10-QPeriod: Q2 FY2012

DOMINION ENERGY, INC Quarterly Report for Q2 Ended Jun 30, 2012

Filed August 1, 2012For Securities:D

Summary

Dominion Energy, Inc.'s (D) second quarter 10-Q filing for the period ending June 30, 2012, reveals a decrease in net income attributable to Dominion by 23% compared to the prior year, largely driven by increased storm restoration costs and less favorable weather impacting electric utility operations. Year-to-date, net income saw an 8% decline due to similar factors, partially offset by lower operational expenses and gains from merchant generation activities. The company's financial position shows total assets of $46.4 billion and total liabilities of $34.2 billion as of June 30, 2012. Cash flow from operations for the year-to-date period was strong at $2.4 billion, supporting investing activities which primarily focused on capital expenditures for growth projects. While liquidity remains adequate with substantial unused credit facilities, investors should note the ongoing regulatory matters, particularly concerning transmission rates and environmental compliance, which could present future financial impacts.

Financial Highlights

48 data points
Beta

Revenue

$3.00B

Net Income

$258.00M

8.6% Net Margin

EPS (Diluted)

$0.45

Total Assets

$46.42B

Cash & Equivalents

$162.00M

Free Cash Flow

-$204.00M

Financial Statements
Beta
Revenue$3.00B
Operating Expenses$2.38B
Operating Income$628.00M
Net Income$258.00M
EPS (Basic)$0.45
EPS (Diluted)$0.45
Shares Outstanding (Basic)572.00M
Shares Outstanding (Diluted)573.10M

Key Highlights

  • 1Net income attributable to Dominion decreased by 23% to $258 million for the second quarter of 2012, compared to $336 million in the prior year.
  • 2Year-to-date net income attributable to Dominion declined by 8% to $752 million, from $815 million in the same period of 2011.
  • 3Operating revenue for Dominion decreased by $235 million in the second quarter and $756 million year-to-date, primarily due to lower merchant generation margins and electric utility sales.
  • 4Storm damage and service restoration costs significantly increased operating expenses, contributing to the decline in net income.
  • 5Dominion's total assets stood at $46.4 billion and total liabilities at $34.2 billion as of June 30, 2012.
  • 6Cash flow from operations remained robust at $2.4 billion for the first six months of 2012, supporting capital expenditures.
  • 7The company is managing ongoing regulatory matters, including appeals related to transmission rates and environmental compliance regulations, which could have future financial implications.

Frequently Asked Questions

The primary reason for the decline in net income attributable to Dominion Energy was the increase in storm damage and service restoration costs, largely due to severe summer storms in late June 2012. Additionally, less favorable weather conditions impacted electric utility operations, and merchant generation margins were lower.

Dominion Energy maintains adequate liquidity with $1.9 billion in unused capacity under its credit facilities as of June 30, 2012. The company relies on both internal cash flows and external capital markets for funding. As of June 30, 2012, total assets were $46.4 billion and total liabilities were $34.2 billion, indicating a leveraged but manageable capital structure.

Yes, Dominion Energy is involved in several significant regulatory matters, including appeals related to transmission rates and ongoing compliance with environmental regulations such as the Clean Air Act and its associated rules (e.g., MATS, CSAPR). While the company believes it complies with applicable regulations, adverse outcomes in these proceedings could lead to substantial capital expenditures or civil penalties, the financial impact of which is currently difficult to estimate.

The report indicates that merchant generation operations experienced lower margins in the second quarter and year-to-date periods of 2012 compared to 2011. This was primarily attributed to decreased realized prices at certain fossil and nuclear generation facilities. The company's strategy includes ongoing reviews of its asset portfolio, which may lead to divestitures of non-strategic assets.