OKLAHOMA CITY, May 3, 2012 /PRNewswire/ -- OGE Energy Corp. (NYSE: OGE), the parent company of Oklahoma Gas and Electric Company (OG&E) and OGE Enogex Holdings LLC, today reported earnings of $0.38 per diluted share for the three months ended March 31, 2012 compared to $0.25 per diluted share for the first quarter of 2011.
OG&E, a regulated electric utility, contributed earnings of $0.13 per share in the first quarter, compared with earnings of $0.06 per share in the first quarter last year. Enogex, a midstream natural gas business, contributed earnings of $0.25 per share compared with earnings of $0.19 per share in the year-ago quarter. The holding company earnings were flat in the first quarter of 2012 and 2011.
"We are pleased with the performance at both of our businesses," said Pete Delaney, OGE Energy chairman and CEO. "Enogex is performing well in a difficult natural gas price environment, highlighting the strategic location of our assets and new investments in the liquids rich natural gas basins of Oklahoma and the Texas panhandle. And, the utility continues to benefit from a variety of investments that have created value for customers."
Discussion of First Quarter 2012
OGE Energy's consolidated gross margin on revenues was $355 million in the first quarter, compared with $307 million a year ago. Net income attributable to OGE Energy was $37 million in the first quarter, compared to $25 million in the year-ago quarter.
OG&E's gross margin on revenues was $231 million in the first quarter, compared with $203 million in the comparable quarter last year. The increase was primarily due to revenues associated with customer-focused investments. Net income at the utility was $12 million in the first quarter, compared with $6 million a year earlier.
Enogex's gross margin on revenues was $124 million in the first quarter, compared with $104 million in the comparable quarter last year. The increase was primarily due to higher gross margins in the transportation and processing businesses. Net income attributable to OGE Enogex Holdings increased from $19 million in the first quarter of 2011 to $25 million in the first quarter of 2012. OGE Energy's portion of EBITDA increased from $48 million in the first quarter of 2011 to $66 million in the first quarter of 2012.
2012 Outlook
OGE Energy's consolidated earnings guidance for 2012 is $3.40 to $3.60 per average diluted share. The guidance assumes approximately 99.1 million average diluted shares outstanding and normal weather for the remainder of the year, but does not reflect any impact from OG&E's pending rate case. More information regarding the Company's 2012 earnings guidance is contained in the Company's First Quarter 2012 10-Q on file with the Securities and Exchange Commission.
Conference Call Webcast
OGE Energy will host a conference call for discussion of the results and the outlook for the rest of 2012 on Thursday, May 3, at 8 a.m. CDT. The conference will be available through http://www.oge.com/. OGE Energy is the parent company of Oklahoma Gas and Electric Company (OG&E), which serves more than 792,000 customers in a service territory spanning 30,000 square miles in Oklahoma and western Arkansas, and of OGE Enogex Holdings LLC, a midstream natural gas business with principal operations in Oklahoma.
Non-GAAP Financial Measures
Enogex has included in this release the non-GAAP financial measure EBITDA. Enogex defines EBITDA as net income attributable to Enogex Holdings before interest, income taxes and depreciation and amortization. EBITDA is a supplemental non-GAAP financial measure used by external users of the Company's financial statements such as investors, commercial banks and others, to assess:
- the financial performance of Enogex's assets without regard to financing methods, capital structure or historical cost basis;
- Enogex's operating performance and return on capital as compared to other companies in the midstream energy sector, without regard to financing or capital structure; and
- the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.
Enogex provides a reconciliation of EBITDA to its most directly comparable financial measure as calculated and presented in accordance with GAAP. The GAAP measure most directly comparable to EBITDA is net income attributable to Enogex Holdings. The non-GAAP financial measure of EBITDA should not be considered as an alternative to GAAP net income attributable to Enogex Holdings. EBITDA is not a presentation made in accordance with GAAP and has important limitations as an analytical tool. EBITDA should not be considered in isolation or as a substitute for analysis of Enogex's results as reported under GAAP. Because EBITDA excludes some, but not all, items that affect net income and is defined differently by different companies in Enogex's industry, Enogex's definition of EBITDA may not be comparable to a similarly titled measure of other companies. To compensate for the limitations of EBITDA as an analytical tool, Enogex believes it is important to review the comparable GAAP measure and understand the differences between the measures. A reconciliation of EBITDA is below and is available on OGE Energy's website: http://www.oge.com/.
