(Source: Business Wire)
Portland General Electric Company (NYSE:POR) today reported net income of $24 million, or $0.31 per diluted share, for the three months ended June 30, 2009, compared to $39 million, or $0.63 per diluted share, for the second quarter of 2008.
Net income in the second quarter of 2009 was impacted by a decline in retail energy deliveries, resulting from both a slow economy and mild weather, along with the sale of excess power into low-priced wholesale markets. Also contributing to the decrease in net income was the effect of estimated customer refunds recorded in the second quarter of 2009 related to Senate Bill 408 (SB 408) due to lower expected earnings. The Company also recorded a gain in 2008 on the sale of fuel oil at its Beaver plant.
Net income for the six months ended June 30, 2009, was $55 million, or $0.77 per diluted share, compared to $67 million, or $1.07 per diluted share, for 2008. This decrease was largely driven by the factors described above with respect to the second quarter of 2009.
"The national recession continues to impact Oregon's economy and, as a result, we saw a decline in retail energy deliveries, primarily in our industrial customers' electricity use. In addition, a depressed wholesale energy market made it difficult to offset reduced revenue with the sale of excess power," said Jim Piro, president and CEO of PGE.
"During this quarter customer satisfaction remained high and we made progress on significant capital projects. Our smart-meter technology is in full-deployment stage, and construction of Phase II and III of our Biglow Canyon Wind Farm is on time and on budget. We are well positioned for growth that will provide long-term benefits to our shareholders."
Second Quarter 2009 Highlights
Total retail customers increased by 0.5% from 813,000 at the end of the second quarter 2008 to 817,000 at the end of the second quarter of 2009.
Total retail energy deliveries decreased by approximately 8% from the second quarter of 2008 as a slow economy impacted the energy usage of industrial and commercial customers and milder weather impacted the energy usage of residential customers.
Revenues declined from $425 million in the second quarter of 2008 to $389 million in the second quarter of 2009. The decline was primarily the result of the following items:
$32 million increase due to higher retail prices in the second quarter of 2009 compared to the second quarter 2008 as a result of a price increase that went into effect on January 1, 2009.
$19 million decrease from a decline in retail energy deliveries.
$23 million decrease in wholesale revenues driven by a 51% decrease in average price and slightly offset by a 1% increase in wholesale energy sales.
$10 million decrease due to fuel oil sales in the second quarter of 2008 ($7 million realized gain in the second quarter of 2008 net of $3 million in costs).
$10 million decrease as lower income taxes resulted in increased customer refunds under SB 408. Refunds were recorded in the second quarter of 2009 compared to collections recorded in the second quarter of 2008.
Purchased power and fuel expense decreased by $1 million in the second quarter of 2009 compared to the second quarter of 2008. This reflects the impacts of higher average variable power costs being offset primarily by a reduction in total system load and refunds to customers booked in the second quarter of 2008 under the power cost adjustment mechanism.
The fair market value of non-qualified benefit plan trust assets increased by $5 million in the second quarter of 2009 compared to a nominal loss in the second quarter of 2008.
Two turbine rotors were found to be damaged during the scheduled 2009 maintenance outage of Colstrip Unit 4, in which PGE has a 20% ownership interest. Based on input from the Colstrip operator, we expect that the outage will extend from late-May to mid-November 2009. PGE's share of the repair costs are estimated to be approximately $2 million. Incremental replacement power costs are estimated to be approximately $11 million through mid-November 2009, with $1 million incurred in the second quarter of 2009.
The scheduled 2009 maintenance outage at PGE's Boardman coal plant has been extended due to generator rotor issues. The plant is expected to be in service by mid-August. Incremental power costs related to the extended outage are estimated to be approximately $5 million, with minimal impact in the second quarter 2009. The Company's repair costs are not expected to be material.
As of June 30, 2009, approximately 100,000 new smart meters have been installed. It is expected that 400,000 smart meters will be installed by the end of 2009.
During the quarter, the first wind turbines at Biglow Canyon Phase II began generating electricity. As of June 30, 2009, fifteen wind turbines had been placed in service, with the remaining fifty turbines scheduled for completion by the end of summer 2009.
