KANSAS CITY, Mo., Nov. 8, 2007 (PRIME NEWSWIRE) -- Aquila, Inc. (NYSE:ILA) today reported net income of $40.5 million for the quarter ended Sept. 30, 2007, or fully diluted per share earnings of 11 cents, compared to net income of $115.7 million in 2006, or fully diluted per share earnings of 31 cents. Repositioning activities in the third quarter of 2006, including gains on the sale of gas utilities, were the primary reasons for the decline in current quarter earnings. Sales for the quarter were $358 million in 2007 versus $317 million in 2006.
"We are pleased with our third quarter results and the strong utility performance," said Richard C. Green, Aquila chairman and chief executive officer. "It's evident that Aquila employees remain dedicated to delivering energy and service to our customers even while preparing for the transition of our businesses to Great Plains Energy and Black Hills."
Results for the nine-month period ending Sept. 30, 2007 were net income of $1.5 million, or fully diluted earnings of less than one cent per share, compared to a 2006 year-to-date net loss of $40.4 million, or 11 cents per fully diluted share. Non-recurring repositioning activities (including our exit from the Elwood tolling agreements and debt tender offer) that occurred last year and rate relief at the utility operations this year were the primary reasons for the improvement in nine month earnings. Year-to-date sales increased to $1.10 billion, an increase of $70 million over 2006 sales of $1.03 billion. The company reported year-to-date EBITDA of $181.6 million in 2007 compared to loss before interest, taxes, depreciation and amortization of $132.0 million in 2006.
Segment EBITDA
Continuing electric utility operations in Missouri and Colorado and natural gas utility operations in Iowa, Kansas, Nebraska and Colorado reported 2007 EBITDA of $100.1 million, up $40.5 million from $59.6 million reported in 2006. Electric Utilities EBITDA increased $36.9 million from 2006 and Gas Utilities reported an EBITDA increase of $3.6 million. Merchant Services EBITDA loss of $1.3 million was $15.7 million better than the loss of $17.0 million reported in 2006, and the Corporate and Other EBITDA loss of $2.7 million in 2007 was $1.0 million less than the $3.7 million loss in 2006.
Electric Utilities
Gross profit was $146.0 million in 2007, an increase of $37.6 million from 2006. Earnings rose primarily because a Missouri rate order granted an increase in base rates and authorized nearly full recovery of actual fuel costs effective June 1, 2007. Also, customer demand for power rose in Missouri because of warmer than normal weather and favorable customer usage.
Operation and maintenance expenses increased in the third quarter of 2007 compared to 2006 primarily as a result of higher labor and benefits costs.
Gas Utilities
Gross profit was $34.5 million in 2007, $3.1 million higher than 2006, due to favorable weather and other volume increases compared to 2006, and rate increases in Kansas and Nebraska. In addition to the increase in gross profit, the company experienced lower operation expenses related to uncollectible customer accounts.
Merchant Services
Merchant Services reported a gross loss of $1.5 million in 2007, compared to a gross loss of $5.0 million a year earlier. The improvement in gross loss from 2006 was a result of the continued merchant trade book wind-down. The primary factor contributing to the 2006 quarter EBITDA loss of $17.0 million was a $9.3 million increase in the company's price reporting litigation reserve in 2006.
Corporate and Other
Corporate and Other reported 2007 an EBITDA loss of $2.7 million, compared to a $3.7 million loss in 2006. The primary factor causing the 2006 quarter EBITDA loss was a $5.5 million charge associated with the prepayment of the Company's former five-year term loan in September 2006.
Discontinued Operations
Discontinued Operations includes the company's former Kansas electric utility operations; its former Michigan, Minnesota, and Missouri gas utility operations; its former Merchant Services peaking plants in Illinois; and its former Everest Connections telecommunications business. The company's discontinued operations reported EBITDA of $2.9 million for the quarter in 2007, which was a $137.8 million decrease from $140.7 million reported in 2006. The EBITDA decrease was due primarily to the gains recognized in 2006 on the sale of the gas utility properties.
Conference Call, Webcast and Additional Information
Today at 9:30 a.m. Eastern Time, Aquila will host a conference call and webcast in which senior executives will review third quarter 2007 results. Participants will be Richard C. Green, Chief Executive Officer, Beth Armstrong, Senior Vice President and Chief Accounting Officer, and Jon Empson, Senior Vice President of Regulated Operations.
To access the live webcast via the Internet, go to Aquila's website at www.aquila.com and click "Presentations & Webcasts" in the "Investor Information" section. Listeners should allow at least five minutes to register and access the presentation. For those unable to listen to the live broadcast, an online replay will be available for two weeks at the same location on the website ("Investor Information"), beginning approximately two hours after the presentation. Replay also will be available by telephone through Thursday, November 15, 2007 at 800-405-2236 in the United States, and at 303-590-3000 for international callers. Callers need to enter the access code 11101289# when prompted.
Based in Kansas City, Mo., Aquila owns electric power generation and operates electric and natural gas transmission and distribution networks serving over 900,000 customers in Colorado, Iowa, Kansas, Missouri and Nebraska. More information is available at www.aquila.com.
The Aquila, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=1753
"EBITDA"
Aquila uses the term "earnings before interest, taxes, depreciation and amortization (EBITDA)" as a performance measure for segment financial analysis. The term is not meant to be considered an alternative to net income or cash flows from operating activities, which are determined in accordance with generally accepted accounting principles. In addition, the term may not be comparable to similarly titled measures used by other companies.
AQUILA, INC.
