1. Earnings Conference Call
First Quarter 2008
May 8, 2008
Operator will introduce you, and then begin reading.
Steven Eschbach, Vice President - Investor Relations, speaks.
Good morning. Welcome to Integrys Energy Group’s 2008 first quarter earnings
conference call. Delivering formal remarks with me today are Larry Weyers, our
President and Chief Executive Officer; Joe O'Leary, our Senior Vice President and Chief
Financial Officer; Larry Borgard, President and Chief Operating Officer of Integrys Gas
Group; Charlie Schrock, President of Wisconsin Public Service Corporation; and Mark
Radtke, President of our nonregulated subsidiary, Integrys Energy Services. Other
members of our executive management team are also present to assist in answering
any questions you may have after our formal remarks are presented.
The slides supporting today’s presentation and an associated data package are located
on our Web site at www.integrysgroup.com. Select Investors, select Presentations, and
then today’s presentation.
Before we begin, I will advise everyone that this call is being recorded and will be
available for replay through August 5, 2008.
I need to direct you to Slides 2 and 3 of our presentation and to point out that this
presentation contains forward-looking statements within the definition of the Securities
and Exchange Commission's Safe Harbor rules including projected results for 2008 for
Integrys Energy Group and its subsidiaries. Forward-looking statements are beyond the
ability of Integrys Energy Group to control and, in many cases, Integrys Energy Group
cannot predict what factors would cause actual results to differ materially from those
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2. indicated by forward-looking statements. I also refer you to the forward-looking
statement section of today's news release and to our filed Securities and Exchange
Commission disclosure documents for further information. Except as may be required
by federal securities laws, Integrys Energy Group and its subsidiaries undertake no
obligation to publicly update or revise any forward-looking statement contained in this
presentation, whether the result of new information, future events, or otherwise.
Slide 4 indicates that today’s presentation includes non-GAAP financial information
related to “diluted earnings per share from continuing operations – adjusted,” “forward
book value,” and “managerial gross margin.” We believe that diluted earnings per share
from continuing operations – adjusted, forward book value, and managerial gross
margin are useful measures for providing investors with additional insight into our
operating performance and the effects of certain items that are not comparable from
one period to the next. Please review the text of this slide regarding non-GAAP
financial information.
I will now turn the call over to Larry Weyers. Larry...
Larry Weyers, President and Chief Executive Officer, speaks.
Thanks, Steve. Good morning, everyone, and thanks for joining us on the call today.
Please turn to Slide 5 where I will begin with an overview of our first quarter 2008
accomplishments.
March 20, 2008, marked the 50th consecutive year of increasing our common stock
dividend. More importantly, it demonstrates the Board of Directors’ confidence in our
long-term prospects of increasing earnings per share by 6 to 8 percent on an average
annualized basis. We are now looking at this year, 2008, as the basis for this. The
dividend payment on our common stock last month also marked the 68th consecutive
year that we have paid a dividend. We are proud of these records.
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3. Other key accomplishments this quarter include Wisconsin Public Service’s Weston 4
power plant generating its first megawatt-hour of electricity in March, being declared in-
service for accounting purposes in April, and remaining on target for full commercial
operation in June 2008. We received approval to increase retail electric rates for
Wisconsin Public Service to accommodate higher purchased power and fuel costs. We
also filed for authorization to increase Wisconsin Public Service’s retail electric and
natural gas rates effective January 1, 2009. Our retail natural gas rate cases in Illinois
are complete. Intervener requests for rehearing of the decision to approve decoupling
or, in the alterative, to adjust the allowed return on equity were not allowed. Our
nonregulated business unit, Integrys Energy Services, has completed the integration of
the former Peoples Energy Services and WPS Energy Services organizations. Our
equity investment in American Transmission Company continues to be a strong
contributor to our overall earnings.
