IDA note 02 04 13.pdf

Sidoti & Company, LLC
Member FINRA & SIPC
Required disclosures appear in the Appendix.
Morning Meeting Note

317 Madison Ave
New York, NY 10017
[phone]
[phone]
www.sidoti.com
Sidoti & Company, LLC © Copyright 2013
IDACORP Inc. (IDA-$46.41) NEUTRAL
Earnings Preview Target: $47
Michael Klein [phone] ([e-mail]) February 4, 2013
Market Cap (Mil) $2,330
Avg. Daily Trading Volume 202,000
Shares Out (Mil) 50.157
Float Shares (Mil) 49.548
Institutional Holdings 69%
Dividend $1.52
Dividend Yield 3.3%

Price to Book Value 1.5x
Return on Equity (2014E) 8.9%
LT Debt to Total Capital 47%
5-ear EPS Growth Rate Projection 4%
52-Week Range (NYSE) 47-38
Russell 2000 911
Short Interest (Mil) 0.945
2011 2012E 2013E 2014E
OLD NEW OLD NEW
Mar. $0.60 $0.50A $0.50 $0.51
June 0.42 0.71A 0.60 0.62
Sep. 1.15 1.84A 1.81 1.87
Dec. 0.18 0.30 0.32 0.34

EPS $2.35 $3.34 $3.23 $3.32

P/E 13.9x 14.4x 14.0x
Note: 2011 EPS exclude $1.01 benefit from tax accounting method change and ADITC reversal. 2011-2014E include $0.08 in annual stock-based compensation
expense. The Russell 2000 Index includes IDACORP. Sum of quarterly EPS may not equal full year total due to rounding and/or changes in share count. NC =
Not covered by Sidoti & Company, LLC.
Yea 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E
Rev.(Mil.) $842.9 $926.3 $879.4 $960.4 $1049.8 $1036.0 $1026.8 $1083.0 $1135.2 $1159.7
GAAP EPS $2.02 $2.33 $1.86 $2.17 $2.64 $2.95 $3.36 $3.34 $3.23 $3.32
Dividend $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.37 $1.56 $1.71
Description: IDACORP Inc. (www.idacorpinc.com) is a holding company that operates through a regulated utility segment, Idaho Power
Company, and two unregulated arms: Ida-West Energy, which focuses on independent power production, and IDACORP Financial
Services (IFS), which manages tax-advantaged real estate investments. The utility serves 496,000 customers in Idaho and Oregon.
Headquarters are in Boise, ID.
Release Date Conference Call Time (Eastern) Contact Co. Guidance Consensus
TBA TBA TBA TBA N/A $0.30
Focus Is On Improving Economic Activity, Which Will Drive Idaho Power’s ROE, Use Of Tax
Credits, In Our View; Valuation Keeps Us NEUTRAL; Maintain $47 Price Target
• We are encouraged by several data points such as a growing customer base, pickup in business activity, declining
unemployment rate, and improving housing market, all of which should benefit IDA’s earnings.
• Our focus on the upcoming earnings release will center on the pace of the economic pickup as we think this is the
real earnings driver for IDA in the near term.
• A lackluster economy will likely result in the use of tax credits to maintain a 9.5% Idaho-jurisdictional ROE. We note
that each time IDA has used tax credits, it was later reversed as the earnings improved throughout the year.
• For 4Q:12, we project EPS of $0.30, in line with consensus and up from $0.18 in 4Q:11. We attribute the
improvement to increased customers, load, and rates, offset by a 17% decline in heating degree days.
• We maintain our NEUTRAL rating and $47 price target which is based on about 14x our 2014 EPS estimate of $3.32.

