Energy holding company NiSource Inc. (NI) reported Monday a 45% year-over-year drop in profit for the fourth quarter as higher net revenues from Gas Distribution and Gas Transmission & Storage businesses were more than offset by increased pension expense as well as reduced electric demand amid the economic downturn. Non-GAAP operating earnings per share declined 24%, and missed analysts' expectations by a penny. The company also provided earnings forecast for the full-year 2010, saying it may beat consensus estimate.
NiSource is engaged in natural gas transmission, storage and distribution, as well as electric generation, transmission and distribution. NiSource's operating companies deliver energy to 3.8 million customers located within the high-demand energy corridor stretching from the Gulf Coast through the Midwest to New England.
Energy was one of the worst-hit sectors by the economic downturn, which forced consumers to curtail their power consumption and save money. The credit crisis also has affected energy companies' investment decisions.
According to the Energy Information Administration, total U.S. electricity consumption fell 3.6% in the 2009, but is estimated to grow by 1.9% in 2010, reflecting projected increase in residential and commercial sector electricity sales as assumed summer air conditioning use this year returns to normal after the mild summer in 2009. Improving economic conditions would help drive growth in electricity sales to the industrial sector over the next two years, with projected consumption of electricity in this sector growing by 0.9% in 2010 and 2.0% 2011.
In a statement, president and chief executive officer, Robert Skaggs, Jr. said. "Our team's exceptional execution enabled NiSource to not only weather the storm during 2009, but to emerge as a stronger, more robust company. Despite unprecedented dislocations in the financial markets and a very challenging economic environment - particularly in our Northern Indiana markets - our company's underlying business performance remained strong, our liquidity position improved significantly, and we produced tangible results from our core strategy to build shareholder value and deliver long-term, sustainable earnings growth."
Fourth Quarter Results
The Merrillville, Indiana-based Fortune 500 company reported net income of $89.5 million or $0.32 per share for the fourth quarter, lower than $162.0 million or $0.59 per share in the prior-year quarter.
Income from continuing operations for the quarter dropped to $88.5 million or $0.32 per share from $127.5 million or $0.46 per share in the year-ago quarter.
Non-GAAP net operating earnings were $98.9 million or $0.35 per share, down from $126.2 million or $0.46 per share in the comparable quarter a year ago. On average, seven analysts polled by Thomson Reuters expected the company to report earnings of $0.36 per share for the quarter. Analysts' estimates typically exclude special items.
Total consolidated gross revenues for the quarter dropped to $1.68 billion from $2.39 billion in the same quarter last year. Three Wall Street analysts had a consensus revenue estimate of $1.48 billion for the quarter.
Total net revenues, excluding cost of sales, for the quarter increased to $927.0 million from $917.0 million in the prior-year quarter.
Peer Performance
Among others in the sector, Richmond, Virginia-based Dominion Resources, Inc. (D) reported last week a decline in fourth-quarter earnings, on a substantial drop in revenues. Earnings were $165 million or $0.28 per share, compared to $348 million or $0.60 per share last year. Quarterly operating revenues declined to $3.26 billion from $4.17 billion in the prior-year quarter.
Another peer, Greensburg, Pennsylvania-based Allegheny Energy, Inc. (AYE) is slated to announce its fourth-quarter results on February 5. Analysts are of the view that Allegheny will report earnings of $0.50 per share on revenues of $912.70 million.
Segmental Details
Gas distribution revenues for the fourth quarter dropped to $840.1 million from $1.47 billion in the year-ago quarter. Segment operating earnings was $114.5 million, down from $134.6 million in the previous year.
Gas transportation and storage revenues were $340.8 million, up from $322.3 million in the same quarter last year. Operating earnings for the segment were flat with the year-ago quarter at $116.6 million.
Electric revenues decreased to $311.0 million from last year's $306.2 million. Operating earnings for the segment declined to $35.6 million from $47.9 million in the year-ago quarter.
Consolidated operating income for the fourth quarter declined to $247.5 million from $299.3 million in the year-ago quarter. Total consolidated operating expenses for NiSource was $685.9 million, up from $623.0 million in the prior-year quarter.
Full-Year Highlights
For fiscal 2009, the company posted net income of $217.7 million or $0.79 per share, sharply higher than $79 million or $0.29 per share reported in fiscal 2008. Income from continuing operations for the year dropped $231.2 million or $0.84 per share from $370.6 million or $1.35 per share in the previous year.
Non-GAAP net operating earnings for the year was $295.3 million or $1.07 per share, down from $349.4 million or $1.28 per share last year. Analysts expected the company to report earnings of %1.06 per share for fiscal 2009.
Total gross net revenues for the full year dropped $6.65 billion from $8.88 billion in the prior year. The Street was looking for full-year 2009 revenues of $7.75 billion. Total gross net revenues, excluding cost of sales, totaled $3.33 billion, up from $3.25 billion in the year-ago period.
Looking Ahead.......
"Our key business priorities for this year are to advance the next wave of Marcellus Shale growth projects in our NGT&S business, continue to execute our infrastructure replacement programs and related regulatory initiatives in the Gas Distribution segment, and complete the NIPSCO repositioning process," Skaggs added.
The company also noted that it would continue to aggressively focus on its core business strategy of synchronizing infrastructure investment with appropriate regulatory and commercial activities.
Providing initial guidance for the full-year 2010, the company said it expects non-GAAP net operating earnings in a range of $1.10 to $1.20 per share. Analysts expect the company to report earnings of $1.10 per share for fiscal 2010.
Meanwhile, the company also projects earnings to grow by 3% to 5% on a long-term basis. Capital expenditure for the year are expected at about $900 million, up about $100 million, or 12.5% from fiscal 2009.
Stock Quote
NI closed Friday's regular trading session at $14.25, down $0.14 on a volume of 3.47 million shares, higher than the three-month average volume of 2.96 million shares. In the past 52-week period, the stock has been trading in a range of $7.79 to $15.82.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.