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News Release

TECO Energy reports second quarter earnings per share up 15 percent to $.53 per share

TAMPA, July 19, 2001

TECO Energy, Inc. (NYSE:TE) today reported second quarter earnings of $.53 per share, up 15 percent from $.46 per share in 2000. Net income for the quarter was $71.9 million, 25 percent higher than the $57.5 million recorded in the 2000 period.

Year-to-date earnings per share increased 22 percent to $1.07 from $0.88 per share in the first six months of 2000. Net income for the six-month period increased 28 percent to $141.6 million compared with $111.0 million for the same period last year.

TECO Energy Chairman and CEO Robert Fagan said, "With these strong second quarter results, TECO Energy is delivering the earnings growth that we projected earlier this year. These outstanding results were led by strong growth in our Florida operations, significantly higher earnings at TECO Power Services and good results at TECO Coal and TECO Coalbed Methane. Our 22 percent higher earnings per share for the first six months shows that we are putting the pieces in place to deliver the long-term earnings growth that we have targeted."

Operating Segment Results:
Results for the second quarter reflected the continued strong customer growth in the electric and gas businesses, higher earnings from TECO Power Services' growing portfolio of generating projects, increased conventional coal and synthetic fuel sales at TECO Coal and higher realized gas prices at TECO Coalbed Methane.

Three months|
ended 6/30/01

Six months
ended 6/30/01

Twelve months
ended 6/30/01

 

(in millions)

Net Income Summary

2001

2000

2001

2000

2001

2000

Tampa Electric

$38.1

$35.7

$68.6

$ 64.3

$148.9

$141.0

Peoples Gas System

4.2

4.0

14.7

12.5

23.9

21.6

Regulated Businesses

$42.3

$39.7

$83.3

$ 76.8

$172.8

$162.6

TECO Power Services

$ 6.8

$ 5.3

$ 9.3

$ 12.6

$ 19.5

$ 17.4

TECO Transport

6.2

6.5

14.6

14.5

29.3

27.7

TECO Coal

13.7

6.3

27.7

6.8

54.4

13.8

Other diversified companies

10.1

5.0

21.4

11.1

38.5

25.0

Unregulated Businesses

$36.8

$23.1

$73.0

$ 45.0

$141.7

$ 83.9

       

Parent / Other

$ (7.2)

$ (5.3)

$(14.7)

$(10.8)

$(33.0)

$(17.3)

Net income before charges

71.9

57.5

141.6

111.0

281.5

229.2

Charges

--

--

--

--

--

(19.6)

Net income from continuing operations

71.9

57.5

141.6

111.0

281.5

209.6

Discontinued operations

--

--

--

--

--

(13.6)

Net income

$71.9

$57.5

$141.6

$111.0

$281.5

$196.0



Segment net income includes internally allocated financing costs. Individual company results for 2000 have been restated to reflect the allocation of financing costs.

Tampa Electric's net income for the second quarter was $38.1 million, compared with $35.7 million for the same period in 2000. The company showed improved results from customer growth of almost 3 percent, which more than offset the impact of mild spring weather on retail energy sales that were essentially unchanged from the same period last year. Higher depreciation expense from normal plant additions was more than offset by lower operations and maintenance expenses. Operations and maintenance expense in last year's quarter included higher expenditures related to improving generating unit reliability.

Tampa Electric's year-to-date net income increased almost 7 percent to $68.6 million, reflecting strong customer growth and almost 5 percent higher retail energy sales as a result of favorable winter weather. Depreciation expense increased in the first half from normal plant additions.

Peoples Gas System reported net income of $4.2 million for the quarter, compared with $4.0 million for the same period last year. Quarterly results reflected strong customer growth of more than 4 percent and higher residential and commercial sales. Year-to-date net income increased more than 17 percent to $14.7 million, reflecting more than 4 percent customer growth and higher residential and commercial usage early in the year as a result of favorable winter weather. Decreased volumes for low-margin, transportation gas for electric power generators, interruptible customers and off-system sales in both the quarter and year-to-date periods reflected the higher cost of gas for these customers who have the ability to switch to alternate fuels or alter consumption patterns.

TECO Power Services' net income for the quarter was $6.8 million, compared with $5.3 million last year. Results for the quarter reflected increased earnings from the Guatemalan generation and distribution operations, return on the investments in the Panda Texas projects and contributions from the operation of Commonwealth Chesapeake Station, which began commercial operation in the second half of 2000, partially offset by increased financing costs. Year-to-date net income of $9.3 million reflected the return on the investment in the Panda Texas projects, strong winter utilization for the Commonwealth Chesapeake Station, which is normally expected to be a summer peaking plant, and increased earnings from the Guatemalan generation operations. The improved operating performance was offset by increased financing costs and a $6.1-million after-tax valuation reserve recognized in the first quarter for TPS' sale of its minority interests in EnŽrgia Global International, Ltd. (EGI) which owned smaller projects in Central America. The sale was completed in the second quarter.

TECO Transport reported net income of $6.2 million in the quarter, compared with $6.5 million for the same period last year. Higher operating expenses and lower government grain shipments were partially offset by higher domestic grain shipments and higher northbound river volumes. Year-to-date net income of $14.6 million reflected higher northbound river volumes, higher cross-gulf dry phosphate movements and lower fuel expenses partially offset by lower government grain shipments. Results in the first half of last year included an approximately $1.5-million after-tax gain associated with the disposition of equipment.

