Consolidated Results
During the six months ended
On a consolidated basis, WGL uses non-GAAP operating earnings (loss) to evaluate overall financial performance, and evaluates segment financial performance based on earnings before interest and taxes (EBIT) and adjusted EBIT. Operating earnings (loss) and adjusted EBIT are non-GAAP financial measures, which are not recognized in accordance with GAAP and should not be viewed as alternatives to GAAP measures of performance. Both non-GAAP operating earnings (loss) and adjusted EBIT adjust for the accounting recognition of certain transactions that we believe are not representative of the ongoing earnings of the company. Additionally, we believe that adjusted EBIT enhances the ability to evaluate segment performance because it excludes interest and income tax expense, which are affected by corporate-wide strategies such as capital financing and tax sharing allocations. Refer to "Reconciliation of Non-GAAP Financial Measures," attached to this news release, for a more detailed discussion of management's use of these measures and for reconciliations to GAAP financial measures.
For the quarter ended
Results by Business Segment
Regulated Utility
Three Months Ended
|
Increase/ |
Six Months Ended
|
Increase/ | |||||||||||||||||||||||
(In millions) | 2018 | 2017 | (Decrease) | 2018 | 2017 | (Decrease) | ||||||||||||||||||||
EBIT |
$ |
151.1 |
$ | 165.2 | $ | (14.1 | ) |
$ |
249.4 | $ | 267.9 | $ | (18.5 | ) | ||||||||||||
Adjusted EBIT |
$ |
143.6 |
$ | 150.2 | $ | (6.6 | ) | $ | 245.0 | $ | 241.6 | $ | 3.4 | |||||||||||||
For the three and six months ended
The comparisons of both EBIT and adjusted EBIT for the three and six
months ended
* This decrease is offset in income tax expense.
Retail Energy-Marketing
Three Months Ended
|
Increase/ |
Six Months Ended
|
Increase/ | ||||||||||||||||||||||
(In millions) | 2018 | 2017 | (Decrease) | 2018 | 2017 | (Decrease) | |||||||||||||||||||
EBIT |
$ |
15.1 |
$ | 9.3 | $ | 5.8 |
$ |
18.8 | $ | 38.4 | $ | (19.6 | ) | ||||||||||||
Adjusted EBIT |
$ |
20.0 |
$ | 13.1 | $ | 6.9 | $ | 26.5 | $ | 23.0 | $ | 3.5 | |||||||||||||
For the three months ended
For the six months ended
Commercial Energy Systems
Three Months Ended
|
Increase/ |
Six Months Ended
|
Increase/ | |||||||||||||||||||||||
(In millions) | 2018 | 2017 | (Decrease) | 2018 | 2017 | (Decrease) | ||||||||||||||||||||
EBIT |
$ |
3.6 |
$ | 8.5 | $ | (4.9 | ) |
$ |
9.2 | $ | 13.2 | $ | (4.0 | ) | ||||||||||||
Adjusted EBIT |
$ |
5.2 |
$ | 10.3 | $ | (5.1 | ) | $ | 12.5 | $ | 16.4 | $ | (3.9 | ) | ||||||||||||
For the three and six months ended
Three Months Ended
|
Increase/ |
Six Months Ended
|
Increase/ | ||||||||||||||||||||||||
(In millions) | 2018 | 2017 | (Decrease) | 2018 | 2017 | (Decrease) | |||||||||||||||||||||
EBIT |
$ |
7.3 |
$ | 42.0 | $ | (34.7 | ) |
$ |
29.5 | $ | 13.5 | $ | 16.0 | ||||||||||||||
Adjusted EBIT |
$ |
(2.2 |
) | $ | (1.3 | ) | $ | (0.9 | ) | $ | 26.2 | $ | 1.4 | $ | 24.8 | ||||||||||||
The EBIT comparisons for both periods reflect lower mark-to-market
valuations associated with long-term transportation strategies.
