Exhibit 99.1
FOR IMMEDIATE RELEASE | | CONTACT: 937-224-5940 |
DPL REPORTS FIRST QUARTER EARNINGS
– Earnings from Continuing Operations Improved Quarter over Quarter –
DAYTON, Ohio, May 3, 2006 — DPL Inc. (NYSE:DPL) today reported basic earnings per share from continuing operations of $0.43 per share for the first quarter of 2006 compared to $0.30 per share for the first quarter of 2005. Including discontinued operations, basic earnings per share for the first quarter of 2006 were $0.49 versus $0.61 for the first quarter of 2005. The $0.12 per share decrease was primarily related to the gain on the sale of the Company’s private equity funds in the first quarter of 2005. Income and gains from the private equity funds are not included in continuing operations.
“We delivered solid first quarter results from continuing operations,” stated Jim Mahoney, DPL President and Chief Executive Officer. “Improved plant availability, strong wholesale sales, reduced interest expense and the ability to recover our fuel costs all helped to offset lower retail sales due to milder weather.”
First Quarter Financial Results
Total revenues increased 11% to $341.1 million in the first quarter of 2006 compared to $307.1 million for the first quarter of 2005. This increase primarily reflects an increase in retail and wholesale electric market rates and wholesale electric volume partially offset by lower electric retail volume. Heating degree days were down 13% compared to the same period for 2005.
| | YTD Ended March 31, | |
$ in millions | | 2006 | | 2005 | | Variance | |
Electric Revenues - Retail | | $ | 283.3 | | $ | 263.9 | | $ | 19.4 | |
Electric Revenues – Wholesale | | 37.4 | | 25.1 | | 12.3 | |
Electric Revenues – RTO ancillary | | 17.7 | | 15.5 | | 2.2 | |
Other Revenues, Net of Fuel Costs | | 2.7 | | 2.6 | | 0.1 | |
Total Revenues | | $ | 341.1 | | $ | 307.1 | | $ | 34.0 | |
Fuel, which includes coal, gas, oil and emission allowance costs, increased by $5.7 million, or 7%, for the first quarter of 2006 compared to 2005 driven by increased output at our generating plants.
| | YTD Ended March 31, | |
$ in millions | | 2006 | | 2005 | | Variance | |
Coal | | $ | 81.5 | | $ | 73.0 | | $ | 8.5 | |
Gas | | 0.6 | | 1.5 | | (0.9 | ) |
Oil | | 1.3 | | 1.2 | | 0.1 | |
Emission Costs | | 0.8 | | 2.8 | | (2.0 | ) |
Total Fuel Costs | | $ | 84.2 | | $ | 78.5 | | $ | 5.7 | |
Purchased power costs decreased by $3.5 million, or 12%, in the first quarter of 2006 compared to the same period in 2005 largely as a result of higher plant availability, which reduced the need to purchase power to satisfy the electricity requirements of consumers.
| | YTD Ended March 31, | |
$ in millions | | 2006 | | 2005 | | Variance | |
Purchased Power | | $ | 13.2 | | $ | 18.0 | | $ | (4.8 | ) |
PJM Ancillaries | | 12.1 | | 10.8 | | 1.3 | |
Total Purchased Power | | $ | 25.3 | | $ | 28.8 | | $ | (3.5 | ) |
Gross margin (revenues minus fuel and purchased power) of $231.6 million for the first quarter of 2006 increased by $31.8 million from $199.8 million for the first quarter of 2005. As a percentage of total revenues, gross margin increased by 2.8 percentage points to 67.9%. This increase was driven by improved wholesale sales (pricing and volume) and the ability to recover additional retail fuel costs.
Operation and maintenance expense increased $8.7 million, or 16%, for the three months ended March 31, 2006 compared to the same period in 2005. The primary reasons for higher operation and maintenance expense were an increase of $2.7 million in legal costs, $2.6 million in service operations costs relating to electric line clearance and electric system overhead and substation costs, $2.4 million in mark-to-market adjustments for restricted stock units (RSUs), $1.7 million in injuries and damages reserves, and $1.3 million in low-income payment program costs. These increases were partially offset by a $2.8 million decrease in Directors’ and Officers’ liability insurance costs.
