Earnings Labs

Dominion Energy, Inc. (D)

Q1 2007 Earnings Call· Wed, May 2, 2007

$63.74

+1.98%

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Same-Day

-0.98%

1 Week

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1 Month

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Transcript

Operator

Operator

Welcome to Dominion’s first quarter conference call. We now have Mr. Tom Chewning, Dominion’s Chief Financial Officer. Please be aware that each of your lines is in a listen only mode. At the conclusion of Mr. Chewning’s prepared remarks we will open the floor for questions. At that time, instructions will be given as the procedure to follow should you want to ask a question. Before introducing Tom Chewning, I will turn the conference over to Joe O’Hare, Director of Investor Relations. Joe O’Hare: Thank you Lindsay, good morning. Welcome to Dominion’s first quarter earnings conference call. This morning we published several supplemental schedules on our website. We ask that you refer to those exhibits for certain historical quantitative results. From time to time during this call, we will refer to certain schedules included in our quarterly earnings release or to pages from our first quarter earnings release kit. Both of which were posted this morning to Dominion’s website. Our website address is www.dom.com/investors/ir.jsp. Let me start by providing the usual cautionary language. The earnings release and other matters that may be discussed on the call today contain forward looking statements and estimates that are subject to various risks and uncertainties. Please refer to our SEC filings including our most recent annual report on form 10K and quarterly report on form 10Q for a discussion of factors that may cause results to differ from managers’ projections, estimates, forecasts, and expectations. Also on this call, we will discuss some measures on the company’s performance that differs from those recognized by GAAP. You will find a reconciliation of these non-GAAP measures to GAAP on our investor relations website under GAAP reconciliation. I now will turn the call over to our CFO, Tom Chewning. Tom?

Tom Chewning

CFO

Thank you Joe and good morning. Joining me this morning is Tom Farrell, President and CEO and other members of our management team. This morning, I will review our first quarter earnings results and how those results reflect the strength of the core businesses that will remain after we success reposition the company. I will then update you on our cash flow credit metrics, liquidity, and hedge positions. Tom Farrell will comment on operational achievements in our business units and the electric utility restructuring legislation recently passed in Virginia, our recent application to reset the Virginia factor, the status of the peoples that hope (inaudible), progress in divesting our non-Appalachia assets and our outlook for future earnings quality business risks growth, and dividend policy. I will conclude by pointing you to an alternative to the 2008 earnings problem we provide on January 31st, and updating you as to when you can expect additional forecasts involving the sales. Dominion produced operating earnings of $1.50 per share in the first quarter of 2007 compared to $1.64 per share last year. Operating earnings per share at delivery, energy, and generation, increased 9% as compared to last year, strongly affirming the earnings power and positive outlook for the new Dominion. Customer growth and a return to normal weather in 2007 benefited utility revenue, but brought along with it higher fuel expenses. These files effectively offset each other. On a GAAP basis, earnings were $1.29 per share for the first quarter of 2007, compared to $1.53 per share last year. The major differences between first quarter 2007 GAAP and operating earnings, relate to asset divesture activity including sales and charges related to our E&P asset divestitures. For all these transactions, GAAP accounting convention requires that we record certain expenses and charges prior to closing, while…

Tom Farrell

President and CEO

Good morning. In our January earnings call, we discussed the importance of safety and operational excellence in order for us to produce the steady and reliable earnings growth we and our fellow shareholders expect. Our first quarter results reflect the strength of the new Dominion. Initiatives under way will insure that we successfully build upon this foundation to deliver strong long term earnings per share and dividend growth. Dominion Retail is again off to a good start, surpassing its net income of last year’s first quarter by nearly 40%, and adding more than twice the number of new customers compared to the same period of last year. During the first quarter, Dominion Energy tied its sendout record of 6.3 billion cubic feet. During the month of February, Dominion Energy also experienced a record storage withdrawal of 78 bcf. This represents the largest withdrawal of any February on record. While these measures show the heavy utilization of our system, we have now completed seven winter seasons in a row without a single firm service interruption. Dominion’s Generation’s units continue to excel in efficiency and safety. Our merchant cold fleet had an equivalent availability factor in excess of 90% this quarter while our nuclear fleet had a capacity factor greater than 95%. Also (inaudible) and three New England plants, Manchester, Salem, and Braden Point, had superior safety performances in the first quarter with zero accidents to report. As we enter a new regulatory year in Virginia, operational strength and a focus on safety will serve both our customers and our shareholders well. Virginia’s new hybrid regulatory model will provide Dominion with a competitive return on equity plus incentives not only to achieve continued high levels of customer service but to invest in construction of new electric generation. We’ll have more on that…