Ladenburg-Thalmann-Aug-2-2013.pdf

Disclosures and Analyst Certifications can be found in Appendix A.
NEW YORK, NY MELVILLE, NY BOSTON, MA MIAMI, FL NAPLES, FL BOCA RATON, FL HOUSTON, TX

520 Madison Avenue y New York, New York 10022 y Telephone: [phone] 800-LAD-THAL

Member: NYSE, NYSE MKT, FINRA, all other principal exchanges and SIPC

IIDDAACCOORRPP ((IIDDAA))
2Q13 Financial Results and Increased Guidance – Reiterating NEUTRAL
Highlights
• We are reiterating our NEUTRAL rating IDA shares. Our revised price target of $52 p/s (previously $50 p/s) implies a 2013/2014/2015 P/E of 14.9x/15.1x/15.9x our EPS estimates of $3.48/$3.45/$3.27 (previously $3.35/$3.41/$3.27). The primary driver of our increased 2013 EPS estimate is 2Q13 irrigation sales, favorable weather year-to-date and cost management. Our 2015
EPS estimate assumes a traditional return on rate base rate structure. However, if the current rate
structure (9.5% return on Idaho-jurisdictional year-end shareholder equity with use of up to $45m of
ADITC to support 9.5% floor) is extended beyond 2014, we estimate 2015 EPS of $2.50.
• On August 1, 2013, IDA reported 2Q13 net income of $45.5m or $0.91 p/s compared to net income
of $35.3m or $0.71 p/s in 2Q12 and our estimate of $0.68 p/s. The primary differences between our estimate and actual results were better than irrigation sales, weather benefit and cost management. The main drivers behind the y-o-y changes include: rate and regulatory changes (+$16.0m), increase in sales volumes attributable to usage per customer (+$6.5m), increase in sales volumes attributable to customer growth (+$2.8m), other changes in operating revenues and expenses, net (+$1.0m), revenue sharing recorded in 2Q13 (-$2.8m), decrease in AFUDC (-$6.8m), change in other non-operating income and expense (-$0.7m), additional amortization of ADITC in 2012
(+$0.8m) and increase in income tax expense (-$6.5m).
• IDA increased 2013 earnings guidance from $3.20-$3.35 p/s to $3.40-$3.55 p/s and assumes the
following: Idaho Power O&M expense $335-$345m (previously $340-$350m), no ADITC needed in
2013 (unchanged), 2013 capital expenditures of $230-$240m (previously $245-$255m), 2014-2015 total capital expenditures of $575-$605m (previous guidance was $570m-$580m) and Idaho Power hydroelectric generation revised from 5.0-7.0m MWh to 5.5-6.0m MWh. Guidance excludes July 2013 favorable weather and high-end of guidance range assumes 75% sharing-band and an ROE of at least 10.5%.
• Other highlights include: favorable economic and customer trends witnessed in 2Q13 (Idaho tax
revenues of $2.75b is +3.5% ahead of projections, 6,000 new customers since 2Q12 or +1.2%),
IDA recorded a $2.8m credit for customer revenue sharing due to ROE in excess of 10.0% (50%
sharing band), cost controls drives 2013 O&M expense forecast down $5m and viewed as
sustainable (focused on labor expenses), recently filed IRP includes Bridger coal plant
environmental compliance costs (COD no earlier than 2018) and Boardman-Hemingway Line as the
supply-side option (draft EIS expected in early 2014 vs previous expectation of mid-2013), Idacorp/Idapower available liquidity at $63.1m/$275.8m, 3m shares available under sales agency agreement with no shares to be issued in 2013, IRP forecasts +1.4% average annual increase in peak hourly demand, CPCN filed for Bridger environmental spend ($130m, SCR installation, November 29, 2013 decision expected), management will recommend to the Board at least a 10% increase in the dividend at the September 2013 scheduled Board meeting, 50-60% dividend payout target of sustainable earnings, IDA evaluating its general rate case strategy (request an extension
of existing rate structure that is set to expire at year-end 2014, file a general rate case, status quo, if
status quo IDA may ask for ability to extend ADITC usage beyond 2014 if necessary), 7-month rate
case timetable.

COMPANY & MARKET DATA
Price (August 1, 2013) $52.87
Price Target, Excl Dividends $52.00
Prior Target $50.00
52 - Week Range $40.18-$54.74
Mkt. Capitalization (mill) $2,596
Enterprise Value (mill) $3,846
FD Shares Outstanding (mill) 49
Avg. Daily Trading Vol. (000) 207
Book Value per Share (1Q13A) $35.34
Dividend (FY13E) / Yield $1.52 2.87%
FY2012A FY2013E FY2014E
Revenue (mill) $1,151 $1,172 $1,181
1Q EPS $0.50 $0.67A
2Q EPS $0.71 $0.91A
3Q EPS $1.84
4Q EPS $0.33
EPS $3.37 $3.48 $3.45
Prior EPS $3.31 $3.40
Consensus EPS $3.26 $3.37
P/E 15.7x 15.2x 15.3x
EV/EBITDA 10.0x 9.7x 9.8x
P/FCF nm nm nm
ESTIMATES
Volume in Millions
0.0
1.0
2.03.0
4.0
$20
$25
$30
$35
$40
$45
$50
$55
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12

Chart data: Bloomberg
Brian J. Russo, CFA
646-432-6312 [e-mail]
Ira Reibeisen 212-409-2051
[e-mail]
Power and Utilities Sector
Company Update

August 2, 2013
NEUTRAL
Brian Russo 646.432.6312 IDACORP (IDA)

Ladenburg Thalmann & Co. Inc. PAGE - 2 -

APPENDIX A: IMPORTANT RESEARCH DISCLOSURES

ANALYST CERTIFICATION
I, Brian Russo, attest that the views expressed in this research report accurately reflect my personal views about the subject security
and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or
views expressed in this research report, provided, however, that:
The research analyst primarily responsible for the preparation of this research report has or will receive compensation based upon
various factors, including the volume of trading at the firm in the subject security, as well as the firm’s total revenues, a portion of
which is generated by investment banking activities.

