IDA research note 02-21-13.pdf

Please refer to pages 3-4 of this report for detailed disclosure and certification information.
* D. A. Davidson & Co. makes a market in this security.
RESEARCH NOTE
Institutional Equity Research

IDACORP, Inc.
February 21, 2013 IDA* – NYSE

Rating: Buy
Price: (2/21/13) $46.86
Price Targets: 12-18 month: $50.00
5-year: $58.00

Industry:
Utilities

Michael Bates
503.603.3045
[e-mail]

First Glance: 4Q Results Ahead of Expectations

 IDACORP reported 4Q EPS of $0.33 versus $0.18 a year ago. Results were
ahead of our estimate of $0.30, which matched consensus. On a full-year basis,
GAAP EPS of $3.37 increased from $3.36 in 2011 and was above guidance
($3.20-$3.35). Excluding nonrecurring tax benefits in both years, we estimate
2012 non-GAAP EPS of $3.22 increased from $2.22 in 2011. A variance model is
attached.
 4Q gross margin rose 18% to $180 million, due primarily to higher retail rates,
improved cost recovery, the commercial operation of Langley Gulch, and higher
sales volumes. These benefits were partially offset by increased operating and
interest expenses.
 Customer sharing. IDA recorded $21.8 million of income to be shared with
customers in 2012 (IDA’s regulatory construct in Idaho requires 50% of earnings
in excess of a 10.0% ROE threshold to be shared with customers, with sharing
stepping up to 75% when the ROE exceeds 10.5%).
 2013 guidance was initiated at $3.20-$3.35. The expected increase from
normalized 2012 results assumes a return to normal weather conditions, with
minimal use of ADITCs to meet the utility’s ROE threshold.
 We will have additional comments following the conference call with management
scheduled for Thursday, February 21st at 4:30 pm ET/1:30 pm PT.

D.A. Davidson & Co.
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Actual vs. Historical and Expected Operating Results
Source: Company reports and D.A. Davidson & Co. estimates

