NICOR Inc. (GAS, Financial) filed Quarterly Report for the period ended 2009-09-30.
Nicor Inc. is a holding company and is a member of the Standard & Poor's 500 Index. Its primary business is Nicor Gas one of the nation's largest natural gas distribution companies. Nicor owns Tropical Shipping a containerized shipping business serving the Caribbean region and the Bahamas. In addition the company owns and has an equity interest in several energy-related businesses. Nicor Inc. has a market cap of $1.7 billion; its shares were traded at around $37.53 with a P/E ratio of 14.8 and P/S ratio of 0.4. The dividend yield of Nicor Inc. stocks is 4.9%.
Gas distribution revenues are impacted by changes in natural gas costs, which are passed directly through to customers without markup, subject to ICC review. Gas distribution revenues decreased $91.1 million for the three months ended September 30, 2009 compared to the prior year due to lower natural gas costs (approximately $120 million decrease), partially offset by the impact of the increase in base rates (approximately $25 million increase). Gas distribution revenues decreased $805.1 million for the nine months ended September 30, 2009 compared to the prior year due primarily to lower natural gas costs (approximately $700 million decrease), lower demand unrelated to weather (approximately $70 million decrease) and warmer weather (approximately $65 million decrease), partially offset by the impact of the increase in base rates (approximately $45 million increase).
Gas distribution margin increased $20.1 million for the three months ended September 30, 2009 compared to the prior year due to the impact of the increase in base rates (approximately $25 million increase). Gas distribution margin increased $31.1 million for the nine months ended September 30, 2009 compared to the prior year due to the impact of the increase in base rates (approximately $45 million increase), partially offset by lower demand unrelated to weather (approximately $6 million decrease), lower franchise gas cost recoveries (approximately $3 million decrease) and warmer weather (approximately $2 million decrease). As a result of the rate order which became effective on March 25, 2009, Nicor Gas will recover through a cost recovery rider current year franchise gas costs over a 12 month period beginning the following May. Prior to the March 25, 2009 rate order, such costs were recovered based upon a fixed amount determined periodically through a rate case proceeding. As a result of this change, franchise gas cost recoveries in 2009 will be lower than prior periods with minimal impact on operating income.
Gas distribution operating and maintenance expense. Gas distribution operating and maintenance expense decreased $0.9 million for the three months ended September 30, 2009 compared to the prior year due to lower company use and storage-related gas costs ($5.0 million decrease) and bad debt expense ($1.3 million decrease due to lower revenues attributable principally to lower natural gas costs), partially offset by higher pension expense, net of capitalization ($5.4 million increase). Operating and maintenance expense increased $10.5 million for the nine months ended September 30, 2009 compared to the prior year due primarily to higher payroll and benefit-related costs ($20.2 million increase, of which $16.3 million relates to higher pension expense, net of capitalization) and the absence of prior year cost recoveries of previously incurred costs ($3.9 million, of which $2.0 million relates to a recovery of costs associated with the PCB matter and $1.9 million relates to legal cost recoveries from a counterparty with whom Nicor previously did business during the PBR timeframe). Partially offsetting these amounts were lower bad debt expense ($7.3 million decrease due to lower revenues attributable principally to lower natural gas costs) and lower franchise gas costs ($7.1 million decrease). As a result of the rate order which became effective on March 25, 2009, the expense for franchise gas costs will be deferred until the related revenue, recovered through a cost recovery rider, is recognized.
Shipping operating expenses. Shipping segment operating expenses decreased $22.3 million and $48.9 million for the three and nine months ended September 30, 2009, respectively, compared to the prior year due primarily to lower transportation-related costs ($12.2 million and $32.5 million decreases, respectively, largely attributable to lower volumes shipped and fuel prices) and charter costs ($2.9 million and $6.7 million decreases, respectively). Also affecting the three months ended results were lower payroll and benefit-related costs ($2.9 million decrease).
Net equity investment income. Net equity investment income decreased $1.9 million for the three months ended September 30, 2009 compared to the prior year due primarily to the absence of income from the company s 50-percent interest in EN Engineering which was sold in the first quarter of 2009 ($1.0 million decrease) and a decrease in income from the company s investment in Triton ($0.6 million decrease). Net equity investment income increased $7.1 million for the nine months ended September 30, 2009, compared to the prior year due primarily to a $10.1 million gain recognized on the sale of EN Engineering, partially offset by the absence of income from the company s investment in EN Engineering ($1.8 million decrease) and a decrease in income from the company s investment in Triton ($1.4 million decrease).
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Nicor Inc. is a holding company and is a member of the Standard & Poor's 500 Index. Its primary business is Nicor Gas one of the nation's largest natural gas distribution companies. Nicor owns Tropical Shipping a containerized shipping business serving the Caribbean region and the Bahamas. In addition the company owns and has an equity interest in several energy-related businesses. Nicor Inc. has a market cap of $1.7 billion; its shares were traded at around $37.53 with a P/E ratio of 14.8 and P/S ratio of 0.4. The dividend yield of Nicor Inc. stocks is 4.9%.
