101.2
$ 110.9
$ 196.8
$ 211.6
Earnings per share from continuing operations - basic

$.39

$.44

$.76

$.67

$1.61

$1.51

Earnings per share from continuing operations - diluted

$.39

$.44

$.76

$.67

$1.60

$1.51

Earnings per share - basic
$.39
$.44
$.76
$.84
$1.49
$1.61
Earnings per share - diluted
$.39
$.44
$.76
$.84
$1.49
$1.61
Average common shares outstanding - basic

132.0

131.7

132.0

131.6

131.9

131.3

Average common shares outstanding - diluted
132.2
132.2
132.3
132.1
132.4
131.7

Summary information (as of June 30):

Three
months

ended

Six
months

ended

Twelve
months

ended

(in millions)

Operating Income Summary:

1999 
1998 
1999 
1998 
1999 
1998
Oper. Inc. before one-time charges

Tampa Electric

Peoples Gas System

TECO Transport

TECO Coal

TECO Power Services

Other Diversified Companies

Other/Eliminations

One-time charges

Consolidated operating income from continuing operations


$68.1

8.6

12.0

5.0

3.6


4.6

101.9


(2.2)

--

$ 99.7


$80.2

4.7

9.4

5.0

3.1


9.6

112.0


(1.7)

--

$ 110.3


$123.3

23.3

23.2

10.2

8.4


10.6

199.0


(4.6)

--

$ 194.4


$136.4

20.1

18.6

9.4

6.6


18.7

209.8


(3.7)

(25.9)

$180.2


$266.5

39.0

47.9

24.3

14.8


26.6

419.1


(9.5)

--

$409.6


$277.6

32.6

42.7

17.5

14.3


39.4

424.1


(6.8)

(25.9)

$ 391.4

Net Income Summary:
Net inc. before one-time charges

Tampa Electric

Peoples Gas System

TECO Transport

TECO Coal

TECO Power Services

Other Diversified Companies

Other/Eliminations

Net income before one-time charges

One-time charges

Net income from continuing operations

Discontinued operations

Net income


$34.8

3.4

6.8

3.6

3.5


4.6


(4.8)

51.9


--

51.9


--


$ 51.9


$41.2

1.8

4.9

3.6

2.0


7.8


(3.4)

57.9


--

57.9


--


$ 57.9


$62.1

10.7

13.1

7.4

6.8


9.9


(9.5)

100.5


--

100.5


.6


$101.1


$67.2

8.9

10.2

6.8

4.2


15.3


(7.1)

105.5


(16.8)

88.7


22.2


$110.9


$136.1

17.3

26.7

18.1

12.3


23.6


(17.4)

216.7


(4.4)

212.3


(15.5)


$ 196.8


$138.5

13.4

24.5

13.1

9.3


32.9


(14.0)

217.7


(18.8)

198.9


12.7


$211.6

Operating income for TECO Power Services was net of interest costs on the company’s limited recourse debt. Operating income for TECO Coalbed Methane included a tax credit on coalbed methane production.

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