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February 22, 2011 Close:$37.97
4Q10 KBCM EPS Estimate:$0.31 (Consensus: $0.36)
2010 KBCM EPS Estimate:$2.85 (Consensus: $2.86)
2011 KBCM EPS Estimate:$3.05 (Consensus: $3.00)
4Q10 and FY10 Actual Results (vs. 4Q09 and FY09):
•4Q10 operating EPS of $0.41 vs. $0.49; GAAP EPS of $0.41 vs. $0.49.
•FY10 operating EPS of $2.95 vs. $2.58; GAAP EPS of $2.95 vs. $2.64.
•Results were above our estimate of $0.31 and consensus of $0.36 per share, which we believe was driven by a reversal of a tax
reserve. Full-year results exceeded the top end of guidance.
Guidance:IDA initiated 2011 guidance of $2.80-$2.95 per share.Importantly,we note IDA did not include the benefit that its
Uniform Capitalization tax method change could add. Under IDA's settlement, we believe this would add $0.12-$0.14 per share
before the actual tax benefit. We believe this nuance could drive some trading confusion.
Highlights:
•New rates and lower taxes drove improvement for the year, partly offset by lower sales and transmission revenue declines.
•Sales were down 4% on mild weather, conservation and the economy. Irrigation was the only customer class that saw increased
sales, driven by dry 3Q conditions.
•IDA expects 2011 hydro conditions to allow the generation of 7.5 million-9.5 million MWh vs. 7.3 million MWh in 2010. Current
hydro conditions, stemming from La Nina conditions, are 110% of normal.
•2011 capex forecast at $300 million-$310 million vs. the 2010 level of $294 million, as the Langley Gulch natural gas plant
construction continues and IDA starts permitting and siting work for planned transmission work.
Initial Take:We expect a mixed to positive response to the earnings release as the 4Q was strong and 2011 guidance is in line with
expectations, if one assumes UCap proceeds smoothly. However, we note the exclusion of Uniform Capitalization benefit from
guidance results in a disappointing headline number, and as such, believe it could cause some confusion, particularly if people infer
that excluding UCap is the result of management concern around receiving approval. We believe management is staying true to its
very conservative history.
4:30 PM EST Conference Call #: (617) 213-8831 Passcode: IDACORP
We will be focused on:
•Economic outlook and 2011 earnings drivers
•Financing needs
•Update on expectations from Congressional Joint Committee on Taxation timing approval of tax method change
•Regulatory update
February 23, 2011 KeyBanc
Quick Alert Capital Markets
IDACORP, Inc. (BUY)
IDA - Quick Alert: 4Q10 Strong; 2011 Guidance Could Cause Confusion
KeyBanc Capital Markets Inc.,
Member NYSE/FINRA/SIPC
Paul T. Ridzon:(216) 689-0270 —pridzon@keybanccm.com
Timothy Yee:(216) 689-0385 —tyee@keybanccm.com
FOR IMPORTANT DISCLOSURES AND CERTIFICATIONS, PLEASE REFER TO PAGES 2 - 3 OF THIS NOTE.
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KeyBanc Capital Markets Inc.Disclosures and Certifications
IDACORP, Inc. - IDA
IDACORP, Inc. is an investment banking client of ours.
We have received compensation for investment banking services from IDACORP, Inc. during the past 12 months
We expect to receive or intend to seek compensation for investment banking services from IDACORP, Inc. within the next
three months.
During the past 12 months, IDACORP, Inc. has been a client of the firm or its affiliates for non-securities related services.
Reg A/C Certification
The research analyst(s) responsible for the preparation of this research report certifies that:(1) all the views expressed in this
research report accurately reflect the research analyst's personal views about any and all of the subject securities or issuers; and (2)
no part of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or
views expressed by the research analyst(s) in this research report.
Three-Year Rating and Price Target History
Rating Disclosures
Distribution of Ratings/IB Services Firmwide and by Sector
KeyBanc Capital Markets
IB Serv/Past 12 Mos.
Rating Count Percent Count Percent
BUY [BUY]207 47.20 49 23.67
HOLD [HOLD]224 51.00 51 22.77
SELL [UND]8 1.80 0 0.00
ENERGY
IB Serv/Past 12 Mos.
Rating Count Percent Count Percent
BUY [BUY]26 42.60 15 57.69
HOLD [HOLD]34 55.70 21 61.76
SELL [UND]1 1.60 0 0.00
Quick AlertFebruary 23, 2011
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Rating System
BUY - The security is expected to outperform the market over the next six to 12 months; investors should consider adding the security
to their holdings opportunistically, subject to their overall diversification requirements.
HOLD - The security is expected to perform in line with general market indices over the next six to 12 months; no buy or sell action is
recommended at this time.
UNDERWEIGHT - The security is expected to underperform the market over the next six to 12 months; investors should reduce their
holdings opportunistically.
The information contained in this report is based on sources considered to be reliable but is not represented to be
complete and its accuracy is not guaranteed. The opinions expressed reflect the judgment of the author as of the date of
publication and are subject to change without notice. This report does not constitute an offer to sell or a solicitation of an
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Quick AlertFebruary 23, 2011