Additionally, both the EBIT and adjusted EBIT comparisons for the three
and six months ended
The three months ended
For the six months ended
Other Activities
Three Months Ended
|
Increase/ |
Six Months Ended
|
Increase/ | |||||||||||||||||||||||||||
(In millions) | 2018 | 2017 | (Decrease) | 2018 | 2017 | (Decrease) | ||||||||||||||||||||||||
EBIT |
$ |
(2.2 |
) | $ | (15.1 | ) | $ | 12.9 |
$ |
(6.4 | ) | $ | (16.3 | ) | $ | 9.9 | ||||||||||||||
Adjusted EBIT |
$ |
(2.0 |
) | $ | (1.1 | ) | $ | (0.9 | ) | $ | (5.6 | ) | $ | (2.3 | ) | $ | (3.3 | ) | ||||||||||||
For the three and six months ended
Intersegment Eliminations
Three Months Ended
|
Increase/ |
Six Months Ended
|
Increase/ | |||||||||||||||||||||||||||
(In millions) | 2018 | 2017 | (Decrease) | 2018 | 2017 | (Decrease) | ||||||||||||||||||||||||
EBIT |
$ |
(4.1 |
) | $ | (1.5 | ) | $ | (2.6 | ) |
$ |
(2.4 | ) | $ | (0.4 | ) | $ | (2.0 | ) | ||||||||||||
Adjusted EBIT |
$ |
(4.1 |
) | $ | (1.4 | ) | $ | (2.7 | ) | $ | (2.4 | ) | $ | 0.1 | $ | (2.5 | ) | |||||||||||||
For the three and six months ended
Other Information
During the pendency period of the proposed merger between WGL and
AltaGas, WGL will not conduct earnings calls and will not give forward
year guidance. Additional information regarding financial results and
recent regulatory events can be found in WGL's and Washington Gas'
combined Form 10-Q for the fiscal quarter ended
WGL, headquartered in
Unless otherwise noted, earnings per share amounts are presented on a diluted basis, and are based on weighted average common and common equivalent shares outstanding.
Please see the attached comparative statements for additional information on our operating results. Also attached to this news release are reconciliations of non-GAAP financial measures.
Forward-Looking Statements
This news release and other statements by us include forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 with respect to the outlook for earnings, revenues,
dividends and other future financial business performance, strategies,
financing plans, legal developments relating to Antero Resources
Corporation (Antero), our investment in
Condensed Consolidated Balance Sheets (Unaudited) |
||||||||||
(In thousands) |
|
|
||||||||
ASSETS | ||||||||||
Property, Plant and Equipment | ||||||||||
At original cost | $ | 6,199,912 | $ | 6,143,841 | ||||||
Accumulated depreciation and amortization | (1,552,274 | ) | (1,513,790 | ) | ||||||
Net property, plant and equipment | 4,647,638 | 4,630,051 | ||||||||
Current Assets | ||||||||||
Cash and cash equivalents | 46,319 | 8,524 | ||||||||
Accounts receivable, net | 730,563 | 553,312 | ||||||||
Storage gas | 76,199 | 243,984 | ||||||||
Derivatives and other | 167,943 | 180,069 | ||||||||
Total current assets | 1,021,024 | 985,889 | ||||||||
Deferred Charges and Other Assets | 1,178,164 | 1,010,069 | ||||||||
Total Assets | $ | 6,846,826 | $ | 6,626,009 | ||||||
CAPITALIZATION AND LIABILITIES | ||||||||||
Capitalization | ||||||||||
|
$ | 1,721,772 | $ | 1,502,690 | ||||||
Non-controlling interest | 6,868 | 6,851 | ||||||||
|
28,173 | 28,173 | ||||||||
Total equity | 1,756,813 | 1,537,714 | ||||||||
Long-term debt | 1,879,304 | 1,430,861 | ||||||||
Total capitalization | 3,636,117 | 2,968,575 | ||||||||
Current Liabilities | ||||||||||
Notes payable and current maturities of long-term debt | 524,833 | 809,844 | ||||||||
Accounts payable and other accrued liabilities | 358,046 | 423,824 | ||||||||
Derivatives and other | 270,918 | 255,320 | ||||||||