‰ Our attention is on the local economy. Recent data points suggest the local economy in and around Boise is improving.
Businesses are relocating to the region, considering expansion, and the population count continues to steadily climb. That
said, we want to see if these trends continue to improve as a healthy economy is key to IDA’s earnings power, we contend.
The company reduced its long-term load growth outlook due to the impact from the recession and demand response
Action Date Px Rating PT
Initiation 9/21/12 42.7 Neutral 45PT 11/2/12 44.8 47

IDACORP INC.
Sidoti & Company, LLC
2

programs, placing even more emphasis on the 2013 Integrated Resource Plan (IRP) and the rate of economic expansion, in
our view.
‰ We project 4Q:12 EPS of $0.30. We think a 9.8% increase in sales to $253 million will drive the year-over-year growth in
earnings from $0.18 in 4Q:11. Contributing to the earnings growth, in our view, is ease in total customers, MWh sales, and
higher rates. Offsetting some of these positives is a 17% decrease in heating degree days.
‰ We maintain our NEUTRAL rating and $47 price target. IDA has made significant progress at improving its dividend,
currently yielding 3.3%, with another 10% increase expected in 4Q:13. Additionally, the utility’s operating environment
appears to be improving. However, a lack of growth drivers and limited upside to our price target temper our enthusiasm for
the stock. Our target is based on about 14x our 2014 EPS estimate of $3.32.

Key Risks Regulation A slowdown in local economy Interest rates

Exhibit 1. IDA Inc. Variance Table
4Q:12 E 4Q:11 A Variance % Change
($ in thousands)Revenue 253,141 230,649 22,492 9.8%
Operating Income 37,965 8,465 29,500 348.5%
Net Income 14,858 8,983 5,875 65.4%
Diluted EPS $0.30 $0.18 $0.12 63.7%
Source: Company reports; Sidoti & Company, LLC estimates
IDACORP INC.
Sidoti & Company, LLC
3

