10-QPeriod: Q1 FY2003

EQT Corp Quarterly Report for Q1 Ended Mar 31, 2003

Filed May 8, 2003For Securities:EQT

Summary

EQT Corp. (EQT) reported a solid first quarter for 2003, with net income increasing by 29.8% to $60.9 million ($0.96 per diluted share) compared to $46.9 million ($0.72 per diluted share) in the first quarter of 2002. This growth was driven by a 23% increase in earnings from continuing operations before accounting changes, primarily due to higher realized selling prices for natural gas, colder weather boosting demand, increased commercial and industrial margins, and improved construction revenues. The company's operational performance across its segments showed strength. Equitable Utilities benefited from colder weather, while Equitable Supply saw improved EBIT due to higher commodity prices and increased sales volumes. NORESCO also contributed with increased construction revenues and lower operating expenses. The company also made strategic moves, including the purchase of the remaining interest in Appalachian Basin Partners, LP, and the establishment of a community giving foundation funded by Westport Resources stock. Financially, EQT Corp. demonstrated improved liquidity, with a significant increase in cash and cash equivalents and a substantial net increase in cash from financing activities, largely due to a $200 million debt issuance. The company also managed its debt effectively, redeeming preferred securities. Despite some challenges noted in specific projects and ongoing environmental regulatory evaluations, the overall financial health and operational performance for the quarter appear positive for investors.

Key Highlights

  • 1Net income increased by 29.8% to $60.9 million in Q1 2003, up from $46.9 million in Q1 2002.
  • 2Diluted Earnings Per Share (EPS) rose to $0.96 in Q1 2003, from $0.72 in the prior year period.
  • 3Operating revenues grew by 16.4% to $342.3 million in Q1 2003, up from $294.0 million in Q1 2002.
  • 4Equitable Supply segment EBIT increased by 29% to $47.8 million, driven by higher commodity prices and increased sales volumes.
  • 5The company purchased the remaining 31% limited partnership interest in Appalachian Basin Partners, LP for $44.2 million.
  • 6Cash and cash equivalents increased significantly to $146.1 million as of March 31, 2003, from $17.7 million at year-end 2002.
  • 7The company issued $200 million in long-term debt during the quarter, strengthening its financing activities.

Frequently Asked Questions

EQT's profitability in the first quarter of 2003 was primarily driven by higher realized selling prices for natural gas, colder weather which boosted demand and sales volumes, improved commercial and industrial margins, and increased construction revenues from the NORESCO segment. The company also benefited from a one-time tax benefit related to a charitable contribution.

The company's balance sheet saw a significant increase in cash and cash equivalents, rising to $146.1 million from $17.7 million at the end of 2002. Total assets also grew to $2.83 billion from $2.44 billion. This was supported by an increase in long-term debt and common stockholders' equity.

The most significant strategic move was the purchase of the remaining 31% limited partnership interest in Appalachian Basin Partners, LP (ABP) for $44.2 million. This acquisition consolidated the partnership fully into EQT's financial statements. Additionally, the company established a community giving foundation funded by a donation of Westport Resources stock.

EQT issued $200 million in long-term debt during the quarter, with plans to use a portion for retiring preferred securities and for general corporate purposes. The company also exercised its option to redeem its $125 million of 7.35% Trust Preferred Capital Securities. EQT maintains adequate borrowing capacity through credit agreements.