Total current liabilities | 1,153,797 | 1,488,988 | ||||||||
Deferred Credits | 2,056,912 | 2,168,446 | ||||||||
Total Capitalization and Liabilities | $ | 6,846,826 | $ | 6,626,009 | ||||||
Condensed Consolidated Statements of Income (Unaudited) |
||||||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||
(In thousands, except per share data) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
OPERATING REVENUES | ||||||||||||||||||||
Utility | $ | 523,480 | $ | 466,270 | $ | 898,470 | $ | 793,333 | ||||||||||||
Non-utility | 362,971 | 375,480 | 640,421 | 657,904 | ||||||||||||||||
Total Operating Revenues | 886,451 | 841,750 | 1,538,891 | 1,451,237 | ||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||
Utility cost of gas | 196,757 | 134,458 | 319,030 | 209,958 | ||||||||||||||||
Non-utility cost of energy-related sales | 287,204 | 301,780 | 512,706 | 554,666 | ||||||||||||||||
Operation and maintenance | 112,556 | 118,261 | 214,782 | 218,978 | ||||||||||||||||
Depreciation and amortization | 40,722 | 39,110 | 81,707 | 74,393 | ||||||||||||||||
General taxes and other assessments | 55,039 | 50,544 | 99,926 | 90,932 | ||||||||||||||||
Total Operating Expenses | 692,278 | 644,153 | 1,228,151 | 1,148,927 | ||||||||||||||||
OPERATING INCOME | 194,173 | 197,597 | 310,740 | 302,310 | ||||||||||||||||
Equity in earnings of unconsolidated affiliates | (27,414 | ) | 7,344 | (21,522 | ) | 7,609 | ||||||||||||||
Other expenses — net | (391 | ) | (1,953 | ) | (1,171 | ) | (1,475 | ) | ||||||||||||
Interest expense | 7,637 | 14,255 | 27,834 | 30,490 | ||||||||||||||||
INCOME BEFORE TAXES | 158,731 | 188,733 | 260,213 | 277,954 | ||||||||||||||||
INCOME TAX EXPENSE (BENEFIT) | 27,223 | 70,778 | (3,887 | ) | 104,232 | |||||||||||||||
NET INCOME | $ | 131,508 | $ | 117,955 | $ | 264,100 | $ | 173,722 | ||||||||||||
Net loss attributable to non-controlling interest | (4,372 | ) | (5,439 | ) | (10,150 | ) | (7,974 | ) | ||||||||||||
Dividends on |
330 | 330 | 660 | 660 | ||||||||||||||||
NET INCOME APPLICABLE TO COMMON STOCK | $ | 135,550 | $ | 123,064 | $ | 273,590 | $ | 181,036 | ||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||||||||||||||||||
Basic | 51,358 | 51,217 | 51,336 | 51,192 | ||||||||||||||||
Diluted | 51,577 | 51,476 | 51,561 | 51,458 | ||||||||||||||||
EARNINGS PER AVERAGE COMMON SHARE | ||||||||||||||||||||
Basic | $ | 2.64 | $ | 2.40 | $ | 5.33 | $ | 3.54 | ||||||||||||
Diluted | $ | 2.63 | $ | 2.39 | $ | 5.31 | $ | 3.52 | ||||||||||||
The following table reconciles EBIT by operating segment to net income (loss) applicable to common stock. |
||||||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||
(In thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
EBIT: | ||||||||||||||||||||
Regulated utility | 151,069 | 165,171 | 249,434 | 267,888 | ||||||||||||||||
Retail energy-marketing | 15,104 | 9,255 | 18,846 | 38,440 | ||||||||||||||||
Commercial energy systems | 3,562 | 8,547 | 9,209 | 13,210 | ||||||||||||||||
Midstream energy services | 7,306 | 41,993 | 29,491 | 13,509 | ||||||||||||||||
Other activities | (2,185 | ) | (15,067 | ) | (6,356 | ) | (16,265 | ) | ||||||||||||
Intersegment eliminations | (4,116 | ) | (1,472 | ) | (2,427 | ) | (364 | ) | ||||||||||||
Total | 170,740 | 208,427 | 298,197 | 316,418 | ||||||||||||||||
Interest expense | 7,637 | 14,255 | 27,834 | 30,490 | ||||||||||||||||
Income tax expense (benefit) | 27,223 | 70,778 | (3,887 | ) | 104,232 | |||||||||||||||
Dividends on |
330 | 330 | 660 | 660 | ||||||||||||||||
