Integrys Energy Group Inc. beat analyst estimates for both its fourth quarter and fiscal year earnings Thursday, despite reduced revenues related to lower prices for natural gas. Analysts maintained hold recommendations on the company’s stock pending regulatory decisions on customer rate hikes. The Chicago-based company reaffirmed its positive earnings guidance for 2011.
In the quarter ended Dec. 31, Integrys’ profit more than tripled to $71.7 million, or 91 centers per diluted share, compared with $23.2 million, or 30 cents per diluted share, in the same period last year. Earnings were augmented by one-time gains associated with derivative and inventory accounting changes. Without those items, the company would have earned $64.2 million, or 82 cents per diluted share. Both the net income and adjusted earnings figures beat estimates from analysts surveyed by Bloomberg LP of 75 cents.
The company’s gross profit margin increased to 10 percent from 4 percent a year ago with much of the savings caused by layoffs and restructuring.
"Reductions in workforce and furloughs are key drivers in labor savings,” CEO Charles Schrock said in a conference call.
Despite the fatter bottom line, revenue for the quarter declined 18 percent to $1.29 billion from $1.57 billion in the year-ago quarter.
Integrys also has benefited from the sale of its more volatile deregulated businesses and from rate hikes in several markets, analysts said.
The decrease in revenue does not affect profits because Integrys passes lower natural gas commodity prices through to its customer, noted Andrew Pusateri, an analyst for Edward Jones & Co. The company makes its profit by charging for delivery. Last week, Integrys subsidiaries Peoples Gas and North Shore Gas, which provide natural gas to Chicago and its northern suburbs, applied for additional rate hikes.
Integrys, through its subsidiaries, provides natural gas services to more than 1.6 million customers in Chicago, Wisconsin, Michigan and Minnesota. It also provides electricity to 489,000 customers in Wisconsin and Michigan.
For the year 2010, Integrys posted a profit of $220.9 million, or $2.83 per diluted share, compared with a loss of $69.6 million, or 91 cents per diluted share, in 2009. The 2009 loss was caused by one-time goodwill impairment charges and restructuring expenses associated with layoffs.
Revenues declined 31 percent to $5.2 billion from $7.49 billion in 2009.
Integrys stock closed Thursday at $48.42, up 47 cents.