Westar Energy, Inc. (NYSE:WR) Q4 2015 Earnings Conference Call - Final Transcript

Feb 25, 2016 • 10:00 am ET


Westar Energy, Inc. (NYSE:WR) Q4 2015 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen and welcome to the Westar Energy Year-End 2015 Conference Call. My name is Matthew and I'll be your operator for today. [Operator Instructions].

And now, I would now like to turn the call over to Mr. Cody VandeVelde, Director of Investor Relations. Please proceed sir.

Cody VandeVelde

Good morning, and welcome to our fourth quarter call. Last night, we filed our 10-K along with the earnings release and supplemental materials. You can find them at westarenergy.com under the Investors section.

Some of our remarks will be forward-looking. So I remind you of uncertainties inherent in our comments this morning and in some of the statements found in the earnings release and accompanying materials. Factors that could cause our future results to differ from what we discuss today include those listed in the 10-K under Forward-Looking Statements and Risk Factors. We encourage you to read the full disclosure in the 10-K and in the earnings materials, both of which are available on our website.

The earnings materials also reflect how we reconcile our gross margin presentation with GAAP earnings. Commenting this morning will be our CFO, Tony Somma and our President and CEO, Mark Ruelle. We have other members of our team available to respond to questions. Tony will offer highlights on last year's results, comment on this year's plans including earnings guidance, our five-year CapEx and financing plans. Mark will share observations about our business, discuss regulatory plans and comment on our recent dividend increase.

With that, I'll turn the call over to Tony.

Tony Somma

Thanks, Cody, good morning. Just a quick update. On our last call we spoke about the RFP we had recently issued for up to 500 megawatts renewables. I'm happy to report that we closed those deals with 480 megawatts, over half of which we will own. Our five-year CapEx table reflects the ownership portion which pushes 2016 expenditures to over $1 billion.

El nino had a big impact on Q4 weather with about 20% fewer heating degree days than the prior year. Overall, this is the second warmest fourth quarter in 120 years. Q4 results were $0.28, down $0.05 from 2014. For the year, earnings came in at $2.11 significantly lower than the prior year. We estimate weather cost us $0.06 to $0.07 for the quarter when compared to normal and $0.05 for the year. Compared to '14, weather also hurt us the same $0.06 to $0.07 for the quarter, but about $0.11 for the year.

Other decreases for the year included a $14 million charge reflecting the settlement of our FERC 206 challenge, a $11 million decrease in energy marketing margins compared to the unusually strong results in the prior year, and about $0.13 dilution from additional shares resale which were not reflected in our prices until our rate order became effective late October.

Turning to sales, Q4 was down 3.5% again due primarily to the mild weather and lower sales to the same handful of large, lower-margin industrial customers most affected by