|
Reconciliation of projected EBITDA to projected net income attributable to Enogex Holdings |
|
|
|
Twelve Months Ended |
|
(In millions) |
December 31, 2012 (A)(B) |
|
|
|
|
|
Net income attributable to Enogex Holdings |
$ |
176 |
|
|
Add: |
|
|
|
|
Interest expense, net |
|
32 |
|
|
Depreciation and amortization expense (C) |
|
100 |
|
|
EBITDA |
$ |
308 |
|
|
OGE Energy's Portion |
$ |
250 |
|
|
|
|
(A) |
Based on midpoint of 2012 guidance. |
|
(B) |
As of November 1, 2010, Enogex Holdings' earnings are no longer subject to tax (other than Texas state margin taxes) and are taxable at the individual partner level. |
|
(C) |
Includes amortization of certain customer-based intangible assets associated with the acquisition from Cordillera in November 2011, which is included in gross margin for financial reporting purposes. |
|
|
|
Reconciliation of EBITDA to net income attributable to Enogex Holdings |
|
|
|
|
|
|
|
Three Months Ended
March 31, 2012 |
|
(In millions) |
|
2012 |
|
|
2011 |
|
Net income attributable to Enogex Holdings |
$ |
49.5 |
|
$ |
34.5 |
|
Add: |
|
|
|
|
|
|
Interest expense, net |
|
7.6 |
|
|
6.4 |
|
Income tax expense (A) |
|
0.1 |
|
|
--- |
|
Depreciation and amortization expense (B) |
|
24.1 |
|
|
18.6 |
|
EBITDA |
$ |
81.3 |
|
$ |
59.5 |
|
OGE Energy's Portion |
$ |
66.1 |
|
$ |
48.4 |
|
|
|
|
|
|
|
|
(A) |
As of November 1, 2010, Enogex Holdings' earnings are no longer subject to tax (other than Texas state margin taxes) and are taxable at the individual partner level. |
|
(B) |
Includes amortization of certain customer-based intangible assets associated with the acquisition from Cordillera in November 2011, which is included in gross margin for financial reporting purposes. |
Some of the matters discussed in this news release may contain forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words "anticipate", "believe", "estimate", "expect", "intend", "objective", "plan", "possible", "potential", "project" and similar expressions. Actual results may vary materially. Factors that could cause actual results to differ materially include, but are not limited to: general economic conditions, including the availability of credit, access to existing lines of credit, access to the commercial paper markets, actions of rating agencies and their impact on capital expenditures; the ability of the Company and its subsidiaries to access the capital markets and obtain financing on favorable terms; prices and availability of electricity, coal, natural gas and natural gas liquids, each on a stand-alone basis and in relation to each other as well as the processing contract mix between percent-of-liquids, percent-of-proceeds, keep-whole and fixed-fee; business conditions in the energy and natural gas midstream industries; competitive factors including the extent and timing of the entry of additional competition in the markets served by the Company; unusual weather; availability and prices of raw materials for current and future construction projects; Federal or state legislation and regulatory decisions and initiatives that affect cost and investment recovery, have an impact on rate structures or affect the speed and degree to which competition enters the Company's markets; environmental laws and regulations that may impact the Company's operations; changes in accounting standards, rules or guidelines; the discontinuance of accounting principles for certain types of rate-regulated activities; whether OG&E can successfully implement its Smart Grid program to install meters for its customers and integrate the Smart Grid meters with its customer billing and other computer information systems; the cost of protecting assets against, or damage due to, terrorism or cyber attacks; advances in technology; creditworthiness of suppliers, customers and other contractual parties; the higher degree of risk associated with the Company's nonregulated business compared with the Company's regulated utility business and other risk factors listed in the reports filed by the Company with the Securities and Exchange Commission including those listed in Risk Factors and Exhibit 99.01 to the Company's Form 10-K for the year ended December 31, 2011.
For the Consolidated Statements of Income, Financial and Statistical Data, please click here.
SOURCE OGE Energy Corp.
Media, Brian Alford, +1-405-553-3187, Financial, Todd Tidwell, +1-405-553-3966, both of OGE Energy Corp.
