Utilities Preview 02-15-13.pdf

Please refer to pages 10-12 of this report for detailed disclosure and certification information.
*D.A. Davidson & Co. makes a market in this security.
INDUSTRY UPDATE
Institutional Equity Research

February 19, 2013 Utilities Update

Prices: 2/15/13

Industry:
Utilities

Michael Bates
503.603.3045
[e-mail]

Utilities Earnings Previews: Week of 2/18/13
AVA, IDA, POR, STR

Several utilities under our coverage are scheduled to report earnings over the next
week. A list of scheduled reports is shown below and additional preview comments for
each respective company are attached.

Among the companies that have reported so far, earnings have generally increased
relative to the year-ago quarter and have, on average, been ahead of published
expectations due to tight cost controls and recent rate increases.

4Q temperatures were generally milder than normal but colder than the same quarter
a year ago, which should drive improved heating demand. Temperature swings
generally have a greater impact on the earnings of utilities serving a relatively high
proportion of residential/small commercial customers. 4Q’12 heating degree day data
and a customer mix breakdown of utilities under our coverage are detailed in Tables 3
and 4.

Outlooks heading into 2013 have been a mixed bag, as increased rates are, in many
cases, expected to be offset by tepid demand growth and increased pension and
benefit expenses.

Table 1: Utilities 4Q’12 Earnings Preview
Source: D.A. Davidson & Co. estimates and Capital IQ consensus
Table 2: Recent Reports
Source: D.A. Davidson & Co. estimates and Capital IQ consensus

Report Call
Date Date EPS Prior Consensus EPS Prior Consensus
*AVA N $26.49 2/20 2/20 $0.44 $0.42 $0.45 $1.50 $1.72 $1.52
*IDA B $46.73 2/21 2/21 $0.30 $0.18 $0.30 $3.35 $3.36 $3.35
*POR B $28.98 2/22 2/22 $0.46 $0.38 $0.41 $1.96 $1.95 $1.91
*STR N $23.54 2/20 2/21 $0.35 $0.34 $0.35 $1.18 $1.16 $1.18
Week of 2/25/13
*GXP N $21.97 2/28 3/1 $0.00 $0.01 $0.02 $1.29 $1.25 $1.31
*ITC B $81.02 2/27 2/28 $1.08 $0.86 $1.08 $4.13 $3.35 $4.13
*MGEE N $53.29 2/26e n/a $0.55 $0.41 $0.55 $2.88 $2.64 $2.82
*NWN N $45.47 3/1 3/1 $1.12 $1.09 $1.10 $2.29 $2.56 $2.39
*TEG B $56.16 2/28 3/1 $0.94 $1.01 $0.95 $3.30 $3.38 $3.28
*UNS N $46.46 2/26 2/26 $0.18 $0.20 $0.16 $2.20 $2.56 $2.19
*WR B $31.06 2/28 3/1 $0.21 $0.16 $0.19 $2.01 $1.81 $1.98
4Q'12 FY'12PriceRatingSymbol
Report
Date EPS Prior Consensus EPS Prior Consensus
*ALE B $46.42 2/15 $0.75 $0.53 $0.75 $2.58 $2.39 $2.57
*BKH N $40.86 1/31 $0.68 $0.46 $0.63 $2.09 $1.69 $2.04
*HE N $27.83 2/15 $0.39 $0.42 $0.32 $1.68 $1.50 $1.61
*LNT B $46.94 2/14 $0.64 $0.58 $0.57 $3.05 $2.95 $2.99
*MDU N $23.95 2/4 $0.40 $0.39 $0.39 $1.14 $1.19 $1.14
*NWE N $38.44 2/14 $0.78 $0.86 $0.76 $2.37 $2.41 $2.36
*OTTR N $28.03 2/12 $0.47 $0.16 $0.30 $1.31 $0.95 $1.18
*WEC N $39.78 1/30 $0.43 $0.49 $0.42 $2.35 $2.18 $2.32
*XEL N $28.11 1/31 $0.29 $0.29 $0.27 $1.83 $1.72 $1.81
Symbol Rating Price 4Q'12 FY'12
D.A. Davidson & Co.
2

Avista is scheduled to report 4Q’12 earnings on Wednesday, February 20th before the market
opens. A conference call with management will be held the same day at 10:30 am ET/7:30 am
PT.

Earnings estimates. We estimate 4Q EPS of $0.44, $0.02 better than the same quarter last
year and a penny below the Street mean. We expect revenue to increase 2.8% to $393 million,
well below the Street consensus of $468 million. On a full-year basis, we are forecasting EPS
of $1.50, compared to $1.72 in 2011 and the $1.52 Street mean.

Ecova. We are forecasting EPS of $0.02, down from $0.05 in 4Q’11. Ecova’s growing pains
produced disappointing results through 3Q’12. Management has characterized the headwinds
as temporary, and projects resumed growth in 2013 as the firm continues to evolve its
platform.