Moving to Slide 6, you will see our initiatives for 2008. Our merger/integration efforts
with Peoples Energy are continuing as planned and remain on target. Details related to
our efforts can be found on Slides 29, 30, and 31 in the Appendix. We are also
continuing to advance our regulated construction projects and you’ll hear more on this
from Larry Borgard and Charlie Schrock. In addition to the rate case we recently filed in
Wisconsin, we plan to file for authorization to increase retail natural gas rates for
Minnesota Energy Resources and Michigan Gas Utilities. And, our nonregulated
business unit, Integrys Energy Services, will be moving forward on its target of growing
long-term core earnings on an average annualized basis by 10 to 15 percent using 2008
as the base.
Now we will take a more in-depth look at how we fared during the quarter. Joe O’Leary
will discuss our first quarter 2008 financial results and our earnings guidance for 2008.
Larry Borgard, Charlie Schrock, and Mark Radkte will follow with operational updates.
I will then return to wrap up our formal remarks and moderate a question and answer
session. I will now turn the call over to Joe O’Leary. Joe…
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4. Joe O’Leary, Senior Vice President and Chief Financial Officer, speaks.
Thank you, Larry.
I will begin by reviewing the major financial and segment highlights for the quarter.
Please keep in mind that it is challenging to make quarter-over-quarter comparisons this
year given the increase in our portfolio of assets. We would like to remind you that our
first quarter 2008 results include the operations of Peoples Energy for a full quarter but
the first quarter 2007 results only include the operations of Peoples Energy starting on
February 22, 2007, through the end of the quarter.
Turning to Slide 7, during the first quarter of 2008, we recognized income from
continuing operations of 136.6 million dollars compared with 117.2 million dollars in the
same quarter a year ago. This resulted in diluted earnings per share of $1.77 for the
quarter ended March 31, 2008, compared with $2.01 for the same period in 2007. Our
diluted earnings per share were impacted by a 19 million share increase in the weighted
average number of outstanding shares of common stock as a result of issuing
31.9 million shares of common stock on February 21, 2007, in conjunction with the
Peoples Energy merger.
There are 7 key items driving the positive 19.4 million dollar quarter-over-quarter
change in income from continuing operations. We have presented them in after-tax
dollars and will discuss them in more detail a little bit later.
First, the addition of the Peoples Gas and North Shore Gas utilities effective
February 22, 2007, contributed 33.8 million dollars more to earnings in the first quarter
of 2008 compared with the first quarter of 2007.
Second, the electric margin at our nonregulated Integrys Energy Services segment
increased by 33.7 million dollars.
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5. Third, heating degree days increased by 11.3 percent at Wisconsin Public Service,
which drove the majority of the 6.1 million dollars of increased earnings at its natural
gas utility.
Fourth, Integrys Energy Services’ operating expenses increased by 5.2 million dollars.
Fifth, higher purchased power and fuel costs at Wisconsin Public Service’s electric utility
were the primary factor in earnings decreasing by 8.0 million dollars. Note that about
9 million dollars of these higher first quarter 2008 costs are expected to be recovered
through the remainder of the year.
Sixth, Section 29 tax credits expired, which resulted in an 18.2 million dollar quarter-
over-quarter decrease in earnings.
Seventh, Integrys Energy Services’ natural gas margin decreased by 19.9 million
dollars.
Finally, 23.0 million dollars were included in discontinued operations in 2007 as a result
of the gain on the sale of Niagara in January 2007 and earnings related to the oil and
natural gas production business unit that was sold in the third quarter of 2007.
Moving on to Slide 8, I will provide you with more details regarding our first quarter
financial results. Our income from continuing operations was 136.6 million dollars or
1 dollar and 77 cents per diluted share. Special items in the first quarter of 2008 that
are not comparable with first quarter 2007 results include:
A net loss of 7 cents per share from purchase accounting adjustments due to the
Peoples Energy merger.
A net loss of 3 cents per diluted share for external costs to achieve synergy
savings associated with the Peoples Energy merger.
Income of 1 cent per diluted share from our synthetic fuel facility.
