Commission File Number | Exact name of registrant as specified in its charter;address of principal executive offices; registrant's telephone number, including area code | State or Other Jurisdiction of Incorporation | I.R.S. Employer Identification No. | |||
1-16163 | WGL Holdings, Inc. 101 Constitution Ave., N.W. Washington, D.C. 20080 (703) 750-2000 | Virginia | 52-2210912 | |||
0-49807 | Washington Gas Light Company 101 Constitution Ave., N.W. Washington, D.C. 20080 (703) 750-4440 | District of Columbia and Virginia | 53-0162882 |
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02 | RESULTS OF OPERATIONS AND FINANCIAL CONDITION |
ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS |
(d) | Exhibits |
News Release issued November 17, 2017 |
WGL Holdings, Inc. | ||||
and | ||||
Washington Gas Light Company | ||||
(Registrants) | ||||
Date: November 17, 2017 | /s/ William R. Ford | |||
William R. Ford | ||||
Vice President & Chief Accounting Officer | ||||
(Principal Accounting Officer) |
![]() |
FOR IMMEDIATE RELEASE November 17, 2017 | CONTACTS: | |||
News Media Brian Edwards | 202-624-6620 | |||
Financial Community Douglas Bonawitz | 202-624-6129 |
• | Consolidated GAAP earnings per share up — $3.74 per share vs. $3.31 per share; Record GAAP earnings of $192.6 million |
• | Non-GAAP operating earnings per share up — $3.11 per share vs. $3.08 per share; Operating earnings of $160.2 million |
Three Months Ended September 30, | Increase/ | Fiscal Year Ended September 30, | Increase/ | ||||||||||||||||||||
(In millions) | 2017 | 2016 | (Decrease) | 2017 | 2016 | (Decrease) | |||||||||||||||||
EBIT | $ | (12.8 | ) | $ | (14.9 | ) | $ | 2.1 | $ | 266.3 | $ | 228.2 | $ | 38.1 | |||||||||
Adjusted EBIT | $ | (23.6 | ) | $ | (21.2 | ) | $ | (2.4 | ) | $ | 227.2 | $ | 224.3 | $ | 2.9 |
Three Months Ended September 30, | Increase/ | Fiscal Year Ended September 30, | Increase/ | ||||||||||||||||||||
(In millions) | 2017 | 2016 | (Decrease) | 2017 | 2016 | (Decrease) | |||||||||||||||||
EBIT | $ | 10.4 | $ | 12.9 | $ | (2.5 | ) | $ | 53.2 | $ | 65.0 | $ | (11.8 | ) | |||||||||
Adjusted EBIT | $ | 12.4 | $ | 24.3 | $ | (11.9 | ) | $ | 41.6 | $ | 54.2 | $ | (12.6 | ) |
Three Months Ended September 30, | Increase/ | Fiscal Year Ended September 30, | Increase/ | ||||||||||||||||||||
(In millions) | 2017 | 2016 | (Decrease) | 2017 | 2016 | (Decrease) | |||||||||||||||||
EBIT | $ | 13.3 | $ | 11.7 | $ | 1.6 | $ | 40.8 | $ | 22.0 | $ | 18.8 | |||||||||||
Adjusted EBIT | $ | 15.0 | $ | 13.1 | $ | 1.9 | $ | 47.6 | $ | 27.3 | $ | 20.3 |
Three Months Ended September 30, | Increase/ | Fiscal Year Ended September 30, | Increase/ | ||||||||||||||||||||
(In millions) | 2017 | 2016 | (Decrease) | 2017 | 2016 | (Decrease) | |||||||||||||||||
EBIT | $ | 16.5 | $ | (9.8 | ) | $ | 26.3 | $ | 37.7 | $ | 7.8 | $ | 29.9 | ||||||||||
Adjusted EBIT | $ | 0.4 | $ | (7.8 | ) | $ | 8.2 | $ | 10.9 | $ | 2.6 | $ | 8.3 |
Three Months Ended September 30, | Increase/ | Fiscal Year Ended September 30, | Increase/ | ||||||||||||||||||||
(In millions) | 2017 | 2016 | (Decrease) | 2017 | 2016 | (Decrease) | |||||||||||||||||
EBIT | $ | (2.0 | ) | $ | (0.4 | ) | $ | (1.6 | ) | $ | (19.9 | ) | $ | (3.2 | ) | $ | (16.7 | ) | |||||
Adjusted EBIT | $ | (1.8 | ) | $ | (0.4 | ) | $ | (1.4 | ) | $ | (4.9 | ) | $ | (3.2 | ) | $ | (1.7 | ) |