Net income applicable to common stock | 135,550 | 123,064 | 273,590 | 181,036 | ||||||||||||||||
Consolidated Financial and Operating Statistics (Unaudited) |
||||||
FINANCIAL STATISTICS |
||||||
Twelve Months Ended
|
||||||
2018 | 2017 | |||||
Closing Market Price — end of period |
|
|
||||
52-Week Market Price Range |
|
|
||||
Price Earnings Ratio | 15.0 | 24.1 | ||||
Annualized Dividends Per Share |
|
|
||||
Dividend Yield | 2.5% | 2.5% | ||||
Return on Average Common Equity | 17.5% | 11.9% | ||||
Total Interest Coverage (times) | 4.9 | 5.7 | ||||
Book Value Per Share — end of period |
|
|
||||
Common Shares Outstanding — end of period (thousands) | 51,359 | 51,219 | ||||
Consolidated Financial and Operating Statistics (Unaudited) |
||||||||||||||||||||||||||||||
UTILITY GAS STATISTICS |
||||||||||||||||||||||||||||||
Three Months Ended |
Six Months Ended |
Twelve Months Ended |
||||||||||||||||||||||||||||
(In thousands) | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
Operating Revenues | ||||||||||||||||||||||||||||||
Gas Sold and Delivered | ||||||||||||||||||||||||||||||
Residential — Firm | $ | 338,074 | $ | 297,406 | $ | 570,563 | $ | 495,427 | $ | 760,342 | $ | 663,189 | ||||||||||||||||||
Commercial and Industrial — Firm | 76,152 | 60,624 | 126,208 | 105,971 | 176,325 | 146,422 | ||||||||||||||||||||||||
Commercial and Industrial — Interruptible | 1,390 | 1,099 | 1,868 | 1,653 | 2,454 | 2,228 | ||||||||||||||||||||||||
415,616 | 359,129 | 698,639 | 603,051 | 939,121 | 811,839 | |||||||||||||||||||||||||
Gas Delivered for Others | ||||||||||||||||||||||||||||||
Firm | 78,287 | 86,024 | 140,729 | 142,099 | 207,618 | 206,413 | ||||||||||||||||||||||||
Interruptible | 20,578 | 14,369 | 35,110 | 29,139 | 55,702 | 46,879 | ||||||||||||||||||||||||
Electric Generation | 378 | 201 | 781 | 576 | 1,536 | 1,599 | ||||||||||||||||||||||||
99,243 | 100,594 | 176,620 | 171,814 | 264,856 | 254,891 | |||||||||||||||||||||||||
514,859 | 459,723 | 875,259 | 774,865 | 1,203,977 | 1,066,730 | |||||||||||||||||||||||||
Other | 8,621 | 6,547 | 23,211 | 18,468 | 44,497 | 39,416 | ||||||||||||||||||||||||
Total | $ | 523,480 | $ | 466,270 | $ | 898,470 | $ | 793,333 | $ | 1,248,474 | $ | 1,106,146 | ||||||||||||||||||
Three Months Ended |
Six Months Ended |
Twelve Months Ended |
||||||||||||||||||||||||||||
(In thousands of therms) | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
Gas Sales and Deliveries | ||||||||||||||||||||||||||||||
Gas Sold and Delivered | ||||||||||||||||||||||||||||||
Residential — Firm | 361,209 | 286,159 | 584,977 | 493,641 | 691,616 | 609,576 | ||||||||||||||||||||||||
Commercial and Industrial — Firm | 91,490 | 66,898 | 150,378 | 124,619 | 200,196 | 167,742 | ||||||||||||||||||||||||
Commercial and Industrial — Interruptible | 1,470 | 1,465 | 2,036 | 2,279 | 2,312 | 2,999 | ||||||||||||||||||||||||
454,169 | 354,522 | 737,391 | 620,539 | 894,124 | 780,317 | |||||||||||||||||||||||||
Gas Delivered for Others | ||||||||||||||||||||||||||||||
Firm | 222,909 | 182,743 | 381,446 | 344,325 | 532,151 | 493,385 | ||||||||||||||||||||||||
Interruptible | 77,191 | 75,572 | 148,833 | 139,735 | 251,643 | 233,214 | ||||||||||||||||||||||||
Electric Generation | 19,771 | 13,229 | 51,845 | 36,828 | 102,628 | 225,701 | ||||||||||||||||||||||||
319,871 | 271,544 | 582,124 | 520,888 | 886,422 | 952,300 | |||||||||||||||||||||||||
Total | 774,040 | 626,066 | 1,319,515 | 1,141,427 | 1,780,546 | 1,732,617 | ||||||||||||||||||||||||
