Energy utility TECO Energy Inc. (TE) announced its fourth-quarter 2011 operating earnings of 25 cents per share, which missed the Zacks Consensus Estimate of 28 cents. The results of the company were higher than 23 cents reported in the year-ago quarter.
Teco Energy’s operating earnings for 2011 were $1.27 per share compared with $1.28 per share reported in 2010. The results fell short of the Zacks Consensus Estimate by 4 cents.
The GAAP and operating earnings per share during the reported quarter and the fiscal year were the same with no charges or gains to cause disparity.
Total Revenue
Total revenue at TECO Energy in the fourth quarter was $750.2 million versus $775.0 million in the year-ago period, reflecting a decline of 3.2%. The year-over-year revenue decline was mainly due to a lower contribution from its regulated business, which was marginally offset by 15.4% growth in its unregulated operations.
Reported quarter revenue missed the Zacks Consensus Estimate of $865 million.
Teco Energy’s total revenue for 2011 was $3,343.4 million versus $3,487.9 million reported in the prior fiscal year, reflecting a decline of 4.1%.
Fiscal year 2011 revenue also fell below the Zacks expectation of $3,513 million.
Operational Update
Total expenses, during both the quarter and the fiscal year, declined year over year, on lower input costs. However, mining related costs moved up 12.4% in the quarter and 5.2% in the fiscal year.
Despite a decrease in revenue during the quarter, the decline in cost more than offset the impact of the fall in top line. This resulted in an operating income growth of 1.6% to $130.3 million from $128.3 million in the year-ago quarter.
Interest charges during the fiscal year decreased to $205.7 million from $232.4 million in 2010 owing to lower long-term debt levels.
During the fiscal year electric sales declined by 6.6% from the 2010 level, as sales declined across all consumer channels. Despite a 0.7% growth in the customer base, the moderate weather compared to the previous fiscal impacted the results unfavorably.
Full-year gas sales were also impacted by the weather. Despite a growth in the customer base by 0.8% from the prior-year level, sales at all customer segments got a beating year over year, with power generation being the only exception.
Financial Update
Cash and cash equivalents of the company as of December 31, 2011, were $44 million versus $67.5 million as of December 31, 2010.
Capital expenditure during the year was $454.1 million, reflecting a reduction of $35.6 million from the 2010 level of $489.7 million.
Long-term debt at the company decreased marginally from the year-ago level. Long-term debts as of December 31, 2011, were $2.68 billion versus $3.14 billion as of December 31, 2010.
Dividend
The company has been consistently paying dividends to shareholders. The company announced a quarterly dividend of 22 cents, which reflects an increase of 0.075 cents from the prior quarterly rate. This hiked quarterly dividend will be paid on February 28, 2012, to shareholders of record as on February 13, 2012.
The new annualized dividend rate will be 88 cents per share reflecting a growth of 3.5% from the previous annualized rate of 85 cents per share.
Guidance
TECO Energy expects earnings per share for 2012 to range between $1.30 and $1.40.
TECO Coal has contracted more than 90% of its expected 2012 sales of 7.0-7.3 million tons, resulting in an average contracted selling price across all products of $96 per ton. The cost of production per ton of coal is expected between $83 and $87 during 2012. The estimated year-over-year increase in production costs is attributable to higher royalty payments and severance taxes.
At the Peer
NextEra Energy Inc. (NEE), which competes with Teco Energy, announced operating earnings for the fourth quarter 2011 of 93 cents per share versus 80 cents per share in the year-ago quarter. NextEra was ahead of the market optimism, booking earnings a penny higher than the Zacks Consensus of 92 cents per share.
The 2011 operating earnings of the company were $4.39 per share compared with $4.30 per share reported in 2010. The results of the company were in line with the Zacks Consensus Estimate.
Teco Energy currently retains a Zacks #5 Rank, which translates in to a short-term Strong Sell rating.
Based in Tampa, Florida, TECO Energy is involved in the generation, purchase, transmission, distribution, and sale of electric energy in Florida.
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