UIL Reports Second Quarter Affirms 2012 Earnings Guidance

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UIL Holdings Corporation
UIL
today reported consolidated net income of $12.0 million, or $0.23 per diluted share for the second quarter of 2012, compared to $14.2 million or $0.28 per diluted share for the same period in 2011. For the first six months of 2012, UIL's consolidated net income was $59.0 million, or $1.16 per diluted share, compared to $66.2 million, or $1.30 per diluted share for the same period in 2011. “We experienced the warmest winter on record and those warm temperatures continued into spring. The warm temperatures significantly impacted the financial results of our gas business,” said James P. Torgerson, UIL's president and chief executive officer. “We have been able to mitigate some of the weather's impact by maintaining our focus on short-term O&M cost controls. We also continue to execute on our growth strategy of converting businesses and households in our service territory to natural gas heat. Year-to-date 2012 conversions are 46% ahead of 2011 levels and we currently are on target to meet our 2012 goal.” Electric distribution, CTA & other Earnings from the electric distribution business for the second quarter in 2012 were $10.9 million, or $0.21 per diluted share, compared to $11.1 million, or $0.22 per diluted share, for the same period in 2011. The decrease in earnings for the quarter was primarily attributable to a decrease in allowance for funds used during construction (AFUDC), partially offset by increased income from UI's equity investment in GenConn. For the first six months of 2012, the electric distribution business had total earnings of $25.1 million, or $0.49 per diluted share, compared to $21.8 million, or $0.43 per diluted share, for the same period in 2011. The increase in earnings for the first six months was primarily attributable to increased income from UI's equity investment in GenConn. Pre-tax earnings from the equity investment in GenConn were $3.9 million, compared to pre-tax earnings of $2.6 million for the same period in 2011. For the first six months of 2012 pre-tax earnings from the equity investment in GenConn were $8.4 million, compared to $4.7 million for the same period in 2011. Electric transmission Earnings from the electric transmission business for the second quarter in 2012 were $7.8 million, or $0.15 per diluted share, compared to $7.9 million, or $0.15 per diluted share, for the same period in 2011. For the first six months of 2012, total transmission earnings were $15.2 million, or $0.30 per diluted share, compared to $15.6 million, or $0.31 per diluted share for the same period in 2011. The decrease was primarily attributable to a decrease in the AFUDC, partially offset by an increase in rate base. Gas distribution The gas distribution business incurred a loss of $3.2 million, or $0.06 per diluted share for the second quarter in 2012, compared to a loss of $1.5 million, or $0.03 per diluted share for the same period in 2011, consistent with the seasonal nature of the gas business. The reduction in gas distribution sales, primarily driven by warmer weather and reduced per customer usage, resulted in a $4.1 million decrease in pre-tax gross margin, compared to the second quarter in 2011. For the first six months of 2012, earnings from the gas distribution business were $25.2 million, or $0.49 per diluted share, compared to $35.9 million, or $0.71 per diluted share for the same period in 2011. Earnings for the second quarter and first six months of 2012 were negatively impacted by lower sales volume primarily due to the impact of warmer weather compared to the same periods in 2011. Heating degree days for the first six months were 20.7% below normal and 21% lower compared to 2011. The warmer temperatures in the first six months of 2012, coupled with reduced per customer usage, resulted in an $18.1 million decrease in pre-tax gross margin, compared to the same period in 2011. The decrease in gross margin for the first six months was partially offset by weather insurance of $3.5 million. “On a positive note, the warmer weather has helped us in our gas conversion efforts and allowed us to get a jump start on gas construction projects,” added Torgerson. “Year-to-date, we have converted more than 4,600 customers, compared to 3,190 customers in the first six months of 2011 and are on track to meet our 2012 goal.”
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