COMPANY BACKGROUND
Headquartered in Boise, Idaho, IDACORP, Inc., (IDA) is a holding company formed in 1998 that is primarily engaged in the
generation, transmission, distribution, sale and purchase of energy. IDA serves over 466,000 retail customers across its 24,000sq
mile service territory in both Idaho and Oregon, and owns approximately 3,267MW of generating capacity. IDA’s principal operating
subsidiary is Idaho Power Company (IPC). The company’s unregulated utilities include IDACORP Financial (IFS) that invests in
affordable housing and real estate and Ida-West Energy Company (Ida-West) that operates small hydroelectric generation projects.

VALUATION METHODOLOGY
We value equities utilizing a multi-faceted approach which includes; sum-of-the-parts, net asset value, discounted cash flow, leading
P/E, and EV/EBITDA.
RISKS
On top of normal economic and market risk factors that impact most all equities, Idacorp (IDA) is uniquely at risk to:
Because of IPC’s predominantly hydroelectric generating base and heavy reliance on hydroelectric generation, which can be
adversely affected by weather, reduced hydroelectric generation can reduce revenues and increase costs.
Continuing declines in stream flows and over-appropriation of water in Idaho may reduce hydroelectric generation and revenues and
increase costs.
Load growth in IPC’s service territory due to customer growth and demand for energy exposes it to greater market and operational risk
as increased reliance on purchased power to meet load requirements could increase costs and reduce earnings and cash flows.
IPC’s reliance on coal and natural gas to fuel its generating facilities exposes it to risk of increased market prices, which could
increase costs and reduced earnings.
Changes in temperature and precipitation can reduce power sales and revenues.
Climate change could affect customer demand and hydroelectric generation and lead to restrictions on generation resources.
If Idaho Public Utility Commission (IPUC), the Oregon Public Utility Commission (OPUC) or the Federal Energy Regulatory
Commission (FERC) grant less rate recovery in rate case filings than IPC needs to cover the costs of providing services, financial
results could be adversely impacted and economic expansion may be limited.
Conditions that may be imposed in connection with hydroelectric license renewals may require large capital expenditures and reduce
earnings and cash flows.
The cost of complying with environmental regulations related to air quality, water quality, natural resources and health and safety can
increase capital expenditures and operating costs and reduce earnings and cash flows.
IDACORP and its subsidiaries are subject to costs and other effects of legal and regulatory proceedings, settlements, investigations
and claims, including those that have arisen out of the western energy situation.
IPC’s business is subject to substantial governmental regulation and may be adversely affected by increased costs resulting from, or
liability under, existing or future regulations or requirements.
Increased capital expenditures can significantly affect liquidity.
As a holding company, IDACORP does not have its own operating income and must rely on the upstream cash flows from its
subsidiaries to pay dividends and make debt payments.
A downgrade in IDA’s credit ratings could negatively affect the company’s ability to access capital and increase their cost of
borrowing.
Adverse results of income tax audits could reduce earnings and cash flows.
Employee workforce factors, including the loss or retirement of key personnel, availability of qualified personnel and an aging
Brian Russo 646.432.6312 IDACORP (IDA)

Ladenburg Thalmann & Co. Inc. PAGE - 3 -

workforce, could increase costs and reduce earnings.

STOCK RATING DEFINITIONS
Buy: The stock’s return is expected to exceed 12.5% over the next twelve months.
Neutral: The stock’s return is expected to be plus or minus 12.5% over the next twelve months.
Sell: The stock’s return is expected to be negative 12.5% or more over the next twelve months.

Investment Ratings are determined by the ranges described above at the time of initiation of coverage, a change in risk, or a change
in target price. At other times, the expected returns may fall outside of these ranges because of price movement and/or volatility. Such
interim deviations from specified ranges will be permitted but will become subject to review.

RATINGS DISPERSION AND BANKING RELATIONSHIPS (AS OF 7/31/13)
Buy: 76% (42% are banking clients)
Neutral: 24% (6% are banking clients)
Sell: 0% (0% are banking clients)

INVESTMENT RATING AND PRICE TARGET HISTORY

Brian Russo 646.432.6312 IDACORP (IDA)

Ladenburg Thalmann & Co. Inc. PAGE - 4 -

COMPANY SPECIFIC DISCLOSURES:
Ladenburg Thalmann & Co. Inc. does not make a market in subject company. Ladenburg Thalmann & Co. Inc. has neither had an
investment banking relationship with, nor received investment banking fees from the subject company in the past 12 months. Neither
the Analyst, nor members of the Analyst’s household own any securities issued by the subject Company.

GENERAL DISCLAIMERS
Information and opinions presented in this report have been obtained or derived from sources believed by Ladenburg Thalmann & Co.
Inc. to be reliable. The opinions, estimates and projections contained in this report are those of Ladenburg Thalmann as of the date of
this report and are subject to change without notice.

Ladenburg Thalmann & Co. Inc. accepts no liability for loss arising from the use of the material presented in this report, except that
this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to
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Ladenburg Thalmann & Co. Inc. may have issued, and may in the future issue, other reports that are inconsistent with, and reach
different conclusions from, the information presented in this report. Those reports reflect the different assumptions, views and
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express or implied, is made regarding future performance. The price, value of and income from any of the securities mentioned in this
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without the prior written consent of Ladenburg Thalmann & Co. Inc.
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