Dominion (D) Meets Q1 Earnings Estimates, '16 View Same

Dominion Resources Inc. (NYSE:D) reported second-quarter 2016 operating earnings of 71 cents per share, in line with the Zacks Consensus Estimate. Earnings were within the guidance range of 65 cents to 75 cents per share.

Operating earnings decreased 2.7% from 73 cents per share a year ago. The decline was due to the impact of a milder weather, a planned refueling outage at Millstone, and share dilution.

GAAP earnings were 73 cents per share compared with 70 cents per share in the year-ago quarter. The difference between GAAP and operating earnings in the reported quarter was due to one-time adjustments.

Total Revenues

Dominion’s operating revenues of $2,598 million in the second quarter missed the Zacks Consensus Estimate of $2,737 million by 5.1%. Revenues also decreased nearly 5.4% year over year.

Highlights of the Release

Total operating expenses in the quarter decreased 5.8% year over year to $1,818 million. The decline in total expenses was primarily due to a 49.5% drop in the cost of purchased gas and a nearly 6.8% decline in electric fuel and other energy-related expenses.

Interest and related charges in the reported quarter were $239 million, up 8.1% from the year-ago quarter.

Dominion Virginia Power recorded 0.96% year-over-year growth in its customer base. However, warmer temperatures led to a 5.8% year-over-year decline in electricity sales volume to 18,920 Gwh in the second quarter.

Segment Update

Dominion Virginia Power recorded a net income of $104 million or 17 cents per share in the second quarter of 2016, down 11.1% year over year.

Dominion Energy recorded earnings of $162 million or 26 cents per share, up 25.6% year over year.

Dominion Generation’s earnings were $171 million or 28 cents per share, down 31.6% year over year.

Corporate and Others swung to a profit of $4 million from a year-ago loss of $67 million or 11 cents per share.

Financial Update

Dominion exited second-quarter 2016 with cash and cash equivalents of $377 million, down from $607 million as of Dec 31 2015.

Long-term debt as of Jun 30, 2016, was $24.8 billion compared with $23.5 billion at the end of 2015.

Cash from operating activities in first-half 2016 was $2.01 billion, down 6.6% from $2.16 billion in the year-ago period.

Looking Ahead

Dominion expects to generate third-quarter 2016 operating earnings in a range of 95 cents to $1.10 per share. Earnings in the year-ago period were $1.03 per share.

Dominion reaffirmed the earnings guidance for 2016 in the range of $3.60 to $4.00 per share.

Other Company Releases

American Electric Power Co., Inc. (NYSE:AEP) reported second-quarter 2016 operating earnings of 95 cents per share, beating the Zacks Consensus Estimate of 90 cents by 5.6%.

DTE Energy Company (NYSE:DTE) reported second-quarter 2016 operating earnings per share of 98 cents, beating the Zacks Consensus Estimate of 90 cents by 8.9%.

NextEra Energy, Inc. (NYSE:NEE) reported second-quarter 2016 adjusted earnings of $1.67 per share, outpacing the Zacks Consensus Estimate of $1.58 by 5.7%.

Our View

Dominion’s earnings were in line with expectation. However, milder weather led to a year-over-year decline in earnings.

The company is nonetheless well poised thanks to its organic and inorganic growth strategies. Dominion’s 1,358-megawatt natural gas combined-cycle facility started operation in the second quarter ahead of expectation and within budget.

The company also started construction on the 1,588-megawatt Greensville County combined cycle power station, which will be able to provide power to nearly 400,000 customers.

In the reported quarter, Dominion served more customers across all customer classes than the year-ago quarter, the only exception being industrial. Overall, customer volume increased 0.9% year over year, which will definitely have a positive impact on Dominion’s performance in the future.

Dominion Resources holds a Zacks Rank #3 (Hold).

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