IDA note 11 01 12.pdf.pdf

Sidoti & Company, LLC
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Sidoti & Company, LLC © Copyright 2012
IDACORP Inc. (IDA-$45.22) NEUTRAL
Earnings Release Target: $45
Michael Klein [phone] ([e-mail]) November 1, 2012

Price to Book Value 1.4x
Return on Equity (2014E) 8.9%
LT Debt to Total Capital 47%
5-Year EPS Growth Rate Projection 4%
52-Week Range (NYSE) 45-38
Russell 2000 823
Short Interest (Mil) 1.157
2011 2012E 2013E 2014E
OLD NEW OLD NEW OLD NEW
Mar. $0.60 $0.50A $0.52 $0.58
June 0.42 0.71A 0.60 0.63
Sep. 1.15 1.51 1.84A 1.51 1.54
Dec. 0.18 0.55 0.30 0.60 0.63

EPS $2.35 $3.27 $3.34 $3.23 $3.38

P/E 13.5x 14.0x 13.4x

Note: Note: 2011 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.
Year 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 $1097.4 $1117.4 $1144.2
GAAP EPS $2.02 $2.33 $1.86 $2.17 $2.64 $2.95 $3.36 $3.34 $3.23 $3.38
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.
IDA Reports 3Q:12 EPS Of $1.84 As Regulatory Cost Recovery And Pickup In Customer Growth
Trends Are Encouraging But Valuation Drives Our NEUTRAL Rating, $45 Price Target
• IDA reported 3Q:12 EPS of $1.84, beating our $1.51 estimate and the Street’s $1.55. Earnings were aided by a $26
million income tax expense benefit from regulatory flow-through tax adjustments.
• The Langley Gulch plant was included in base rates, while other regulatory recovery mechanisms such as the
annual Power Cost Adjustment (PCA) also contributed to the bottom line.
• Management raised 2012 EPS guidance to $3.30-$3.40 (from $3.20-$3.35) and reiterated they do not expect to use
any additional accumulated deferred investment tax credits (ADITC) in 2012.
• We are encouraged by the 1.1% pickup in total customers year over year, the second consecutive quarter of 1.1%
gains, combined with a 1.5% increase in MWh sales in the quarter.
• Our estimates and rating are subject to change pending today’s 4:30pm ET conference call where we will seek more
color regarding the tax adjustments, growth outlook, and local economy (dial: 617-597-5330; ID: 93821340).
• We maintain our NEUTRAL rating and $45 price target, which is based on about 13x our 2014 EPS estimate of 3.38.

‰ IDA reported 3Q:12 EPS of $1.84. Idaho Power had a 21% increase in general business sales and a 8% increase in total
revenue, largely attributable to the inclusion of the Langley Gulch plant into rates beginning in July and other regulatory
mechanisms such as the Idaho PCA. These regulatory items contributed $32.1 million to net income, or $0.64 to EPS, on a
year-over-year basis. Owing to the strong earnings, management has raised 2012 EPS guidance to $3.30-$3.40 (from
$3.20-$3.25) and reiterated they do not plan to use any additional ADITC to achieve a 9.5% Idaho jurisdictional ROE. Our
NEUTRAL stance has been predicated on a lack of perceived growth drivers and therefore heavy dependence on a pickup in
Action Date Px Rating PT
Initiation 9/21/12 42.7 Neutral 45

IDACORP INC.
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the local economy. We are encouraged by the 1.5% increase in MWh sales (3.1% increase in residential customers) and
1.1% overall increase in total customers at the end of the period. Our estimates and rating are subject to change pending
today’s 4:30pm ET conference call where we will be looking for additional commentary on the key growth drivers over the
couple of years, local economy, as well as some of the regulatory flow-through tax adjustments booked in 3Q:12.
‰ We maintain our NEUTRAL rating and $45 price target. Our current outlook balances IDA’s earnings visibility through
2014 owing to the use of ADITC and a growing dividend, combined with what we perceive as a lack of growth drivers. Our
target is currently based on about 13x our 2014 EPS estimate of $3.38

