Energy company Mirant Corp. (MIR) Friday reported a surge in third-quarter profit, supported by unrealized hedging gains. On an adjusted basis, the company posted a decline in earnings for the third quarter. However, adjusted earnings per share rose from last year on reduced share count and surpassed analysts' estimates. Further, the company announced its decision to begin open market share repurchases for $200 million.
The company's third-quarter net income was $1.61 billion, or $8.69 per share, compared with $775 million, or $2.74 per share, last year. For the sequentially preceding quarter, the company's net loss reached $783 million, or $3.90 per share.
In the prior-year quarter, the company reported net income from discontinuing operations of $133 million, or $0.47 per share. On a continuing operations basis, income for the year-ago quarter was $642 million, or $2.27 per share.
Results for current year third quarter included unrealized gains, principally on hedges, of $1.395 billion, compared with unrealized gains of $13 million last year. Prior-year's results also included a $362 million gain related to the Pepco settlement.
Excluding one-time items, Mirant reported net income of $216 million, or $1.17 per share, in comparison with $323 million, or $1.14 per share, last year.
On average, four analysts polled by First Call/Thomson Financial expected the company to earn $1.08 per share in the quarter.
The company's adjusted earnings before interest, tax, depreciation and amortization, or EBITDA, from continuing operations fell to $278 million from $323 million in the previous year.
Among Mirant's peers, electric utility firm AES Corp. (AES) on Thursday reported a 39% upside in its third-quarter profit, helped by higher pricing across all regions and increased demand in Latin America. Quarterly revenues were up 25%.
Another rival, Calpine Corp. (CPN) today reported a slide in its third-quarter net income despite 37% revenue growth, hurt by reorganization related charges. Meanwhile, Reliant Energy Inc. (RRI) has posted a net loss for the third quarter, compared with a profit in the previous year. The company's revenues were higher than the previous year.
For the nine-month period, Mirant earned $672 million, or $3.10 per share, compared with $1.98 billion, or $6.99 per share, a year ago. Income from continuing operations was $621 million, or $2.86 per share, up from $426 million, or $1.50 per share, in the prior-year period. Results for 2008 included unrealized gains, principally on hedges, of $218 million compared with unrealized losses of $383 million for 2007.
However, adjusted net income for the nine-month period was $440 million, or $2.03 per share, down from $614 million, or $2.17 per share, in the same period last year.
Mirant also stated that it is resuming its program of returning cash to stockholders and will now begin open market purchases for an additional $200 million. The company had previously returned $3.856 billion between November 2007 and September 2008.
Going ahead, Mirant lowered its 2008 adjusted EBITDA guidance to $763 million from $877 million, and 2009 adjusted EBITDA guidance to $981 million from $1.096 billion.
MIR is trading at $15.77, up $0.08, on a volume of 338,055 shares.
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