Exhibit 99.1
Cascade Natural Gas Corporation Announces First Quarter Earnings
SEATTLE--(BUSINESS WIRE)--Jan. 25, 2006--Cascade Natural Gas
Corporation (NYSE:CGC) reports fiscal year 2006 first quarter earnings
of $8.0 million, or $0.70 per share, compared to $6.6 million, or
$0.59 per share, for the first quarter of fiscal year 2005. Included
in earnings are mark-to-market valuations on derivatives used to hedge
gas supply prices, which reduced reported fiscal 2006 first quarter
earnings by $0.03 per share and fiscal 2005 first quarter earnings by
$0.04 per share.
Financial and Operating Highlights
Operating Margins
Total operating margin (revenue minus gas cost and revenue taxes)
increased by $1.9 million over the first quarter of fiscal 2005.
Residential and commercial margins drove the majority of the
margin improvement with a $1.7 million increase, $1.4 million of which
is due to a 10.4% increase in average consumption per customer. These
consumption increases resulted from cooler weather, especially during
December. Our 4.9% year-to-year growth in customer count contributed
$1.1 million more. Most of the remainder of the residential and
commercial margin difference results from a change following last
fall's Oregon purchased gas adjustment filing (PGA), which has the
effect of reallocating certain demand charge recoveries. For the first
quarter, this change reduced the reported margin by $535,000 when
compared to the same quarter in fiscal 2005, but it is not expected to
impact full year earnings.
Electric generation operating margin increased year-to-year by
$259,000, while industrial operating margin dropped by $172,000 from
the same quarter last year.
All other items combined resulted in an increase of $109,000 to
total margin, most of which is due to the reduction in mark-to-market
losses.
Cost of Operations
Cost of Operations (operating expense, depreciation and
amortization, and property and miscellaneous taxes) is down by
$542,000, compared to the first quarter of fiscal year 2005.
Management initiatives resulted in $1.6 million in reduced quarterly
operating expenses. Last fall's reduction in force, combined with
other reduction opportunities, and a focus on managing overtime
reduced direct labor costs by $638,000. Outsourcing our retiree
medical obligations to an insurance company contributed toward the
$617,000 in reduced benefit costs. Another $356,000 in year-to-year
cost reductions was achieved in various corporate and administrative
areas. These operating cost savings were partially offset by incentive
compensation accruals totaling $680,000. Depreciation and amortization
increased $209,000, consistent with capital spending over the most
recent four quarters. We also increased bad debt expense by $180,000
in anticipation of potential collection issues due to recent gas cost
increases.
Capital Spending and Funding of Operations
Capital spending during the quarter was $3.8 million compared to
$7.8 million in the first quarter of fiscal year 2005. Part of the
difference was due to $1.0 million relating to the completed AMR and
call center centralization projects and $1.4 million of one-time
specific system reinforcement expenditures in the first quarter of
fiscal year 2005. The remaining $1.6 million is attributable to the
implementation of a new investment evaluation process to assure that
all capital spending provides an adequate return or is required for
safety or regulatory compliance. Our current expectation is we will
end the year at or below our fiscal 2006 capital budget of $22.0
million. We have adequate liquidity and borrowing lines to meet our
anticipated needs, and estimate that cash flow will be sufficient to
support operations, fund capital spending and pay dividends at their
current level.
Other Items
Management is expecting earnings for fiscal year 2006 to be in the
range of $0.96 to $1.08. Our outlook assumes average weather for the
rest of the fiscal year and does not include any effects of
mark-to-market valuations.
The Company previously announced its declaration of a regular
quarterly cash dividend of $0.24 per common share, payable February 15
to shareholders of record at January 31, 2006.
To assist the Company in evaluating all available options to
maximize shareholder value, we have retained J.P. Morgan Securities
Inc. to provide strategic and financial advice as well as regulatory
support. The Company is currently finalizing its rate case filing,
including its Conservation Alliance Plan (decoupling), for its
Washington State operations and expects to file before the end of this
quarter.
Live Web-cast
The Company will host a live web-cast to discuss the quarterly
results January 26 at 8:00 a.m. Pacific Time. To listen to the call,
log on to our web site, cngc.com and select "Investors," then click
the live web-cast icon.
