EVANSVILLE—Mild winter weather was the big story at Vectren Corp. last quarter, with the unusually warm temperatures helping one segment of the business and hurting some others.
Vectren's earnings were up overall, with first-quarter net income of $51.3 million (63 cents per share) compared to $44.6 million (55 cents per share) during the same period a year ago.
Vectren operates both a utility group and a nonutility group. The utility group delivers electricity and natural gas to customers, and the nonutility group includes pipeline construction and repair, coal mining and other energy-related operations.
Utility group earnings were $56 million (69 cents per share) last quarter, compared to earnings of $48.6 million (59 cents per share) a year ago. In the nonutility group Vectren lost $4.8 million last quarter, as compared to a loss of $10.5 million a year ago.
The mild winter lowered Vectren's earnings in its electricity and coal operations, but helped improve results in its pipeline businesses.
"Clearly, 'weather' is what happened this quarter," said Vectren's Chief Financial Officer, Jerry Benkert.
"It had an impact across our businesses."
Earnings from electric utility services alone totaled $15.6 million last quarter, as compared to $8.6 million a year ago.
An electrical rate increase that went into effect a year ago helped boost electric utility earnings, as did lower operating and interest costs. The mild weather reduced electrical utility earnings by $2 million because people used less electricity to heat their homes last quarter. (Temperature fluctuations have minimal effect on Vectren's natural gas earnings because its gas rates are structured in a way that does not tie gas usage to profitability.)
Vectren's coal mining operations, which sell to both Vectren's power plants and to third parties, posted a $300,000 loss last quarter, down $1.9 million from a year ago.
One reason for the coal mining loss, Benkert said, is that because customers were using less electricity there was less demand for coal to fuel power plants.
On the positive side, mild weather helped Miller Pipeline and Minnesota Limited, two Vectren subsidiaries that build and repair underground pipelines.
These companies fall under Vectren's infrastructure services division, which posted earnings of $3 million last quarter as compared to a $2.9 million loss a year ago.
Mild weather meant crews could take on more work than usual during the winter, which helped boost earnings.
The company said increased demand for pipeline infrastructure, and its acquisition of Minnesota Limited in March 2011, also helped boost earnings.
Vectren also affirmed its earlier earnings guidance for the full year. That guidance is for consolidated earnings of $1.75 to $1.95 per share.
Vectren released its financial results after the financial markets closed Wednesday. Shares of the company's stock closed at $29.20 on the New York Stock Exchange, down 26 cents.