Utility Gas Purchase Expense (excluding asset optimization) |
|
45.67 |
¢ |
|
43.94 |
¢ |
|
44.26 |
¢ |
|
40.17 |
¢ |
|
39.04 |
¢ |
|
35.15 |
¢ |
||||||||||||
HEATING DEGREE DAYS | ||||||||||||||||||||||||||||||
Actual | 2,106 | 1,727 | 3,441 | 2,923 | 3,645 | 4,651 | ||||||||||||||||||||||||
Normal | 2,099 | 2,098 | 3,410 | 3,416 | 3,711 | 5,525 | ||||||||||||||||||||||||
Percent Colder (Warmer) than Normal | 0.3 | % | (17.7 | )% | 0.9 | % | (14.4 | )% | (1.8 | )% | (15.8 | )% | ||||||||||||||||||
Average Active Customer Meters | 1,172,365 | 1,154,427 | 1,169,572 | 1,151,289 | 1,164,162 | 1,148,092 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||
Natural Gas Sales | ||||||||||||||||||||||||||||||
Therm Sales (thousands of therms) | 247,400 | 269,100 | 446,300 | 489,600 | 649,900 | 734,800 | ||||||||||||||||||||||||
Number of Customers (end of period) | 112,500 | 122,800 | 112,500 | 122,800 | 112,500 | 122,800 | ||||||||||||||||||||||||
Electricity Sales | ||||||||||||||||||||||||||||||
Electricity Sales (thousands of kWhs) | 2,875,600 | 3,048,300 | 5,677,000 | 6,151,500 | 11,773,800 | 13,123,000 | ||||||||||||||||||||||||
Number of Accounts (end of period) | 106,200 | 121,200 | 106,200 | 121,200 | 106,200 | 121,200 | ||||||||||||||||||||||||
WGL ENERGY SYSTEMS | ||||||||||||||||||||||||||||||
Megawatts in service | 238 | 200 | 238 | 200 | 238 | 200 | ||||||||||||||||||||||||
Megawatt hours generated | 66,071 | 57,695 | 128,129 | 106,449 | 311,391 | 240,007 | ||||||||||||||||||||||||
Reconciliation of Non-GAAP Financial
Measures
(Unaudited)
The tables below reconcile operating earnings (loss) on a consolidated basis to GAAP net income (loss) applicable to common stock and adjusted EBIT on a segment basis to EBIT. Management believes that operating earnings (loss) and adjusted EBIT provide a meaningful representation of our earnings from ongoing operations on a consolidated and segment basis, respectively. These measures facilitate analysis by providing consistent and comparable measures to help management, investors and analysts better understand and evaluate our operating results and performance trends, and assist in analyzing period-to-period comparisons. Additionally, we use these non-GAAP measures to report to the board of directors and to evaluate management's performance.
To derive our non-GAAP measures, we adjust for the accounting recognition of certain transactions (non-GAAP adjustments) based on at least one of the following criteria:
- To better match the accounting recognition of transactions with their economics;
- To better align with regulatory view/recognition;
- To eliminate the effects of:
i. Significant out of period adjustments;
ii. Other significant items that may obscure historical earnings comparisons and are not indicative of performance trends; and
iii. For adjusted EBIT, other items which may obscure segment comparisons.
There are limits in using operating earnings (loss) and adjusted EBIT to analyze our consolidated and segment results, respectively, as they are not prepared in accordance with GAAP and may be different than non-GAAP financial measures used by other companies. In addition, using operating earnings (loss) and adjusted EBIT to analyze our results may have limited value as they exclude certain items that may have a material impact on our reported financial results. We compensate for these limitations by providing investors with the attached reconciliations to the most directly comparable GAAP financial measures.
