COC Keybanc-Aug-5-2010.pdf

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August 4, 2010 Close:$35.99
2Q10 KBCM EPS Estimate:$0.57 (Consensus: $0.58)
2010 KBCM EPS Estimate:$2.75 (Consensus: $2.72)
2011 KBCM EPS Estimate:$2.80 (Consensus: $2.88)
2Q10 Actual Results (vs. 2Q09):
•2Q10 operating EPS of $0.62 vs. $0.49; GAAP EPS of $0.82 vs. $0.58.
•Results were below our estimate of $0.57 and consensus of $0.58 per share due to mild weather and what looks like continued
economic weakness. We note sizable moving pieces in the quarter that are non-recurring in nature, including the reversal of a 1Q
benefit from deferred tax amortization, which was a $0.09-$0.10 per share drag in 2Q10. Additionally, the Company booked
approximately $25 million ($0.52 per share) from the benefit of expensing previously capitalized repair costs, as well as a $0.22
reserve fro uncertain tax positions..
Guidance:Maintained 2010 earnings guidance in the range of $2.65- $2.80 per share, citing the ability to use ADITC or tax
strategies to reach its threshold ROE of 9.5%
Highlights:
•Weather and the economy drove a 4% reduction in volumes, driving an estimated $0.08 decline in earnings.
•The release does not mention whether the $25 million benefit from the tax methodology change is net of a provision for return to
customers.
•IDA expects 2010 hydro conditions to allow the generation of 7.0 to 8.0 million MWh vs. the prior view of 6.5 million-8.5 million
MWh.
•Results appear to have been weakened by intra-period tax allocations of an estimated $0.04-$0.05, which we expect to reverse by
year-end.
Initial Take:We expect a potential negative response around the level of tax benefit, which we believe could be lower than
expectations.
4:30 PM EDT Conference Call #: [phone]; Passcode: Idaho.
We will be focused on:
•Economic outlook and 2010 sales trends
•Regulatory update
•More detail around tax method change and shareholder portion of benefit
August 5, 2010 KeyBanc
Quick Alert Capital Markets
IDACORP, Inc. (HOLD)
IDA - Quick Alert: 2Q10 Messy Quarter on Items, Challenging Weather
KeyBanc Capital Markets Inc.,
Member NYSE/FINRA/SIPC
Paul T. Ridzon:[phone] —[e-mail]
Timothy Yee:[phone] —[e-mail]
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]189 48.50 44 23.28
HOLD [HOLD]193 49.50 49 25.39
SELL [UND]8 2.10 1 12.50
ENERGY
IB Serv/Past 12 Mos.
Rating Count Percent Count Percent
BUY [BUY]25 43.10 11 44.00
HOLD [HOLD]33 56.90 21 63.64
SELL [UND]0 0.00 0 0.00
Quick AlertAugust 5, 2010
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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
offer to buy any securities. Our company policy prohibits research analysts and members of their families from owning
securities of any company followed by that analyst, unless otherwise disclosed. Our officers, directors, shareholders and
other employees, and members of their families may have positions in these securities and may, as principal or agent,
buy and sell such securities before, after or concurrently with the publication of this report. In some instances, such
investments may be inconsistent with the opinions expressed herein. One or more of our employees, other than the
research analyst responsible for the preparation of this report, may be a member of the Board of Directors of any
company referred to in this report. The research analyst responsible for the preparation of this report is compensated
based on various factors, including the analyst's productivity, the quality of the analyst's research and stock
recommendations, ratings from investor clients, competitive factors and overall Firm revenues, which include revenues
derived from, among other business activities, the Firm's performance of investment banking services. In accordance with
industry practices, our analysts are prohibited from soliciting investment banking business for our Firm.
Investors should assume that we are seeking or will seek investment banking or other business relationships with the
company described in this report.
Quick AlertAugust 5, 2010