Diverse factors help boost third-quarter earnings for NV Energy
Broadway musicals, international flights and occupied homes don’t have much in common on the surface.
What they do share, though, is a role in boosting NV Energy’s third-quarter earnings. And though a rate increase also contributed strongly to the local power utility’s income gains, the quarterly report was notable for its hints at a slowly improving local economy.
First, about those results: NV Energy reported net income of $223.2 million, or 94 cents a share, in the quarter that ended Sept. 30. That was up from $173.5 million, or 73 cents a share, in the same quarter a year earlier. Quarterly revenue rose to $1.03 billion, up from $1.02 billion in the third quarter of 2011.
The company’s income bested analyst estimates of 88 cents a share, according to Thomson Reuters. Analysts also projected revenue of $1.11 billion.
The biggest contributor to the utility’s income gain came from a 2.7 percent rate increase on Jan. 1. The Public Utilities Commission of Nevada approved the increase so that NV Energy could recoup the $694.8 million it spent adding 484 megawatts to its Harry Allen Generation Station in Apex in 2011. The rate jump was behind 13 cents of the 21 cent-per-share improvement.
But a glimmer of hope in the local economy also boosted earnings. In a Friday conference call to discuss financial results with analysts, CFO Jonathan Halkyard credited 3 cents of the per-share income jump to new projects including McCarran International Airport’s Terminal 3 and the Smith Center for the Performing Arts. Plus, the number of low-power-use properties, which consist mostly of vacant homes, fell to its lowest local level since 2008, Halkyard said. The percentage of low-use residential customers dropped to 7.1 percent in the quarter, down from a peak of about 9 percent in early 2010.
NV Energy’s customer base also grew 1.1 percent – the 10th straight quarter of ratepayer increases.
Despite the bright spots, company officials said Southern Nevada’s economy hasn’t completely bounced back.
“While we’re pleased by increased sales, it’s probably too early to view the numbers as a broad-based resurgence in the local economy,” Halkyard said. “In general, the economy in Southern Nevada is on the same course of gradual and still-slow recovery.”
Hotter weather contributed 1 cent to higher year-to-year earnings per share. Plus, the utility refinanced debt, and lower interest rates added 2 cents a share to income.
Operating and maintenance expenses were down $5 million from the third quarter of 2011 as well.
Michael Yackira, the utility’s CEO, said the financial report “reinforces many of the strategies and initiatives we’ve been executing over the past few years.”
“The Nevada economy continues to make gradual improvement, and we have managed our business operations accordingly,” Yackira said.
The utility also adjusted its earnings guidance, saying it expects to earn $1.30 to $1.40 a share in 2012, assuming weather stays normal in the fourth quarter. That forecast was up from $1.15 to $1.25 in July.
The company’s shares fell 12 cents, or 0.63 percent, Friday to close at $18.87 on the New York Stock Exchange.
Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512. Follow @J_Robison1 on Twitter.