The following tables present the unaudited reconciliation of non-GAAP operating earnings to GAAP net income (loss) applicable to common stock (consolidated by quarter):
Reconciliation of Non-GAAP Financial Measures (Unaudited) |
|||||||||||||||||||||||
Fiscal Year 2018 | |||||||||||||||||||||||
Quarterly Period Ended(1) | |||||||||||||||||||||||
(In thousands, except per share data) |
|
|
|
|
Fiscal Year | ||||||||||||||||||
Operating earnings (loss) | $ | 94,923 | $ | 109,485 | $ | 204,408 | |||||||||||||||||
Non-GAAP adjustments(2) | (14,351 | ) | 10,287 | (4,064 | ) | ||||||||||||||||||
De-designated interest rate swaps(3) | (354 | ) | 13,183 | 12,829 | |||||||||||||||||||
Income tax effect of non-GAAP adjustments(4) | 4,956 | (4,839 | ) | 117 | |||||||||||||||||||
Re-measurement impact of Tax Cuts and Jobs Act(5) | 52,866 | 7,434 | 60,300 | ||||||||||||||||||||
Net income (loss) applicable to common stock | $ | 138,040 | $ | 135,550 | $ | — | $ | — | $ | 273,590 | |||||||||||||
Diluted average common shares outstanding | 51,549 | 51,577 | 51,561 | ||||||||||||||||||||
Operating earnings (loss) per share | $ | 1.84 | $ | 2.12 | $ | 3.96 | |||||||||||||||||
Per share effect of non-GAAP adjustments | 0.84 | 0.51 | 1.35 | ||||||||||||||||||||
Diluted earnings (loss) per average common share | $ | 2.68 | $ | 2.63 | $ | 5.31 | |||||||||||||||||
Fiscal Year 2017 | |||||||||||||||||||||||
Quarterly Period Ended(1) | |||||||||||||||||||||||
(In thousands, except per share data) |
|
|
|
|
Fiscal Year | ||||||||||||||||||
Operating earnings (loss) | $ | 59,362 | $ | 96,087 | $ | 155,449 | |||||||||||||||||
Non-GAAP adjustments(2) | (2,324 | ) | 38,468 | 36,144 | |||||||||||||||||||
De-designated interest rate swaps(3) | — | 2,516 | 2,516 | ||||||||||||||||||||
Income tax effect of non-GAAP adjustments(4) | 934 | (14,007 | ) | (13,073 | ) | ||||||||||||||||||
Net income (loss) applicable to common stock | $ | 57,972 | $ | 123,064 | $ | — | $ | — | $ | 181,036 | |||||||||||||
Diluted average common shares outstanding | 51,445 | 51,476 | 51,458 | ||||||||||||||||||||
Operating earnings (loss) per share | $ | 1.15 | $ | 1.87 | $ | 3.02 | |||||||||||||||||
Per share effect of non-GAAP adjustments | (0.02 | ) | 0.52 | 0.50 | |||||||||||||||||||
Diluted earnings (loss) per average common share | $ | 1.13 | $ | 2.39 | $ | 3.52 | |||||||||||||||||
(1) Quarterly earnings per share may not sum to year-to-date or annual earnings per share as quarterly calculations are based on weighted average common and common equivalent shares outstanding, which may vary for each of those periods.
(2) Refer to the reconciliations of adjusted EBIT to EBIT below for further details on our non-GAAP adjustments. Note that non-GAAP adjustments associated with interest expense or income taxes are shown separately and are not included in the reconciliation from adjusted EBIT to EBIT.
(3) Non-GAAP adjustment related to mark-to-market
valuations on forward starting interest rate swaps associated with
anticipated future financing. Due to certain covenants in our merger
agreement with AltaGas, it is no longer probable that the 30-year debt
issuance that the swaps were originally intended to hedge will occur.
However, we believe that some form of financing will continue to be
required. The hedges were de-designated in
(4) Non-GAAP adjustments are presented on a gross basis and the income tax effects of those adjustments are presented separately. The income tax effects of non-GAAP adjustments, both current and deferred, are calculated at the individual company level based on the applicable composite tax rate for each period presented, with the exception of transactions not subject to income taxes. Additionally, the income tax effect of non-GAAP adjustments includes investment tax credits related to distributed generation assets.