2009 Earnings Guidance
PGE's full-year 2009 earnings guidance is $1.35 to $1.45 per diluted share. Guidance was revised to the current range on July 22nd, 2009, from $1.80 to $1.90 per diluted share. Key drivers for the revision of guidance on July 22nd, 2009, include:
Decline in retail margins due to the reduction in load primarily in the industrial sector from the economic recession and the sale of excess power into low-priced wholesale markets (approximately $0.15 per diluted share);
Replacement power and repair costs due to the extension of the scheduled 2009 maintenance outages at the Colstrip Unit 4 and Boardman coal plants. In addition, hydroelectric results are lower than forecasted (approximately $0.15 per diluted share); and
Impacts from the above items results in lower income taxes which requires increased customer refunds under SB 408, an Oregon utility tax law (approximately $0.15 per diluted share).
PGE expects long-term average annual earnings growth of 6 to 8 percent starting from 2010 earnings results, as 2009 reflects the near-term impacts of the economic recession on load and energy markets.
Liquidity
During the quarter PGE secured an additional $30 million in revolver capacity to bring total borrowing capacity under revolving credit facilities to $525 million. As of June 30, 2009, the company had an aggregate remaining borrowing capacity of $324 million available under the credit facilities. As of July 31, 2009, the aggregate borrowing capacity was $296 million. PGE posts or receives margin deposits related to power and natural gas contracts. These contracts are used to meet load requirements and are reflected in customer prices. As of June 30, 2009, PGE had posted margin deposits of $309 million, consisting of $127 million in cash and $182 million in letters of credit. Provided market prices remain unchanged from June 30, 2009, the Company anticipates that approximately 32% of collateral deposits at the end of the second quarter would roll-off by the end of 2009 and approximately 52% is expected to roll off by the end of 2010. As of July 31, 2009, margin deposits were $331 million.
Capital Expenditures
Capital expenditures in 2009 are estimated to be $720 million. The majority of these expenditures are related to Phases II ($230 million) and III ($176 million) of the Biglow Canyon Wind Farm, smart meters ($59 million) and ongoing expenditures for production, transmission and distribution ($226 million).
Capital expenditures in 2010 are estimated to be $520 million, the majority of which are for Phase III of the Biglow Canyon Wind Farm ($198 million), smart meters ($60 million) and ongoing expenditures for production, transmission and distribution ($223 million).
Financing Plans
PGE issued $300 million in First Mortgage Bonds in April 2009 to fund capital expenditures related to Biglow Canyon and smart meters and to refinance $142 million of Pollution Control Bonds. The Company anticipates issuing approximately $375 million of debt through 2010, most of which will be used for the last phase of the Biglow Canyon wind projects and to refinance approximately $186 million in debt maturities in 2010.
Second Quarter 2009 Earnings Call and Webcast August 3, 2009
PGE will host a conference call with financial analysts and investors on Monday, August 3, 2009, at 11 a.m. ET. The conference call will be webcast live on the PGE Web site at www.PortlandGeneral.com. A replay of the call will be available beginning at 7 p.m. ET on Monday, August 3, through Monday, August 10.
Jim Piro, president and CEO; Maria Pope, senior vice president, CFO and treasurer; and Bill Valach, director of investor relations, will participate in the call. Management will respond to questions following formal comments.
The attached condensed consolidated statements of income, balance sheets, statements of cash flows and supplemental operating statistics are an integral part of this earnings release.
About Portland General Electric Company
Portland General Electric, headquartered in Portland, Ore., is a vertically integrated electric utility that serves approximately 817,000 residential, commercial and industrial customers in Oregon. Visit our Web site at www.PortlandGeneral.com.