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6. Taking into consideration the items I mentioned, our diluted earnings per share from
continuing operations – adjusted was 1 dollar and 86 cents for the first quarter of 2008
compared with 1 dollar and 74 cents in the comparable quarter last year.
Turning to Slide 9, earnings for the regulated natural gas utility segment increased by
40.4 million dollars in the first quarter of 2008 versus the first quarter of 2007. Key
drivers of the increase, in after-tax dollars, are listed on the bottom of Slide 9. The
primary drivers were the increased earnings at Peoples Gas and North Shore Gas and
colder weather than normal for Wisconsin Public Service.
Turning to Slide 10, earnings for the regulated electric utility segment decreased by
9.7 million dollars in the first quarter of 2008 versus the first quarter of 2007. The key
drivers of the decrease, in after-tax dollars, are listed on the bottom of Slide 10. The
primary drivers were increased purchased power and fuel costs offset by less
maintenance activity for planned outages at our power plants. Remember, the after-tax
impact of the recovery of a significant portion of the fuel and purchased power costs
during the remainder of the year is about 9 million dollars.
Turning to Slide 11, income from continuing operations for the nonregulated Integrys
Energy Services segment decreased by 13.3 million dollars in the first quarter of 2008
versus the first quarter of 2007. The key drivers of the decrease, in after-tax dollars, are
listed on the bottom of Slide 11. There are a number of items contributing to the
quarter-over-quarter decrease, but the key items are no significant synfuel production
earnings and increased operating and maintenance expenses in 2008 for increased
sales staff and infrastructure build out for future growth.
Turning to our Holding Company and Other segment on Slide 12, results improved by
1.8 million dollars from breaking even in the first quarter of 2007 to earnings of
1.8 million dollars in the same period in 2008. The key drivers of the increase in
earnings, in after-tax dollars, are listed on the bottom of Slide 12. The primary drivers
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7. included a 1.7 million dollar increase in earnings from the American Transmission
Company and reduced interest expense.
Slide 13 shows our projected capital expenditures for 2008 through 2010. Wisconsin
Public Service’s expenditures are up slightly for Weston 4 in 2008 due to a number of
small final work order changes needed to place the plant in service. Wisconsin Public
Service’s environmental expenditures are down slightly in 2008 and 2009 from what we
projected during our conference call in February due to delays in environmental
projects. Projected expenditures at Peoples Gas were also reduced by 20 million
dollars in 2008 and 40 million dollars in 2009 due to a change in the accelerated cast
iron main replacement program for those years but keeping the expenditures at the
projected level in 2010. Integrys Energy Services’ projected capital expenditures
increased by about 18 million dollars in 2008 due to a landfill gas project.
Estimated utility depreciation through 2010 can be found on Slide 32 in the Appendix,
and information related to our projected debt financings and equity issuances for 2008
and 2009 is contained on Slide 33 in the Appendix. We do not plan for any new equity
issuances through the end of 2009.
Now we will move on to our 2008 financial guidance, which is covered in Slide 14.
We expect our 2008 diluted earnings per share to be between 3 dollars and 37 cents
and 3 dollars and 82 cents for Integrys Energy Group. For the remainder of 2008 our
guidance assumes normal weather, the continued availability of generating units, the
anticipated merger impacts relating to transition costs and anticipated purchase
accounting adjustments, anticipated merger synergy savings, and recently obtained rate
relief for our utilities as recently approved by regulators. Our diluted earnings per share
guidance does not include the impact of Integrys Energy Services’ mark-to-market
volatility in 2008, which will include about 20 million dollars of net mark-to-market after-
tax losses in 2008 relating to contracts terminating in 2008 that had net mark-to-market
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8. after-tax gains recognized in the prior year. See our news release and supplemental
data package relating to this guidance.
