Vectren earnings exceed estimate

Feb 19 - Evansville Courier & Press

Booming demand in Vectren Corp.' s pipeline business helped carry the company to better-thanexpected earnings last year. The Evansville-based energy company released its fourth-quarter and full-year 2012 earnings report late Thursday.

Net income for the year that ended Dec. 31 was $159 million, or $1.94 per share. That's above last year's earnings of $141.6 million ($1.73 per share), and it also beats Vectren's full-year earnings guidance of $1.80 to $1.90 per share.

Much of that strength, the company said, came from its infrastructure services division. That division, which includes subsidiaries Miller Pipeline and Minnesota Limited, builds and repairs underground utility pipes.

Full-year earnings for this division totaled $40.5 million, as compared to $14.9 million in 2011.

"It shows up as our brightest star," Vectren Chief Financial Officer Jerry Benkert.

Benkert said demand for shale oil and gas is leading to strong demand for new pipeline, and aging infrastructure is also creating high demand for replacement and repairs. Last year's favorable weather conditions also helped, the company said, with warm and dry weather that allowed crews to spend more days on the job than usual.

But the boom in shale oil and gas that has helped Vectren's infrastructure services division has had the opposite effect on some other parts of Vectren's business, Benkert said.

Vectren's coal mining operations earned $16.6 million in 2011 but ended up losing $3.5 million last year.

Vectren has a financial interest in ProLiance, a company that makes money from buying and reselling natural gas. Vectren's share of ProLiance's losses last year was $17.6 million, which represented an improvement over its $22.9 million loss in 2011.

The ability to access shale oil and gas deposits, a recent industry development, has resulted in low and stable natural gas prices. That means ProLiance has less opportunity to make money from price fluctuations. It also means that in some cases, utility companies are firing up gas-fired power plants and using their coal- fired plants less, Benkert said. This move reduces the demand for coal.

For the fourth quarter alone Vectren's net income was $42.8 million (52 cents per share), as compared to $46.6 million (56 cents per share) during the same period a year earlier.

Looking ahead, Vectren says it expects its full-year 2013 earnings to be in the range of $1.90 to $2.10 per share. That includes utility group earnings in the range of $1.65 to $1.75 per share, and nonutility group earnings in the range of 20 to 40 cents per share.

Originally published by Susan Orr, orrs@courierpress.com, 812-461-0783, Evansville Courier & Press.

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