Interest expense decreased $12.8 million, or 33%, in the first quarter of 2006 compared to the first quarter of 2005 primarily due to debt reduction of approximately $450 million, which occurred in the third quarter of 2005.
Other income for the first quarter of 2006 decreased $11.7 million compared to the first quarter of 2005. This decrease is primarily attributable to the $12.4 million gain on the sale of emission allowances in the first quarter of 2005. There were no emission allowance sales in the first quarter of 2006.
Liquidity and Cash Flow
DPL’s cash and cash equivalents totaled $391.1 million and short-term investments available for sale totaled $126.8 million at March 31, 2006, compared to $595.8 million in cash and cash equivalents and $125.8 million in short-term investments at December 31, 2005. This decrease was primarily attributed to the stock buyback and increased capital expenditures.
Capital expenditures were $110.9 million for the first quarter of 2006 compared to $43.0 million for the first quarter of 2005. Capital additions are expected to approximate $365 million in 2006. DPL expects to finance its capital additions in 2006 with a combination of cash and short-term investments, internally generated funds and debt financing.
Stock Buyback
As of March 31, 2006, DPL has repurchased a total of 5.9 million shares at a cost of $161 million. The stock buyback is part of a previously announced $400 million program.
Future Outlook
The Company reaffirmed its full-year 2006 guidance of $1.35 to $1.50 basic earnings per share from continuing operations.
Conference Call/Webcast
DPL will conduct a webcast conference call with financial analysts Thursday, May 4, 2006, at 9:00 a.m. Eastern Time to discuss results. Interested parties, including investors and the media, can access the webcast conference call real-time on DPL’s website at www.dplinc.com in the Company’s investor relations section. Please go to the website at least fifteen minutes prior to the start of the event to register, download and install any necessary audio software to listen to the webcast. For those who are unable to listen to the live webcast, it will be archived on the DPL Inc. website.
About DPL
DPL Inc. (NYSE:DPL) is a regional electric energy and utility company. DPL’s principal subsidiaries include The Dayton Power and Light Company (DP&L); DPL Energy, LLC (DPLE); and DPL Energy Resources, Inc. (DPLER). DP&L, a regulated electric utility, provides service to over 500,000 retail customers in West Central Ohio; DPLE engages in the operation of merchant peaking generation facilities; and DPLER is a competitive retail electric supplier in Ohio, selling to major industrial and commercial customers. DPL, through its subsidiaries, owns and operates approximately 4,400 megawatts of generation capacity, of which 2,800 megawatts are low cost coal-fired units and 1,600 megawatts are natural gas and diesel peaking units. Further information can be found at www.dplinc.com.
Certain statements contained in this release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Matters presented which relate to events or developments that are expected to occur in the future, including management’s expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters constitute forward-looking statements. Forward-looking statements are based on management’s beliefs, assumptions and expectation of the Company’s future economic performance, taking into account the information currently available to management. These statements are not statements of historical fact. Such forward-looking statements are subject to risks and uncertainties and investors are cautioned that outcomes and results may vary materially from those projected due to many factors beyond DPL’s
control. Forward-looking statements speak only as of the date of the document in which they are made. We disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances on which the forward-looking statement is based.
DPL Inc.