(In thousands) | September 30, 2017 | September 30, 2016 | ||||||
ASSETS | ||||||||
Property, Plant and Equipment | ||||||||
At original cost | $ | 6,143,841 | $ | 5,542,916 | ||||
Accumulated depreciation and amortization | (1,513,790 | ) | (1,415,679 | ) | ||||
Net property, plant and equipment | 4,630,051 | 4,127,237 | ||||||
Current Assets | ||||||||
Cash and cash equivalents | 8,524 | 5,573 | ||||||
Accounts receivable, net | 553,312 | 491,020 | ||||||
Storage gas | 243,984 | 207,132 | ||||||
Derivatives and other | 180,069 | 139,749 | ||||||
Total current assets | 985,889 | 843,474 | ||||||
Deferred Charges and Other Assets | 1,010,069 | 1,078,739 | ||||||
Total Assets | $ | 6,626,009 | $ | 6,049,450 | ||||
CAPITALIZATION AND LIABILITIES | ||||||||
Capitalization | ||||||||
WGL Holdings common shareholders’ equity | $ | 1,502,690 | $ | 1,375,561 | ||||
Non-controlling interest | 6,851 | 409 | ||||||
Washington Gas Light Company preferred stock | 28,173 | 28,173 | ||||||
Total equity | 1,537,714 | 1,404,143 | ||||||
Long-term debt | 1,430,861 | 1,435,045 | ||||||
Total capitalization | 2,968,575 | 2,839,188 | ||||||
Current Liabilities | ||||||||
Notes payable and current maturities of long-term debt | 809,844 | 331,385 | ||||||
Accounts payable and other accrued liabilities | 423,824 | 405,351 | ||||||
Derivatives and other | 255,320 | 290,190 | ||||||
Total current liabilities | 1,488,988 | 1,026,926 | ||||||
Deferred Credits | 2,168,446 | 2,183,336 | ||||||
Total Capitalization and Liabilities | $ | 6,626,009 | $ | 6,049,450 |
Three Months Ended September 30, | Fiscal Year Ended September 30, | |||||||||||||||
(In thousands, except per share data) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
OPERATING REVENUES | ||||||||||||||||
Utility | $ | 151,036 | $ | 131,505 | $ | 1,143,337 | $ | 1,044,117 | ||||||||
Non-utility | 278,087 | 328,394 | 1,211,387 | 1,305,442 | ||||||||||||
Total Operating Revenues | 429,123 | 459,899 | 2,354,724 | 2,349,559 | ||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Utility cost of gas | 14,408 | 8,370 | 274,247 | 245,189 | ||||||||||||
Non-utility cost of energy-related sales | 215,217 | 290,990 | 1,002,908 | 1,123,077 | ||||||||||||
Operation and maintenance | 113,435 | 104,963 | 429,890 | 401,776 | ||||||||||||
Depreciation and amortization | 40,651 | 34,198 | 154,138 | 132,566 | ||||||||||||
General taxes and other assessments | 29,564 | 26,685 | 152,528 | 146,655 | ||||||||||||
Total Operating Expenses | 413,275 | 465,206 | 2,013,711 | 2,049,263 | ||||||||||||
OPERATING INCOME (LOSS) | 15,848 | (5,307 | ) | 341,013 | 300,296 | |||||||||||
Equity in earnings of unconsolidated affiliates | 5,099 | 3,248 | 20,216 | 13,806 | ||||||||||||
Other income (expenses) — net | 2,410 | 957 | 1,819 | 4,646 | ||||||||||||
Interest expense | 18,474 | 13,553 | 74,026 | 52,310 | ||||||||||||
INCOME (LOSS) BEFORE TAXES | 4,883 | (14,655 | ) | 289,022 | 266,438 | |||||||||||
INCOME TAX EXPENSE (BENEFIT) | 4,778 | (5,545 | ) | 111,159 | 98,074 | |||||||||||
NET INCOME (LOSS) | $ | 105 | $ | (9,110 | ) | $ | 177,863 | $ | 168,364 | |||||||
Net loss attributable to non-controlling interest | (3,544 | ) | (550 | ) | (16,077 | ) | (550 | ) | ||||||||
Dividends on Washington Gas Light Company preferred stock | 330 | 330 | 1,320 | 1,320 | ||||||||||||