NEUTRAL rated. Our $25 price target equates to 14.1x our 2013 EPS estimate.

IDACORP is scheduled to report 4Q’12 earnings on Thursday, February 21st before the market
opens. A conference all with management will be held the same day at 2:30 pm ET/11:30 am
PT.

Earnings estimates. We are forecasting 4Q EPS of $0.30, a $0.12 improvement from last
year and in line with the Street mean. We expect revenues to increase 5.8% to $244 million,
slightly below the Street consensus of $249 million. On a full-year basis, we are forecasting
EPS of $3.35, compared to $3.36 in 2011 and in line with the Street mean.
Expecting margin improvement. We are forecasting quarterly gross margin of $167 million,
up ~10% from $152 million in 4Q’11. The expected increase should be driven by higher retail
rates and the commercial operation of the Langley Gulch plant since June 29, 2012, with these
benefits partially offset by higher operating expenses.

BUY rated. Our $50 price target equates to 14.9x our 2013 EPS estimate.

Portland General Electric is scheduled to report 4Q’12 earnings on Friday, February 22nd
before the market opens. A conference call with management will be held the same day at
11:00 am ET/8:00 am PT.

Earnings estimates. We are forecasting EPS of $0.46, $0.08 higher than 4Q’11 and slightly
above the Street mean of $0.41.We expect revenue to increase 3.9% to $498 million, above
the Street consensus of $489 million. On a full-year basis, we expect EPS of $1.96, a penny
above the 2011 total and slightly above the Street mean of $1.91.

Rate case filed. On February 15th, Portland General Electric filed for a ~$105 million (+6.2%)
electric rate increase with the Oregon Public Utility Commission (OPUC). The rate increase is
based on a 10.0% ROE with a 50% equity layer and a 7.86% return on an average rate base
of $3.13 billion. Factors driving the request include improvements to existing power plants and
wind forecasting, new Clackamas River fish-sorting facilities, a disaster-preparedness center,
technology investments, employee benefit costs, and new federal regulations. An order from
the OPUC is expected in late 2013 for prices effective January 1, 2014.

Port Westward 2. On January 31st, POR announced its intention to proceed with development
of the Port Westward Unit 2 (PW2) flexible generating source. As proposed, the 220 MW gas-
fired plant will be located adjacent to POR’s existing gas-fired Port Westward and Beaver
plants. Construction will begin in mid-2013, should be finished in 2015, and is expected to cost
$285-$310 million (excluding AFUDC). We expect the company to give more details on this
quarter’s call.

BUY rated. Our $32 price target equates to 15.5x our 2014 EPS estimate.

Avista Corp.
(AVA – NEUTRAL - $25.00 target)
IDACORP, Inc.
(IDA – BUY - $50.00 target)
Portland General Electric Co.
(POR – BUY - $32.00 target)
D.A. Davidson & Co.
3
Questar is scheduled to report 4Q’12 earnings on Wednesday, February 20th after the market
closes. A conference call with management will be held the next day at 9:30 am ET/6:30 am
PT.

Earnings estimates. We are forecasting EPS of $0.35 for the quarter, up a penny from last
year and in line with the Street mean. We expect revenue to be roughly flat at $354 million,
well below the Street consensus of $400 million. On a full-year basis, we are forecasting EPS
of $1.18, in line with the Street average and $0.02 above last year’s total.

Wexpro II. On January 30th, the latest development in Questar’s Wexpro II agreement came
about in the form of a brief from the Office of Consumer Services. The brief argued that
another agreement between Wexpro and Questar lasting in perpetuity was not in the best
interests of the public. This was expected as the Office of Consumer Services defends the
interests of the public. In our view, another deal that locks in at-cost pricing with Wexpro would
help boost Questar in the long-run.

