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Pepco Holdings Inc. (POM - Analyst Report) reported fourth-quarter 2013 adjusted earnings of 24 cents per share, exceeding the Zacks Consensus Estimate by 3 cents. Earnings surged 41% year over year.

The bottom-line improvement was attributable to higher electric distribution revenues as increased infrastructure investment drove higher rates, as well as to decline in operation and maintenance expenses.

Including impairment charges related to Pepco Energy Services’ long-lived assets of 1 cent, net income came in at 23 cents, improving 53% year over year.

Behind the Headlines

Pepco Holdings' total revenue in the fourth quarter was $1.09 billion, up 3.3% from $1.06 billion in the year-ago period. Quarterly revenues, however, fell short of the Zacks Consensus Estimate of $1.465 billion.

Total operating expenses in the quarter declined 1.9% to $0.936 billion from $0.954 billion in the comparable year-ago period.

In the fourth quarter, Pepco Holdings' total electric sales at Power Delivery were up 0.8% to 11,085 gigawatt hours (GWh).

As of Dec 31, 2013, Delmarva Powers’ installation and activation of electric smart meters is underway in its Maryland service territory, and is already complete in its Delaware service territory.  Both installations and activation of smart meters in the District of Columbia and Maryland service zones are nearly completed.

Full-Year Highlights

For full-year 2013, Pepco Holdings' adjusted earnings came in at $1.14 per share on revenues of $4.67 billion.

While the top line inched up 0.9%, the bottom line increased 16.3%. Though earnings per share exceeded the Zacks Consensus Estimate of $1.12, revenues fell short of the expectation of $5.059 billion.

Net income of 45 cents per share plunged 53% year over year.

Financial Update

Pepco Holdings' cash and cash equivalents, including restricted cash, were $36 million as of Dec 31, 2013, up marginally from $35 million as of Dec 31, 2012. Long-term debts as of Dec 31, 2013 were $4.05 billion, up 11% from $3.6 billion as of Dec 31, 2012.


Pepco Holdings unveiled 2014 earnings outlook in the range of $1.12 to $1.27 per share.

Other Company Releases

DTE Energy Company (DTE - Analyst Report) reported fourth quarter 2013 operating earnings per share of $1.01, beating the Zacks Consensus Estimate by 4.1%. The bottom line also jumped 18.8% year over year.

NiSource Inc.’s (NI - Analyst Report) posted fourth-quarter 2013 net operating earnings from continuing operations of 47 cents per share, surpassing the Zacks Consensus Estimate by a penny.

Public Service Enterprise Group Inc. (PEG - Analyst Report) reported fourth-quarter operating earnings of 49 cents per share, beating the Zacks Consensus Estimate by 4.3% and the year-ago earnings figure by 19.5%.

Our View

Pepco Holdings currently retains a Zacks Rank #3 (Hold).

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