FINANCIAL DATA
(Unaudited)
(in millions, except per share amounts)
| | Three Months Ended
March 31, | |
| | 2006 | | 2005 | |
Earnings Per Share of Common Stock - Basic: | | | | | |
—From Continuing Operations | | $ | 0.43 | | $ | 0.30 | |
—From Discontinued Operations | | $ | 0.06 | | $ | 0.31 | |
Total | | $ | 0.49 | | $ | 0.61 | |
| | | | | |
Earnings Per Share of Common Stock - Diluted: | | | | | |
—From Continuing Operations | | $ | 0.40 | | $ | 0.28 | |
—From Discontinued Operations | | $ | 0.06 | | $ | 0.30 | |
Total | | $ | 0.46 | | $ | 0.58 | |
| | | | | |
Earnings | | | | | |
—From Continuing Operations | | $ | 51.3 | | $ | 36.1 | |
—From Discontinued Operations | | $ | 7.6 | | $ | 37.6 | |
Total | | $ | 58.9 | | $ | 73.7 | |
| | | | | |
Average Number of Common Stocks Outstanding: | | | | | |
Basic | | 120.2 | | 120.4 | |
Diluted | | 129.3 | | 127.7 | |
DPL Inc.
CONSOLIDATED STATEMENTS OF RESULTS OF OPERATIONS
| | Three Months Ended
March 31, | |
$ in millions except per share amounts | | 2006 | | 2005 | |
| | (unaudited) | | | |
| | | | | |
Revenues | | $ | 341.1 | | $ | 307.1 | |
| | | | | |
Cost of revenues: | | | | | |
Fuel | | 84.2 | | 78.5 | |
Purchased power | | 25.3 | | 28.8 | |
| | | | | |
Total cost of revenues | | 109.5 | | 107.3 | |
| | | | | |
Gross margin | | 231.6 | | 199.8 | |
| | | | | |
Operating expenses: | | | | | |
Operation and maintenance | | 62.4 | | 53.7 | |
Depreciation and amortization | | 36.9 | | 35.9 | |
General taxes | | 28.0 | | 27.8 | |
Amortization of regulatory assets, net | | 1.1 | | 0.5 | |
| | | | | |
Total operating expenses | | 128.4 | | 117.9 | |
| | | | | |
Operating income | | 103.2 | | 81.9 | |
| | | | | |
Investment income | | 6.4 | | 6.1 | |
Interest expense | | (26.3 | ) | (39.1 | ) |
Other income (deductions) | | (0.3 | ) | 11.4 | |
| | | | | |
Earnings from continuing operations before income taxes | | 83.0 | | 60.3 | |
| | | | | |
Income tax expense | | 31.7 | | 24.2 | |
| | | | | |
Earnings from continuing operations | | 51.3 | | 36.1 | |
| | | | | |
Discontinued operations | | | | | |
(Loss) Income from discontinued operations | | (0.5 | ) | 35.0 | |
Gain on disposal of discontinued operations | | 13.2 | | 28.8 | |
Income tax expense | | 5.1 | | 26.2 | |
| | | | | |
Earnings from discontinued operations | | 7.6 | | 37.6 | |
| | | | | |
Net Income | | $ | 58.9 | | $ | 73.7 | |
| | | | | |
Average common shares outstanding (millions): | | | | | |
Basic | | 120.2 | | 120.4 | |
Diluted | | 129.3 | | 127.7 | |
| | | | | |
Basic earnings per share of common stock: | | | | | |
Earnings from continuing operations | | $ | 0.43 | | $ | 0.30 | |
Earnings from discontinued operations | | 0.06 | | 0.31 | |
Net income per basic common share | | $ | 0.49 | | $ | 0.61 | |
| | | | | |
Diluted earnings per share of common stock: | | | | | |
Earnings from continuing operations | | $ | 0.40 | | $ | 0.28 | |
Earnings from discontinued operations | | 0.06 | | 0.30 | |
Net income per diluted common share | | $ | 0.46 | | $ | 0.58 | |
| | | | | |
Dividends paid per share of common stock | | $ | 0.250 | | $ | 0.240 | |
| | | | | |
Book value per share | | $ | 7.97 | | $ | 8.82 | |
| | | | | |
DPL Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | Three Months Ended
March 31, | |