Safe Harbor Statement
Statements in this news release that relate to future plans, objectives, expectations, performance, events and the like may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding earnings guidance, statements regarding growth prospects, statements regarding future financing activities and capital expenditures, statements regarding the cost and completion of capital projects, such as the smart meter project and the Biglow Canyon Wind Farm, as well as other statements containing words such as "will," "anticipates," "believes," "intends," "estimates," "promises," "expects," "should," "conditioned upon" and similar expressions. Investors are cautioned that any such forward-looking statements are subject to risks and uncertainties, including the effects of the economic downturn in the state of Oregon, including reductions in demand for electricity and the sale of excess energy into a declining wholesale market; final regulatory review and approval of the deferral of excess power costs related to Boardman's outage; regulatory approval and rate treatment of the smart meter and Biglow Canyon Wind Farm projects; operational risks relating to the Company's generation facilities, including unscheduled plant outages, which may result in unanticipated operating, maintenance and repair costs, as well as replacement power costs; the costs of compliance with environmental laws and regulations, including those that govern emissions from thermal power plants; changes in weather, hydroelectric, and energy market conditions, which could affect the availability and cost of purchased power and fuel; and the outcome of various legal and regulatory proceedings; and general economic and financial market conditions. As a result, actual results may differ materially from those projected in the forward-looking statements. All forward-looking statements included in this news release are based on information available to the Company on the date hereof and such statements speak only as of the date hereof. The Company assumes no obligation to update any such forward-looking statement. Prospective investors should also review the risks and uncertainties listed in the Company's most recent Annual Report on Form 10-K and the Company's reports on Forms 8-K and 10-Q filed with the United States Securities and Exchange Commission, including Management's Discussion and Analysis of Financial Condition and Results of Operation and the risks described therein from time to time.
POR-F
Source: Portland General Electric Company
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Dollars in millions, except per share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 Revenues $ 389 $ 425 $ 874 $ 896 Operating expenses: Purchased power and fuel 184 185 439 435 Production and distribution 43 46 85 85 Administrative and other 46 47 91 94 Depreciation and amortization 50 50 107 100 Taxes other than income taxes 21 21 44 43 Total operating expenses 344 349 766 757 Income from operations 45 76 108 139 Other income (expense): Allowance for equity funds used during construction 6 2 8 4 Miscellaneous income (expense), net 4 1 1 (2 ) Other income, net 10 3 9 2 Interest expense 26 23 51 46 Income before income taxes 29 56 66 95 Income taxes 3 17 16 28 Net income 26 39 50 67 Less: net income (loss) attributable to noncontrolling interests 2 - (5 ) - Net income attributable to Portland General Electric Company $ 24 $ 39 $ 55 $ 67 Weighted-average shares outstanding (in thousands): Basic 75,131 62,532 70,352 62,531 Diluted 75,235 62,588 70,447 62,580 Earnings per share - basic and diluted $ 0.31 $ 0.63 $ 0.77 $ 1.07 Dividends declared per common share $ 0.255 $ 0.245 $ 0.500 $ 0.480 -------------------------------------------------------------------------------
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in millions) (Unaudited) June 30, December 31, 2009 2008 ASSETS Current assets: Cash and cash equivalents $ 58 $ 10 Accounts receivable, net 150 168 Unbilled revenues 63 96 Assets from price risk management activities - current 26 31 Inventories 75 71 Margin deposits 127 189 Current deferred income taxes 120 17 Regulatory assets - current 244 194 Other current assets 29 44 Total current assets 892 820 Electric utility plant, net 3,662 3,301 Non-qualified benefit plan trust 45 46 Nuclear decommissioning trust 47 46 Regulatory assets - noncurrent 585 631 Other noncurrent assets 53 45 Total assets $ 5,284 $ 4,889 -------------------------------------------------------------------------------