(5) In
(6) Non-GAAP measures for the quarter ended
Reconciliation of Non-GAAP Financial
Measures
(Unaudited)
The following tables summarize non-GAAP adjustments by operating segment
and present reconciliations of adjusted EBIT to EBIT. EBIT is defined as
earnings before interest and taxes, less amounts attributable to
non-controlling interest. Items we do not include in EBIT are interest
expense, inter-company financing activity, dividends on
Three Months Ended |
|||||||||||||||||||||||||||||||||||
(In thousands) |
Regulated
Utility |
Retail Energy-
Marketing |
Commercial
Energy Systems |
Midstream
Energy Services |
Other
Activities |
Eliminations |
Total | ||||||||||||||||||||||||||||
Adjusted EBIT | 143,604 | 20,000 | 5,232 | (2,231 | ) | (2,049 | ) | (4,103 | ) | $ | 160,453 | ||||||||||||||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
Unrealized mark-to-market valuations on energy-related derivatives(a) | 12,292 | (4,896 | ) | — | 2,122 | — | (13 | ) | 9,505 | ||||||||||||||||||||||||||
Storage optimization program(b) | (2,968 | ) | — | — | — | — | — | (2,968 | ) | ||||||||||||||||||||||||||
DC weather impact(c) | (1,859 | ) | — | — | — | — | — | (1,859 | ) | ||||||||||||||||||||||||||
Distributed generation asset related investment tax credits(d) | — | — | (1,670 | ) | — | — | — | (1,670 | ) | ||||||||||||||||||||||||||
Change in measured value of inventory(e) | — | — | — | 7,415 | — | — | 7,415 | ||||||||||||||||||||||||||||
Merger related costs(f) | — | — | — | — | (136 | ) | — | (136 | ) | ||||||||||||||||||||||||||
Total non-GAAP adjustments | $ | 7,465 | $ | (4,896 | ) | $ | (1,670 | ) | $ | 9,537 | $ | (136 | ) | $ | (13 | ) | $ | 10,287 | |||||||||||||||||
EBIT | $ | 151,069 | $ | 15,104 | $ | 3,562 | $ | 7,306 | $ | (2,185 | ) | $ | (4,116 | ) | $ | 170,740 | |||||||||||||||||||
Three Months Ended |
|||||||||||||||||||||||||||||||||||
(In thousands) |
Regulated
Utility |
Retail Energy-
Marketing |
Commercial
Energy Systems |
Midstream
Energy Services |
Other
Activities |
Eliminations |
Total | ||||||||||||||||||||||||||||
Adjusted EBIT | $ | 150,223 | $ | 13,149 | $ | 10,312 | $ | (1,252 | ) | $ | (1,061 | ) | $ | (1,412 | ) | $ | 169,959 | ||||||||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
Unrealized mark-to-market valuations on energy-related derivatives(a) | 21,050 | (3,894 | ) | — | 23,658 | — | (60 | ) | 40,754 | ||||||||||||||||||||||||||
Storage optimization program (b) | 866 | — | — | — | — | — | 866 | ||||||||||||||||||||||||||||
DC weather impact(c) | (6,968 | ) | — | — | — | — | — | (6,968 | ) | ||||||||||||||||||||||||||
Distributed generation asset related investment tax credits(d) | — | — | (1,765 | ) | — | — | — | (1,765 | ) | ||||||||||||||||||||||||||
Change in measured value of inventory(e) | — | — | — | 19,587 | — | — | 19,587 | ||||||||||||||||||||||||||||
Merger related costs (f) | — | — | — | — | (11,905 | ) | — | (11,905 | ) | ||||||||||||||||||||||||||
Third-party guarantee (g) | — | — | — | — | (2,101 | ) | — | (2,101 | ) | ||||||||||||||||||||||||||
Total non-GAAP adjustments | $ | 14,948 | $ | (3,894 | ) | $ | (1,765 | ) | $ | 43,245 | $ | (14,006 | ) | $ | (60 | ) | $ | 38,468 | |||||||||||||||||
EBIT | $ | 165,171 | $ | 9,255 | $ | 8,547 | $ | 41,993 | $ | (15,067 | ) | $ | (1,472 | ) | $ | 208,427 | |||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures (Unaudited) |
|||||||||||||||||||||||||||||||||||
Six Months Ended |
|||||||||||||||||||||||||||||||||||
(In thousands) |
Regulated
Utility |
Retail Energy-
Marketing |
Commercial
Energy Systems |
Midstream
Energy Services |
Other
Activities |
Eliminations |
Total | ||||||||||||||||||||||||||||
Adjusted EBIT | $ | 244,954 | $ | 26,534 | $ | 12,546 | $ | 26,226 | $ | (5,563 | ) | $ | (2,436 | ) | $ | 302,261 | |||||||||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
Unrealized mark-to-market valuations on energy-related derivatives(a) | 10,846 | (7,688 | ) | — | 2,243 | — | 9 | 5,410 | |||||||||||||||||||||||||||
Storage optimization program(b) | (3,429 | ) | — | — | — | — | — | (3,429 | ) | ||||||||||||||||||||||||||
DC weather impact(c) | (2,937 | ) | — | — | — | — | — | (2,937 | ) | ||||||||||||||||||||||||||
Distributed generation asset related investment tax credits(d) | — | — | (3,337 | ) | — | — | — | (3,337 | ) | ||||||||||||||||||||||||||
Change in measured value of inventory(e) | — | — | — | 1,022 | — | — | 1,022 | ||||||||||||||||||||||||||||
