Aquila Reports First Quarter 2008 Results; Strong Utility Performance Continues

Earnings Conference Call and Webcast are Thursday, May 8 At 9:30 a.m. Eastern Time


KANSAS CITY, Mo., May 6, 2008 (PRIME NEWSWIRE) -- Aquila, Inc. (NYSE:ILA) reported today that its electric and gas utilities in Missouri and four other states delivered a 93 percent improvement in EBITDA performance. In the first quarter of 2008, EBITDA for Aquila's electric and gas utilities was $68.1 million, up $32.8 million from $35.3 million reported in 2007. This improvement in utility results was accompanied by a decline in merger-related costs compared to those incurred in the first quarter of 2007.

"Our earnings improvement and operational performance demonstrates the tremendous dedication and commitment of Aquila employees," said Richard C. Green, Aquila's chairman and chief executive officer. "We are starting the year with good momentum and will be ready to turn over strong utilities when our transactions with Great Plains Energy and Black Hills Corporation close."

On a consolidated basis, Aquila reported net income of $8.5 million for the quarter ended Mar. 31, 2008, or fully diluted earnings per share of two cents, compared to net loss of $24.3 million in 2007, or fully diluted loss per share of six cents. Sales for the quarter were $483.1 million in 2008 versus $444.2 million in 2007.

Segment EBITDA

Electric Utilities EBITDA increased $26.7 million from 2007, and Gas Utilities reported an EBITDA increase of $6.1 million. Merchant Services EBITDA loss of $1.8 million was $2.3 million better than the loss of $4.1 million reported in 2007, and the Corporate and Other EBITDA loss of $.3 million in 2008 was $10.0 million less than the $10.3 million loss in 2007.

Electric Utilities

Gross profit was $88.5 million in 2008, an increase of $32.2 million from 2007. Earnings rose primarily because a Missouri rate order granted an increase in base rates and authorized 95% recovery of actual fuel costs over base rates effective June 1, 2007. Customer demand for power also rose in Missouri because of colder than normal weather and favorable customer usage.

Operation and maintenance expense increased in 2008 compared to 2007, primarily due to a provision related to the South Harper litigation.

Gas Utilities

Gross profit was $70.5 million in 2008, $6.8 million higher than 2007 due to favorable weather and other volume increases and rate increases in Kansas and Nebraska.

Merchant Services

Merchant Services reported a gross loss of $1.4 million in 2008, compared to a gross loss of $3.4 million in the first quarter of 2007. The primary factor contributing to the decrease in the gross loss was the expiration of long-term gas delivery contracts since the first quarter of 2007.

Corporate and Other

Corporate and Other reported in 2008 an EBITDA loss of $.3 million, compared to a $10.3 million loss in 2007. The 2007 EBITDA loss included approximately $8.5 million of costs associated with the pending merger, including financial advisor fees, employee retention costs and legal and other costs.

Discontinued Operations

Discontinued Operations EBITDA of $8.8 million in 2007 were primarily related to the company's former Kansas electric utility operations, which were sold on April 1, 2007.

Conference Call, Webcast and Additional Information

On Thursday, May 8 at 9:30 a.m. Eastern Time, Aquila will host a conference call and webcast in which senior executives will review first quarter 2008 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 one week 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, May 15, 2008 at 800-405-2236 in the United States and at 303-590-3000 for international callers. Callers need to enter the access code 11111245# 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
                                                        March 31,
                                       -------------------------------
 In millions, except per share amounts              2008        2007
 ---------------------------------------------------------------------
 Sales                                           $  483.1    $  444.2
 Cost of sales                                      325.5       327.6
 ---------------------------------------------------------------------
 Gross profit                                       157.6       116.6
 ---------------------------------------------------------------------
 Operating expenses:
    Operation and maintenance expense                87.3        91.0
    Taxes other than income taxes                     7.3         8.9
    Restructuring charges                             --          1.6
    Net loss on asset sales and other charges         --          --
 ---------------------------------------------------------------------
 Total operating expenses                            94.6       101.5
 ---------------------------------------------------------------------
 Other income (expense)                               3.0         5.8
 ---------------------------------------------------------------------
 Earnings before interest, taxes, depreciation
   and amortization                                  66.0        20.9
 Depreciation and amortization expense               29.1        27.2
 Total interest expense                              32.0        34.7
 ---------------------------------------------------------------------
 Income (loss) from continuing operations before      4.9       (41.0)
    income taxes
 Income tax expense (benefit)                        (3.6)      (13.8)
 ---------------------------------------------------------------------
 Income (loss) from continuing operations             8.5       (27.2)

