TECO Energy reports detailed third quarter results, total earnings per share up almost 6 percent to $.76 per share
TAMPA, October 17, 2002
Earnings per share from continuing operations up 7 percent to $.72 per share
TECO Energy, Inc. (NYSE: TE) today reported third quarter earnings from continuing operations of $.72 per share (basic), up 7 percent from $.67 per share in 2001. Net income from continuing operations for the quarter was $112.8 million, 24 percent higher than the $90.8 million recorded in the 2001 period. The actions taken to advance the sale of TECO Coalbed Methane's gas-producing assets resulted in this business being shown as discontinued operations effective with the third quarter results. Total earnings per share including discontinued operations at TECO Coalbed Methane were $.76, compared with $.72 for the third quarter last year. The average number of common shares outstanding in the third quarter was almost 15 percent higher than in the same period in 2001.
Year-to-date earnings per share from continuing operations increased almost 12 percent to $1.80 from $1.61 per share for the nine-month period ended Sept. 30, 2001. Net income from continuing operations for the 2002 nine-month period increased almost 23 percent to $263.6 million, compared with $214.7 million for the same period last year. Total earnings per share, including the discontinued operations of TECO Coalbed Methane, increased almost 7 percent to $1.91, compared with $1.79 for the first nine months last year.
Chairman and CEO Robert Fagan said, "Once again, we are delivering the earnings per share growth we projected. Our regulated Florida operations continued to grow, and our balanced portfolio of unregulated companies performed well. We achieved these results in spite of an economy that continues to sputter and energy prices that remained lower than expected this summer."
"We have announced our plans for the remainder of this year and for 2003 and are committed to delivering on those plans. Our recent issuance of additional equity has strengthened our balance sheet, which is important during this time of market turmoil and uncertainty in the energy markets, and has allowed us to accelerate the implementation of our financial plan for next year as well as reduce our execution risk," Fagan added.
Net Income Summary
Peoples Gas System
TECO Power Services
Other Diversified Companies
Net Income from
Tampa Electric's net income for the third quarter was $63.1 million, compared with $56.8 million for the same period in 2001. The company showed improved results from customer growth of more than 2 percent and 2 percent higher retail energy sales. Results for the quarter included higher depreciation expense from normal plant additions and higher operations and maintenance expense related to power plant outage and personnel expenses. The equity component of allowance for funds used during construction (AFUDC) (which represents allowed equity cost capitalized to the construction costs), primarily from the Gannon to Bayside Units 1 and 2 repowering project, increased to $6.9 million for the quarter, from $1.9 million for the same period last year.
Tampa Electric's year-to-date net income increased more than 15 percent to $144.5 million, reflecting more than 2.5 percent customer growth and almost 3 percent higher retail energy sales as a result of more-normal weather. The equity component of AFUDC increased to $16.9 million from $4.0 million in the first nine months of 2001. Depreciation expense and operations and maintenance expenses increased as a result of the factors discussed for the quarter and a small early retirement plan in the second quarter.
Peoples Gas System reported net income of $3.1 million for the quarter, compared with $2.6 million for the same period last year. Quarterly results reflected almost 5 percent customer growth, higher residential and commercial sales, increased gas transportation for power generation customers and off- system sales, and lower operating expenses. Year-to-date net income was $17.3 million, unchanged from the same period last year. Year-to-date results reflected mild winter weather offset by lower operating expenses, more than 4 percent customer growth, higher commercial usage and increased volumes for low margin, transportation gas. Transportation-only sales to electric power generators, interruptible customers and off-system sales increased because lower gas prices made gas utilization more attractive for these price- sensitive customers.