$ in millions | | 2006 | | 2005 | |
| | (unaudited) | | | |
| | | | | |
Cash flows from operating activities: | | | | | |
Net income | | $ | 58.9 | | $ | 73.7 | |
Less: Earnings from discontinued operations | | (7.6 | ) | (37.6 | ) |
Earnings from continuing operations | | 51.3 | | 36.1 | |
| | | | | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
Depreciation and amortization | | 36.9 | | 35.9 | |
Amortization of regulatory assets, net | | 1.1 | | 0.5 | |
Deferred income taxes | | (2.4 | ) | 14.7 | |
Captive insurance provision | | 1.2 | | 1.3 | |
Gain on sale of other investments | | (1.0 | ) | (4.2 | ) |
Changes in certain assets and liabilities | | (1.8 | ) | (27.7 | ) |
Deferred compensation assets | | 3.1 | | 3.5 | |
Deferred compensation obligations | | (1.3 | ) | 1.4 | |
Other | | 4.5 | | (1.7 | ) |
Net cash provided by operating activities | | 91.6 | | 59.8 | |
| | | | | |
Cash flows from investing activities: | | | | | |
Capital expenditures | | (110.9 | ) | (43.0 | ) |
Purchases of short-term investments and securities | | (494.8 | ) | (7.1 | ) |
Sales of short-term investments and securities | | 494.8 | | 25.1 | |
Cash flow from discontinued operations | | — | | 747.2 | |
Net cash provided by / (used for) investing activities | | (110.9 | ) | 722.2 | |
| | | | | |
Cash flows from financing activities: | | | | | |
Purchase of treasury shares | | (155.3 | ) | — | |
Exercise of stock options | | 0.2 | | — | |
Registration of warrants | | (0.1 | ) | — | |
Retirement of long-term debt | | — | | (6.0 | ) |
Retirement of preferred securities | | — | | (0.1 | ) |
Dividends paid on common stock | | (30.2 | ) | (28.5 | ) |
Net cash (used for) financing activities | | (185.4 | ) | (34.6 | ) |
| | | | | |
Cash and cash equivalents: | | | | | |
Net change | | (204.7 | ) | 747.4 | |
Balance at beginning of period | | 595.8 | | 202.1 | |
| | | | | |
Cash and cash equivalents at end of period | | $ | 391.1 | | $ | 949.5 | |
| | | | | |
Supplemental cash flow information: | | | | | |
Interest paid, net of capitalized interest | | $ | 32.6 | | $ | 54.2 | |
Income taxes paid, net | | $ | 22.4 | | $ | 6.7 | |
DPL Inc.
CONSOLIDATED BALANCE SHEETS
$ in millions | | At
March 31,
2006 | | At
December 31,
2005 | |
| | (unaudited) | | | |
| | | | | |
Assets | | | | | |
Property: | | | | | |
Property, plant and equipment | | $ | 4,762.1 | | $ | 4,667.7 | |
| | | | | |
Less: Accumulated depreciation and amortization | | (2,129.0 | ) | (2,094.8 | ) |
| | | | | |
Net property | | 2,633.1 | | 2,572.9 | |
| | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | 391.1 | | 595.8 | |
Short-term investments available for sale | | 126.8 | | 125.8 | |
Accounts receivable, less provision for uncollectible accounts of $1.0 and $1.0, respectively | | 201.7 | | 194.9 | |
Inventories, at average cost | | 87.6 | | 80.2 | |
Taxes applicable to subsequent years | | 34.4 | | 45.9 | |
Other current assets | | 21.8 | | 20.2 | |
Total current assets | | 863.4 | | 1,062.8 | |
| | | | | |
Other assets: | | | | | |
Regulatory assets | | 82.4 | | 83.8 | |
Other deferred assets | | 74.3 | | 72.2 | |
Total other assets | | 156.7 | | 156.0 | |
| | | | | |
Total Assets | | $ | 3,653.2 | | $ | 3,791.7 | |
| | | | | |
Capitalization and Liabilities | | | | | |