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK | $ | 3,319 | $ | (8,890 | ) | $ | 192,620 | $ | 167,594 | |||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||||||||||||||
Basic | 51,219 | 51,070 | 51,205 | 50,369 | ||||||||||||
Diluted | 51,491 | 51,070 | 51,475 | 50,564 | ||||||||||||
EARNINGS (LOSS) PER AVERAGE COMMON SHARE | ||||||||||||||||
Basic | $ | 0.06 | $ | (0.17 | ) | $ | 3.76 | $ | 3.33 | |||||||
Diluted | $ | 0.06 | $ | (0.17 | ) | $ | 3.74 | $ | 3.31 |
Three Months Ended September 30, | Fiscal Year Ended September 30, | |||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
EBIT: | ||||||||||||||||
Regulated utility | $ | (12,807 | ) | $ | (14,883 | ) | $ | 266,307 | $ | 228,219 | ||||||
Retail energy-marketing | 10,420 | 12,913 | 53,195 | 64,968 | ||||||||||||
Commercial energy systems | 13,270 | 11,741 | 40,834 | 21,992 | ||||||||||||
Midstream energy services | 16,529 | (9,824 | ) | 37,689 | 7,807 | |||||||||||
Other activities | (1,978 | ) | (411 | ) | (19,865 | ) | (3,184 | ) | ||||||||
Intersegment eliminations | 1,467 | (88 | ) | 965 | (504 | ) | ||||||||||
Total | $ | 26,901 | $ | (552 | ) | $ | 379,125 | $ | 319,298 | |||||||
Interest expense | 18,474 | 13,553 | 74,026 | 52,310 | ||||||||||||
Income tax expense (benefit) | 4,778 | (5,545 | ) | 111,159 | 98,074 | |||||||||||
Dividends on Washington Gas preferred stock | 330 | 330 | 1,320 | 1,320 | ||||||||||||
Net income (loss) applicable to common stock | $ | 3,319 | $ | (8,890 | ) | $ | 192,620 | $ | 167,594 |
Fiscal Year Ended September 30, | ||||
2017 | 2016 | |||
Closing Market Price — end of period | $84.20 | $62.70 | ||
52-Week Market Price Range | $86.89 - $58.66 | $74.10 - $56.90 | ||
Price Earnings Ratio | 22.4 | 18.8 | ||
Annualized Dividends Per Share | $2.04 | $1.95 | ||
Dividend Yield | 2.4% | 3.1% | ||
Return on Average Common Equity | 13.4% | 12.8% | ||
Total Interest Coverage (times) | 5.0 | 5.8 | ||
Book Value Per Share — end of period | $29.34 | $26.93 | ||
Common Shares Outstanding — end of period (thousands) | 51,219 | 51,081 |
Three Months Ended September 30, | Fiscal Year Ended September 30, | ||||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||||
Operating Revenues | |||||||||||||||||
Gas Sold and Delivered | |||||||||||||||||
Residential — Firm | $ | 74,222 | $ | 65,671 | $ | 685,206 | $ | 615,170 | |||||||||
Commercial and Industrial — Firm | 23,395 | 16,386 | 156,088 | 136,646 | |||||||||||||
Commercial and Industrial — Interruptible | 107 | 318 | 2,239 | 2,181 | |||||||||||||
97,724 | 82,375 | 843,533 | 753,997 | ||||||||||||||
Gas Delivered for Others | |||||||||||||||||
Firm | 30,604 | 28,898 | 208,988 | 206,709 | |||||||||||||
Interruptible | 8,733 | 8,182 | 49,731 | 46,300 | |||||||||||||
Electric Generation | 396 | 543 | 1,331 | 1,954 | |||||||||||||
39,733 | 37,623 | 260,050 | 254,963 | ||||||||||||||
137,457 | 119,998 | 1,103,583 | 1,008,960 | ||||||||||||||
Other | 13,579 | 11,507 | 39,754 | 35,157 | |||||||||||||
Total | $ | 151,036 | $ | 131,505 | $ | 1,143,337 | $ | 1,044,117 | |||||||||
Three Months Ended September 30, | Fiscal Year Ended September 30, | ||||||||||||||||
(In thousands of therms) | 2017 | 2016 | 2017 | 2016 | |||||||||||||
Gas Sales and Deliveries | |||||||||||||||||
Gas Sold and Delivered | |||||||||||||||||
