CH Energy Group Reports Second-Quarter Earnings
(Poughkeepsie, NY) Earnings per share for the second quarter of 2006 for CH Energy Group, Inc. (NYSE:CHG) were 26 cents per share, versus the 41 cents per share posted during the second quarter of 2005. Increased operating and maintenance expenses, unseasonable weather, and the absence of one-time income tax adjustments that had been made in 2005 were among the primary drivers of the variation. Some of the favorable offsetting developments of the quarter included gains from several regulatory mechanisms within utility Central Hudson Gas & Electric Corporation, the sale of property held by holding company CH Energy Group and an increase in income from Central Hudson Enterprises Corporation's interest in Cornhusker Energy Lexington, LLC, a Nebraska ethanol plant.
"These quarter-over-quarter results were anticipated, and our business remains fundamentally strong," said Steven V. Lant, Chairman of the Board, President and Chief Executive Officer. "We continue to make progress on several long-term objectives. Within our regulated utility, the terms of an Order – approved by the New York State Public Service Commission on July 19 and made public just yesterday – to increase energy delivery rates are being carefully reviewed. If we accept those terms, these increases in electric and natural gas delivery rates would be the first in more than 13 years, and would immediately improve cash flows.
"Our regulated utility and our non-regulated fuel distribution business, meanwhile, also both continue to see growth in their customer base. In addition, we continue to make progress in our non-regulated investment portfolio, with the addition of our majority ownership of the Lyonsdale Biomass plant that was acquired in April," Lant said.
Regulated Electric and Gas Business:
Central Hudson earned 25 cents per share in the second quarter of 2006, compared to 37 cents during the same period of 2005. Reduced heating and cooling degree days decreased electric deliveries for residential and commercial customers by 7 and 3 percent, respectively, from the same quarter of the prior year; electric deliveries to industrial customers declined by 4 percent. Natural gas deliveries decreased by 10 percent overall as compared to the second quarter of 2005, with residential, commercial and industrial deliveries falling by 10, 9 and 19 percent, respectively. Vegetation management, transmission line inspection and other electric infrastructure expenses contributed to an increase in operating expenses. Various regulatory mechanisms partially offset the impacts of reduced sales and increased operating expenses.
Unregulated Fuel Distribution Businesses:
Griffith Energy Services lost 13 cents per share – compared to a 9-cent-per-share loss during the same period last year – during a quarter in which fuel distribution businesses typically report losses due to the nature of their seasonal delivery business. Increased operating expenses associated with the acquisition of several small "tuck-in" fuel distribution companies also contributed to this business segment's quarterly loss; however, these acquisitions are expected to add to Griffith's revenues in the heating season. Additional marketing expenses were also incurred in order to increase the residential customer base. Improved service profitability resulting from increased service contract revenue helped to offset the decline, as did an increase in margins for certain petroleum products.
Unregulated – Other Businesses:
Unregulated business units earned 14 cents during the quarter, compared to 13 cents in the second quarter of 2005. Central Hudson Enterprises Corporation's investment in the Cornhusker ethanol plant increased earnings by 4 cents per share during the quarter, while the sale of property held by the holding company increased quarterly results by 3 cents. Income taxes increased 8 cents compared to the second quarter of the prior year due to the absence of a one-time item related to the favorable settlement of a 2001 tax audit.
About CH Energy Group
With more than 450,000 customers CH Energy Group, Inc. is a family of companies seizing new opportunities in the energy marketplace through two primary subsidiaries: Central Hudson Gas & Electric Corporation is a regulated transmission and distribution utility serving approximately 367,000 customers in eight counties of New York State's Mid-Hudson River Valley, and delivering natural gas and electricity in a 2,600-square-mile service territory that extends from the suburbs of metropolitan New York City north to the Capital District at Albany. Central Hudson Enterprises Corporation, a non-regulated subsidiary, is the umbrella for a family of energy-related companies and investments focused primarily on fuel oil distribution and renewable energy. CHEC's fuel distribution business supplies energy products and services to more than 85,000 customers in seven states, stretching from Connecticut to the Washington, D.C. area. CHEC also has interests in a Lexington, Neb., ethanol plant, two wind power projects, and a biomass plant in upstate New York.
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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, July 25, 2006. Dial-in: 1-800-611-1148; Conference Name: “CH Energy Group.” A digitized replay of the call will be available from 7:15 p.m. (ET) on July 25, 2006, until 11:59 p.m. (ET) on August 1, 2006, by dialing 1‑800‑475‑6701 and entering access code #836163. In addition, the call will be web cast on the Company’s Web site at www.CHEnergyGroup.com., where consolidated financial statements are also available.
Forward-Looking Statements
Statements included in this news release, including documents incorporated by reference that 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 Securities Exchange Act of 1934, as amended. Forward-looking statements may be identified by words including "anticipates," "believes," "projects," "intends," “estimates," "expects," "plans," "assumes," "seeks," and similar expressions. Forward-looking statements including, without limitation, those relating to CH Energy Group, Inc. and its subsidiaries' future business prospects, revenues, proceeds, working capital, 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: weather; energy supply and demand; fuel prices; interest rates; potential future acquisitions; developments in the legislative, regulatory and competitive environment; market risks; electric and gas industry restructuring and cost recovery; the ability to obtain adequate and timely rate relief; changes in fuel supply or costs; the success of strategies to satisfy electricity requirements now that Central Hudson's major electric generation assets have been sold; future market prices for energy, capacity, and ancillary services; 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, Inc. and its subsidiaries 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.