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Diversified utility, NiSource Inc. (NI - Analyst Report) posted net operating earnings of 69 cents per share in the first quarter of 2013, 2 cents or 2.8% lower than the Zacks Consensus Estimate. Earnings were also 9.2% lower than the year-ago quarter.

NiSource recorded GAAP earnings of 69 cents per share compared with 68 cents per share in the prior year.

Total Revenue

Gross revenue during the quarter increased 5.4% year over year to $1.78 billion from $1.69 billion. The improvement was mainly due to higher contribution from Gas Transportation and Storage and Electric Operations. The Gas Distribution segment was a partial offset with sales declining year over year.

Highlights of the Release

Total operating expenses increased 8% year over year to $684.6 million. The increase was mainly due to a 13% increase in operating and maintenance expenses.

In the wake of higher operating expenses, operating income inched down 1.4% to $427.9 million.

The company continues to work on its capital expenditure programs, which are aimed at ensuring the safety and reliability of its services.  Besides using its cash flow, NiSource issued long-term debts of $750 million at favorable rates to fund its capital programs.

Financial Position

As of Mar 31, 2013, NiSource had cash and cash equivalents of $101.4 million, up from $36.3 million as of Dec 31, 2012.

Long-term debts (excluding debts due within a year) as of Mar 31, 2013 were $6,803.9 million versus $6,819.1 million as of Dec 31, 2012.

Cash flow from operating activities in the first quarter of 2013 decreased to $449.1 million from $480 million in the prior-year quarter. The company distributed dividend worth $74.7 million in the reported quarter versus $65.1 million in the prior-year period.

2013 Guidance

NiSource reiterated its 2013 operating earnings per share guidance in the range of $1.50 to $1.60. The company did not provide GAAP figures but indicated that 2013 numbers would differ from operating earnings due to unpredictable weather and other factors affecting comparability.

Other Company Releases

CMS Energy Corp. (CMS - Analyst Report) reported earnings of 53 cents per share in the first quarter of 2013, surpassing the Zacks Consensus Estimate of 46 cents by 15.22%

Empire District Electric Co. (EDE - Snapshot Report) announced first-quarter 2013 operating earnings of 30 cents per share, 11.11% above the Zacks Consensus Estimate of 27 cents.

Northwestern Corporation (NWE - Snapshot Report) announced first-quarter 2013 operating earnings of $1.01 per share, 8.6% above the Zacks Consensus Estimate of 93 cents.

Our View

Nisource continues to work on its growth objectives the outcome of which will only be apparent in the forthcoming periods.

We noticed an expansion in the gas and electric customer base, which was primarily due to an increase in residential customers. However, electric sales volume contracted primarily due to lower sales to industrial customers.

Merrillville, Ind. based NiSource is an energy holding company founded in 1912. Along with its subsidiaries, the company provides natural gas, electricity and other products and services in the U.S. The company currently has a Zacks Rank #3 (Hold).

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