TECO Power Services' net income for the quarter was $25.6 million, compared with $15.5 million last year. Results for the quarter reflected $6 million in after-tax income from a settlement agreement with Electric Reliability Council of Texas (ERCOT) relating to amounts due for ancillary services provided by the Frontera Power Station in the second quarter. This settlement agreement was recently approved by the ERCOT board and is separate from the company's previously announced agreement with ERCOT for a reliability must run (RMR) contract for future services. Frontera Power Station also provided ancillary services in the third quarter, which contributed to higher quarterly results, as did higher capacity payments and higher prices for the Guatemalan generating units and increased earnings from construction-related and loan agreements with Panda Energy. These improved results were partially offset by increased operating and financing costs and lower power prices and sales in the PJM market for the Commonwealth Chesapeake Station in Virginia.
Year-to-date net income at TECO Power Services was $39.4 million, compared with $24.8 million for the same period last year. These results reflected higher capacity payments due to higher prices and generation at the Guatemalan generating units and increased earnings from construction-related and loan agreements with Panda Energy. The improved operating performance was partially offset by higher operations and maintenance expense and lower energy prices and sales at the Commonwealth Chesapeake Station, higher operating costs and increased financing costs. Year-to-date results in 2001 included a $6.1- million after-tax valuation reserve recognized for TPS' sale of its minority interests in Energia Global International, Ltd. (EGI), which owned smaller projects in Central America.
TECO Transport reported net income of $4.7 million in the quarter, compared with $6.9 million for the same period last year. Year-to-date net income was $15.8 million, compared with $21.5 million for the first nine months last year. Both quarterly and year-to-date results reflected lower revenues from lower northbound river volumes and lower volume for Tampa Electric, more than offsetting the effects of lower fuel expense and higher phosphate shipments.
TECO Coal achieved net income of $21.7 million for the quarter, up from $12.9 million last year. These results reflected increased prices for conventional coal and synthetic fuel and increased synthetic fuel production resulting in higher tax credits, partially offset by increased mining costs. Year-to-date net income was $58.8 million, compared with $40.6 million last year, as a result of these same factors.
TECO Energy's other unregulated companies recorded net income of $1.3 million for the quarter, compared to a $(0.6)-million net loss for the same period in 2001. These results were driven primarily by higher net income at Prior Energy, TECO Energy's end-use gas management company, which was acquired in November 2001, and from tax benefits related to TECO's propane investment. Year-to-datenet income of $5.4 million primarily reflects the addition of Prior Energy earnings at TECO Solutions, which also includes TECO BGA, TECO Properties, TECO Gas Services and TECO Propane Ventures. TECO Coalbed Methane, which was previously reported in the other unregulated business category, is now shown as discontinued operations.
Third quarter results included a $3.0-million after-tax charge at TECO Investments for an aircraft leased to US Airways, which has filed for bankruptcy.
Interest expense was down for the quarter and on a year-to-date basis, reflecting additional borrowing in support of TECO Energy's capital investment program offset by higher capitalized finance costs during construction and lower short-term interest rates.
Cash from operations was $177.0 million for the quarter, compared with $166.6 million in 2001. Cash used for investing activities was $399.7 million, compared with $294.7 million last year. Net cash received from financing activities was $270.1 million including a $550 million long-term debt issuance, compared with $132.4 million last year. Cash from financing activities is net of dividend payments of $55.4 million in the third quarter of 2002, compared with $46.9 million last year.
Year-to-date cash from operations was $499.3 million, compared with $398.9 million in 2001. Cash used for investing activities was $1.3 billion, compared with $754.8 million last year. Net cash received from financing activities was $889.5 million, compared with $333.8 million last year, net of dividend payments of $153.4 million in the first nine months of 2002, compared with $136.1 million last year.
Additional financial information related to the company's results through September 30, 2002 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, and TECO Solutions.
Summary Information (as of September 30)
(millions except per share amounts)
Net income from continuing operations
Net income (loss)from
Earnings per share from
continuing operations— basic
Earnings per share from continuing operations— diluted
Earnings per share— basic
Earning per share — diluted
Average common shares outstanding — basic
Average common shares outstanding — diluted