SCANA reports financial results for second quarter 2016

CAYCE, SC – SCANA Corporation (NYSE: SCG) announced earnings for the second quarter of 2016 of $105 million, or earnings per share of 74 cents, compared to $99 million, or earnings per share of 69 cents, for the second quarter of 2015.

For the first six months of 2016, SCANA reported earnings of $281 million, or earnings per share of $1.97, compared to $499 million, or earnings per share of $3.49, for the same period in 2015.  Year to date 2015 earnings include a $201 million, or $1.41 per share, net of tax gain from the sale of two subsidiaries, Carolina Gas Transmission (CGT) and SCANA Communications, Inc. (SCI).

“On a year-to-date basis, weather has had no net effect on 2016 earnings, as opposed to the eleven cents per share positive effect during the first half of 2015,” said Jimmy Addison, Executive Vice President and Chief Financial Officer.  “Otherwise, electric margins continue to increase as expected from the recovery of financing costs through the Base Load Review Act and customer growth.”

FINANCIAL RESULTS BY MAJOR LINES OF BUSINESS

South Carolina Electric & Gas Company

Reported earnings for the second quarter of 2016 at South Carolina Electric & Gas Company (SCE&G), SCANA’s principal subsidiary, were $113 million, or earnings per share of 79 cents, compared to $111 million, or 77 centsper share, in the same quarter of 2015. Electric margins benefited from a Base Load Review Act rate increase and customer growth, partially offset by milder weather during the second quarter of 2016 when compared to the prior year and slightly lower average use.  The adoption of new depreciation rates for electric and common utility property also contributed to increased earnings for the quarter.  These items were partially offset by an increase in operations and maintenance expenses, as well as increases in expenses related to our capital program including interest expense and property taxes.  Abnormal weather increased earnings by 5 cents per share in the second quarter of 2016, compared to abnormal weather contributing 6 cents per share in the second quarter of 2015.  At June 30, 2016, SCE&G was serving approximately 706,000 electric customers and 352,000 natural gas customers, up 1.6 and 2.9 percent, respectively, over 2015.

PSNC Energy

PSNC Energy, the Company’s North Carolina-based retail natural gas distribution subsidiary, reported seasonal breakeven results for the second quarter of 2016, consistent with the second quarter of 2015.  At June 30, 2016, PSNC Energy was serving approximately 534,000 customers, an increase of 3.0 percent over the previous year.  On March 31, 2016, PSNC Energy filed an application with the North Carolina Utilities Commission for a base rate increase to cover operation and expansion costs and to request an integrity management rider.

SCANA Energy Marketing 

SCANA Energy Marketing, which markets natural gas in deregulated energy markets, including Georgia where the Company does business as SCANA Energy, reported breakeven results for the second quarter of 2016, compared to a seasonal loss of $2 million, or 2 cents per share, in the second quarter of 2015. This increase is primarily due to higher margins in the second quarter of 2016 versus the same quarter of the prior year.

Corporate and Other, Net

SCANA’s corporate and other businesses, which include the holding company, and prior to their sales, CGT and SCI, reported a loss of $8 million, or 5 cents per share in the second quarter of 2016, compared to a loss of $10 million, or 6 cents per share in the second quarter of 2015.

EARNINGS OUTLOOK

Based on 2015 GAAP earnings per share of $5.22, the Company reaffirms its targeted average annual earnings per share growth rate range to be negative 6 to 0 percent over the next 3 to 5 years due to the impact of the gains on the sales of the subsidiaries and incremental electric margins due to abnormal weather in 2015.  (Because of the importance of weather to SCE&G’s earnings and its unpredictability, the Company is not able to provide 2016 GAAP earnings guidance.)

In addition to the GAAP basis guidance above, the Company reaffirms its targeted average annual growth rate for GAAP-Adjusted Weather-Normalized earnings per share to be 4 to 6 percent over the next 3 to 5 years. The Company previously reset its base year for this outlook to 2015 GAAP-Adjusted Weather-Normalized earnings per share of $3.73 (reflecting downward adjustments of 12 cents per share pre-tax and a tax effect of 4 cents per share for a net of tax 8 cents per share to normalize weather in the electric business and $2.39 per share pre-tax and a tax effect of $.98 for a net of tax $1.41 per share to remove the gains on the sales of CGT and SCI).  The Company also reaffirms its guidance for 2016 GAAP-Adjusted Weather-Normalized earnings per share of $3.90 to $4.10, with an internal target of $4.00 per share.

The Company’s management believes that these non-GAAP earnings and earnings growth measures provide a meaningful representation of the Company’s fundamental earnings power and can aid in performing period-over-period financial analysis and comparison with peer group data. In management’s opinion, these non-GAAP measures serve as useful indicators of the financial results of the Company’s primary businesses and as a basis for management’s provision of earnings guidance and growth projections. In addition, management uses these non-GAAP measures in part in making budgetary and operational decisions including determining eligibility for certain incentive compensation payments. These non-GAAP measures are not intended to replace the GAAP measures of earnings per share or average annual earnings per share growth rate, but are offered as supplements to those GAAP measures.

Factors and risks that could impact future earnings are discussed in the Company’s filings with the Securities and Exchange Commission and below under the Safe Harbor Statement.