Highlight of Business Operations:
Corporate and eliminations operating results decreased $1.9 million for the nine months ended September 30, 2009 compared to the prior year due to the absence of prior year recoveries of previously incurred legal costs ($3.1 million decrease) and the absence of prior year benefits realized on life insurance contracts ($1.3 million decrease). The legal cost recoveries were from a counterparty with whom Nicor previously did business during the PBR timeframe. The total recovery was $5.0 million, of which $3.1 million was allocated to corporate and $1.9 million was allocated to the gas distribution segment (recorded as a reduction to operating and maintenance expense). Partially offsetting the impact of these prior year items were lower legal and business development costs ($1.7 million decrease) and lower costs of a natural weather hedge associated with the utility-bill management products offered by Nicor s energy-related products and services businesses ($0.8 million decrease). The company recorded $2.8 million of costs associated with the natural weather hedge in the current year compared to $3.6 million of costs recorded in the prior year. Benefits or costs resulting from variances from normal weather related to these products are recorded primarily at the corporate level as a result of an agreement between the parent company and certain of its subsidiaries. The weather impact of these contracts generally serves to partially offset the gas distribution segment s weather risk. The amount of the offset attributable to the utility-bill management products marketed by Nicor s other energy ventures will vary depending upon a number of factors including the time of year, weather patterns, the number of customers for these products and the market price for natural gas.Gas distribution revenues are impacted by changes in natural gas costs, which are passed directly through to customers without markup, subject to ICC review. Gas distribution revenues decreased $91.1 million for the three months ended September 30, 2009 compared to the prior year due to lower natural gas costs (approximately $120 million decrease), partially offset by the impact of the increase in base rates (approximately $25 million increase). Gas distribution revenues decreased $805.1 million for the nine months ended September 30, 2009 compared to the prior year due primarily to lower natural gas costs (approximately $700 million decrease), lower demand unrelated to weather (approximately $70 million decrease) and warmer weather (approximately $65 million decrease), partially offset by the impact of the increase in base rates (approximately $45 million increase).
Gas distribution margin increased $20.1 million for the three months ended September 30, 2009 compared to the prior year due to the impact of the increase in base rates (approximately $25 million increase). Gas distribution margin increased $31.1 million for the nine months ended September 30, 2009 compared to the prior year due to the impact of the increase in base rates (approximately $45 million increase), partially offset by lower demand unrelated to weather (approximately $6 million decrease), lower franchise gas cost recoveries (approximately $3 million decrease) and warmer weather (approximately $2 million decrease). As a result of the rate order which became effective on March 25, 2009, Nicor Gas will recover through a cost recovery rider current year franchise gas costs over a 12 month period beginning the following May. Prior to the March 25, 2009 rate order, such costs were recovered based upon a fixed amount determined periodically through a rate case proceeding. As a result of this change, franchise gas cost recoveries in 2009 will be lower than prior periods with minimal impact on operating income.
Gas distribution operating and maintenance expense. Gas distribution operating and maintenance expense decreased $0.9 million for the three months ended September 30, 2009 compared to the prior year due to lower company use and storage-related gas costs ($5.0 million decrease) and bad debt expense ($1.3 million decrease due to lower revenues attributable principally to lower natural gas costs), partially offset by higher pension expense, net of capitalization ($5.4 million increase). Operating and maintenance expense increased $10.5 million for the nine months ended September 30, 2009 compared to the prior year due primarily to higher payroll and benefit-related costs ($20.2 million increase, of which $16.3 million relates to higher pension expense, net of capitalization) and the absence of prior year cost recoveries of previously incurred costs ($3.9 million, of which $2.0 million relates to a recovery of costs associated with the PCB matter and $1.9 million relates to legal cost recoveries from a counterparty with whom Nicor previously did business during the PBR timeframe). Partially offsetting these amounts were lower bad debt expense ($7.3 million decrease due to lower revenues attributable principally to lower natural gas costs) and lower franchise gas costs ($7.1 million decrease). As a result of the rate order which became effective on March 25, 2009, the expense for franchise gas costs will be deferred until the related revenue, recovered through a cost recovery rider, is recognized.
Shipping operating expenses. Shipping segment operating expenses decreased $22.3 million and $48.9 million for the three and nine months ended September 30, 2009, respectively, compared to the prior year due primarily to lower transportation-related costs ($12.2 million and $32.5 million decreases, respectively, largely attributable to lower volumes shipped and fuel prices) and charter costs ($2.9 million and $6.7 million decreases, respectively). Also affecting the three months ended results were lower payroll and benefit-related costs ($2.9 million decrease).
Net equity investment income. Net equity investment income decreased $1.9 million for the three months ended September 30, 2009 compared to the prior year due primarily to the absence of income from the company s 50-percent interest in EN Engineering which was sold in the first quarter of 2009 ($1.0 million decrease) and a decrease in income from the company s investment in Triton ($0.6 million decrease). Net equity investment income increased $7.1 million for the nine months ended September 30, 2009, compared to the prior year due primarily to a $10.1 million gain recognized on the sale of EN Engineering, partially offset by the absence of income from the company s investment in EN Engineering ($1.8 million decrease) and a decrease in income from the company s investment in Triton ($1.4 million decrease).
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