Cascade Natural Gas Corporation is a local distribution company
providing natural gas service to approximately 235,000 residential,
commercial, and large industrial customers in the states of Washington
and Oregon.
Forward-Looking Statements
The Company's discussion in this report, or in any information
incorporated herein by reference, may contain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements, other than statements of
historical facts, are forward-looking statements, including statements
concerning plans, objectives, goals, strategies, and future events or
performance. The disclaimers under the caption "Forward-Looking
Statements," included under item 7A of the Company's Annual Report on
Form 10-K filed on December 15, 2005 for the year ended September 30,
2005, apply in their entirety to all forward-looking statements
contained in this report.
Cascade Natural Gas Corporation
Financial Highlights -- (Thousands, except per share amounts)
First Quarter Fiscal 2006
Fiscal Year 2006
-----------------------------------------
Three Months Ended
------------------------------- Year
to
Dec 31 Mar 31 Jun 30 Sep 30 Date
--------- ------ ------ ------- ---------
Revenues $158,632 $158,632
Operating Margin 30,791 30,791
Cost of Operations 15,042 15,042
-------- ------ ------ ------- --------
Operating Income (Loss) 15,749 - - - 15,749
Interest and Other 2,972 2,972
Income Taxes 4,737 4,737
-------- ------ ------ ------- --------
Net Income (Loss) $ 8,040 $ 8,040
Common Shares Outstanding:
End of Period 11,439 11,439
Average 11,428 11,428
Earnings (Loss) Per Share
Basic and diluted $ 0.70 $ 0.70
Dividends Paid per share $ 0.24 $ 0.24
Capital Expenditures (net) $ 3,756 $ 3,756
Book Value Per Share $ 10.88 $ 10.88
Market Closing Price $ 19.51 $ 19.51
Active Customers (End of
Period) 235 235
Gas Deliveries (Therms):
Residential & Commercial 95,682 95,682
Industrial & Other 230,396 230,396
Degree Days
5-Year Average 2,106 2,106
Actual 2,250 2,250
Colder (warmer) than 5-year
avg. 7% 7%
Colder (warmer) than prior
year 16% 16%
Fiscal Year 2005
-----------------------------------------------
Three Months Ended
------------------------------------- Year
ended
Dec 31 Mar 31 Jun 30 Sep 30 Sep 30
--------- --------- -------- -------- ---------
Revenues $104,613 $117,711 $ 56,315 $ 47,861 $326,500
Operating Margin 28,922 30,842 17,674 14,277 91,715
Cost of Operations 15,584 16,245 16,412 17,042 65,283
-------- -------- -------- -------- --------
Operating Income
(Loss) 13,338 14,597 1,262 (2,765) 26,432
Interest and Other 2,894 2,976 2,891 2,792 11,553
Income Taxes 3,812 4,269 (502) (1,947) 5,632
-------- -------- -------- -------- --------
Net Income (Loss) $ 6,632 $ 7,352 $ (1,127) $ (3,610) $ 9,247
Common Shares
Outstanding:
End of Period 11,292 11,338 11,384 11,413 11,413
Average 11,279 11,312 11,367 11,396 11,339
Earnings (Loss) Per
Share
Basic and diluted $ 0.59 $ 0.65 $ (0.10) $ (0.32) $ 0.82
Dividends Paid per
share $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.96
Capital Expenditures
(net) $ 7,770 $ 7,759 $ 6,038 $ 6,444 $ 28,011
Book Value Per Share $ 10.89 $ 11.32 $ 10.99 $ 10.39 $ 10.39
Market Closing Price $ 21.20 $ 19.96 $ 20.50 $ 21.77 $ 21.77
Active Customers (End
of Period) 225 228 225 227 227
Gas Deliveries
(Therms):
Residential &
Commercial 82,643 92,637 39,632 22,843 237,755
Industrial & Other 227,779 228,890 176,178 211,305 844,152
Degree Days
5-Year Average 2,091 2,271 806 212 5,380
Actual 1,945 2,230 769 226 5,170
Colder (warmer) than
5-year avg. (7%) (2%) (5%) 7% (4%)
Colder (warmer) than
prior year (8%) (1%) 16% 15% (1%)
CONTACT: Cascade Natural Gas Corporation
Rick Davis, 206-624-3900