Table 1: IDACORP Income Statement
(in thousands, except where noted)
Mar Jun Sep Dec 2011 Mar A Jun A Sep A Dec E 2012E Mar E Jun E Sep E Dec E 2013E 2014E
Total operating revenue 251,494 234,983 309,630 230,649 1,026,756 241,140 254,701 334,019 253,141 1,083,001 257,135 262,481 341,075 274,485 1,135,177 1,159,743
Purchased power 25,094 36,423 66,141 35,678 163,336 34,277 45,178 71,570 36,748 187,773 32,563 46,533 64,413 39,688 183,198 182,231
Fuel expense 29,902 19,704 41,195 40,741 131,542 32,751 21,285 55,978 41,148 151,162 33,079 21,924 57,098 44,029 156,128 158,261
Power cost adjustment 31,306 15,501 (10,189) 1,879 38,497 9,008 (3,211) (42,871) 1,917 (35,157) 9,008 (3,211) (47,158) 1,917 (39,445) (41,802)
Other O&M 70,661 85,472 84,562 97,945 338,640 78,515 86,005 89,968 88,151 342,639 79,299 90,305 91,767 96,966 358,337 367,090
Energy efficiency programs 6,711 5,796 18,504 6,652 37,663 4,477 8,084 8,410 6,785 27,756 4,522 8,327 8,662 7,124 28,635 29,057
Depreciation 29,464 29,693 30,115 30,517 119,789 30,542 29,879 31,607 31,923 123,951 32,242 32,565 32,890 33,219 130,917 136,232
Taxes other than income taxes 7,211 7,182 7,302 7,200 28,895 8,100 7,849 7,012 7,704 30,665 8,262 8,006 7,152 7,858 31,278 33,230
Other 1,054 913 607 1,572 4,146 1,127 832 1,002 800 3,761 800 800 800 800 3,200 3,200
Total Operating income- EBIT 50,091 34,299 71,393 8,465 164,248 42,343 58,800 111,343 37,965 250,451 57,361 57,233 125,450 42,884 282,928 292,244
EBITDA 79,555 63,992 101,508 38,982 284,037 72,885 88,679 142,950 69,888 374,402 89,603 89,798 158,340 76,104 413,845 428,477
Other income, net 4,538 5,041 6,010 5,620 21,209 6,593 6,571 2,928 2,342 18,434 2,290 2,263 1,870 2,203 8,627 8,312
Earnin s loss of unconsolidated e uit -method (1,294) (4,447) 2,085 4,454 798 1,419 (1,928) 1,304 795 - -
Total interest expense, net 18,959 17,568 17,446 17,553 71,526 17,205 17,436 19,401 19,229 73,271 21,303 19,986 19,879 19,707 80,875 80,730
Pre-tax income 34,376 17,325 62,042 986 114,729 33,150 46,007 96,174 21,078 196,409 38,348 39,510 107,442 25,380 210,680 219,826
Tax rate 14.2% NM NM NM NM 25.1% 23.0% 4.1% 29.5% 14.8% 33.8% 23.8% 14.8% 35.1% 22.4% 22.2%
Income tax (benefit) expense 4,888 (3,652) (45,372) (7,997) (52,133) 8,333 10,569 3,910 6,221 29,033 12,956 9,409 15,902 8,898 47,165 48,732
Net Income 29,488 20,977 107,414 8,983 166,862 24,817 35,438 92,264 14,858 167,377 25,392 30,101 91,539 16,482 163,515 171,094
Ad. for income loss attributable to noncontrollin 252 (76) (347) 2 (169) 112 (137) (195) (220) - -
Net income attributable to IDA 29,740 20,901 107,067 8,985 166,693 24,930 35,301 92,069 14,858 167,157 25,392 30,101 91,539 16,482 163,515 171,094
EPS, diluted 0.60 0.42 2.16 0.18 3.36 0.50 0.71 1.84 0.30 3.34 0.50 0.60 1.81 0.32 3.23 3.32
Dividend per share 0.30 0.30 0.30 0.30 1.20 0.33 0.33 0.33 0.38 1.37 0.38 0.38 0.38 0.42 1.56 1.71
Payout ratio 35.7% 41.0% 48.2% 51.6%
Shares outstanding, basic 49,290 49,420 49,520 49,598 49,457 49,860 49,927 49,966
Shares outstanding, diluted 49,356 49,516 49,622 49,734 49,558 49,905 49,984 50,080 50,230 50,050 50,381 50,532 50,684 50,836 50,608 51,474
Margin Analysis
O&M as % of Sales 28.1% 36.4% 27.3% 42.5% 33.0% 32.6% 33.8% 26.9% 34.8% 31.6% 30.8% 34.4% 26.9% 35.3% 31.6% 31.7%
Operating Margin 19.9% 14.6% 23.1% 3.7% 16.0% 17.6% 23.1% 33.3% 15.0% 23.1% 22.3% 21.8% 36.8% 15.6% 24.9% 25.2%
EBITDA Margin 31.6% 27.2% 32.8% 16.9% 27.7% 30.2% 34.8% 42.8% 27.6% 34.6% 34.8% 34.2% 46.4% 27.7% 36.5% 36.9%
Pretax Margin 13.7% 7.4% 20.0% 0.4% 11.2% 13.7% 18.1% 28.8% 8.3% 18.1% 14.9% 15.1% 31.5% 9.2% 18.6% 19.0%
Net Margin 11.7% 8.9% 34.7% 3.9% 16.3% 10.3% 13.9% 27.6% 5.9% 15.5% 9.9% 11.5% 26.8% 6.0% 14.4% 14.8%
YoY Change
Revenue -0.6% -2.8% 0.1% -0.6% -0.9% -4.1% 8.4% 7.9% 9.8% 5.5% 6.6% 3.1% 2.1% 8.4% 4.8% 2.2%
O&M -2.0% 13.8% 17.5% 31.0% 15.2% 11.1% 0.6% 6.4% -10.0% 1.2% 1.0% 5.0% 2.0% 10.0% 4.6% 2.4%
Operating profit 47.1% -6.3% -19.8% -78.3% -17.3% -15.5% 71.4% 56.0% 348.5% 52.5% 35.5% -2.7% 12.7% 13.0% 13.0% 3.3%
EBITDA 27.0% -2.0% -14.1% -43.1% -9.7% -8.4% 38.6% 40.8% 79.3% 31.8% 22.9% 1.3% 10.8% 8.9% 10.5% 3.5%
Pretax profit 100.3% -23.4% -19.7% -96.0% -19.1% -3.6% 165.6% 55.0% 2037.8% 71.2% 15.7% -14.1% 11.7% 20.4% 7.3% 4.3%
Net income 86.0% -46.5% 60.0% -55.6% 17.1% -15.8% 68.9% -14.1% 65.4% 0.3% 2.3% -15.1% -0.8% 10.9% -2.3% 4.6%
Pro forma EPS, diluted 79.6% -48.3% 55.1% -56.4% 13.9% -17.1% 67.3% -14.8% 63.7% -0.7% 0.9% -15.7% -1.8% 9.6% -3.3% 2.9%
2011 EPS includes $56.9 million benefit from tax accounting method change, $6.8 million ADITC reversal and $18.1 million customer refund
Source: Company reports, Sidoti & Company, LLC estimates
Appendix
Required Disclosures

