DTE Energy’s GAAP earnings for the second quarter of 2010 were 51 cents per share, in line with operating earnings recorded in the year-ago period. The difference between GAAP and operating earnings, during the second quarter, was owing to the following one-time items: a favorable impact of 1 cent from the Gas Utility segment and 14 cents from Corporate and Other, and a charge of 3 cents from non-utility operations.
Total Revenues
DTE Energy reported total revenues of $1,792 million for the second-quarter 2010 versus $1,688 million in the year-ago period, reflecting a growth of 6.2%.
Operational Update
Operating expenses of DTE Energy in the second-quarter 2010 were $1,536 million versus $1,473 million in the year-ago period. The spike in operating expenses resulted from a 5.4% year-over-year increase in inputs costs.
Operating income in the reported quarter was $256 million, manifesting a growth of 19% year over year.
Interest expenses in the second-quarter 2010 were $136 million versus $134 million in the year-ago quarter.
Net Income
Reported net income was $86 million versus $83 million a year ago.
Segment-wise Net Income
Electric Utility: Earnings per share of 51 cents at the segment were a penny higher than the year-ago period. The growth resulted primarily from the January 2010 rate order, which was partially pinned down by a 2009 property tax settlement and other one-time cost reductions in 2009.
Gas Utility: The segment reported a loss of 1 cent a share, narrower than a loss of 9 cents a share a year ago. The lower loss stemmed from a June 2010 rate order, but was partially offset by warmer weather.
Gas Storage and Pipelines: Operating earnings of 6 cents a share were level with the year-ago quarter.
Unconventional Gas Production: The operating loss from this segment during second-quarter 2010 was 1 cent a share, in line with the prior-year quarter.
Power and Industrial Projects: Driven by the benefits of higher coke sales and new projects, this segment reported operating earnings of 13 cents per share during the reported quarter versus an operating loss of 1 cent per share in the second-quarter 2009.
Energy Trading: This segment reported an operating loss of 15 cents per share versus operating earnings of 16 cents per share in the second quarter of 2009 due to weak performance and accounting timing.
Corporate and Other: The operating loss during the quarter was 14 cents per share compared with a loss of 5 cents in the second quarter of 2009. The year-over-year decline was driven primarily by one-time tax related items in 2009.
Dividend
The board of directors of DTE Energy raised the quarterly dividend rate of the company to 56 cents per share from the present level of 53 cents. The dividend will be payable on Oct 15, 2010, to shareholders of record on Sept 20, 2010.
Guidance
DTE Energy reaffirmed its earnings guidance for 2010 in the range of $3.45–$3.80 per share. The company aims to deliver long-term annual growth of 5% to 6%.
Our Take
We appreciate the consistent dividend payment exercise of the company to increase shareholder value. To add to it, DTE Energy also raised its quarterly dividend payment rate by 3 cents after three years, indicating a gradual improvement in its business.
We retain a short-term Zacks #2 Rank (Buy) and a longer-term Neutral recommendation on the stock.
Based in Detroit, Michigan, DTE Energy, together with its subsidiaries, operates as an electric and natural gas utility company in Michigan.
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