Also included in the news release and supplemental data package is the projected
guidance range for 2008 diluted earnings per share from continuing operations –
adjusted, which is anticipated to be between 3 dollars and 60 cents and 4 dollars and
5 cents. The diluted earnings per share from continuing operations – adjusted guidance
indicates the financial results we anticipate will come from our continuing operations
after excluding the negative impacts of the Peoples Energy merger transition costs to
achieve merger synergy savings and merger purchase accounting adjustments. See
our news release and supplemental data package for further details relating to the
special items.
Please note that this slide has been revised from the slide provided with our
February 20, 2008 earnings call to reflect a 6-cent increase to 2007 diluted earnings per
share from continuing operations – adjusted, which was required to accurately reflect
the impact of the purchase accounting adjustments related to the Peoples Energy
merger.
Now I’ll turn the call over to Larry Borgard, President of Integrys Gas Group. Larry…
Larry Borgard, President – Integrys Gas Group, speaks.
Thanks Joe.
Beginning on Slide 15, our Illinois natural gas rate cases are essentially complete, and
the details of the rate orders are repeated on the top portion of this slide. New
information since our last earnings conference call is contained in the last sub-bullet on
this slide. We petitioned the Illinois Commerce Commission to reopen the rate case
proceedings for reconsideration of a number of issues, including the infrastructure rider.
A number of parties requested reconsideration of certain other issues, including the
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9. elimination of the decoupling rider. All of the requests for the reopening of this rate case
on the more substantive issues were denied by the Illinois Commerce Commission in
April. However, legislation has been introduced in the state legislature to roll back
decoupling. We are actively supporting the Illinois Commerce Commission’s decision to
approve this rate setting mechanism. As a result of this rider, in the first month of
operation, customers of Peoples Gas and North Shore Gas will receive an overall net
credit of 1 million dollars on their May 2008 bills. The May adjustment is based on
natural gas usage from March 2008 when weather was colder than normal and
revenues collected were higher than what the utilities were expected to recover. This
new tool aligns the utilities’ interests with our customers’ interests to encourage
conservation, protect the environment, and provide peace of mind that the utilities will
be able to focus on ensuring a safe, efficient, and reliable natural gas delivery system.
It should be noted that Illinois’ Attorney General recently filed a Notice of Appeal with
the Illinois Appellate Court identifying as issues the volume balancing rider, its impact
on return on equity, and an adjustment to rate base for post test year depreciation. A
final decision on this appeal is not expected until at least 2009.
Also during the first quarter, we signed a new collective bargaining agreement with the
union representing many of the Peoples Gas employees and extended our relationship-
building success from regulatory relations to employee relations. Key resolutions
included a five-year contract expiring in 2013, annual wage increases ranging from
3 percent to 3.25 percent, and moving all new hires to a defined contribution pension
plan instead of a defined benefit plan.
Initiatives for the balance of 2008 are indicated on Slide 16 and include the
development of plans to accelerate investment in replacement of cast iron main in
Chicago. In our next rate case, we plan to seek traditional ratemaking treatment for
recovery of these capital improvement expenditures and to seek reconsideration of our
proposed infrastructure rider for future expenditures.
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10. We also plan to move forward with retail natural gas rate case filings for Minnesota
Energy Resources and Michigan Gas Utilities by the summer of 2008. We have made
substantial progress on our bad debt exposure through our improved credit and
collection efforts. It has been over five years since Minnesota Energy Resources and
Michigan Gas Utilities last received authorized rate increases from their respective state
regulatory authorities. We anticipate interim rate increases becoming effective, subject
to refund, prior to the heating season.
As a final note, we have reviewed our bad debt reserves at all of our natural gas
companies taking into consideration current economic conditions. We feel comfortable
with where these levels are at this point, but will continue to closely monitor our
receivables as we move into our traditionally heavy collection period. Additionally, we
are working aggressively to make sure our customers access the Low Income Home
Energy Assistance Program dollars available to them.