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS, continued (Dollars in million) (Unaudited) June 30, December 31, 2009 2008 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 186 $ 217 Liabilities from price risk management activities - current 254 225 Regulatory liabilities - current 66 43 Short-term debt - 203 Current portion of long-term debt 186 142 Other current liabilities 72 59 Total current liabilities 764 889 Long-term debt, net of current portion 1,408 1,164 Liabilities from price risk management activities - noncurrent 168 201 Regulatory liabilities - noncurrent 645 640 Noncurrent deferred income taxes 414 304 Unfunded status of pension and postretirement plans 176 174 Non-qualified benefit plan liabilities 94 91 Other noncurrent liabilities 71 72 Total liabilities 3,740 3,535 Commitments and contingencies (see notes) Shareholders' equity: Portland General Electric Company shareholders' equity: Preferred stock, no par value, 30,000,000 shares authorized; none issued and outstanding as of June 30, 2009, and December 31, 2008 - - Common stock, no par value, 160,000,000 shares authorized; 75,148,908 and 62,575,257 shares issued and outstanding as of June 30, 2009, and December 31, 2008, respectively 830 659 Accumulated other comprehensive loss (5 ) (5 ) Retained earnings 717 700 Total Portland General Electric Company shareholders' equity 1,542 1,354 Noncontrolling interests' equity 2 - Total shareholders' equity 1,544 1,354 Total liabilities and shareholders' equity $ 5,284 $ 4,889 -------------------------------------------------------------------------------
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) Six Months Ended June 30, 2009 2008 Cash flows from operating activities: Net income $ 50 $ 67 Reconciliation of net income to net cash provided by operating activities: Depreciation and amortization 107 100 Power cost deferrals (9 ) 8 Deferred income taxes 8 19 Allowance for equity funds used during construction (8 ) (4 ) Increase (decrease) in net liabilities (assets) from price risk management activities 6 (412 ) Regulatory deferral - price risk management activities (6 ) 412 Other non-cash income and expenses, net 14 13 Changes in working capital: Decrease in margin deposits 62 147 Decrease in receivables 51 53 Decrease in payables (56 ) (35 ) Other working capital items, net 1 (9 ) Other, net - 9 Net cash provided by operating activities 220 368 Cash flows from investing activities: Capital expenditures (395 ) (206 ) Sales of nuclear decommissioning trust securities 17 13 Purchases of nuclear decommissioning trust securities (17 ) (12 ) Insurance proceeds - 3 Other, net (1 ) (2 ) Net cash used in investing activities (396 ) (204 ) Cash flows from financing activities: Proceeds from issuance of common stock, net of issuance costs 170 - Proceeds from issuance of long-term debt 430 50 Debt issuance costs (4 ) - Payments on long-term debt (142 ) (56 ) Borrowings on revolving credit facilities 82 - Payments on revolving credit facilities (213 ) - Payments on short-term debt, net (72 ) - Dividends paid (34 ) (29 ) Noncontrolling interests' cash contributions 7 - Net cash provided by (used in) financing activities 224 (35 ) Change in cash and cash equivalents 48 129 Cash and cash equivalents, beginning of period 10 73 Cash and cash equivalents, end of period $ 58 $ 202 Supplemental cash flow information is as follows: Cash paid during the period for: Interest, net of amounts capitalized $ 35 $ 39 Income taxes - 3 Non-cash investing and financing activities: Accrued capital additions 52 12 Accrued dividends payable 20 15 -------------------------------------------------------------------------------
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES SUPPLEMENTAL OPERATING STATISTICS (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 Operating revenues (millions) Retail sales: Residential $ 168 $ 169 $ 401 $ 404 Commercial 149 145 298 294 Industrial 39 39 81 77 Total retail sales 356 353 780 775 Direct access customers - (2 ) (1 ) (4 ) Other retail revenues 4 12 33 9 Total retail revenues 360 363 812 780 Wholesale revenues 21 44 49 92 Other operating revenues 8 18 13 24 Total revenues $ 389 $ 425 $ 874 $ 896 Energy sold and delivered - MWhs (thousands) Retail energy sales: Residential 1,646 1,764 3,997 4,122 Commercial 1,718 1,739 3,451 3,530 Industrial 558 640 1,162 1,208 Total retail energy sales 3,922 4,143 8,610 8,860 Delivered to direct access customers 464 602 914 1,189 Total retail energy deliveries 4,386 4,745 9,524 10,049 Wholesale sales 688 681 1,397 1,487 Total energy sold and delivered 5,074 5,426 10,921 11,536 Retail customers - end of period Residential 714,379 710,819 Commercial 102,827 101,958 Industrial 267 261 Total retail customers 817,473 813,038 -------------------------------------------------------------------------------
Degree Days Heating Cooling 2009 2008 2009 2008 1st Quarter 2,022 1,981 - - Average 1,831 1,840 - - 2nd Quarter 578 860 90 98 Average 683 664 71 67 Note: "Average" amounts represent 15-year rolling averages provided by the National Weather Service (Portland Airport). -------------------------------------------------------------------------------
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