Sidoti & Company, LLC
4

IDACORP Inc. (IDA-$46.41) NEUTRAL Target: $47 February 4, 2013

Key Risks Regulation A slowdown in local economy Interest rates

Valuation:
‰ We maintain our NEUTRAL rating and $47 price target. IDA has made significant progress at improving its dividend,
currently yielding 3.3%, with another 10% increase expected in 4Q:13. Additionally, the utility’s operating environment
appears to be improving. However, a lack of growth drivers and limited upside to our price target temper our enthusiasm
for the stock. Our target is based on about 14x our 2014 EPS estimate of $3.32.

Required Disclosures
The Sidoti & Company, LLC (Sidoti) Equity Research rating system consists of BUY and NEUTRAL recommendations. BUY
suggests capital appreciation of at least 25% from initiation of coverage over the next 12 months, while NEUTRAL denotes that a
stock is not likely to provide similar gains over a 12-month period. As of 02/04/13, Sidoti provides research on 502 companies, of
which 359 (71%) are rated BUY and 143 (29%) are rated NEUTRAL. Of the BUYS, Sidoti has received investment banking
income from 3 companies (0.84%). Of the NEUTRALS, Sidoti has received investment banking income from 1 company (0.70%).
Of the NEUTRALS, 82 trade above our price targets. Of the NEUTRALS, 68 trade above our price targets. A risk to our price
target is that the analyst’s estimates or forecasts may not be met. This report contains forward-looking statements, which involve
risks and uncertainties. Actual results may differ significantly from such forward-looking statements. Factors that may cause such
a difference include, but are not limited to, those discussed in the “Risk Factors” section in the SEC filings available in electronic
format through SEC Edgar filings at www.sec.gov. The research analyst certifies that this report accurately reflects his/her
personal views about the subject securities and issuers and that none of the research analyst's compensation was, is or will be
directly or indirectly related to the analyst's specific recommendations or views contained in this research report. Sidoti does NOT
own securities of the issues described herein. Sidoti policy does not allow an analyst or a member of their household to own
shares in any company that he/she covers. Sidoti policy does not allow employees or household members to serve as an officer
or director of a covered company. Sidoti does not make a market in any securities. Sidoti has a non-research Capital Markets
employee that will seek compensation for investment banking services from this company. Sidoti employees, including research
analysts, receive compensation that is based in part upon the overall performance of the firm, including revenues generated by
Sidoti’s investment banking activities, but compensation is not directly related to investment banking revenues.

Other Disclosures

This report is for information purposes only and is not intended as an offer to sell or a solicitation to buy securities. Sidoti does not
maintain a predetermined schedule for publication of research and will not necessarily update this report. The stock rating on this
report reflects the analyst’s recommendation based on a 12 month period. Based on published near-term earnings estimates, the
analyst’s short-term opinion may be different from what is published in this report. Information contained herein is based on
sources we believe to be reliable but we do not guarantee their accuracy. Prices and opinions concerning the composition of
market sectors included in this report reflect the judgments as of this date and are subject to change without notice. It should be
presumed that the analyst who authored this report has had discussions with the subject company to ensure factual accuracy
prior to publication. This report was prepared for market professionals and institutional investor customers. Market professionals
Action Date Px Rating PTInitiation 9/21/12 42.7 Neutral 45
PT 11/2/12 44.8 47

Appendix Continued

Sidoti & Company, LLC
5

and institutional investors should consider this report as only a single factor in making their investment decisions. This research
report is not a substitute for the exercise of your independent judgment. At times, Sidoti may be in possession of material non-
public information, none of which is used in the preparation of our research. Sidoti maintains and enforces written policies and
procedures reasonably designed to prevent any controlling persons, officers (or persons performing similar functions), or
employees of Sidoti from influencing the activities of research analysts and the content of research reports prepared by the
research analyst. Reprints of Sidoti & Company, LLC reports are prohibited without permission. Additional information is available
upon request.