Electricity and natural gas company Xcel Energy Inc. (XEL) announced its operating earnings for the fourth quarter 2010 of 29 cents per share versus 37 cents per share in the year-ago quarter, reflecting a decline of 27.6%. The results of the company were lower than the Zacks Consensus Estimate of 31 cents per share.
Xcel's operating earnings of 2010 were $1.62 per share compared with $1.50 per share reported in 2009. The results again lagged the Zacks Consensus Estimate, provided by 14 covering analysts, by 2 cents.
Xcel Energy's GAAP earnings for 2010 were $1.62 per share versus $1.48 per share recorded in 2009. The ongoing earnings and GAAP earnings were same in 2010, owing to an impact of 1 cent from the COLI settlement, PSRI and Medicare Part D and a gain of 1 cent per share from discontinued operations.
Total Revenue
Xcel Energy's total revenue for fourth-quarter 2010 was $2.56 billion versus $2.61 billion reported in the year-ago period, reflecting a decline of 2.0%. The year-over-year decline in revenue was due to lower contribution from Natural Gas and Others.
Reported quarter revenue surpassed the Zacks Consensus Estimate of $2.52 billion.
Xcel Energy's total revenue for 2010 was $10.3 billion versus $9.6 billion reported in the prior fiscal year, reflecting a growth of 6.9%. Despite a 4.5% year-over-year decline in Natural Gas contribution, the growth in total revenue was attributable to higher contribution from Electric and Other segment.
Fiscal year 2010 revenue of the company surpassed the Zacks Consensus Estimate of $10.2 billion.
Segment-wise Revenue
Electric: The revenue contribution from this segment during the fourth quarter 2010 increased 1.0% to $1,974.6 million from $1,955.6 million in the year-ago period.
The revenue contribution from this segment during 2010 increased 9.7% to $8,451.8 million from $7,704.7 million in 2009.
The electric revenues of the company were largely impacted by the fluctuation in the price of natural gas, coal and uranium used in the generation of electricity, however the fuel recovery mechanism, which allows the company to recover current expenses, came in handy, otherwise revenues and margins would have been affected by volatile input costs.
Natural gas: Revenue at this segment decreased 10.7% to $572.4 million from $641.5 million in the year ago period.
The 2010 revenue at this segment decreased 4.4% to $1,782.6 million from $1,865.7 million in 2009.
Other: Segment revenue in the reported quarter was $19.9 million versus $21.0 million in the year-ago period, reflecting a decline of 5.2%.
In 2010, the contribution from Others increased by 3.5% to $76.5 million from $73.9 million in 2009.
Quarterly Highlights
Total operating expenses of Excel Energy during the fourth quarter decreased 0.9% to $2,244.6 million from $2,265.2 million in the year-ago quarter. The decrease in expenses was mainly due to a 7.8% fall in the input costs used for generation of electricity.
However, operating expenses, as a percentage of total revenue, increased by 92 basis points year over year, which negatively impacted the operating results of the company. As a result, operating income of the company declined by 8.8% year-over-year to $322.3 million from $353.2 million reported in the year-ago period.
Yearly Highlights
Total operating expenses of Excel Energy during 2010 increased 6.3% to $8,691 million from $8,175.8 million in 2009. The increases in operating expenses were mainly due to a 9.2% increase in Electric fuel and purchased power cost.
The operating expenses in 2010 increased year-over-year, however it declined when considered as a percentage of total revenue. This resulted in the year-over-year growth of operating income of the company by 10.3%.
Total interest charges and financing cost at the end of 2010 increased by 5.1% to $548.6 million from $521.8 million at the end of 2009. The increase in expense was mainly due to higher long-term debt levels to fund investment in utility operations, partially mitigated by lower interest rates.
The company increased its generation capacity by 962 megawatts by purchasing two generation units Blue Spruce Energy Center and Rocky Mountain Energy Center in December 2010 for $739 million plus an additional $3 million.
Financial Update
Long-term debts of the company as of December 31,2010 were $9.3 billion versus $7.9 billion as of December 31, 2009.
The company from time to time issues debt and equity to refinance debts, fund operations and for other general corporate purposes. During the second half of 2011 the company plans to raise around $700 million through issue of bonds and unsecured notes.
The company provided capital expenditure plans from 2011 till 2015. Capital spending for 2011 is $2.45 billion, for 2012 it is $2.35 billion, for 2013 it is $3 billion, for 2014 it is $2.8 billion and for 2015 it is $2.55 billion. The major share of the expenses will be incurred on its subsidiary Northern States Power Company (NSP)-Minnesota, and the smallest amount will be incurred on its subsidiary NSP-Wisconsin.
2011 Guidance
Xcel Energy reaffirmed its earnings guidance for 2011 in the range of $1.65–$1.75 per share. The guidance assumes normal weather pattern in 2011. The company guides weather-adjusted retail electric utility sales to grow 1% to 1.3% in 2011, while the weather-adjusted retail firm natural gas sales is expected to remain flat from 2010 levels.
The operating and maintenance expenses of the company are expected to increase by 4%, while Depreciation expense is projected to increase in a range of $55 million to $65 million in 2011.
Interest expenses of the company in 2011 are going to increase by $15 million to $25 million as the company is planning to issue more notes in 2011.
Our View
We appreciate the initiatives taken by the company to reward its shareholders through dividend payments. The annualized dividend of the company for 2010 was $1.00 per share, a hike of 3 cents from 2009 levels.
Xcel Energy currently retains a Zacks #3 Rank (short-term Hold rating). We maintain our long-tern Neutral rating on the stock.
Based in Minneapolis, Minnesota, Xcel Energy is a U.S. electricity and natural gas company, with operations in eight Western and Midwestern states.
XCEL ENERGY INC (XEL): Free Stock Analysis Report
Zacks Investment Research
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