Residential — Firm | 38,688 | 33,749 | 600,279 | 590,625 | |||||||||||||
Commercial and Industrial — Firm | 25,040 | 14,731 | 174,436 | 167,832 | |||||||||||||
Commercial and Industrial — Interruptible | 10 | 425 | 2,554 | 2,771 | |||||||||||||
63,738 | 48,905 | 777,269 | 761,228 | ||||||||||||||
Gas Delivered for Others | |||||||||||||||||
Firm | 74,554 | 60,001 | 495,031 | 501,030 | |||||||||||||
Interruptible | 41,775 | 44,083 | 242,545 | 239,013 | |||||||||||||
Electric Generation | 28,301 | 122,968 | 87,611 | 291,252 | |||||||||||||
144,630 | 227,052 | 825,187 | 1,031,295 | ||||||||||||||
Total | 208,368 | 275,957 | 1,602,456 | 1,792,523 | |||||||||||||
Utility Gas Purchase Expense (excluding asset optimization) | 31.66 | ¢ | 36.79 | ¢ | 41.57 | ¢ | 35.44 | ¢ | |||||||||
HEATING DEGREE DAYS | |||||||||||||||||
Actual | 6 | 1 | 3,127 | 3,341 | |||||||||||||
Normal | 11 | 11 | 3,717 | 3,730 | |||||||||||||
Percent Colder (Warmer) than Normal | (45.5 | )% | (90.9 | )% | (15.9 | )% | (10.4 | )% | |||||||||
Average Active Customer Meters | 1,160,305 | 1,143,616 | 1,154,952 | 1,141,763 | |||||||||||||
WGL ENERGY SERVICES | |||||||||||||||||
Natural Gas Sales | |||||||||||||||||
Therm Sales (thousands of therms) | 90,200 | 100,900 | 693,300 | 750,700 | |||||||||||||
Number of Customers (end of period) | 116,200 | 133,000 | 116,200 | 133,000 | |||||||||||||
Electricity Sales | |||||||||||||||||
Electricity Sales (thousands of kWhs) | 3,048,500 | 3,769,600 | 12,248,400 | 13,090,700 | |||||||||||||
Number of Accounts (end of period) | 113,700 | 127,400 | 113,700 | 127,400 | |||||||||||||
WGL ENERGY SYSTEMS | |||||||||||||||||
Megawatts in service | 221 | 145 | 221 | 145 | |||||||||||||
Megawatt hours generated | 93,352 | 68,481 | 290,465 | 211,495 |
• | To better match the accounting recognition of transactions with their economics; |
• | To better align with regulatory view/recognition; |
• | To eliminate the effects of: |
i. | Significant out of period adjustments; |
ii. | Other significant items that may obscure historical earnings comparisons and are not indicative of performance trends; and |
iii. | For adjusted EBIT, other items which may obscure segment comparisons. |
Fiscal Year 2017 | ||||||||||||||||||||
Quarterly Period Ended(1) | ||||||||||||||||||||
(In thousands, except per share data) | Dec. 31 | Mar. 31 | Jun. 30 | Sept. 30 | Fiscal Year | |||||||||||||||
Operating earnings (loss) | $ | 59,362 | $ | 96,087 | $ | 13,635 | $ | (8,840 | ) | $ | 160,244 | |||||||||
Non-GAAP adjustments(3) | (2,324 | ) | 38,468 | (3,093 | ) | 22,317 | 55,368 | |||||||||||||
De-designated interest rate swaps(4) | — | 2,516 | (7,757 | ) | (329 | ) | (5,570 | ) | ||||||||||||
Income tax effect of non-GAAP adjustments(5) | 934 | (14,007 | ) | 5,480 | (9,829 | ) | (17,422 | ) | ||||||||||||
Net income (loss) applicable to common stock | $ | 57,972 | $ | 123,064 | $ | 8,265 | 3,319 | $ | 192,620 | |||||||||||
Diluted average common shares outstanding | 51,445 | 51,476 | 51,493 | 51,491 | 51,475 | |||||||||||||||
Operating earnings (loss) per share | $ | 1.15 | $ | 1.87 | $ | 0.26 | $ | (0.17 | ) | $ | 3.11 | |||||||||
Per share effect of non-GAAP adjustments | (0.03 | ) | 0.52 | (0.10 | ) | 0.23 | 0.63 | |||||||||||||
