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UIL Holdings Corporation Reports 2010 Financial Results and Provides 2011 Earnings Guidance

^{Published on 2011-02-22 13:15:46 - Market Wire}
 

NEW HAVEN, Conn.--([ BUSINESS WIRE ])--UIL Holdings Corporation (NYSE: UIL) today reported consolidated net income of $54.9 million, or $1.53 per basic share, an increase in net income of $0.6 million, and a decrease of $0.41 per basic share, compared to 2009. Excluding the impact of the gas distribution acquisition and transition related activities, earnings for 2010 were $61.3 million, or $2.04 per share, an increase of 5% on an earnings per share basis when compared to the same period in 2009.

"The integration of all of our operating companies is underway with an emphasis on process integration initiatives and best practices. The implementation of these initiatives is expected to continue through this year with most being completed before 2012."

For the fourth quarter of 2010, earnings were $12.4 million, or $0.25 per basic share, compared to net income of $6.7 million, or $0.22 per basic share, for the same period in 2009. Excluding the impact of the gas distribution acquisition and transition related activities, earnings for the fourth quarter of 2010 were $10.4 million, or $0.35 per share, an increase of 58% on an earnings per share basis when compared to the same period in 2009.

aUIL had a remarkable year in 2010 a" we closed on the acquisition of three gas companies within six months of announcement, launched a new and innovative transmission venture and GenConn Energya™s Devon plant was completed and became operational,a commented James P. Torgerson, UILa™s President and CEO. aIn addition, GenConn Energya™s second plant, located in Middletown, Connecticut, is currently on schedule to be operational by June 2011.a

aImportantly 2011 will be a transition year. Therefore, we will continue to focus on controlling operational costs and executing on our capital expenditure plan at each of our regulated subsidiaries,a added Torgerson. aThe integration of all of our operating companies is underway with an emphasis on process integration initiatives and best practices. The implementation of these initiatives is expected to continue through this year with most being completed before 2012.a

The following table provides earnings per share on both a pre-acquisition and post-acquisition basis for the fourth quarter and full year of 2010, compared to the same periods in 2009.

Electric distribution, CTA & other

Earnings from the electric distribution business in 2010 were $35.5 million, or $0.99 per basic share, compared to $31.7 million, or $1.13 per basic share, for the same period in 2009. For the fourth quarter of 2010, earnings from the electric distribution business were $3.7 million, or $0.07 per basic share, compared to $1.4 million, or $0.04 per basic share in the fourth quarter of 2009. The increase in earnings for both the quarter and full year 2010 was primarily due to increased operating income from revenues from the approved rate increase effective January 1, 2010, partially offset by lower CTA rate base. Earnings from UIa™s equity investment in GenConn were $1.2 million in 2010.

Electric transmission

Earnings from the electric transmission business in 2010 were $28.3 million, or $0.79 per basic share, compared to $25.3 million, or $0.90 per basic share, for the same period in 2009. For the fourth quarter of 2010, earnings from the electric transmission business were $7.3 million, or $0.15 per basic share, compared to $6.1 million, or $0.21 per basic share in the fourth quarter of 2009. The favorable earnings for both the quarter and full year of 2010 were primarily due to an increase in the allowance for funds used during construction, as well as a higher rate base.

Gas distribution

Earnings from the newly acquired gas distribution businesses for the period November 17, 2010 through December 31, 2010 were $12.9 million, or $0.36 per basic share.

Corporate

UIL Holdings retains certain costs, primarily interest expense, at the holding company, or acorporatea levels, which are not allocated to the various subsidiaries. UIL Corporate incurred net after-tax costs of $2.5 million, or $0.07 per basic share in 2010, compared to net after-tax costs of $2.7 million, or $0.09 per basic share, in the same period of 2009. For the fourth quarter of 2010, Corporate incurred after-tax costs of $0.6 million, or $0.01 per basic share, compared to net after-tax costs of $0.8 million or $0.03 per basic share in the fourth quarter of 2009.

Looking Forward

UIL's consolidated earnings estimate for 2011 is $1.75 - $1.95 per share. Details of the 2011 earnings estimates are summarized as follows:

UILa™s objective is for its regulated businesses to earn the allowed return on an aggregate basis. Major factors impacting the earnings per share estimates for 2011 are as follows:

• Earnings take into account a full year of the gas distribution earnings, which are expected to contribute $0.70 - $0.80 per share.
• In 2011, UIL will incur costs from the transition services agreement with Iberdrola USA, while also incurring costs involved in the permanent transition of these services to UIL.
• The full realization of saving half of the $23 million Iberdrola USA 2009 charges to the gas companies is not expected until 2012. The savings opportunities have been identified and we project to fully achieve those savings in 2012.
• The earnings expectations for 2011 also include the impact of 100% bonus depreciation for tax purposes on qualified property. The deferred taxes generated by bonus depreciation reduced the electric and gas rate bases, along with GenConna™s rate base.
• UIa™s investment in GenConna™s peaking generation project in Middletown, Connecticut is scheduled to be in commercial operation by June 2011. With the GenConn Devon plant in operation for the full year 2011, the two GenConn units are expected to contribute $0.12 - $0.14 per share in 2011.
• CTA earnings are expected to decline by $0.07 - $0.09 per share in 2011 compared to 2010, as rate base continues to be amortized.