NEUTRAL rated. Our $21 price target equates to ~17.5x our 2013 EPS estimate.
.
Questar Corp.
(STR – NEUTRAL - $21.00 target)
D.A. Davidson & Co.
4
Table 3: Heating Degree Day Data (HDD) – December and 4Q’12 Totals
Source: National Weather Service’s Climate Prediction Center
December % Dev % Dev 4Q'12 % Dev % Dev
HDD v. Avg v. 2011 Total v. Avg v. 2011
Duluth, MN 1436 -10%8%3136 -8%12%
Cedar Rapids, IA 1110 -14%6%2476 -3%14%
Madison, WI 1080 -17%2%2382 -12%9%
Spokane, WA 1036 -11%-8%2313 -12%-8%
Colorado Springs, CO 1038 -6%-6%2145 -12%-5%
Lincoln, NE 1143 -4%6%2306 -3%8%
Rapid City, SD 1228 0%7%2629 -2%4%
Kansas City, MO 894 -15%1%1786 -10%4%
Boise, ID 887 -18%-15%1845 -18%-12%
Pocatello, ID 1103 -11%-17%2393 -11%-14%
Tri Cities, WA 763 -18%-21%1691 -11%-11%
Boise, ID 887 -18%-15%1845 -18%-12%
Bismarck, ND 1548 1%26%3311 1%21%
Madison, WI 1080 -17%2%2382 -12%9%
Great Falls, MT 1205 -3%17%2646 -6%8%
Sioux Falls, SD 1336 -7%14%2769 -6%14%
Portland, OR 683 -10%-14%1433 -12%-14%
Jamestown, ND 1594 0%27%3377 1%24%
Fergus Falls, MN 1436 -10%8%3136 -8%12%
Portland, OR 683 -10%-14%1433 -12%-14%
Salt Lake City, UT 924 -13%-16%1795 -18%-18%
Chicago, IL 885 -23%-4%2025 -12%10%
Green Bay, WI 1118 -17%1%2508 -11%10%
Rochester, MN 1263 -15%5%2547 -17%7%
Tucson, AZ 351 -12%-28%419 -33%-38%
Milwaukee, WI 957 -20%-2%2184 -11%9%
Topeka, KS 881 -14%2%1715 -13%1%
Denver, CO 1037 -4%-12%2149 -8%-8%
Minneapolis, MN 1281 -10%11%2641 -10%16%
Eau Claire, WI 1306 -11%4%2782 -8%10%
Westar Energy
WR
Xcel Energy
XEL
Otter Tail
OTTR
Portland General Electric
POR
Questar
STR
Integrys Energy Group
TEG
UNS Energy
UNS
Wisconsin Energy
WEC
Northwest Natural Gas
NWN
Stock Location
ALLETE
ALE
Alliant Energy
LNT
Avista
AVA
Black Hills
BKH
Great Plains Energy
GXP
IDACORP
IDA
MDU Resources Group
MDU
MGE Energy
MGEE
NorthWestern
NWE
D.A. Davidson & Co.
5
Table 4: Breakdown of Electric Utility Revenue Mix (2011)
Source: Company reports, regulatory & SEC filings, United States Department of Energy website

