(Poughkeepsie, NY) CH Energy Group, Inc. (NYSE:CHG) today reported third-quarter earnings of 55 cents per share, 44 cents per share higher than those of the same period of 2010. The increase was driven by a 30-cent reduction in impairment charges associated with the Corporation’s renewable energy investments and by an improvement in earnings at its core subsidiary, regulated utility Central Hudson Gas & Electric Corporation.
“Our 2011 third-quarter earnings reflect an impairment charge of 14 cents per share related to a small wind energy investment. The recent downturn in electricity prices indicated that the plants were unlikely to recover to the value projected when the investment was made, so it was necessary for us to record an impairment for our full investment in the project,” said Chairman of the Board, President and C.E.O. Steven V. Lant, who noted that the impairment was appreciably less than the 44-cent-per-share impairment charge recognized on an ethanol investment during the same period last year.
“These quarterly earnings results illustrate the appropriateness of the change in direction that we announced a year ago to reduce earnings volatility by moving away from renewable energy assets and concentrating on our core competency of energy delivery,” said Lant. “We have made substantial progress on execution in the year since, having divested the three largest renewable energy assets.
“Exiting this business line has clearly reduced our risk. But there have been additional benefits: We have used the proceeds of our asset sales to repurchase $50 million worth of common stock and to repay $20 million of debt, and we have demonstrated strong, stable results within our primary subsidiary, Central Hudson.
“In fact, we had enough confidence in our underlying earnings power to increase our dividend last month for the first time in 12 years,” Lant said. “Our decision to return our strategic focus to our strongest core competency of energy delivery was absolutely the right course of action.”
CH Energy Group earnings totaled $2.03 per share for the first nine months of 2011, as compared to $1.84 per share for the first three quarters of 2010. Year-to-date, the holding company’s business units posted the following results: Central Hudson, $2.01 per share, as compared to $2.26 per share in 2010; Griffith, 3 cents per share, as compared to 1 cent in 2010; and Other Businesses and Investments, a loss of 1 cent per share, as compared to a loss of 43 cents in 2010.
CH Energy Group released the following third-quarter results by business unit:
Central Hudson Gas & Electric Corporation
Central Hudson posted third-quarter earnings of 76 cents per share, as compared to 60 cents during the third quarter of 2010. The most significant quarterly drivers of the 16-cent improvement were higher delivery revenues of 11 cents per share and 8 cents of reduced expenses that resulted from an acceleration of tree trimming into the first half of this year in order to take advantage of cost savings opportunities, Lant said.
“These positive influences and other factors were partially offset by a number of items, including approximately 4 cents per share of expenses associated with restoring service following Tropical Storm Irene,” Lant said. “However, what’s most important is to recognize that our current regulatory agreement allows us to continue to invest in our utility infrastructure to benefit our customers while producing sustainable earnings growth as our investment base expands.”
Griffith Energy Services
Griffith Energy Services posted a loss of 15 cents per share during the third quarter, as compared to a loss of 14 cents per share during the same period of 2010. Lant said the results reflect the seasonal nature of Griffith’s business.
Other Businesses and Investments
CH Energy Group’s other businesses and investments reduced earnings by 6 cents per share during the quarter, a 29-cent improvement as compared to the third quarter of 2010, when this business unit posted a 35-cent-per-share loss due primarily to a 44-cent impairment taken in regard to CH Energy Group’s investment in the Cornhusker Energy Lexington, LLC ethanol production plant.
“Once we made the decision to exit renewable energy, we moved quickly and decisively to divest assets that had the highest potential value,” Lant said, noting that the remaining assets constitute less than 1 percent of CH Energy Group’s assets. “Neither the continuing operations nor the disposition of the remaining facilities would have a material impact on the financial condition of CH Energy Group.”
About CH Energy Group, Inc.: CH Energy Group, Inc. is predominantly an energy delivery company headquartered in Poughkeepsie, NY. Regulated transmission and distribution subsidiary Central Hudson Gas & Electric Corporationserves approximately 300,000 electric and about 75,000 natural gas customers in eight counties of New York State’s Mid-Hudson River Valley, delivering natural gas and electricity in a 2,600-square-mile service territory that extends north from the suburbs of metropolitan New York City to the Capital District at Albany. CH Energy Group also operates Central Hudson Enterprises Corporation (CHEC), a non-regulated subsidiary composed primarily of Griffith Energy Services, which supplies petroleum products and related services to approximately 57,000 customers in the Mid Atlantic Region.
CH Energy Group's mission is to provide electricity, natural gas, petroleum and related services to an expanding customer base in a safe, reliable, courteous and affordable manner; to produce growing financial returns for shareholders; to foster a culture that encourages employees to reach their full potential; and to be a good corporate citizen.
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Conference Call: Mr. Lant will conduct a conference call with investors to review financial results at 2:00 p.m. (ET) today, Oct. 27, 2011. Dial-in: 1-800-230-1093; Conference Name “CH Energy Group.” Supplemental materials will be posted to the Company’s Web site at www.CHEnergyGroup.com to assist participants in following the Conference Call presentation. A digitized replay of the call will be available from 4:30 p.m. (ET) on Oct. 27, 2011, until 11:59 p.m. on Nov. 3, 2011, by dialing 1-800-475-6701 and entering access code 220616. In addition, the call will be webcast live in listen-only mode and available for replay for approximately 30 days within the Investor Relations section of the Company’s Web site at www.CHEnergyGroup.com.
Downloadable Financial Statements Available Here
Forward-Looking Statements –
Statements included in this news release and any documents incorporated by reference which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 21E of the Exchange Act. Forward-looking statements may be identified by words including “anticipates,” “intends,” “estimates,” “believes,” “projects,” “expects,” “plans,” “assumes,” “seeks,” and similar expressions. Forward-looking statements including, without limitation, those relating to CH Energy Group’s and Central Hudson’s future business prospects, revenues, proceeds, working capital, investment valuations, liquidity, income, and margins, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements, due to several important factors, including those identified from time-to-time in the forward-looking statements. Those factors include, but are not limited to: deviations from normal seasonal weather and storm activity; fuel prices; energy supply and demand; potential future acquisitions; legislative, regulatory, and competitive developments; interest rates; access to capital; market risks; electric and natural gas industry restructuring and cost recovery; the ability to obtain adequate and timely rate relief; changes in fuel supply or costs including future market prices for energy, capacity, and ancillary services; the success of strategies to satisfy electricity, natural gas, fuel oil, and propane requirements; the outcome of pending litigation and certain environmental matters, particularly the status of inactive hazardous waste disposal sites and waste site remediation requirements; and certain presently unknown or unforeseen factors, including, but not limited to, acts of terrorism. CH Energy Group and Central Hudson undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
Given these uncertainties, undue reliance should not be placed on the forward-looking statements.