Consolidated Statements of Income
---------------------------------
3 Months Ended 9 Months Ended
September 30, September 30,
------------------------------------
In millions, except per share
amounts 2007 2006 2007 2006
---------------------------------------------------------------------
Sales $357.7 $316.6 $1,100.5 $1,030.6
Cost of sales 178.8 181.8 676.7 661.2
---------------------------------------------------------------------
Gross profit 178.9 134.8 423.8 369.4
---------------------------------------------------------------------
Operating expenses:
Operation and maintenance
expense 78.4 87.8 240.8 240.8
Taxes other than income taxes 8.5 8.5 21.9 22.6
Restructuring charges -- .6 1.6 5.5
Net loss on asset sales and
other charges -- 5.5 1.3 246.9
---------------------------------------------------------------------
Total operating expenses 86.9 102.4 265.6 515.8
---------------------------------------------------------------------
Other income (expense) 4.1 6.5 23.4 14.4
---------------------------------------------------------------------
Earnings before interest, taxes,
depreciation and amortization 96.1 38.9 181.6 (132.0)
Depreciation and amortization
expense 27.3 27.0 81.4 78.5
Total interest expense 31.5 42.7 111.6 124.4
---------------------------------------------------------------------
Income (loss) from continuing
operations before income taxes 37.3 (30.8) (11.4) (334.9)
Income tax expense (benefit) 5.6 (10.2) (.6) (43.9)
---------------------------------------------------------------------
Income (loss) from continuing
operations 31.7 (20.6) (10.8) (291.0)
Earnings from discontinued
operations, net of tax 8.8 136.3 12.3 250.6
---------------------------------------------------------------------
Net income (loss) $40.5 $115.7 $1.5 $(40.4)
=====================================================================
Weighted average shares
outstanding - diluted 376.1 375.2 375.7 375.0
---------------------------------------------------------------------
Earnings (loss) per share from
continuing operations - diluted $.09 $(.05) $(.03) $(.78)
---------------------------------------------------------------------
Earnings per share from
discontinued operations -
diluted .02 .36 .03 .67
---------------------------------------------------------------------
Net income (loss) per share -
diluted $.11 $.31 $-- $(.11)
=====================================================================
AQUILA, INC.
Segment EBITDA Reconciliation to Income (Loss) from
Continuing Operations Before Income Taxes
---------------------------------------------------
3 Months Ended
September 30,
----------------- Favorable
In millions 2007 2006 (Unfavorable)
---------------------------------------------------------------------
Utilities:
Electric Utilities $94.9 $58.0 $36.9
Gas Utilities 5.2 1.6 3.6
---------------------------------------------------------------------
Total Utilities 100.1 59.6 40.5
---------------------------------------------------------------------
Merchant Services (1.3) (17.0) 15.7
Corporate and Other (2.7) (3.7) 1.0
---------------------------------------------------------------------
Total EBITDA 96.1 38.9 57.2
Depreciation and amortization 27.3 27.0 (.3)
Interest expense 31.5 42.7 11.2
---------------------------------------------------------------------
Income (loss) from continuing
operations before income taxes $37.3 $(30.8) $68.1
=====================================================================
9 Months Ended
September 30,
----------------- Favorable
In millions 2007 2006 (Unfavorable)
---------------------------------------------------------------------
Utilities:
Electric Utilities $149.3 $120.5 $28.8
Gas Utilities 41.7 29.3 12.4
---------------------------------------------------------------------
Total Utilities 191.0 149.8 41.2
---------------------------------------------------------------------
Merchant Services (1.9) (249.0) 247.1
Corporate and Other (7.5) (32.8) 25.3
---------------------------------------------------------------------
Total EBITDA 181.6 (132.0) 313.6
Depreciation and amortization 81.4 78.5 (2.9)
Interest expense 111.6 124.4 12.8
---------------------------------------------------------------------
Loss from continuing operations
before income taxes $(11.4) $(334.9) $323.5
=====================================================================
AQUILA, INC.
Consolidated Balance Sheets
---------------------------
September 30, December 31,
In millions 2007 2006
---------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 92.5 $ 232.8
Funds on deposit 50.5 107.9
Accounts receivable, net 219.9 257.0
Inventories and supplies 119.5 116.0
Price risk management assets 46.3 71.3
Regulatory assets, current 7.8 29.0
Other current assets 21.6 33.5
Current assets of discontinued operations -- 26.5
---------------------------------------------------------------------
Total current assets 558.1 874.0
---------------------------------------------------------------------
Utility plant, net 1,917.4 1,825.1
Non-utility plant, net 123.1 130.2
Price risk management assets 18.3 43.4
Goodwill, net 111.0 111.0
Regulatory assets 128.4 149.0
Deferred charges and other assets 51.6 53.6
Non-current assets of discontinued operations -- 286.1
---------------------------------------------------------------------
Total Assets $2,907.9 $3,472.4
=====================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of long-term debt $ 2.3 $ 19.7
Accounts payable 113.7 205.4
Accrued interest 31.0 49.7
Regulatory liabilities, current 33.2 10.8
Accrued compensation and benefits 25.8 26.8
Pension and post-retirement benefits, current 3.5 3.5
Other accrued liabilities 59.7 94.3
Price risk management liabilities 38.4 74.5
Customer funds on deposit 23.5 15.6
Current liabilities of discontinued operations -- 1.4
---------------------------------------------------------------------
Total current liabilities 331.1 501.7
---------------------------------------------------------------------
Long-term debt, net 1,035.9 1,385.9
Deferred income taxes and credits -- 19.3
Price risk management liabilities 7.3 27.1
Pension and post-retirement benefits 73.4 72.5
Regulatory liabilities 73.0 72.4
Deferred credits 52.1 51.5
Non-current liabilities of discontinued
operations -- 35.9
Common shareholders' equity 1,335.1 1,306.1
---------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $2,907.9 $3,472.4
=====================================================================