Residential Commercial Industrial Other
ALE ALLETE Inc.71%29%13%13%45%1%
AVA Avista Corp.74%26%33%28%12%1%
BKH Black Hills Corp.84%16%30%35%12%6%
GXP Great Plains Energy Inc.91%9%41%38%8%3%
HE Hawaiian Electric Industries Inc.100%-32%35%33%1%
IDA IDACORP Inc.84%16%40%22%14%9%
LNT Alliant Energy Corp.89%11%37%23%28%-
MDU MDU Resources Group Inc.94%6%39%41%11%3%
MGEE MGE Energy Inc.99%1%33%52%5%10%
NWE NorthWestern Corp.91%9%37%46%5%3%
OTTR Otter Tail Corp.89%11%31%34%22%1%
POR Portland General Electric Co.96%4%48%35%12%-
TEG Integrys Energy Group Inc.81%19%31%30%20%1%
UNS UNS Energy Corp.79%21%36%24%13%6%
WEC Wisconsin Energy Corp.92%8%36%31%24%1%
WR Westar Energy Inc.76%24%32%28%16%-
XEL Xcel Energy Inc.85%15%31%18%35%1%
87%14%34%31%19%3%
97%3%37%34%25%0%
Other Breakdown of Retail Mix
Average Under Coverage
USA Total
Symbol Company Name Retail
D.A. Davidson & Co.
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Avista - Historical and Projected Operating Results
Source: D.A. Davidson & Co. estimates and company reports
$ in millions -- Fiscal year ends 12/31 1Q'11 2Q'11 3Q'11 4Q'11 2011 1Q'12 2Q'12 3Q'12 4Q'12e 2012e 1Q'13e 2Q'13e 3Q'13e 4Q'13e 2013e 2014e
Operating Revenues:
Utility Revenues $437.7 $320.0 $302.0 $381.9 $1,441.5 $405.5 $293.3 $292.1 $392.5 $1,383.4 $419.1 $299.4 $283.6 $402.2 $1,404.2 $1,433.4
Non-Utility Revenues 38.9 40.6 41.7 57.1 178.3 46.8 50.3 48.5 52.9 198.5 54.6 54.6 54.6 54.6 218.2 228.2
Operating Revenues $476.6 $360.6 $343.7 $438.9 $1,619.8 $452.3 $343.6 $340.6 $445.3 $1,581.8 $473.6 $353.9 $338.1 $456.8 $1,622.4 $1,661.6
Operating Expenses:
Resource Costs $248.1 $155.8 $171.4 $214.8 $790.0 $211.0 $136.0 $153.8 $216.2 $717.0 $215.4 $134.5 $138.7 $218.0 $706.6 $712.7
Other Operating Expenses 90.9 101.3 92.3 112.6 397.2 107.1 107.6 107.1 114.3 436.1 112.6 112.9 113.8 117.7 457.0 475.5
Depreciation And Amortization 27.7 28.2 28.3 29.3 113.6 30.3 31.3 31.6 31.7 125.0 32.4 32.4 32.5 32.5 129.6 131.5
Taxes Other Than Income Taxes 25.0 19.7 16.8 21.8 83.3 25.1 20.4 18.1 22.5 86.1 25.6 20.7 18.4 22.8 87.5 89.0
Total Operating Expenses $391.8 $305.0 $308.8 $378.5 $1,384.2 $373.5 $295.3 $310.6 $384.6 $1,364.1 $386.0 $300.5 $303.3 $391.0 $1,380.7 $1,408.7
EBITDA $111.9 $83.0 $61.6 $88.6 $345.0 $108.4 $78.9 $57.8 $92.3 $337.5 $119.9 $85.7 $67.2 $98.1 $370.9 $384.0
Operating Income $84.8 $55.5 $34.9 $60.4 $235.6 $78.7 $48.3 $30.0 $60.7 $217.8 $87.6 $53.4 $34.8 $65.8 $241.7 $253.0
Net Interest Expense (18.2)(17.6)(17.9)(17.6)(71.3)(18.8)(18.7)(18.6)(18.2)(74.3)(18.2)(18.5)(18.6)(18.5)(73.9)(77.5)
Other Income (Deductions), Net (0.6)(0.8)(1.6)(1.1)(4.2)(0.6)(0.7)(3.8)(0.1)(5.2)(0.1)(0.1)(0.1)(0.1)(0.4)(0.4)
Income Before Income Taxes $66.0 $37.1 $15.4 $41.7 $160.2 $59.4 $28.9 $7.6 $42.4 $138.2 $69.4 $34.8 $16.1 $47.1 $167.4 $175.1
Income Taxes 23.6 13.6 3.7 15.7 56.6 21.1 10.4 1.6 15.5 48.7 24.5 12.2 5.6 16.6 58.8 61.4
Effective Tax Rate 35.8%36.6%24.2%37.7%35.4%35.6%35.9%21.2%36.7%35.2%35.3%35.0%34.5%35.1%35.1%35.1%
Net Income From Continuing $42.4 $23.5 $11.6 $26.0 $103.5 $38.2 $18.5 $6.0 $26.9 $89.6 $44.9 $22.6 $10.6 $30.6 $108.6 $113.7