| | | | | |
Capitalization: | | | | | |
Common shareholders’ equity: | | | | | |
Common stock, at par value of $0.01 per share | | $ | 1.2 | | $ | 1.3 | |
Other paid-in capital, net of treasury stock | | — | | 25.1 | |
Warrants | | 50.0 | | 50.0 | |
Common stock held by employee plans | | (76.1 | ) | (86.1 | ) |
| | | | | |
Accumulated other comprehensive income | | (15.0 | ) | (14.2 | ) |
| | | | | |
Earnings reinvested in the business | | 964.6 | | 1,062.0 | |
| | | | | |
Total common shareholders’ equity | | 924.7 | | 1,038.1 | |
| | | | | |
Preferred stock | | 22.9 | | 22.9 | |
| | | | | |
Long-term debt | | | | | |
First mortgage bonds | | 683.0 | | 683.0 | |
Other long-term obligations | | 769.0 | | 994.1 | |
Total long-term debt | | 1,452.0 | | 1,677.1 | |
| | | | | |
Total capitalization | | 2,399.6 | | 2,738.1 | |
| | | | | |
Current liabilities: | | | | | |
Current portion - long-term debt | | 225.9 | | 0.9 | |
Accounts payable | | 145.9 | | 130.2 | |
Accrued taxes | | 148.6 | | 178.5 | |
Accrued interest | | 21.5 | | 28.9 | |
Other current liabilities | | 29.0 | | 31.1 | |
Total current liabilities | | 570.9 | | 369.6 | |
| | | | | |
Deferred credits: | | | | | |
Deferred taxes | | 333.4 | | 327.0 | |
Unamortized investment tax credit | | 45.7 | | 46.4 | |
Insurance and claims costs | | 25.5 | | 24.3 | |
Other deferred credits | | 278.1 | | 286.3 | |
Total deferred credits | | 682.7 | | 684.0 | |
| | | | | |
Total Capitalization and Liabilities | | $ | 3,653.2 | | $ | 3,791.7 | |
DPL Inc.
OPERATING STATISTICS
(unaudited)
| | Three Months Ended
March 31, | |
| | 2006 | | 2005 | |
| | | | | |
Sales (millions of kWh): | | | | | |
Residential | | 1,468 | | 1,535 | |
Commercial | | 893 | | 885 | |
Industrial | | 988 | | 1,010 | |
Other retail | | 338 | | 331 | |
Other miscellaneous revenues | | — | | — | |
Total retail | | 3,687 | | 3,761 | |
| | | | | |
Wholesale | | 819 | | 617 | |
| | | | | |
Total sales | | 4,506 | | 4,378 | |
| | | | | |
Revenues ($ in thousands): | | | | | |
Residential | | $ | 130,631 | | $ | 125,932 | |
Commercial | | 71,299 | | 63,610 | |
Industrial | | 57,805 | | 52,860 | |
Other retail | | 20,607 | | 18,756 | |
Other miscellaneous revenues | | 2,979 | | 2,750 | |
Total retail | | 283,321 | | 263,908 | |
| | | | | |
Wholesale | | 37,420 | | 25,097 | |
| | | | | |
RTO ancillary revenues | | 17,704 | | 15,502 | |
| | | | | |
Other revenues, net of fuel costs | | 2,698 | | 2,638 | |
| | | | | |
Total revenues | | $ | 341,143 | | $ | 307,145 | |
| | | | | |
Other Statistics: | | | | | |
Average price per kWh - retail (cents) | | 7.60 | | 6.94 | |
Fuel cost per net kWh generated (cents) | | 1.88 | | 1.85 | |
Electric customers at end of period | | 514,380 | | 511,180 | |
Average kWh use per residential customer | | 3,212 | | 3,378 | |
Peak demand - maximum one-hour use (mw) | | 2,307 | | 2,617 | |
| | | | | |
Degree Days | | | | | |
Heating | | 2,514 | | 2,897 | |
Cooling | | — | | — | |
Inquiries concerning this report should be directed to:
Arthur Meyer
Vice President
Telephone (937) 259-7208
The information contained herein is submitted for general information
and not in connection with any sale or offer for sale of,
or solicitation of any offer to buy, any securities.