Fourth Quarter and Year-end 2010 Earnings Conference Call

In conjunction with this earnings release, UIL will conduct a webcast conference call with financial analysts on Wednesday, February 23, 2011, beginning at 10:00 a.m. eastern time. UILa™s executive management will present an overview of the financial results followed by a question and answer session. Interested parties, including analysts, investors and the media, may listen live via the internet by logging onto the Investors section of UILa™s website at [ http://www.uil.com ]. Institutional investors can access the call via Thomson Street Events ([ www.streetevents.com ]), a password-protected event management site.

Headquartered in New Haven, Connecticut, UIL Holdings Corporation (NYSE:UIL) is a diversified energy delivery company serving a total of 690,000 electric and natural gas utility customers in 66 communities across two states, with combined total assets of over $4 billion.

UIL is the parent company for The United Illuminating Company (UI), Connecticut Natural Gas Corporation (CNG), The Southern Connecticut Gas Company (SCG), and The Berkshire Gas Company (BGC), each more than 100 years old. UI provides for the transmission and delivery of electricity and other energy related services for Connecticuta™s Greater New Haven and Bridgeport areas. SCG and CNG are natural gas distribution companies that serve customers in Connecticut, while Berkshire Gas serves natural gas customers in western Massachusetts. UIL employs more than 1,850 people in the New England region. For more information on UIL Holdings, visit [ http://www.uil.com ].

Use of Non-GAAP Measures

UIL Holdings believes that a breakdown, presented on a net income and per share basis, of how the acquisition-related financial activities described above contributed to the change in net income is useful in understanding the overall change in the consolidated results of operations for UIL Holdings from one reporting period to another. UIL Holdings presents such per share amounts by taking the dollar amount of the applicable change for the acquisition activity, booked in accordance with generally accepted accounting principles (GAAP), and applying UIL Holdings' combined effective statutory federal and state tax rate and then dividing by the average number of shares of UIL Holdings common stock outstanding for the periods presented. Any such amounts provided are provided for informational purposes only and are not intended to be used to calculate "Pro-forma" amounts.

UIL Holdings also believes earnings per share (EPS) information as presented in its earnings guidance is useful in understanding the earnings expectations for the business, as a whole.The amounts presented in the earnings guidance show the EPS for each of UIL Holdingsa™ lines of business.EPS is calculated by dividing the projected 2011 net income for each line of business by the projected average number of shares of UIL Holdings common stock outstanding for 2011.Total consolidated EPS is a GAAP-basis presentation.

Forward-Looking Statements

Certain statements contained herein, regarding matters that are not historical facts, are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). These include statements regarding managementa™s intentions, plans, beliefs, expectations or forecasts for the future. Such forward-looking statements are based on UIL Holdingsa™ expectations and involve risks and uncertainties; consequently, actual results may differ materially from those expressed or implied in the statements. Such risks and uncertainties include, but are not limited to, general economic conditions, legislative and regulatory changes, changes in demand for electricity, gas and other products and services, unanticipated weather conditions, changes in accounting principles, policies or guidelines, and other economic, competitive, governmental, and technological factors affecting the operations, markets, products and services of UIL Holdingsa™ subsidiaries, The United Illuminating Company, The Southern Connecticut Gas Company, Connecticut Natural Gas Corporation and The Berkshire Gas Company. Such risks and uncertainties with respect to UIL Holdingsa™ recent acquisition of The Southern Connecticut Gas Company, Connecticut Natural Gas Corporation and The Berkshire Gas Company include, but are not limited to, the possibility that the expected benefits will not be realized, or will not be realized within the expected time period. The foregoing and other factors are discussed and should be reviewed in UIL Holdingsa™ most recent Annual Report on Form 10-K and other subsequent periodic filings with the Securities and Exchange Commission. Forward-looking statements included herein speak only as of the date hereof and UIL Holdings undertakes no obligation to revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances.

The following are summaries of UIL Holdingsa™ unaudited consolidated financial information for the fourth quarter and full years of 2010 and 2009: