Unseasonably mild weather, one-time charges and a rate refund in its Florida market combined to push Progress Energy Inc.'s fourth-quarter net income down 17 percent from a year earlier.
The Raleigh, N.C., utility, the parent of Progress Energy Florida of St. Petersburg, also warned Wednesday that it expects earnings per share this year to grow less than expected and possibly fall as the company dilutes its stock by issuing more shares for employees and investors. That prompted at least one Wall Street analyst to lower his recommendation on Progress' shares.
In the three months ended Dec. 31, Progress posted net income of $102-million, or 42 cents a share, down from $123-million, or 55 cents a share, during the same period last year. Fourth-quarter revenue totaled $2.16-billion, up 10 percent from $1.97-billion a year earlier.
Progress said its fourth-quarter earnings were hurt by unseasonably warm temperatures in the Carolinas and $24-million in write-downs for the company's affordable-housing investments in the Carolinas and coal-mining operations in Kentucky.
Ongoing earnings, which exclude charges, came in at 82 cents a share in the fourth quarter, exceeding the Thomson Financial/First Call consensus projection of 76 cents. The results were aided by a $20.8-million gain for storm-recovery costs the North Carolina Utilities Commission has permitted Progress to place in a deferred account. The company can ask the commission to eventually pass on the costs to Carolina ratepayers. Progress reported ongoing earnings of 71 cents a share in the fourth quarter of 2002.
For full year 2003, Progress recorded net income of $782-million, surging 48 percent from 2002 net income of $528-million largely because of a one-time, after-tax charge of $224.8-million the company took in the third quarter of 2002 to write down poorly performing telecom investments.
Looking ahead, Progress expects ongoing earnings this year of $845-million to $880-million, or $3.50 to $3.65 a share, compared with 2003 ongoing earnings of $844-million or $3.56 a share. That forecast falls below Wall Street's previous expectations of $3.73 a share, in part because the company's stock has been diluted because of shares recently issued under its dividend-reinvestment and employee-benefit plans, according to spokesman Garrick Francis. In addition, the company's completion in 2003 of two wholesale power plants in Georgia and North Carolina means it will have a full year of operating expenses for those two plants this year, Francis said.
J.P. Morgan Securities analyst Jim von Riesemann cut his investment recommendation on Progress to "neutral" from "overweight," saying that the company's shares were already fully valued in light of the lowered earnings outlook.
Progress Energy Florida recorded fourth-quarter net income of 20 cents a share, down from 29 cents a year earlier due to higher pension costs, a one-time rate refund and other factors.
Progress Energy Carolinas recorded fourth-quarter net income of 45 cents a share, down from 52 cents, because of mild weather and its $7-million share of the affordable-housing charge.
Progress' shares closed Wednesday at $44.13 apiece, up 23 cents.
Earlier, TECO Energy Inc., parent of Tampa Electric Co., postponed the release of its fourth-quarter and year-end financial results to Feb. 5 from Jan. 27.
_ Louis Hau can be reached at hausptimes.com or (813) 226-3404.