Minority Interest 0.5 0.5 0.9 1.4 3.3 (0.2)0.4 0.2 0.3 0.7 0.4 0.4 0.4 0.4 1.8 2.1
Net Income $41.9 $23.0 $10.7 $24.6 $100.2 $38.4 $18.2 $5.8 $26.6 $88.9 $44.5 $22.2 $10.1 $30.1 $106.9 $111.6
Average Diluted Shares 57.4 58.1 58.2 58.6 58.1 59.0 58.9 59.1 59.8 59.2 60.0 60.2 60.3 60.5 60.3 60.9
Diluted EPS by Segment:
Avista Utilities $0.70 $0.36 $0.13 $0.38 $1.56 $0.67 $0.31 $0.13 $0.43 $1.53 $0.72 $0.34 $0.14 $0.47 $1.68 $1.73
Ecova 0.03 0.03 0.06 0.05 0.17 (0.01)0.02 0.01 0.02 0.04 0.03 0.03 0.03 0.03 0.11 0.13
Other 0.00 0.00 (0.01)(0.00)(0.01)(0.00)(0.02)(0.04)(0.00)(0.07)(0.01)(0.01)(0.01)(0.01)(0.02)(0.02)
Diluted EPS $0.73 $0.40 $0.18 $0.42 $1.72 $0.65 $0.31 $0.10 $0.44 $1.50 $0.74 $0.37 $0.17 $0.50 $1.78 $1.83
Ratio Analysis:
Return on Average Equity (ttm)9.5%9.1%8.8%8.6%8.5%8.2%7.7%7.2%7.2%6.9%7.5%7.7%7.9%8.1%8.0%8.0%
Return on Average Assets (ttm)2.8%2.7%2.6%2.5%2.4%2.4%2.2%2.1%2.1%2.1%2.2%2.3%2.4%2.5%2.5%2.5%
Return on Capital (ttm)4.4%4.3%4.2%4.1%4.0%3.9%3.6%3.4%3.4%3.3%3.6%3.7%3.8%3.9%3.9%3.9%
EBITDA Margin 23.5%23.0%17.9%20.2%21.3%24.0%23.0%17.0%20.7%21.3%25.3%24.2%19.9%21.5%22.9%23.1%
Operating Margin 17.8%15.4%10.1%13.8%14.5%17.4%14.1%8.8%13.6%13.8%18.5%15.1%10.3%14.4%14.9%15.2%
Pretax Margin 13.9%10.3%4.5%9.5%9.9%13.1%8.4%2.2%9.5%8.7%14.6%9.8%4.8%10.3%10.3%10.5%
Net Margin 8.8%6.4%3.1%5.6%6.2%8.5%5.3%1.7%6.0%5.6%9.4%6.3%3.0%6.6%6.6%6.7%
Dividends Per Common Share $0.275 $0.275 $0.275 $0.275 $1.100 $0.290 $0.290 $0.290 $0.290 $1.160 $0.299 $0.299 $0.299 $0.299 $1.195 $1.231
Dividend Payout Ratio (ttm)55.0%58.4%61.1%63.6%63.6%45.7%54.1%60.0%77.3%77.3%44.2%50.9%54.8%67.3%67.3%67.2%
Dividend Growth Rate 10.0%10.0%10.0%10.0%10.0%5.5%5.5%5.5%5.5%5.5%3.0%3.0%3.0%3.0%3.0%3.0%
D.A. Davidson & Co.
7
IDACORP - Historical and Projected Operating Results
Source: D.A. Davidson & Co. estimates and company reports
$ millions -- Fiscal year ends 12/31 3Q'11 4Q'11 2011 1Q'12 2Q'12 3Q'12 4Q'12e 2012e 1Q'13e 2Q'13e 3Q'13e 4Q'13e 2013e 2014e
Operating Revenues $309.6 $230.6 $1,026.8 $241.1 $254.7 $334.0 $244.0 $1,073.9 $257.4 $257.3 $364.1 $276.9 $1,155.6 $1,180.1
Power Supply Expenses 97.1 78.3 333.4 76.0 63.3 84.7 76.8 300.7 74.8 65.2 109.9 80.9 330.8 331.7
Gross Margin $212.5 $152.4 $693.4 $165.1 $191.4 $249.3 $167.3 $773.2 $182.6 $192.1 $254.2 $196.0 $824.9 $848.4
Operating Expenses:
Other Operations And Maintenance 84.6 97.9 338.6 78.5 86.0 90.0 85.0 339.5 82.8 90.5 93.4 88.3 355.0 367.5
Energy Efficiency Programs 18.5 6.7 37.7 4.5 8.1 8.4 5.1 26.1 5.1 5.1 7.3 5.5 23.1 23.6
Depreciation 30.1 30.5 119.8 30.5 29.9 31.6 33.6 125.6 33.6 32.9 34.0 34.4 134.9 138.4
Taxes Other than Income Taxes 7.3 7.2 28.9 8.1 7.8 7.0 8.0 31.0 8.0 8.0 8.1 8.1 32.2 32.5
Other Operating Expenses 0.6 1.6 4.1 1.1 0.8 1.0 1.0 4.0 1.0 1.0 1.0 1.0 4.0 4.0
Total Operating Expenses $141.1 $143.9 $529.1 $122.8 $132.6 $138.0 $132.7 $526.1 $130.6 $137.6 $143.7 $137.3 $549.3 $566.0
EBITDA $109.6 $49.1 $306.0 $80.9 $93.3 $147.2 $70.3 $391.7 $87.7 $89.5 $146.7 $95.4 $419.3 $432.4