Key Risks Regulation Slowdown in local economy Interest rates

Exhibit 1. IDA Inc. Variance Table
3Q:12 A 3Q:12 E Variance % Change 3Q:11 A % Change
($ in thousands)
Revenue 334,019 340,783 (6,764) -2.0% 309,630 7.9%
Operating Income 111,343 127,350 (16,007) -12.6% 71,393 56.0%
Net Income 92,264 75,848 16,416 21.6% 107,414 -14.1%
Diluted EPS $1.84 $1.51 $0.33 21.5% $2.16 -14.8%
Source: Company reports; Sidoti & Company, LLC estimates
IDACORP INC.
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Table 1: IDACORP Income Statement
(in thousands, except where noted)
2010 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 1,036,029 251,494 234,983 309,630 230,649 1,026,756 241,140 254,701 334,019 250,675 1,080,535 251,257 254,970 346,194 264,938 1,117,359 1,144,237
Purchased power 143,769 25,094 36,423 66,141 35,678 163,336 34,277 45,178 71,570 37,462 188,487 34,963 46,082 53,971 29,113 164,128 167,411
Fuel expense 159,673 29,902 19,704 41,195 40,741 131,542 32,751 21,285 55,978 41,148 151,162 33,406 21,711 39,918 41,971 137,006 139,746
Third-party transmission expense - - - -
Power cost adjustment 51,226 31,306 15,501 (10,189) 1,879 38,497 9,008 (3,211) (42,871) 1,917 (35,157) 9,008 (3,211) (17,831) 1,917 (10,117) (10,117)
Other O&M 293,925 70,661 85,472 84,562 97,945 338,640 78,515 86,005 89,968 88,151 342,639 80,084 87,725 82,803 89,914 340,526 347,337
Energy efficiency programs 44,184 6,711 5,796 18,504 6,652 37,663 4,477 8,084 8,410 6,785 27,756 4,611 8,327 19,440 6,989 39,367 40,548
Gain on sale of emission allowances - - - -
Depreciation 115,921 29,464 29,693 30,115 30,517 119,789 30,542 29,879 31,607 31,923 123,951 31,089 31,400 31,714 32,031 126,234 131,360
Taxes other than income taxes 24,046 7,211 7,182 7,302 7,200 28,895 8,100 7,849 7,012 7,776 30,737 8,748 8,477 8,517 8,398 34,140 36,871
Other 4,615 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 198,670 50,091 34,299 71,393 8,465 164,248 42,343 58,800 111,343 34,713 247,199 48,548 53,660 126,861 53,805 282,874 287,881
EBITDA 314,591 79,555 63,992 101,508 38,982 284,037 72,885 88,679 142,950 66,636 371,150 79,637 85,060 158,575 85,837 409,109 419,242
Other income, net 15,165 4,538 5,041 6,010 5,620 21,209 6,593 6,571 2,928 5,609 21,701 5,588 5,663 7,487 5,862 24,600 24,946
Earnings (loss) of unconsolidated equity-method investments 3,008 (1,294) (4,447) 2,085 4,454 798 1,419 (1,928) 1,304 795 - -
Total interest expense, net 75,114 18,959 17,568 17,446 17,553 71,526 17,205 17,436 19,401 17,476 71,518 20,293 18,933 17,730 18,534 75,491 75,024
Pre-tax income 141,729 34,376 17,325 62,042 986 114,729 33,150 46,007 96,174 22,846 198,177 33,842 40,390 116,618 41,133 231,984 237,804
Tax rate -0.5% 14.2% NM NM NM NM 25.1% 23.0% 4.1% 34.6% 15.5% 22.7% 25.4% 34.3% 25.6% 29.5% 26.7%
Income tax (benefit) expense (731) 4,888 (3,652) (45,372) (7,997) (52,133) 8,333 10,569 3,910 7,910 30,722 7,699 10,252 39,981 10,542 68,474 63,543
Net Income 142,460 29,488 20,977 107,414 8,983 166,862 24,817 35,438 92,264 14,936 167,455 26,144 30,138 76,637 30,591 163,510 174,260