Diluted earnings (loss) per average common share | $ | 1.12 | $ | 2.39 | $ | 0.16 | $ | 0.06 | $ | 3.74 | ||||||||||
Fiscal Year 2016(2) | ||||||||||||||||||||
Quarterly Period Ended(1) | ||||||||||||||||||||
(In thousands, except per share data) | Dec. 31 | Mar. 31 | Jun. 30 | Sept. 30 | Fiscal Year | |||||||||||||||
Operating earnings (loss) | $ | 59,205 | $ | 89,490 | $ | 11,561 | (4,656 | ) | $ | 155,600 | ||||||||||
Non-GAAP adjustments(3) | 13,312 | 25,815 | (16,109 | ) | (8,541 | ) | 14,477 | |||||||||||||
Income tax effect of non-GAAP adjustments(5) | (4,346 | ) | (9,017 | ) | 6,573 | 4,307 | (2,483 | ) | ||||||||||||
Net income (loss) applicable to common stock | $ | 68,171 | $ | 106,288 | $ | 2,025 | $ | (8,890 | ) | $ | 167,594 | |||||||||
Diluted average common shares outstanding | 50,030 | 50,282 | 50,905 | 51,070 | 50,564 | |||||||||||||||
Operating earnings (loss) per share | $ | 1.18 | $ | 1.78 | $ | 0.23 | $ | (0.09 | ) | $ | 3.08 | |||||||||
Per share effect of non-GAAP adjustments | 0.18 | 0.33 | (0.19 | ) | (0.08 | ) | 0.23 | |||||||||||||
Diluted earnings (loss) per average common share | $ | 1.36 | $ | 2.11 | $ | 0.04 | $ | (0.17 | ) | $ | 3.31 |
Three Months Ended September 30, 2017 | ||||||||||||||||||||||||||||
(In thousands) | Regulated Utility | Retail Energy- Marketing | Commercial Energy Systems | Midstream Energy Services | Other Activities(i) | Eliminations | Total | |||||||||||||||||||||
Adjusted EBIT | $ | (23,631 | ) | $ | 12,434 | $ | 15,047 | $ | 384 | $ | (1,751 | ) | $ | 2,101 | $ | 4,584 | ||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||||||||
Unrealized mark-to-market valuations on energy-related derivatives(a) | 9,623 | (2,014 | ) | — | 11,226 | — | (634 | ) | 18,201 | |||||||||||||||||||
Storage optimization program(b) | 1,203 | — | — | — | — | — | 1,203 | |||||||||||||||||||||
DC weather impact(c) | (2 | ) | — | — | — | — | — | (2 | ) | |||||||||||||||||||
Distributed generation asset related investment tax credits(d) | — | — | (1,777 | ) | — | — | — | (1,777 | ) | |||||||||||||||||||
Change in measured value of inventory(e) | — | — | — | 4,919 | — | — | 4,919 | |||||||||||||||||||||
Merger related costs(f) | — | — | — | — | (227 | ) | — | (227 | ) | |||||||||||||||||||
Total non-GAAP adjustments | $ | 10,824 | $ | (2,014 | ) | $ | (1,777 | ) | $ | 16,145 | $ | (227 | ) | $ | (634 | ) | $ | 22,317 | ||||||||||
EBIT | $ | (12,807 | ) | $ | 10,420 | $ | 13,270 | $ | 16,529 | $ | (1,978 | ) | $ | 1,467 | $ | 26,901 | ||||||||||||
Three Months Ended September 30, 2016 | ||||||||||||||||||||||||||||
(In thousands) | Regulated Utility | Retail Energy- Marketing | Commercial Energy Systems | Midstream Energy Services | Other Activities(j) | Eliminations | Total | |||||||||||||||||||||
Adjusted EBIT | $ | (21,171 | ) | $ | 24,282 | $ | 13,139 | $ | (7,762 | ) | $ | (411 | ) | $ | (88 | ) | $ | 7,989 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||||||||
Unrealized mark-to-market valuations on energy-related derivatives(a) | 4,017 | (11,369 | ) | — | (9,699 | ) | — | — | (17,051 | ) | ||||||||||||||||||
Storage optimization program (b) | 663 | — | — | — | — | — | 663 | |||||||||||||||||||||
DC weather impact(c) | (114 | ) | — | — | — | — | — | (114 | ) | |||||||||||||||||||
Distributed generation asset related investment tax credits(d) | — | — | (1,398 | ) | — | — | — | (1,398 | ) | |||||||||||||||||||