I will now turn this call over to Charlie Schrock, President of Wisconsin Public Service,
for an update on our Wisconsin and Upper Michigan utilities. Charlie…
Charlie Schrock, President of Wisconsin Public Service, speaks.
Thank you, Larry, and I ask our listeners to refer to Slide 17.
Key accomplishments for our Wisconsin and Upper Michigan utilities included Weston 4
generating its first megawatt-hour of electricity in March. This was about two months
beyond the mid-January date that was assumed in our rate case. The delay was due to
a few equipment issues that were encountered as we were going through the start-up
process. We also experienced a failure on one of the two forced draft fans. While this
failure did not impact our initial start-up testing, it has delayed the testing of the unit
above 50 percent power. Notwithstanding this, we are still targeting full commercial
operation of Weston 4 in June 2008. As a result of the delayed startup, we filed for
authorization to increase retail electric rates to recover increased purchased power and
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11. fuel costs. A 29.7 million dollar annual rate increase was granted and became effective
on March 22, 2008. Because Wisconsin’s current fuel rules only allow for prospective
recovery, it is anticipated that 23.6 million dollars will be collected in rates over the next
three quarters.
Wisconsin Public Service filed on April 1 for authorization to increase its retail electric
rates by 106.8 million dollars, or 7.75 percent, and its retail natural gas rates by
11.7 million dollars, or 2.16 percent, effective January 1, 2009. It should be noted that
this rate filing did not include recovery of both operation and maintenance costs and
capital costs associated with our proposed 99-megawatt Iowa wind project, as we didn’t
have a certificate of authority from the Public Service Commission of Wisconsin for that
project at the time of filing the rate case. We will amend our filing to include the Iowa
wind project after a written order is received. This rate filing also requested
authorization to increase retail electric rates in 2010 by 0.33 percent plus an adjustment
for fuel related costs. The proposed retail electric rate increase for 2009 is required
because of the completion of the refund to retail electric customers of the non-qualified
decommissioning trust fund related to the sale of the Kewaunee nuclear power plant of
approximately 54 million dollars in 2007, the cost of operating Weston 4, increased
electric transmission costs, and the recovery of the costs associated with the October
2007 lightning strike and subsequent outage at Weston 3. The proposed retail natural
gas rate increase is required primarily because of costs associated with the construction
of the natural gas laterals connecting the Wisconsin Public Service natural gas
distribution system to the Guardian 2 natural gas pipeline. Details related to our rate
case filing are summarized for you in the Appendix on Slide 34.
Our initiatives for the remainder of 2008 are indicated on Slide 18 and include ensuring
that Weston 4, a 500-megawatt, supercritical pulverized coal plant, becomes
commercially operational in June.
In March, we announced the signing of a letter of intent to acquire a 150-megawatt wind
farm in Minnesota that is expected to achieve commercial operation between 2012 and
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12. 2014. Negotiations for a definitive agreement are underway. This is in addition to the
99-megawatt wind farm acquisition in Iowa that we announced in November 2007 and
for which the Public Service Commission of Wisconsin recently granted approval to
purchase. Estimated acquisition and construction related activities for this approved
project are approximately 251 million dollars – excluding any capitalized allowance for
funds used during construction. The closing on the purchase is expected to occur in the
third quarter of 2008 with the wind farm becoming commercially operational late in
December 2009. The wind farm acquisitions are expected to help Wisconsin Public
Service reach its Renewable Portfolio Standard target of generating 10 percent of its
retail electric sales from renewable power by 2015.
In April, we began construction of the natural gas laterals that will connect to the
Guardian 2 natural gas pipeline. We expect to complete this 75 million dollar project
near the end of 2008. The Guardian 2 pipeline will create competition by having an
alternate natural gas transportation source for our Wisconsin customers and will create
additional, much needed, pipeline capacity in our regulated natural gas business
territory.
Now Mark Radtke, President of Integrys Energy Services, will discuss our nonregulated
operations. Mark…
Mark Radtke, President of Integrys Energy Services, speaks.
Thanks, Charlie.
