Integrys Slightly Above Estimates

Integrys Energy Group Inc. (TEG - Snapshot Report) reported adjusted earnings of 35 cents per share, marginally beating the Zacks Consensus Estimate of 33 cents but below 46 cents earned a year ago. The better-than-expected results were driven by a partial recovery of non-cash accounting losses recorded in prior periods, a decrease in bad debt expense, an increase in realized retail natural gas margins and wholesale electric margins at Integrys Energy business, offset by losses recorded at the Natural Gas Utility segment. 

Integrys Energy Services segment net income was $23.8 million versus a net loss of $94.5 million last year. Earnings for the Holding company and Other segment were $8.9 million (up 456%), and for the Regulated Electric Utility segment were $38.3 million (down 26%), while the Regulated Natural Gas Utility segment posted a loss of $19.9 million (versus a loss of $17.8 million). 

Net revenue in the quarter dropped 60% to $1.3 billion, primarily due to a sharp decline in non-regulated revenues as well as lower utility revenues. Non-regulated business revenues in the quarter were $754.0 million (down 70%) and utility revenues were $543.8 million (down 20%). 

As previously announced, Integrys has shifted its focus on the core utility businesses. Recently, the group’s subsidiary, Integrys Energy Services, announced plans to sell its wholesale natural gas marketing business in a two-part transaction, expected to be completed by early 2011. The first part of the deal is anticipated to close by the end of the fourth quarter. 

Integrys provided an adjusted earnings guidance range of $2.26−$2.38 per share, excluding the Integrys Energy Services earnings. For 2011, the first full year Integrys Energy Group expects to be a predominantly Midwestern regional regulated utility company, the projected earnings guidance range is $2.80−$3.20 per share. Integrys has reaffirmed its expected long-term EPS growth rate of 4% to 6% on an annualized basis, with 2011 as its base year.