Change in measured value of inventory(e) | — | — | — | 7,637 | — | — | 7,637 | |||||||||||||||||||||
Net insurance proceeds(h) | $ | 1,722 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,722 | ||||||||||||||
Total non-GAAP adjustments | $ | 6,288 | $ | (11,369 | ) | $ | (1,398 | ) | $ | (2,062 | ) | $ | — | $ | — | $ | (8,541 | ) | ||||||||||
EBIT | $ | (14,883 | ) | $ | 12,913 | $ | 11,741 | $ | (9,824 | ) | $ | (411 | ) | $ | (88 | ) | $ | (552 | ) |
Fiscal Year Ended September 30, 2017 | ||||||||||||||||||||||||||||
(In thousands) | Regulated Utility | Retail Energy- Marketing | Commercial Energy Systems | Midstream Energy Services | Other Activities(j) | Eliminations | Total | |||||||||||||||||||||
Adjusted EBIT | $ | 227,228 | $ | 41,597 | $ | 47,586 | $ | 10,880 | $ | (4,862 | ) | $ | 1,328 | $ | 323,757 | |||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||||||||
Unrealized mark-to-market valuations on energy-related derivatives(a) | 49,338 | 11,598 | — | 18,823 | — | (363 | ) | 79,396 | ||||||||||||||||||||
Storage optimization program(b) | 1,496 | — | — | — | — | — | 1,496 | |||||||||||||||||||||
DC weather impact(c) | (11,755 | ) | — | — | — | — | — | (11,755 | ) | |||||||||||||||||||
Distributed generation asset related investment tax credits(d) | — | — | (6,752 | ) | — | — | — | (6,752 | ) | |||||||||||||||||||
Change in measured value of inventory(e) | — | — | — | 7,986 | — | — | 7,986 | |||||||||||||||||||||
Merger related costs(f) | — | — | — | — | (12,902 | ) | — | (12,902 | ) | |||||||||||||||||||
Third party guarantee(g) | — | — | — | — | (2,101 | ) | — | (2,101 | ) | |||||||||||||||||||
Total non-GAAP adjustments | $ | 39,079 | $ | 11,598 | $ | (6,752 | ) | $ | 26,809 | $ | (15,003 | ) | $ | (363 | ) | $ | 55,368 | |||||||||||
EBIT | $ | 266,307 | $ | 53,195 | $ | 40,834 | $ | 37,689 | $ | (19,865 | ) | $ | 965 | $ | 379,125 | |||||||||||||
Fiscal Year Ended September 30, 2016 | ||||||||||||||||||||||||||||
(In thousands) | Regulated Utility | Retail Energy- Marketing | Commercial Energy Systems | Midstream Energy Services | Other Activities(i) | Eliminations | Total | |||||||||||||||||||||
Adjusted EBIT | $ | 224,314 | $ | 54,219 | $ | 27,329 | $ | 2,647 | $ | (3,184 | ) | $ | (504 | ) | $ | 304,821 | ||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||||||||
Unrealized mark-to-market valuations on energy-related derivatives(a) | 11,951 | 10,749 | — | 20,708 | — | — | 43,408 | |||||||||||||||||||||
Storage optimization program (b) | (376 | ) | — | — | — | — | — | (376 | ) | |||||||||||||||||||
DC weather impact(c) | (9,392 | ) | — | — | — | — | — | (9,392 | ) | |||||||||||||||||||
Distributed generation asset related investment tax credits(d) | — | — | (5,337 | ) | — | — | — | (5,337 | ) | |||||||||||||||||||
Change in measured value of inventory(e) | — | — | — | (15,548 | ) | — | — | (15,548 | ) | |||||||||||||||||||
Net insurance proceeds(h) | 1,722 | — | — | — | — | 1,722 | ||||||||||||||||||||||
Total non-GAAP adjustments | $ | 3,905 | $ | 10,749 | $ | (5,337 | ) | $ | 5,160 | $ | — | $ | — | $ | 14,477 | |||||||||||||
EBIT | $ | 228,219 | $ | 64,968 | $ | 21,992 | $ | 7,807 | $ | (3,184 | ) | $ | (504 | ) | $ | 319,298 |