Operating Income $71.4 $8.5 $164.2 $42.3 $58.8 $111.3 $34.6 $247.1 $52.0 $54.5 $110.5 $58.7 $275.6 $282.3
Other Income 6.0 5.6 21.2 6.6 6.6 2.9 1.6 17.7 1.8 1.9 2.0 2.1 7.6 10.5
Earnings Of Investments 2.1 4.5 0.8 1.4 (1.9)1.3 0.5 1.3 0.3 0.3 0.3 0.3 1.2 1.2
Net Interest Expense 17.4 17.5 71.5 17.2 17.4 19.4 17.9 72.0 18.1 18.4 18.8 18.6 73.9 79.8
Income Before Income Taxes $62.0 $1.0 $114.7 $33.2 $46.0 $96.2 $18.8 $194.2 $36.0 $38.2 $93.9 $42.5 $210.5 $214.2
Income Taxes (45.4)(8.0)(52.1)8.3 10.6 3.9 3.8 26.6 7.2 7.6 18.8 8.5 42.1 42.8
Effective Tax Rate -73.1%-803.7%-45.4%25.1%23.0%4.1%20.0%13.7%20.0%20.0%20.0%20.0%20.0%20.0%
Net Income $107.4 $9.0 $166.9 $24.8 $35.4 $92.3 $15.1 $167.6 $28.8 $30.5 $75.1 $34.0 $168.4 $171.4
Noncontrolling Interest (0.3)0.0 (0.2)0.1 (0.1)(0.2)0.1 (0.1)0.1 0.1 0.1 0.1 0.3 0.3
Net Income Available For Common $107.1 $9.0 $166.7 $24.9 $35.3 $92.1 $15.1 $167.4 $28.9 $30.6 $75.2 $34.1 $168.7 $171.7
Average Diluted Shares 49.6 49.7 49.6 49.9 50.0 50.1 50.2 50.0 50.2 50.3 50.3 50.4 50.3 50.5
Diluted EPS - GAAP $2.16 $0.18 $3.36 $0.50 $0.71 $1.84 $0.30 $3.35 $0.57 $0.61 $1.49 $0.68 $3.35 $3.40
Ratio Analysis:
Return on Average Equity (ttm)11.4%10.5%10.5%10.0%10.7%9.5%9.8%9.8%9.9%9.5%8.4%9.3%9.3%9.0%
Return on Average Assets (ttm)3.8%3.5%3.5%3.4%3.6%3.2%3.3%3.3%3.3%3.2%2.8%3.2%3.2%3.1%
EBITDA Margin 35.4%21.3%29.8%33.5%36.6%44.1%28.8%36.5%34.1%34.8%40.3%34.5%36.3%36.6%
Operating Margin 23.1%3.7%16.0%17.6%23.1%33.3%14.2%23.0%20.2%21.2%30.3%21.2%23.8%23.9%
Pre-Tax Margin 20.0%0.4%11.2%13.7%18.1%28.8%7.7%18.1%14.0%14.8%25.8%15.3%18.2%18.2%
Net Margin 34.6%3.9%16.2%10.3%13.9%27.6%6.2%15.6%11.2%11.9%20.6%12.3%14.6%14.5%
Dividends Per Common Share $0.30 $0.30 $1.20 $0.33 $0.33 $0.33 $0.38 $1.37 $0.38 $0.38 $0.42 $0.42 $1.60 $1.84
Dividend Payout Ratio (ttm)33.4%35.7%35.7%37.7%35.6%40.0%40.9%40.9%41.5%44.2%52.3%47.6%47.6%54.1%
Dividend Growth 0.0%0.0%0.0%10.0%10.0%10.0%26.7%14.2%15.2%15.2%26.7%10.0%16.5%15.2%
D.A. Davidson & Co.
8
Portland General Electric - Historical and Projected Operating Results
Source: D.A. Davidson & Co. estimates and company reports
$ in millions -- Fiscal year ends 12/31 3Q'11 4Q'11 2011 1Q'12 2Q'12 3Q'12 4Q'12e 2012e 1Q'13e 2Q'13e 3Q'13e 4Q'13e 2013e 2014e
Operating Revenues $439 $479 $1,813 $479 $413 $450 $498 $1,840 $487 $415 $460 $499 $1,862 $1,885
Resource Costs 182 215 760 195 156 182 225 758 195 154 187 227 763 761
Gross Margin $257 $264 $1,053 $284 $257 $268 $273 $1,082 $292 $261 $273 $272 $1,099 $1,124
Operating Expenses:
Production And Distribution 50 54 201 53 51 49 52 205 54 54 55 53 216 214Administrative And Other 55 60 218 54 56 50 54 214 54 54 53 55 216 223Depreciation And Amortization 59 57 227 62 63 63 63 251 64 66 64 62 256 266
Taxes Other Than Income Taxes 25 24 98 27 26 24 28 105 27 27 27 27 108 110
Total Operating Expenses $189 $195 $744 $196 $196 $186 $197 $775 $199 $200 $200 $197 $796 $813
EBITDA $124 $130 $542 $154 $125 $146 $141 $566 $159 $127 $139 $139 $564 $588
Income From Operations $68 $69 $309 $88 $61 $82 $76 $307 $93 $61 $74 $75 $303 $311
