PORT HURON, Mich., Nov. 12 /PRNewswire/ -- Noting that for the third
consecutive quarter warmer than normal temperatures continue to affect
earnings, SEMCO Energy, Inc. (Nasdaq: SMGS) reported a net loss of $2,762,000
or $.18 per share for the quarter ended September 30, 1998, compared to a loss
of $3,148,000 or $.23 per share for the same period in 1997. On a weather-
normalized basis, SEMCO Energy had a net loss of $2,112,000 or $.14 per share
for the third quarter, compared to a loss of $2,848,000 or $.21 per share for
the third quarter of 1997. The company typically has losses during the third
quarter because its primary business of natural gas distribution relies on the
winter heating season for most of its earnings.
"The gas distribution business typically incurs an operating loss for the
third quarter due to its seasonal nature," said William L. Johnson, Chairman,
President and Chief Executive Officer of SEMCO Energy. "I am happy to report
that the loss has been reduced because of the strategic initiatives taken by
our management team over the past 12 months. Cost reductions at the gas
utility and profits from recent acquisitions and other business segments
helped to reduce the operating loss. If the weather had cooperated, we would
have shown more improvement in operating results. I am confident that our
diversification strategy into areas where we have core competencies, will
enhance long-term profitability."
The quarterly net loss from the company's regulated gas distribution
business, on a weather-normalized basis, improved approximately $250,000
compared to the same period in 1997. The improvement is attributed primarily
to reductions in operation and maintenance expenses and a favorable adjustment
to the one-time charge related to the early retirement program recorded during
the first quarter of 1998.
Net income from SEMCO Energy's non-regulated businesses increased by
approximately $480,000 during the third quarter of 1998 compared to the same
period in 1997. The increase in net income is due primarily to profits
generated by the company's new construction and engineering businesses.
Net income for the nine months ended September 30, 1998 was $2,803,000
($.19 per share) compared to $6,563,000 ($.48 per share) for the same period
last year. On a weather-normalized basis, net income was $7,303,000 ($.50 per
share) compared to $6,563,000 ($.48 per share) for the first nine months of
The net income for the company's regulated gas distribution business, on a
weather-normalized basis was $3,395,000 higher during the first nine months of
1998 compared to the same period of 1997. The increase in net income for the
gas distribution business is due primarily to increases in rates, reductions
in operation and maintenance expenses and a change in the method of accounting
for property taxes recorded during the first quarter of 1998.
The increase in weather-normalized net income for the company's gas
distribution business is partially offset by a decrease in net income for the
company's non-regulated businesses of approximately $2,600,000 due primarily
to a reduction in gas marketing margins and volumes, increased interest
expense and an extraordinary charge.
SEMCO Energy, Inc. is an energy-focused holding company with three
subsidiaries: SEMCO Energy Gas Company, a regulated natural gas distributor
with 240,000 customers in Michigan; SEMCO Energy Services, which markets gas
in parts of the United States and Canada; and SEMCO Energy Ventures, an asset-
based holding company that acquires and operates businesses in natural gas
construction, energy engineering and retail propane distribution.
Further detail is shown in the following table (unaudited):
SEMCO ENERGY, INC. & SUBSIDIARIES
Consolidated Statement of Income
Quarter Ended Sept. 30, Nine Months Ended Sept. 30,
1998 1997 1998 1997
Operating Revenues $107,237,000 $123,848,000 $438,379,000 $498,064,000
Operating Expenses $106,601,000 $123,753,000 $426,814,000 $482,230,000
Operating Income $636,000 $95,000 $11,565,000 $15,834,000
(Loss), Net $371,000 $(31,000) $1,014,000 $15,000
Interest Expense $1,007,000 $64,000 $12,579,000 $15,849,000
Interest Expense $3,769,000 $3,212,000 $11,061,000 $9,286,000
Net Income (a) (b) $(2,762,000) $(3,148,000) $2,803,000 $6,563,000
Share (a) (b) (c) $(0.18) $(0.23) $0.19 $0.48
Per Share (c) 0.19 0.19 0.57 0.56
Average Number of Common Shares
Outstanding (c) 15,356,000 13,705,000 14,520,000 13,677,000
(a) The nine months ended September 30, 1998 include income of $1,784,000
from a change in accounting method.
(b) The nine months ended September 30, 1998 include a charge of $499,000
from an early retirement of long-term debt.
(c) Adjusted to give retroactive effect to 5% stock dividends in May 1998
and May 1997.
SOURCE SEMCO Energy, Inc.
CONTACT: Edric R. Mason, Jr. of SEMCO Energy, 810-989-4104, or fax, 810-989-4098