(a) | Adjustments to eliminate unrealized mark-to-market gains (losses) for our energy-related derivatives for our regulated utility and retail energy-marketing operations as well as certain derivatives related to the optimization of transportation capacity for the midstream energy services segment. With the exception of certain transactions related to the optimization of system capacity assets as discussed in footnote (b) below, when these derivatives settle, the realized economic impact is reflected in our non-GAAP results, as we are only removing interim unrealized mark-to-market amounts. |
(b) | Adjustments to shift the timing of storage optimization margins for the regulated utility segment from the periods recognized for GAAP purposes to the periods in which such margins are recognized for regulatory sharing purposes. In addition, lower-of-cost or market adjustments related to system and non-system storage optimization are eliminated for non-GAAP reporting because the margins will be recognized for regulatory purposes when the withdrawals are made at the unadjusted historical cost of storage inventory. |
(c) | Eliminates the estimated financial effects of warm or cold weather in the District of Columbia, as measured consistent with our regulatory tariff. Washington Gas has regulatory weather protection mechanisms in Maryland and Virginia designed to neutralize the estimated financial effects of weather. Utilization of normal weather is an industry standard, and it is our practice to evaluate our rate-regulated revenues by utilizing normal weather and to provide estimates and guidance on the basis of normal weather. |
(d) | To reclassify the amortization of deferred investment tax credits from income taxes to operating income for the commercial energy systems segment. These credits are a key component of the operating success of this segment and therefore are included within adjusted EBIT to help management and investors better assess the segment's performance. |
(e) | For our midstream energy services segment, adjustments to reflect storage inventory at market or at a value based on the price used to value the physical forward sales contract that is economically hedging the storage inventory. Adjusting our storage optimization inventory in this fashion better aligns the settlement of both our physical and financial transactions and allows investors and management to better analyze the results of our non-utility asset optimization strategies. Additionally, this adjustment also includes the net effect of certain sharing mechanisms on the difference between the changes in our non-GAAP storage inventory valuations and the unrealized gains and losses on derivatives not subject to non-GAAP adjustments. |
(f) | Adjustment to eliminate external costs associated with the Merger Agreement with AltaGas. |
(g) | Guarantee on behalf of a third party associated with a solar investment. |
(h) | Represents the net proceeds of an environmental insurance policy, net of regulatory sharing. The adjustment for the quarter ended September 30, 2016, includes $0.9 million related to prior periods of fiscal year 2016. |
(i) | Activities and transactions that are not significant enough on a standalone basis to warrant treatment as an operating segment and that do not fit into one of our four operating segments. |
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