Other Income (Expenses)(3)4 6 4 1 1 2 8 1 1 1 1 5 11
Interest Expense 27 28 110 28 27 27 29 111 25 25 25 25 100 102
Pretax Income $38 $45 $205 $64 $35 $56 $49 $204 $70 $37 $50 $52 $208 $219
Income Tax Expense (Benefit)11 16 58 15 9 19 14 57 20 11 15 15 60 64
Effective Tax Rate 28.9%35.6%28.3%23.4%25.7%33.9%29.0%28.0%29.0%29.0%29.0%29.0%29.0%29.0%
Net Income $27 $29 $147 $49 $26 $37 $35 $147 $50 $26 $36 $37 $148 $155
Noncontrolling Interests (1)(1)0 0 0 0 0 0
Net Income for Common $27 $29 $147 $49 $26 $38 $35 $148 $50 $26 $36 $37 $148 $155
Average Diluted Shares Outstanding 75.4 75.4 75.4 75.4 75.5 75.5 75.5 75.5 75.5 75.5 75.5 75.5 75.5 75.5
Diluted EPS $0.36 $0.38 $1.95 $0.65 $0.34 $0.50 $0.46 $1.96 $0.66 $0.35 $0.47 $0.49 $1.96 $2.06
Ratio Analysis:
Return on Average Equity (ttm)8.8%9.0%9.0%7.6%7.8%8.4%8.7%8.7%8.6%8.5%8.3%8.4%8.4%8.5%
Return on Average Assets (ttm)2.6%2.6%2.6%3.2%2.3%3.5%3.5%2.6%3.3%2.5%3.1%3.0%2.5%2.5%EBITDA Margin 28.2%27.1%29.9%32.2%30.3%32.4%28.3%30.7%32.6%30.7%30.2%27.8%30.3%31.2%Operating Margin 15.5%14.4%17.0%18.4%14.8%18.2%15.2%16.7%19.2%14.6%16.1%15.1%16.3%16.5%
Pre-Tax Margin 8.7%9.4%11.3%13.4%8.5%12.4%9.8%11.1%14.3%8.9%10.9%10.4%11.2%11.6%
Net Margin 6.2%6.1%8.1%10.2%6.3%8.2%7.0%8.0%10.2%6.3%7.7%7.4%7.9%8.2%
Dividends Declared Per Share $0.265 $0.265 $1.055 $0.265 $0.270 $0.270 $0.270 $1.075 $0.270 $0.278 $0.278 $0.278 $1.104 $1.137
Dividend Payout Ratio 55.1%54.1%54.1%62.9%61.3%56.9%55.0%55.0%55.1%55.5%56.8%56.4%56.4%55.3%
Dividend Growth Rate 1.9%1.9%1.9%1.9%1.9%1.9%1.9%1.9%1.9%3.0%3.0%3.0%2.7%3.0%
D.A. Davidson & Co.
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Questar - Historical and Projected Operating Results
Source: D.A. Davidson & Co. estimates and company reports
$ in millions -- Fiscal year ends 12/31 1Q'11 2Q'11 3Q'11 4Q'11 2011 1Q'12 2Q'12 3Q'12 4Q'12e 2012e 1Q'13e 2Q'13e 3Q'13e 4Q'13e 2013e 2014e
Operating Revenue $470.0 $222.9 $146.7 $354.8 $1,194.4 $425.7 $188.4 $141.8 $353.9 $1,109.8 $440.5 $200.0 $148.7 $357.0 $1,146.1 $1,184.0
Cost of Sales 209.9 31.2 (30.0)110.4 321.5 152.7 (11.5)(42.1)108.3 207.4 168.7 (8.0)(42.6)107.2 225.4 213.4
Gross Margin $260.1 $191.7 $176.7 $244.4 $872.9 $273.0 $199.9 $183.9 $245.6 $902.4 $271.8 $207.9 $191.2 $249.8 $920.7 $970.7
Operating Expenses:
Operating & Maintenance 51.4 39.8 35.4 49.3 175.9 56.7 39.7 36.8 47.8 181.0 56.7 40.5 37.0 48.5 182.7 187.8
General & Administrative 33.0 26.2 24.1 34.6 117.9 29.1 29.9 29.0 34.2 122.2 31.6 31.9 31.5 35.3 130.3 133.6
Production & Other Taxes 13.6 13.1 13.5 12.3 52.5 14.3 12.6 11.1 11.5 49.5 13.6 13.5 13.1 11.9 52.2 53.7
Depreciation, Depletion & Amortization 39.4 38.9 40.1 41.5 159.9 44.2 45.5 45.9 43.3 178.9 44.3 44.8 45.3 45.5 180.0 195.6
Total Operating Expenses $137.4 $118.0 $113.1 $137.7 $506.2 $144.3 $127.7 $122.8 $136.8 $531.6 $146.2 $130.7 $126.9 $141.3 $545.1 $570.7
EBITDA $165.9 $115.9 $108.4 $150.6 $540.8 $175.2 $121.2 $109.7 $154.3 $560.4 $172.2 $124.3 $112.0 $156.4 $565.0 $605.0
Operating Income $122.8 $73.7 $63.8 $106.6 $366.9 $130.9 $72.6 $63.6 $108.8 $375.9 $125.6 $77.2 $64.3 $108.5 $375.6 $399.9