$ millions -- Fiscal year ends 12/31 4Q'11 4Q'12e 4Q'12 $ chg % chg 2011 2012e 2012 $ chg % chg
Operating Revenues $230.6 $244.0 $250.8 $20.2 8.7% $1,026.8 $1,073.9 $1,080.7 $53.9 5.3%
Power Supply Expenses 78.3 76.8 71.3 (7.0) -8.9% 333.4 300.7 295.3 (38.1) -11.4%
Gross Margin $152.4 $167.3 $179.5 $27.2 17.8% $693.4 $773.2 $785.4 $92.0 13.3%
Operating Expenses:
Other Operations And Maintenance 97.9 85.0 94.5 (3.4) -3.5% 338.6 339.5 349.0 10.4 3.1%
Energy Efficiency Programs 6.7 5.1 6.3 (0.3) -4.9% 37.7 26.1 27.3 (10.4) -27.5%
Depreciation 30.5 33.6 31.9 1.4 4.6% 119.8 125.6 123.9 4.2 3.5%
Taxes Other than Income Taxes 7.2 8.0 7.5 0.3 4.6% 28.9 31.0 30.5 1.6 5.5%
Other Operating Expenses 1.6 1.0 9.1 7.5 477.5% 4.1 4.0 12.0 7.9 190.4%
Total Operating Expenses $143.9 $132.7 $149.4 $5.5 3.8% $529.1 $526.1 $542.8 $13.7 2.6%
EBITD $49.1 $70.3 $71.5 $22.4 45.7% $306.0 $391.7 $392.9 $86.8 28.4%
Operating Income $8.5 $34.6 $30.1 $21.6 255.8% $164.2 $247.1 $242.6 $78.4 47.7%
Other Income 5.6 1.6 10.6 4.9 87.7% 21.2 17.7 26.6 5.4 25.6%
Earnings Of Investments 4.5 0.5 (1.1) (5.6) n.m. 0.8 1.3 (0.3) (1.1) n.m.
Net Interest Expense 17.5 17.9 19.8 2.3 13.0% 71.5 72.0 73.9 2.4 3.3%
Income Before Income Taxes $1.0 $18.8 $19.7 $18.7 1881.4% $114.7 $194.2 $195.0 $80.3 70.0%
Income Taxes (8.0) 3.8 3.3 11.3 n.m. (52.1) 26.6 26.1 78.2 n.m.
Effective Tax Rate -803.7%20.0% 16.7%-45.4% 13.7% 13.4%
Net Income $9.0 $15.1 $16.4 $7.4 82.5% $166.9 $167.6 $168.9 $2.1 1.2%
Noncontrolling Interest 0.0 0.1 0.0 0.0 n.m. (0.2) (0.1) (0.2) (0.0) 2.4%
Net Income Available For Common $9.0 $15.1 $16.5 $7.5 83.0% $166.7 $167.4 $168.8 $2.1 1.2%
Average Diluted Shares Outstanding 49.7 50.2 50.2 0.4 0.9% 49.6 50.0 50.0 0.5 0.9%
Diluted EPS - GAAP $0.18 $0.30 $0.33 $0.15 82.7% $3.36 $3.35 $3.37 $0.01 0.3%
IRS Settlement - Uniform Capitalization $1.15 ($1.15)
Accounting Method Change $0.16 $0.16 $0.16
Diluted EPS - Adjusted $0.18 $0.30 $0.33 $0.15 82.7% $2.22 $3.19 $3.22 $1.00 45.1%
D.A. Davidson & Co.
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Copyright D.A. Davidson & Co., 2013. All rights reserved.
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Required Disclosures
D.A. Davidson & Co. expects to receive, or intends to seek, compensation for investment banking services from this company in the
next three months.
D.A. Davidson & Co. is a full service investment firm that provides both brokerage and investment banking services. Michael Bates, the
research analyst principally responsible for the preparation of this report, will receive compensation that is based upon (among other
factors) D.A. Davidson & Co.’s investment banking revenue. However, D.A. Davidson & Co.’s analysts are not directly compensated
for involvement in specific investment banking transactions.
I, Michael Bates, attest that (i) all the views expressed in this research report accurately reflect my personal views about the common
stock of the subject company, and (ii) no part of my compensation was, is, or will be, directly or indirectly, related to the specific
recommendations or views expressed in this report.

Ratings Information

D.A. Davidson & Co. Institutional Research Ratings Buy Neutral Underperform
Risk adjusted return potential azbycx
Over 15% total return
expected on a risk adjusted
basis over next 12-18 months
>0-15% return potential
on a risk adjusted basis over next 12-18 months
Likely to remain flat or lose
value on a risk adjusted basis over next 12-18 months
Distribution of Ratings (as of 12/31/12) Buy Hold Sell
Corresponding Institutional Research Ratings Buy Neutral Underperform
and Distribution 54% 43% 3%
Distribution of companies from whom D.A. Davidson & Co. has received compensation for investment banking services in last 12 mos.
Institutional Coverage 7% 5% 0%

D.A. Davidson & Co.’s Institutional Research Rating Scale (maintained since 7/9/02): Buy, Neutral, Underperform
D.A. Davidson & Co.
Two Centerpointe Drive, Suite 400  Lake Oswego, Oregon 97035  [phone]  [phone]  www.dadavidson.com
Copyright D.A. Davidson & Co., 2013. All rights reserved.
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Target prices are our Institutional Research Department’s evaluation of price potential over the next 12-18 months and 5 years, based
upon our assessment of future earnings and cash flow, comparable company valuations, growth prospects and other financial criteria.
Certain risks may impede achievement of these price targets including, but not limited to, broader market and macroeconomic
fluctuations and unforeseen changes in the subject company’s fundamentals or business trends.

Other Disclosures

Information contained herein has been obtained by sources we consider reliable, but is not guaranteed and we are not soliciting any
action based upon it. Any opinions expressed are based on our interpretation of data available to us at the time of the original
publication of the report. These opinions are subject to change at any time without notice. Investors must bear in mind that inherent in
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remember that past performance is not necessarily an indicator of future performance and D.A. Davidson & Co. makes no guarantee,
express or implied, as to future performance. Investors should note this report was prepared by D.A. Davidson & Co.’s Institutional
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