Our nonregulated business is continuing to grow, and Slide 19 illustrates that growth in
terms of our physical retail delivered volumes in the first quarter of 2008 versus the first
quarter of 2007. While the Peoples Energy merger was a major component of that
growth in both our retail natural gas and electric business lines, we are beginning to see
the contributions of our larger sales team across the geographic markets in which we
operate. Organic retail natural gas sales growth was most pronounced in our Illinois,
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13. Michigan, and Wisconsin markets. We grew our retail electric delivered volumes over
1.5 million megawatt-hours, and Texas led our organic growth, followed by post-merger
growth in Illinois.
Slide 20 depicts our growing forward book sales, or ”backlog.” I am pleased with our
continued success in growing the forward book, especially in this rising energy price
environment. Rising prices tend to reduce our customer’s enthusiasm for making long-
term price commitments, instead, often choosing to re-contract on a seasonal or even
monthly basis. For example, at the end of March last year, the average retail natural
gas contract had 11.5 months remaining, effectively through the middle of March 2008.
At the end of March this year, that average term is down 17 percent to 9.6 months. We
see a similar effect in our retail electric business, where the average term of our largest
market, Illinois, is down 65 percent on a quarter-over-quarter basis. Other than my
empathy for customers experiencing these higher prices, I’m not particularly alarmed by
this reduced contracting term, and would expect it to stretch back out when prices
stabilize or decline. Whether or not prices remain high, we generally don’t expect
customers to stay away from longer term contracts indefinitely.
On Slide 21, you can see that our managerial gross margin—the metric we like to use to
measure our business performance—showed a fairly significant decrease from where it
was a year ago. Included in the 2007 results, however, is the value associated with the
Peoples merger. For comparability, removing that one-time pop in forward book value
in 2007, results in a 5.5 million dollar increase in managerial gross margin in 2008
compared with 2007. I am quite pleased about this result, particularly in a rising energy
price environment. Evidence of our customer base shortening their contract terms is
demonstrated by the slight decline in our forward book value. The increase in realized
gross margin, commensurate with our increased delivered volume, more than offsets
the forward book decline, to result in a managerial gross margin increase of almost
9 percent.
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14. We have previously discussed Managerial Gross Margin and how it differs from
generally accepted accounting principles or GAAP gross margin. Slide 22 takes it one
step further by giving you a total adjustment that eliminates the volatility that derivative
accounting can introduce. The Mark-to-Market Volatility Adjustment line items
represent the difference between GAAP and Managerial Gross Margin-based earnings.
As we have described in the past, this measure removes the timing mismatches caused
by derivative accounting rules, and provides a better perspective on the value we
actually created during the period. All of the other numbers on this schedule are
reflected in our reported earnings per share – adjusted numbers that Joe presented
earlier.
Slide 23 demonstrates the future impact on GAAP gross margins related to the large
mark-to-market gains we have recorded to date. As you can see in the far right column,
most of our mark-to-market timing differences will reverse out during the remainder of
2008. With that being said, we cannot predict the impact that mark-to-market might
have on transactions that settle beyond the current year. It is important to note that
these amounts are based on current contracts and do not reflect new business and
further optimization of our portfolio of assets.
Turning now to Slide 24 for an operational update, our organizational integration of
Peoples Energy and the associated platforms are in place. Our systems and process
integration is substantially complete, although we still have improvements to make, and
are working through a number of operational issues that have impacted our ability to bill
some of our customers on a timely basis. We have moved virtually all of the Peoples
Energy contracts over to Integrys Energy Services, and have begun contract renewal of
those customers, many of whom have contracts coming due in the second quarter.
From an operational perspective, we did see a period of reduced transaction liquidity in
electric markets with the crisis in the financial sector. Liquidity has returned, and we
remain acutely aware of the credit risk we have with all of our counterparties, especially
banks impacted by the mortgage crisis, regardless of their credit rating, as we’ve seen
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15. how quickly that can change. We have continued to grow our originated wholesale
customer-based business, even in these tough market conditions.
