DTE Energy Co. (DTE) announced its first-quarter 2011 operating earnings of $1.11 per share, which fell short of the Zacks Consensus Estimate by a dime. Earnings in the quarter were also lower than $1.38 per share reported in the year-ago period.
The year-over-year decline in operating earnings during the first quarter of 2011 was due to lackluster results at Energy Trading, Power and Industrial Projects, and Corporate and Other.
GAAP earnings in the quarter were $1.04 per share versus $1.38 per share in the first quarter of 2010. The 7 cent difference between GAAP and operating earnings was due to a one-time adjustment at its Electric Utility segment.
Total Revenue
Total revenue at DTE Energy at the end of the first quarter was $2,431.0 million versus $2,453.0 million in the year-ago period, reflecting a decline of 0.9%.
Reported quarter revenue however surpassed the Zacks Consensus Estimate of $2,033 million.
Segment Update
Electric Utility: Segment earnings during first quarter 2011 were $97 million or 57 cents per share, up from $91 million or 55 cents per share in the prior-year quarter.
Gas Utility: Earnings from this segment during the quarter under review were $83 million or 49 cents per share, a slight increase from $79 million or 48 cents per share reported in the prior-year quarter.
Gas Storage and Pipelines: Segment profit increased a mere $1 million to $15 million or 9 cents per share from $14 million or 8 cents per share in the year-ago quarter.
Unconventional Gas Production: Segment loss narrowed marginally to $2 million or 1 cent per share from a loss of $3 million or 2 cents per share in the first quarter of 2010.
Power and Industrial Projects: The segment posted a profit of $10 million or 6 cents per share, down from $18 million or 11 cents per share reported in the comparable quarter, a year ago.
Energy Trading: The segment posted a profit of $2 million or 1 cent per share, which was significantly lower than the profit of $38 million or 23 cents per share in the prior-year quarter.
Corporate and Other: Net loss in the quarter was $17 million or 10 cents per share, compared with a loss of $8 million or 5 cents per share in the prior-year quarter.
Quarterly Highlights
The company saw a 3% year-over-year rise in total operating expenses during the quarter. At the same time, as a percentage of total revenue, total expenses swelled by 320 basis points over the prior-year quarter. The increase was aggravated by steeper input costs that rose 7.6% year over year.
Consequently, the higher operating expenses took a toll on the operating income of the company. Operating income during the reported quarter decreased by 17.4% to $390.0 million from $472.0 million in the first quarter of 2010.
Interest charges during the quarter dropped 10% to $126.0 million from $140.0 million in the first quarter of 2010.
A Sneak Look into 2011
DTE Energy reiterated its operating earnings guidance for 2011 in a range of $3.40 to $3.70 per share.
Our View
Despite the mixed results from DTE Energy, during the quarter, we are somewhat heartened by the company’s operational efficiency. The company was able to trim its operation and maintenance expenses by 3.2% year over year.
DTE Energy currently retains a Zacks #3 Rank (short-term Hold rating). We provide a long-term Neutral rating on the stock. The company competes with CMS Energy Corp. (CMS) and Wisconsin Energy Corp. (WEC).
Based in Detroit, Michigan, DTE Energy operates as an electric and natural gas utility company. The company is also involved in non-utility operations.
CMS ENERGY (CMS): Free Stock Analysis Report
DTE ENERGY CO (DTE): Free Stock Analysis Report
WISC ENERGY CP (WEC): Free Stock Analysis Report
Zacks Investment Research