Net Gain from Asset Sales 0.1 0.2 (0.1) 0.2 2.2 0.4 2.5 5.1
Interest & Other Income 2.9 2.3 3.7 1.5 10.4 1.4 2.6 1.7 1.3 7.0 1.5 1.5 1.5 1.5 6.0 6.0
Income from Unconsolidated Affiliates 0.9 1.0 1.0 0.9 3.8 0.9 0.9 1.0 0.9 3.7 0.9 0.9 0.9 0.9 3.4 3.4
Interest Expense (16.0)(14.8)(13.3)(12.7)(56.8)(14.7)(15.1)(14.5)(14.5)(58.8)(13.3)(13.5)(13.6)(13.7)(54.2)(55.2)
Income Before Income Taxes $110.6 $62.2 $55.2 $96.3 $324.3 $118.5 $61.0 $51.8 $96.4 $327.7 $114.6 $66.0 $53.1 $97.1 $330.8 $354.2
Income Taxes (40.7)(21.9)(19.1)(34.7)(116.4)(43.3)(21.8)(18.0)(35.1)(118.2)(42.8)(23.9)(18.8)(34.5)(119.8)(128.5)
Effective Tax Rate 36.8%35.2%34.6%36.0%35.9%36.5%35.7%34.7%36.4%36.1%37.3%36.2%35.4%35.5%36.2%36.3%
Net Income $69.9 $40.3 $36.1 $61.6 $207.9 $75.2 $39.2 $33.8 $61.3 $209.5 $71.8 $42.1 $34.3 $62.7 $210.9 $225.7
Average Diluted Shares Outstanding 178.5 178.8 178.9 179.0 178.8 179.3 178.3 176.5 176.0 177.5 176.0 176.0 176.0 176.0 176.0 176.0
Diluted EPS $0.39 $0.23 $0.20 $0.34 $1.16 $0.42 $0.22 $0.19 $0.35 $1.18 $0.41 $0.24 $0.19 $0.36 $1.20 $1.28
Segment EPS:
Wexpro $0.12 $0.13 $0.14 $0.13 $0.53 $0.14 $0.14 $0.15 $0.14 $0.57 $0.15 $0.15 $0.15 $0.16 $0.61 $0.66
Questar Pipeline 0.09 0.09 0.11 0.10 0.38 0.09 0.09 0.10 0.09 0.37 0.09 0.09 0.09 0.09 0.35 0.36
Questar Gas 0.19 0.00 (0.04)0.11 0.26 0.19 (0.01)(0.05)0.11 0.24 0.18 0.00 (0.05)0.11 0.24 0.28
Corporate (0.01)(0.00)(0.00)0.00 (0.01)(0.00)(0.00)(0.00)(0.00)(0.01)(0.00)(0.00)(0.00)(0.00)(0.01)(0.01)
Diluted EPS $0.39 $0.22 $0.20 $0.34 $1.16 $0.42 $0.22 $0.19 $0.35 $1.18 $0.41 $0.24 $0.19 $0.36 $1.20 $1.28
Analysis:
Return on Equity (ttm)12.5%19.6%19.8%19.4%19.4%19.7%19.8%19.8%19.9%19.9%19.4%19.5%19.3%19.1%19.1%18.9%
Return on Assets (ttm)4.5%6.3%6.4%6.2%6.2%6.3%6.2%6.0%5.9%5.9%5.8%5.8%5.7%5.6%5.6%5.7%
Return on Capital (ttm)3.6%4.5%4.6%4.3%4.3%4.4%4.3%4.0%3.9%3.9%3.7%3.8%3.7%3.6%3.6%3.6%
EBITDA Margin 35.3%52.0%73.9%42.4%42.4%41.2%64.3%77.4%43.6%43.6%39.1%62.2%75.3%43.8%43.8%45.7%
Operating Margin 26.1%33.1%43.5%30.0%30.0%30.7%38.5%44.9%30.7%30.7%28.5%38.6%43.3%30.4%30.4%31.5%
Pretax Margin 23.5%27.9%37.6%27.1%27.1%27.8%32.4%36.5%27.2%27.2%26.0%33.0%35.7%27.2%27.2%28.4%
Net Margin 14.9%18.1%24.6%17.4%17.4%17.7%20.8%23.8%17.3%17.3%16.3%21.1%23.1%17.6%17.6%18.3%
Dividends per Common Share $0.153 $0.153 $0.153 $0.163 $0.620 $0.163 $0.163 $0.170 $0.170 $0.665 $0.170 $0.170 $0.182 $0.182 $0.704 $0.753
Dividend Payout Ratio (ttm)50.5%51.4%50.8%53.3%53.3%52.9%54.0%56.0%56.4%56.4%57.6%57.3%58.1%58.7%58.7%58.7%
Dividend Growth Rate 17.3%17.3%8.9%16.1%14.8%6.6%6.6%11.5%4.6%7.3%4.6%4.6%7.0%7.0%5.8%7.0%
D.A. Davidson & Co.
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Copyright D.A. Davidson & Co., 2013. All rights reserved.
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D.A. Davidson & Co.
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Copyright D.A. Davidson & Co., 2013. All rights reserved.
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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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