(TE) TECO Energy Reports Lackluster Numbers

Energy utility TECO Energy Inc. (TE) announced its second-quarter 2011 operating earnings of 36 cents per share, at par with the Zacks Consensus Estimate and a penny above the year-ago figure.

GAAP and operating earnings remained the same with no one-time items at play.

Total Revenue

Total revenue at TECO Energy at the end of the second quarter was $885.7 million versus $898.8 million in the year-ago period, reflecting a decline of 1.5%. The year-over-year revenue fall was perpetrated by a 1.3% decline in Regulated Electric and Gas revenues and a 1.9% slip in Unregulated revenue.

The top line reported in the quarter also missed the Zacks Consensus Estimate of $905 million.

Quarterly Highlights

The company saw a 2% year-over-year decrease in total expenses during the quarter, which was primarily due to a 10.6% decline in purchased power and an 8.9% fall in the cost of natural gas sold.

Despite the year-over-year revenue decline, operating income during the reported quarter increased marginally by 0.7% to $171.1 million from $169.9 million in the second quarter of 2010, mainly due to reduction in expenses.

Interest charges decreased by 12% to $51.2 million from $58.2 million in the year-ago quarter.

Financial Update

Cash and cash equivalents of the company as of June 30, 2011, were $61.8 million, lower than $97.8 million as of June 30, 2010.

The company incurred capital expenditure of $107.3 million, down $25.2 million from $132.2 million in the second quarter of 2010.

The company marginally lowered its debt levels during the reporting quarter. Long-term debt of the company as of June 30, 2011 was $2,949.1 million versus $3,148.1 million as of December 31, 2010.


TECO Energy reiterated its earnings per share expectation for 2011 in a range of $1.25 to $1.40.

Tampa Electric, TECO’s regulated electric operation, expects lower year-over-year energy sale in 2011 assuming normal weather conditions. In 2010, Tampa Electric benefited from an unusual weather pattern.

The company’s coal production wing, TECO Coal, now expects to sell 8.2 to 8.5 million tons of coal in 2011 at an average price of $88 per ton, down from the previous sales range of 8.5–9.0 million tons. The reduction in guidance was due to year-to-date delays in mine plan approvals by regulatory authorities and the availability of contract miners. The cost of production per ton of coal is expected between $74 and $78 during 2011.

At the Peer

NextEra Energy Inc.(NEE), which competes with TECO Energy, announced operating earnings for the second quarter 2011 of $1.18 per share, surpassing the year-ago results of $1.11 and the Zacks Consensus Estimate of $1.09.

NextEra Energy’s total operating revenue for second-quarter 2011 was $3.96 billion, up 10.3% from $3.59 billion reported in the year-ago period. Reported quarter revenue also surpassed the Zacks Consensus Estimate of $3.72 billion.

Our View

Despite failing to meet our top-line expectation during the quarter, we see a glimmer of hope with both Tampa Electric and People Gas recording customer growth of a respective 0.7% and 0.6% year over year.

TECO Energy currently retains a Zacks #3 Rank (short-term Hold rating). We provide a long-term Neutral rating on the stock.

Based in Tampa, Florida, TECO Energy is involved in the generation, purchase, transmission, distribution, and sale of electricity in Florida.

NEXTERA ENERGY (NEE): Free Stock Analysis Report

TECO ENERGY (TE): Free Stock Analysis Report

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