Adj. for (income) loss attributable to noncontrolling interests 338 252 (76) (347) 2 (169) 112 (137) (195) (220) - -
Net income attributable to IDA 142,798 29,740 20,901 107,067 8,985 166,693 24,930 35,301 92,069 14,936 167,235 26,144 30,138 76,637 30,591 163,510 174,260
EPS, diluted 2.95 0.60 0.42 2.16 0.18 3.36 0.50 0.71 1.84 0.30 3.34 0.52 0.60 1.51 0.60 3.23 3.38
Dividend per share 1.20 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 40.6% 35.7% 41.0% 48.2% 50.7%
Shares outstanding, diluted 48,340 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 28.4% 28.1% 36.4% 27.3% 42.5% 33.0%32.6% 33.8% 26.9% 35.2% 31.7% 31.9% 34.4% 23.9% 33.9% 30.5% 30.4%
Operating Margin 19.2% 19.9% 14.6% 23.1% 3.7% 16.0% 17.6% 23.1% 33.3% 13.8% 22.9% 19.3%21.0% 36.6% 20.3% 25.3% 25.2%
EBITDA Margin 30.4% 31.6% 27.2% 32.8% 16.9% 27.7% 30.2%34.8% 42.8% 26.6% 34.3% 31.7%33.4% 45.8% 32.4% 36.6% 36.6%
Pretax Margin 13.7% 13.7% 7.4% 20.0% 0.4% 11.2% 13.7%18.1% 28.8% 9.1% 18.3% 13.5%15.8% 33.7% 15.5% 20.8% 20.8%
Net Margin 13.8% 11.7% 8.9% 34.7% 3.9% 16.3% 10.3% 13.9% 27.6% 6.0% 15.5% 10.4% 11.8% 22.1% 11.5% 14.6% 15.2%
YoY Change
Revenue -1.3% -0.6% -2.8% 0.1% -0.6% -0.9% -4.1% 8.4% 7.9% 8.7% 5.2% 4.2% 0.1% 3.6% 5.7% 3.4% 2.4%
O&M 0.4% -2.0% 13.8% 17.5% 31.0% 15.2% 11.1% 0.6% 6.4% -10.0% 1.2% 2.0% 2.0% -8.0% 2.0% -0.6% 2.0%
Operating profit -2.4% 47.1% -6.3% -19.8% -78.3% -17.3%-15.5% 71.4% 56.0% 310.1% 50.5% 14.7% -8.7% 13.9% 55.0% 14.4% 1.8%
EBITDA 0.1% 27.0% -2.0% -14.1% -43.1% -9.7% -8.4% 38.6% 40.8% 70.9% 30.7% 9.3% -4.1% 10.9% 28.8% 10.2% 2.5%
Pretax profit -3.4% 100.3% -23.4% -19.7% -96.0% -19.1%-3.6% 165.6% 55.0% 2217.0% 72.7% 2.1% -12.2% 21.3% 80.0% 17.1% 2.5%
Net income 14.5% 86.0% -46.5% 60.0% -55.6% 17.1% -15.8% 68.9% -14.1% 66.3% 0.4% 5.3% -15.0% -16.9% 104.8% -2.4% 6.6%
Pro forma EPS, diluted 12.1% 79.6% -48.3% 55.1% -56.4% 13.9% -17.1% 67.3% -14.8% 64.6% -0.7% 3.9% -15.6% -17.8% 102.4% -3.3% 4.6%
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
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IDACORP Inc. (IDA-$45.22) NEUTRAL Target: $45 November 1, 2012

Key Risks Regulation Slowdown in local economy Interest rates

Valuation:
‰ We maintain our NEUTRAL rating and $45 price target. Our current outlook balances IDA’s earnings visibility through
2014 owing to the use of ADITC and a growing dividend, combined with what we perceive as a lack of growth drivers. Our
target is currently based on about 13x our 2014 EPS estimate of $3.38

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 11/01/12, Sidoti provides research on 512 companies, of
which 363 (70%) are rated BUY and 148 (30%) are rated NEUTRAL. Of the BUYS, Sidoti has received investment banking
income from 3 companies (0.83%). Of the NEUTRALS, Sidoti has received investment banking income from 1 company (0.68%).
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Action Date Px Rating PT
Initiation 9/21/12 42.7 Neutral 45

Appendix Continued

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