Exhibit 99.1
Cascade Natural Gas Announces Fiscal Year 2005 Second Quarter and
Year-to-Date Earnings
SEATTLE--(BUSINESS WIRE)--April 21, 2005--Cascade Natural Gas
Corporation (NYSE:CGC) reported earnings of $7.4 million, or $0.65 per
share, for the fiscal second quarter ended March 31, 2005, compared to
$8.7 million, or $0.77 per share, for the second quarter ended March
31, 2004. Earnings for the six-month period were $14.0 million, or
$1.24 per share, compared to $16.6 million, or $1.48 per share, for
the six months ended March 31, 2004.
Financial and Operating Highlights
Second Quarter Operating Margin (revenue minus gas cost and
revenue taxes) decreased $1.3 million compared to the quarter ended
March 31, 2004. This includes a $1.9 million reduction in residential
and commercial margins primarily due to an 8% decline in per customer
consumption. Consumption reductions are attributed to warmer weather,
results of conservation efforts spurred by higher natural gas prices,
and improved energy efficiency in buildings and appliances. Customer
growth was 4.6% in the quarter and contributed $1.1 million to
margins, partially offsetting the effects of lower consumption.
Industrial operating margin was lower by $843,000 in the fiscal
2005 second quarter. Gas Management Services revenue accounted for
$525,000 of the decline due to fewer customers and lower margin on gas
supply sales. Distribution services margins from sales to industrial
customers were down $362,000 as a result of reduced customer usage.
These operating margin comparisons exclude the positive effects of
mark-to-market (M-to-M) derivative valuations of $549,000 in 2005 and
$69,000 in 2004.
Overall operating margin benefited from a $525,000 accrual
reversal resulting from analysis in connection with submittal of
management's Spring Earnings Review report to the Oregon PUC for
fiscal year 2004. Based on final fiscal 2004 Oregon earnings,
management determined there would be no fiscal 2004 earnings sharing.
To reflect this change in estimate, the Company reversed the fiscal
2004 earnings-sharing accrual.
Year-To-Date Operating Margin declined $3.0 million, equal to
4.8%. Important factors were 4% lower degree-days for the six months
and $1.3 million lower Gas Management Services sales. Other
contributing factors were customer conservation, and continued
building and appliance energy efficiency. This comparison excludes a
2005 year-to-date negative M-to-M valuation of $119,000 and the
$525,000 Oregon earnings sharing accrual reversal. It also excludes a
2004 positive M-to-M valuation of $475,000.
Cost of Operations
Second Quarter Cost of Operations (operating expense, depreciation
and amortization, and property and miscellaneous taxes) was up
$785,000 in the second quarter comparison. Depreciation and
amortization accounted for $345,000 of the increase due to growth in
plant-in-service. Operating expense increased $372,000. Significant
changes in operating expenses included a $404,000 increase in bad debt
expense, executive transition costs of $590,000 and call center
consolidation charges of $146,000. These increases were partially
offset by lower labor and benefits expense.
Year-To-Date Cost of Operations was up $1.2 million with $630,000
attributed to depreciation expense, $615,000 to executive transition
charges, $313,000 to the call center consolidation, and $124,000 for
bad debt expense. Benefits expense was lower by $755,000 year-to-date.
Capital Spending
Net capital spending in the quarter was $7.8 million compared to
$9.7 million in the second quarter of fiscal year 2004. The $1.9
million decline reflects the September 2004 completion of the
automated meter-reading project. For the six months, capital spending
was $15.5 million compared to $19.9 million in 2004 and a total fiscal
year 2005 capital budget of $28.4 million.
Full Year Guidance and Other
Primarily due to year-to-date operating margin declines,
management is providing updated full year earnings guidance of $0.92
to $0.97 per share. Projections do not include any effects of
mark-to-market valuations or executive transition costs.
The Company previously announced its declaration of a $0.24 per
share quarterly dividend on common stock, payable May 13, 2005 to
shareholders of record at the close of business April 29, 2005.
Cascade Natural Gas Corporation is a local distribution company
providing natural gas service to approximately 227,000 customers in
the states of Washington and Oregon.
Statements contained in this report that are not historical in
nature are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are subject to risks and uncertainties that may cause
actual future results to differ materially. Such risks and
uncertainties with respect to the Company include, among others, its
ability to successfully implement internal performance goals,
competition from alternative forms of energy and other sellers of
energy, consolidation in the energy industry, performance issues with
key natural gas suppliers, the capital-intensive nature of the
Company's business, regulatory issues, including the need for adequate
and timely rate relief to recover capital and operating costs and to
sustain dividend levels, the weather, increasing competition brought
on by deregulation initiatives at the federal and state regulatory
levels, the potential loss of large volume industrial customers due to
"bypass" or the shift by such customers to special competitive
contracts at lower per unit margins, exposure to environmental cleanup
requirements, and economic conditions, particularly in the Company's
service area.
