Avista (AVA) Q4 2004 earnings summary

Executive summary

• 2004 net income available for common stock was $35.2 million and diluted EPS was $0.72, down from $43.4 million and $0.89 in 2003; Idaho rate-case write-offs and lower Energy Marketing earnings weighed on results.

• Higher utility rates and Avista Advantage’s return to profitability partially offset the effects of the Idaho write-offs, higher natural gas costs and below-normal hydro flows.

• Priorities included improving cash flow and earnings, controlling costs, reducing debt and restoring investment-grade credit status.

Financial highlights

• Operating revenues were $1,151.6 million in 2004, up from $1,123.4 million in 2003; income from operations was $140.5 million, down from $171.7 million.

• Income from continuing operations was $35.6 million versus $50.6 million in 2003; net income was $35.2 million versus $44.5 million.

• Diluted EPS was $0.72 versus $0.89 in 2003; dividends paid per common share increased to $0.515 from $0.490.

• Net cash provided by continuing operating activities was $108.3 million, compared with $122.6 million in 2003; utility property capital expenditures were $115.3 million.

Outlook and guidance

• 2005 income is expected to improve at Avista Utilities, primarily from the continued effect of rate increases, and at Avista Advantage through revenue growth and processing efficiencies.

• Combined electric and natural gas customer growth is expected to be 2%–3% annually; 2005 capital budget is $130 million.

• Hydro generation was forecast at 84% of normal for 2005, assuming normal precipitation for the remainder of the year; reduced generation was expected to lower operating cash flow by ~$25 million and pretax earnings by ~$2.5 million versus the original forecast.

• 2005 cash flows and the $350 million five-year credit line were expected to fund capital expenditures, debt maturities excluding $54.6 million of WP Funding LP debt, and other commitments.