Merger related costs(f) | — | — | — | — | (793 | ) | — | (793 | ) | ||||||||||||||||||||||||||
Total non-GAAP adjustments | $ | 4,480 | $ | (7,688 | ) | $ | (3,337 | ) | $ | 3,265 | $ | (793 | ) | $ | 9 | $ | (4,064 | ) | |||||||||||||||||
EBIT | $ | 249,434 | $ | 18,846 | $ | 9,209 | $ | 29,491 | $ | (6,356 | ) | $ | (2,427 | ) | $ | 298,197 | |||||||||||||||||||
Six Months Ended |
|||||||||||||||||||||||||||||||||||
(In thousands) |
Regulated
Utility |
Retail Energy-
Marketing |
Commercial
Energy Systems |
Midstream
Energy Services |
Other
Activities |
Eliminations |
Total | ||||||||||||||||||||||||||||
Adjusted EBIT | $ | 241,603 | $ | 23,044 | $ | 16,384 | $ | 1,409 | $ | (2,259 | ) | $ | 93 | $ | 280,274 | ||||||||||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
Unrealized mark-to-market valuations on energy-related derivatives(a) | 36,486 | 15,396 | — | 13,981 | — | (457 | ) | 65,406 | |||||||||||||||||||||||||||
Storage optimization program (b) | 202 | — | — | — | — | — | 202 | ||||||||||||||||||||||||||||
DC weather impact(c) | (10,403 | ) | — | — | — | — | — | (10,403 | ) | ||||||||||||||||||||||||||
Distributed generation asset related investment tax credits(d) | — | — | (3,174 | ) | — | — | — | (3,174 | ) | ||||||||||||||||||||||||||
Change in measured value of inventory(e) | — | — | — | (1,881 | ) | — | — | (1,881 | ) | ||||||||||||||||||||||||||
Merger related costs (f) | — | — | — | — | (11,905 | ) | — | (11,905 | ) | ||||||||||||||||||||||||||
Third-party guarantee (g) | — | — | — | — | (2,101 | ) | — | (2,101 | ) | ||||||||||||||||||||||||||
Total non-GAAP adjustments | $ | 26,285 | $ | 15,396 | $ | (3,174 | ) | $ | 12,100 | $ | (14,006 | ) | $ | (457 | ) | $ | 36,144 | ||||||||||||||||||
EBIT | $ | 267,888 | $ | 38,440 | $ | 13,210 | $ | 13,509 | $ | (16,265 | ) | $ | (364 | ) | $ | 316,418 | |||||||||||||||||||
Footnotes: |
||
(a) |
Adjustments to eliminate unrealized mark-to-market gains (losses) for our energy-related derivatives for our regulated utility and retail energy-marketing operations as well as certain derivatives related to the optimization of transportation capacity for the midstream energy services segment. With the exception of certain transactions related to the optimization of system capacity assets as discussed in footnote (b) below, when these derivatives settle, the realized economic impact is reflected in our non-GAAP results, as we are only removing interim unrealized mark-to-market amounts. |
|
(b) |
Adjustments to shift the timing of storage optimization margins for the regulated utility segment from the periods recognized for GAAP purposes to the periods in which such margins are recognized for regulatory sharing purposes. In addition, lower-of-cost or market adjustments related to system and non-system storage optimization are eliminated for non-GAAP reporting because the margins will be recognized for regulatory purposes when the withdrawals are made at the unadjusted historical cost of storage inventory. |
|
(c) |
Eliminates the estimated financial effects of warm or cold
weather in the |
|
(d) |
To reclassify the amortization of deferred investment tax credits from income taxes to operating income for the commercial energy systems segment. These credits are a key component of the operating success of this segment and therefore are included within adjusted EBIT to help management and investors better assess the segment's performance. |
|
(e) |
For our midstream energy services segment, adjustments to reflect storage inventory at market or at a value based on the price used to value the physical forward sales contract that is economically hedging the storage inventory. Adjusting our storage optimization inventory in this fashion better aligns the settlement of both our physical and financial transactions and allows investors and management to better analyze the results of our non-utility asset optimization strategies. Additionally, this adjustment also includes the net effect of certain sharing mechanisms on the difference between the changes in our non-GAAP storage inventory valuations and the unrealized gains and losses on derivatives not subject to non-GAAP adjustments. |
|
(f) |
Adjustment to eliminate external costs associated with the proposed merger with AltaGas. |
|
(g) |
Guarantee on behalf of a third party associated with a solar investment. |
|
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