 Earnings from discontinued operations,
  net of tax                                          --          2.9
 ---------------------------------------------------------------------

 Net income (loss)                               $     8.5   $  (24.3)
 =====================================================================

 Weighted average shares outstanding - diluted      376.1       375.5
 ---------------------------------------------------------------------

 Earnings (loss) per share from continuing
    operations - diluted                         $    .02    $   (.07)
 ---------------------------------------------------------------------

 Earnings per share from
    discontinued operations - diluted                 --          .01
 ---------------------------------------------------------------------

 Net income (loss) per share - diluted           $    .02    $   (.06)
 =====================================================================

                             AQUILA, INC.

            Segment EBITDA Reconciliation to Income (Loss)
            from Continuing Operations Before Income Taxes


                                 3 Months Ended March 31,
                                  ----------------------   Favorable
 In millions                          2008        2007   (Unfavorable)
 ---------------------------------------------------------------------

 Utilities:
    Electric Utilities            $   32.9    $    6.2    $   26.7
    Gas Utilities                     35.2        29.1         6.1
 ---------------------------------------------------------------------
      Total Utilities                 68.1        35.3        32.8
 ---------------------------------------------------------------------
 Merchant Services                    (1.8)       (4.1)        2.3
 Corporate and Other                   (.3)      (10.3)       10.0
 ---------------------------------------------------------------------

 Total EBITDA                         66.0        20.9        45.1

 Depreciation and amortization        29.1        27.2        (1.9)

 Interest expense                     32.0        34.7         2.7
 ---------------------------------------------------------------------
 Income (loss) from continuing
  operations before income taxes  $    4.9    $  (41.0)   $   45.9
 =====================================================================

                              AQUILA, INC.

                       Consolidated Balance Sheets

                                           March 31,      December 31,
 In millions                                 2008             2007
 ---------------------------------------------------------------------
 ASSETS

 Cash and cash equivalents               $    28.2       $    34.4
 Funds on deposit                             33.9            41.3
 Accounts receivable, net                    243.8           256.1
 Inventories and supplies                     78.7           102.6
 Price risk management assets                 46.0            32.0
 Regulatory assets, current                   43.7            58.5
 Other current assets                         21.1            30.7
 ---------------------------------------------------------------------
 Total current assets                        495.4           555.6
 ---------------------------------------------------------------------
 Utility plant, net                        2,088.3         2,022.0
 Non-utility plant, net                      129.0           122.8
 Price risk management assets                 16.4            13.1
 Goodwill, net                               111.0           111.0
 Regulatory assets                           118.2           125.1
 Deferred charges and other assets            41.1            44.0
 ---------------------------------------------------------------------
 Total Assets                            $ 2,999.4       $ 2,993.6
 =====================================================================
 LIABILITIES AND SHAREHOLDERS' EQUITY

 Current maturities of long-term debt    $     2.4       $     2.4
 Short-term debt                             100.0            25.0
 Accounts payable                            128.4           190.7
 Accrued interest                             31.4            46.4
 Regulatory liabilities, current              12.4            19.4
 Accrued compensation and benefits            11.5            28.4
 Pension and post-retirement
  benefits, current                            3.3             3.3
 Other accrued liabilities                    63.1            48.6
 Price risk management liabilities            30.6            31.2
 Customer funds on deposit                    23.0            26.1
 ---------------------------------------------------------------------
 Total current liabilities                   406.1           421.5
 ---------------------------------------------------------------------
 Long-term debt, net                       1,034.1         1,035.4
 Deferred income taxes and credits            --              --
 Price risk management liabilities              .6              .5
 Pension and post-retirement benefits         46.8            46.4
 Regulatory liabilities                       92.5            80.4
 Deferred credits                             53.4            53.7
 Common shareholders' equity               1,365.9         1,355.7
 ---------------------------------------------------------------------
 Total Liabilities and
  Shareholders' Equity                   $ 2,999.4         2,993.6
 =====================================================================

            

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