Cascade Natural Gas Corporation
Financial Highlights - (Thousands, except per share amounts)
Second Quarter Fiscal 2005
Fiscal Year 2005
-----------------------------------------
Three Months Ended Year
-------------------------------
to
Dec 31 Mar 31 Jun Sep 30 Date
30
--------- --------- --- ------- ---------
Revenues $104,613 $117,711 $222,324
Operating Margin 28,922 30,842 59,764
Cost of Operations 15,584 16,245 31,829
-------- -------- --- ------- --------
Operating Income
(Loss) 13,338 14,597 0 0 27,935
Interest and Other 2,894 2,976 5,870
Income Taxes 3,812 4,269 8,081
-------- -------- --- ------- --------
Net Income (Loss) $ 6,632 $ 7,352 $- $- $ 13,984
Common Shares
Outstanding:
End of Period 11,292 11,338 11,338
Average 11,279 11,312 11,296
Earnings (Loss) Per
Share
Basic $ 0.59 $ 0.65 $ 1.24
Diluted $ 0.59 $ 0.65 $ 1.24
Dividends Paid per
share $ 0.24 $ 0.24 $ 0.48
Capital Expenditures
(net) $ 7,770 $ 7,759 $ 15,529
Book Value Per Share $ 10.89 $ 11.32 $ 11.32
Market Closing Price $ 21.20 $ 19.96 $ 19.96
Active Customers
(End of Period) 225 228 228
Gas Deliveries
(Therms):
Residential &
Commercial 82,643 92,637 175,280
Industrial & Other 227,779 228,890 456,669
Degree Days
5-Year Average 2,091 2,271 4,362
Actual 1,945 2,230 4,175
Colder (warmer) than
5-year avg. (7%) (2%) (4%)
Colder (warmer) than
prior year (8%) (1%) (4%)
Fiscal Year 2004
-------------------------------------
Three Months Ended
--------------------------------------
Dec 31 Mar 31 Jun 30 Sep 30
--------- --------- --------- --------
Revenues $104,884 $119,454 $ 52,077 $ 41,663
Operating Margin 30,693 32,142 16,637 14,336
Cost of Operations 15,129 15,460 14,696 15,276
-------- -------- -------- --------
Operating Income
(Loss) 15,564 16,682 1,941 (940)
Interest and Other 3,116 3,121 3,099 3,050
Income Taxes 4,543 4,892 (492) (1,384)
-------- -------- -------- --------
Net Income (Loss) $ 7,905 $ 8,669 $ (666) $ (2,606)
Common Shares
Outstanding:
End of Period 11,181 11,210 11,241 11,268
Average 11,158 11,196 11,227 11,254
Earnings (Loss) Per
Share
Basic $ 0.71 $ 0.77 $ (0.06) $ (0.23)
Diluted $ 0.71 $ 0.77 $ (0.06) $ (0.23)
Dividends Paid per
share $ 0.24 $ 0.24 $ 0.24 $ 0.24
Capital Expenditures
(net) $ 10,216 $ 9,672 $ 9,557 $ 9,575
Book Value Per Share $ 10.61 $ 11.17 $ 10.89 $ 10.52
Market Closing Price $ 21.09 $ 21.79 $ 22.07 $ 21.23
Active Customers
(End of Period) 216 218 215 214
Gas Deliveries
(Therms):
Residential &
Commercial 86,070 96,038 33,746 21,900
Industrial & Other 260,887 223,894 182,387 229,431
Degree Days
5-Year Average 2,044 2,275 874 229
Actual 2,106 2,249 661 196
Colder (warmer) than
5-year avg. 3% (1%) (24%) (14%)
Colder (warmer) than
prior year 4% 10% (20%) 40%
Fiscal Year 2004
--------------------
Year Year
Ended to Date
Sep 30 Mar 31
--------- ---------
Revenues $318,078 $224,339
Operating Margin 93,808 62,835
Cost of Operations 60,561 30,589
-------- --------
Operating Income
(Loss) 33,247 32,246
Interest and Other 12,386 6,237
Income Taxes 7,559 9,436
-------- --------
Net Income (Loss) $ 13,302 $ 16,573
Common Shares
Outstanding:
End of Period 11,268 11,210
Average 11,209 11,177
Earnings (Loss) Per
Share
Basic $ 1.19 $ 1.48
Diluted $ 1.19 $ 1.48
Dividends Paid per
share $ 0.96 $ 0.48
Capital Expenditures
(net) $ 39,020 $ 19,888
Book Value Per Share $ 10.52 $ 11.17
Market Closing Price $ 21.23 $ 21.79
Active Customers
(End of Period) 214 218
Gas Deliveries
(Therms):
Residential &
Commercial 237,754 182,108
Industrial & Other 896,599 484,781
Degree Days
5-Year Average 5,422 4,319
Actual 5,212 4,355
Colder (warmer) than
5-year avg. (4%) 1%
Colder (warmer) than
prior year 3% 7%
CONTACT: Cascade Natural Gas Corporation
J.D. Wessling, 206-624-3900