TECO Coal achieved net income of $13.7 million, up from $6.3 million last year. These results included increased conventional coal production from the Perry County Coal operations that were acquired late last year, and a full quarter of production from the synthetic fuel facilities which became operational during the second quarter last year. Year-to-date net income of $27.7 million reflected increased conventional coal production and better metallurgical coal prices and two full quarters of synthetic fuel sales.

TECO Energy's other unregulated companies recorded net income of $10.1 million for the quarter, compared to $5.0 million for the same period in 2000. For the quarter, TECO Coalbed Methane achieved higher earnings, as higher gas prices more than offset the impact of normal production declines. Year-to-date net income of $21.4 million reflected higher gas prices throughout the period at TECO Coalbed Methane and increased earnings at TECO Propane Ventures and TECO Solutions, which includes BGA, BCH, TECO Properties and TECO Gas Marketing. Non-operating Items

Financing costs were higher for the quarter, reflecting higher borrowing levels primarily associated with the expansion of the independent power business. Beginning in the first quarter of 2001, a portion of financing costs were allocated to the respective operating subsidiaries by TECO Energy. Segment results for 2001 reflect these allocated financing costs; prior periods have been restated to reflect pro forma financing costs as if the costs had been similarly allocated.

Cash from operations was $97.1 million for the quarter, compared with $87.8 million in 2000. Cash used for investing activities was $163.8 million compared with $171.6 million last year. Net cash received from financing activities was $81.7 million compared with $89.8 million last year, including dividend payments of $46.8 million in the second quarter of 2001, compared with $42.0 million last year.

Year-to-date cash from operations was $232.6 million, compared with $195.0 million in 2000. Cash used for investing activities was $460.1 million compared with $387.6 million last year. Net cash received from financing activities was $201.4 million compared with $122.8 million last year, including dividend payments of $89.2 million in the first six months of 2001, compared with $83.1 million last year.

Outlook
For 2001, TECO Energy expects earnings to increase 15 percent above last year's $1.99 per share. This forecast is based on the strong first half results and several other factors discussed below. TECO Power Services expects increased earnings from the addition of the Frontera Power Station, full year of operations at the Hamakua Power Station, and the second phase of the Commonwealth Chesapeake Power Station, which entered commercial service in June. Customer growth and related increased energy sales and investment in facilities to serve the growing customer base are expected to produce improved results at the regulated Florida utilities. Improvements in coal prices are expected to increase net income at TECO Coal. The improved operating performance is expected to be partially offset by increased financing costs and increased shares outstanding due to the sale of 8.625 million shares in March.

Additional financial information related to the company's results through June 30, including unaudited financial statements; segment revenues and operating income; and electric and gas volumes, is available at the Investor Relations section of TECO Energy's web site at www.tecoenergy.com.

TECO Energy is a diversified energy-related holding company headquartered in Tampa. Its principal businesses are Tampa Electric, Peoples Gas System, TECO Power Services, TECO Transport, TECO Coal, TECO Coalbed Methane, TECO Propane Ventures and TECO Solutions.

Note: 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, Peoples Gas System or TECO Power Services; commodity price changes affecting the competitive positions of Tampa Electric and Peoples Gas System as well as the margins at TECO Coalbed Methane and TECO Coal; energy price changes affecting TECO Power Services' merchant plants; changes in and compliance with environmental regulations that may impose additional costs or curtail some activities; TECO Power Services' ability to successfully develop, construct, finance and operate its projects on schedule and within budget; TECO Energy's ability to find and successfully implement attractive investments in unregulated businesses; interest rates and other factors that could impact TECO Energy's ability to obtain access to sufficient capital on satisfactory terms; and TECO Coal's ability to successfully operate its synthetic fuel production facilities in a manner qualifying for Section 29 federal income tax credits, which credits could be impacted by changes in tax law or interpretive action by the U. S. Treasury. Some of 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, 2000, 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)

      
 

2001

2000

2001

2000

2001

2000

Revenues

$641.8

$559.5

$1,314.4

$1,084.0

$2,526.4

$2,130.0

Net income from continuing

Operations
(after non-recurring charges)

$71.9

$57.5

$141.6

$111.0

$281.5

$209.6

       

Net income (loss) from
discontinued operations

-

-

-

-

-

(13.6)


Gain (loss) on disposal of
discontinued operations

-

-

-

-

-

-


Net income

$71.9

$57.5

$141.6

$111.0

$281.5

$196.0


       

Earnings per share from continuing

$0.53

$0.46

$1.07

$0.88

$2.18

$1.64

operations — basic

      

Earnings per share from continuing

$0.52

$0.46

$1.06

$0.88

$2.16

$1.64

operations — diluted

      
       

Earnings per share — basic

$0.53

$0.46

$1.07

$0.88

$2.18

$1.53

Earnings per share — diluted

$0.52

$0.46

$1.06

$0.88

$2.16

$1.53

       

Average common shares
outstanding — basic

135.7

125.3

131.7

125.8

129.0

128.1

       

Average common shares
outstanding — diluted

136.9

125.4

132.9

125.9

129.9

128.2

       
1.) Net income (loss) from
continuing operations

$71.9

$57.5

$141.6

$111.0

$281.5

$229.2

(before non-recurring charges)

      
       
2.) Earnings per share from
Continuing operations

$0.53

$0.46

$1.07

$0.88

$2.18

$1.79

(before non-recurring charges)

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