We are seeing higher default rates among our retail customers. Our bad debt reserves
have risen compared with the first quarter of 2007 as our credit team works through a
challenging environment. To date, the team has been able to remediate the bad debt
issues and employ tools like credit insurance, which has reduced adverse financial
exposure for us. Although we have yet to see significant negative financial impacts of
this credit-challenged environment, we will continue to monitor this closely.
On March 31, we announced the creation of a new group that is focused on renewable
energy, efficiency, and conservation. This renewable energy group was created in
response to customers’ growing interest in sustainability and our concern for the
environment. We are focused on delivering value-added energy services and
renewable energy products to our wholesale and retail customers. Examples of new
offerings from this group include electric supply involving Renewable Energy
Certificates, energy-efficiency programs that promote conservation, and development of
renewable energy projects. Integrys Energy Services has been involved in developing
renewable energy projects in the past, including the recently commissioned Winnebago
Energy Center, a 6.4-megawatt landfill gas-to-electricity project in Rockford, Illinois.
The formation of this group is consistent with our asset management strategy, and it
formally brings our existing activities, like the Winnebago Energy Center, under one
area. It also allows us to accelerate our activities in this sector by deploying expertise
within this group across all of our business lines.
Moving to Slide 25, I will discuss our key initiatives for the balance of this year. We
have continued to add to our sales force that will support our existing wholesale
customers and provide added strength to the expansion of our business opportunities.
We are working on building out our natural gas capability and adding originators that
focus on serving the producer market. We also anticipate launching a new product to
our environmentally aware customers late in the second quarter.
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16. Even with the competitive energy landscape, we still expect to achieve a 10 to
15 percent long-term annual growth rate in core earnings using 2008 as the base. This
will be driven by expansion in our more recently entered markets—Texas, New
England, and the West—as well as continued improvement in our capability to optimize
supply in existing markets. We have seen benefits of increased regional scope within
each of our markets. Essentially, we are capitalizing on expanded opportunities with
our improved capabilities. Our commercial and industrial electric business still has very
small market share in most of the markets open to competition, and our originated
wholesale customer business still has lots of potential to increase market share. And
that is a real silver lining, because existing markets are the easiest and lowest cost to
grow.
Now, I will turn the call back to Larry Weyers. Larry…
The President and Chief Executive Officer speaks.
Thanks, Mark.
Let me remind you of the key points from today’s discussion relating to the drivers of our
future earnings growth. First, we will advance our construction projects—the 500-
megawatt Weston 4 power plant and the Guardian 2 pipeline laterals, among others.
Second, we will move forward with rate cases as needed to ensure opportunities to earn
reasonable returns on these investments. Third, our expansion into developed markets
in the United States and Canada is expected to grow core earnings for Integrys Energy
Services on an average annualized basis by 10 to 15 percent using 2008 as the base.
Fourth, using 2008 as a starting point, we expect to grow earnings per share at 6 to
8 percent on an average annualized basis, although there could be some variation on a
year-to-year basis.
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17. Finally, as set forth in Slide 26, our earnings guidance for 2008 for diluted earnings per
share from continuing operations – adjusted is between 3 dollars and 60 cents and
4 dollars and 5 cents.
We appreciate you listening to our prepared remarks, now I would like to open the floor
to questions.
STOP
Allow operator to give instructions.
Repeat the question before answering.
Signal for the last question.
Take last question and then end the call with the following:
Steve Eschbach, Vice President – Investor Relations speaks:
Thank you for being a part of our first quarter earnings conference call. A replay of this
conference call will be available until August 5, 2008, by dialing toll free 800-947-6332.
The text for today's presentation is available on our Web site at
www.integrysgroup.com. Just select Investors and then Presentations.
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18. If you have additional questions, you may contact me at 312-228-5408 or Donna
Sheedy at 920-433-1857.
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