Back to top

Analyst Blog

TECO Energy, Inc. (TE - Analyst Report) announced fourth-quarter 2013 operating earnings of 21 cents per share in line with the Zacks Consensus Estimate. Earnings were however 2.6% below the year-ago figure. The decline reflects higher fuel costs and mining related expenses.
 
2013 earnings of 95 cents surpassed the Zacks consensus estimate of 94 cents by 1 cent. However, current year earnings showed a decline of 17.1% compared to 2012 earnings.
 
Operational Highlights
 
Total revenue at TECO Energy at the end of the fourth quarter was $0.68 billion, surpassing the Zacks Consensus Estimate of $0.67 billion by 2.4% and level with the year-ago figure. 
 
Reported revenues of $2.9 billion for 2013 marginally surpassed the Zacks Consensus Estimate of $2.8 billion by 0.2%. Revenues for 2013 declined by 4.8% compared to last year revenues.
 
Total operating expenses in fourth quarter increased 1.7% year over year to $0.59 billion.
 
Net Income in the reported quarter was $44.4 million down 2.6% from the comparable year ago period.
 
Segment Details
 
Tampa Electric: Segment net income was $39.8 million, up 9.9% from $36.2 million in the year-ago quarter. The upside can be attributed to base rate settlement, higher energy sales due to favourable weather and lower depreciation and interest expense. However, this growth was partially offset by higher operations and maintenance expenses.
 
Peoples Gas: Segment net income was up 7.0% year over year to $7.6 million due to customer growth of 1.2% in the reported quarter and a decline in depreciation and amortization expense. 
 
TECO Coal: Segment income was $6.7 million compared with $10.8 million during the prior-year period, depicting a decline of nearly 40.0%.
 
Financial Update
 
Cash and cash equivalents of the company as of Dec 31, 2013, were $185.2 million, down from $200.5 million as of Dec 31, 2012.
 
Capital expenditure in the reported quarter was $161.5 million, up from $149.9 million spent in the fourth quarter of 2012.  
 
Cash flow from operating activities during the fourth quarter was $152.5 million, up from $149.1 million during the prior-year period.
 
Guidance
 
TECO Energy provided consolidated earnings per share guidance for 2014 in the band of 95 cents to $1.05.
 
Peoples Gas maintains its expectation to earn above the mid-point of its allowed Return on Equity (ROE) range of 9.75% to 11.75%. The segment expects to benefit from moderate customer growth and customer switching from other sources of fuel to natural gas.
 
Tampa Electric expects to earn in the mid range of its authorized allowed ROE range of 9.25% to 11.25%. This primarily is expected to be driven by the September rate case settlement and base revenues on $50.0 million in 2014.
 
TECO Coal has 80% of its expected sales contracted for 2014 and another 15% committed but unpriced, and 5% unsold.
 
Upcoming Releases
 
Brookfield Infrastructure Partners L.P. (BIP - Snapshot Report) is slated to release its fourth-quarter 2013 earnings on Feb 5, 2014. The Zacks Consensus Estimate is 85 cents.
 
Black Hills Corporation (BKH - Snapshot Report) is slated to release its fourth-quarter 2013 earnings on Feb 6, 2014. The Zacks Consensus Estimate is 66 cents.
 
ALLETE, Inc. (ALE - Snapshot Report) is slated to release its fourth-quarter 2013 earnings on Feb 14, 2014. The Zacks Consensus Estimate is 84 cents.
 
Our View
 
In 2013, TECO Energy was able to register a 1.3% increase in natural gas customer and 1.8% increase in electricity customers from 2012 levels. We believe the ability of the company to expand its customer base will have positive impact on its performance going forward.
 
TECO Energy currently has a Zacks Rank #3 (Hold).
 

Please login to Zacks.com or register to post a comment.