UIL Reports 2012 Earnings and Announces 2013 Earnings Guidance

  UIL Reports 2012 Earnings and Announces 2013 Earnings Guidance

Business Wire

NEW HAVEN, Conn. -- February 21, 2013

Today, UIL Holdings Corporation (NYSE: UIL) reported consolidated net income
of $103.6 million, or $2.02 per diluted share, in 2012, an increase of $3.9
million, or $0.07 per diluted share, compared to 2011. UIL’s consolidated net
income for the fourth quarter of 2012 was $28.8 million, or $0.56 per diluted
share, an increase of $7.5 million, or $0.14 per diluted share, compared to
the fourth quarter of 2011.

“It has clearly been a successful year,” said James P. Torgerson, UIL’s
president and chief executive officer. “Consolidated earnings have increased
and we’ve continued to convert businesses and households to natural gas heat,
exceeding our 2012 goal by 9%, converting more than 11,100 customers. Our
strategic growth initiative will continue in 2013 and the State of
Connecticut’s comprehensive energy strategy provides additional opportunities
to enhance our gas marketing strategy.”

“Among the challenges we faced during 2012, our service territory experienced
the warmest winter on record in 2012 and those warm temperatures carried into
spring. To offset the negative impact of this weather on earnings at the gas
companies, we focused on short-term operations and maintenance cost controls
in our operations,” added Torgerson. “This cost control discipline was
instrumental in partially mitigating the impact weather had on UIL’s
consolidated earnings.”

“Superstorm Sandy also presented a challenge, but employees from all the UIL
businesses worked together to assess the damage and to restore service to all
our customers and businesses as quickly as possible,” Torgerson continued.
“UIL was honored with two awards from the Edison Electric Institute, the
first, a mutual assistance award for our help in the mid-Atlantic after the
June Derecho wind storm, and the second for restoration during Superstorm
Sandy. This marks the second consecutive year UIL received an award for its
restoration efforts.”

UIL Holdings Corporation’s results for the year ended 2012 and the fourth
quarter 2012, as compared to the respective periods of 2011, are presented in
the table below:

              Net Income (Loss) - $M
               Year ended December 31,            Quarter ended December 31,
               2012       2011       '12 vs      2012       2011       '12 vs
                                       '11                                 '11
                                                                           
Electric
Distribution   $ 52.7      $ 37.6      $ 15.1      $ 9.4       $ 2.7       $ 6.7
& Other
Electric         32.0        31.3        0.7         8.6         8.1         0.5
Transmission
Gas             32.2      43.8      (11.6 )    14.3      14.1      0.2
Distribution
                                                                           
Operating        116.9       112.7       4.2         32.3        24.9        7.4
Companies
                                                                           
Corporate        (13.3 )     (13.0 )     (0.3  )     (3.5  )     (3.6  )     0.1
                                                                      
Consolidated   $ 103.6    $ 99.7     $ 3.9      $ 28.8     $ 21.3     $ 7.5
Earnings


               Earnings (Loss) Per Share
               Year ended December 31,             Quarter ended December 31,
               2012        2011        '12 vs      2012        2011        '12 vs
                                       '11                                 '11
                                                                           
Electric
Distribution   $ 1.03      $ 0.74      $ 0.29      $ 0.18      $ 0.05      $ 0.13
& Other
Electric         0.63        0.61        0.02        0.17        0.16        0.01
Transmission
Gas             0.63      0.86      (0.23 )    0.28      0.28      -
Distribution
                                                                           
Operating        2.29        2.21        0.08        0.63        0.49        0.14
Companies
                                                                           
Corporate        (0.27 )     (0.26 )     (0.01 )     (0.07 )     (0.07 )     -
                                                                      
Consolidated   $ 2.02     $ 1.95     $ 0.07     $ 0.56     $ 0.42     $ 0.14
Earnings
                                                                           
Avg. Shares      51.1        50.9                    51.1        51.0
- dilutive

Amounts may not add due to rounding.


United Illuminating

United Illuminating increased earnings by $15.8 million, or $0.31 per diluted
share, in 2012, compared to 2011, and increased earnings by $7.2 million, or
$0.14 per diluted share, for the fourth quarter 2012, compared to the same
period in 2011. Details of the increase follow.

                      Electric distribution, CTA & other

The electric distribution business earned $52.7 million, or $1.03 per diluted
share, in 2012, an increase of $15.1 million, or $0.29 per diluted share, when
compared to 2011. The increase in 2012 compared to 2011 was due to reduced
operation and maintenance expenses as well as increased income of $4.0
million, pre-tax, from the investment in GenConn and the recovery of $2.7
million, pre-tax, relating to a power procurement incentive recorded in the
third quarter of 2012. The reduced operation and maintenance expenses were due
primarily to lower expenses for rent, uncollectibles and outside services.

In the fourth quarter of 2012, the electric distribution business earned $9.4
million, or $0.18 per diluted share, an increase of $6.7 million, or $0.13 per
diluted share, compared to the fourth quarter of 2011. The increase for the
fourth quarter was primarily due to reduced operation and maintenance
expenses, including rent and outside services. In the fourth quarter of 2011,
additional system restoration costs were incurred relating to the October
Nor’easter.

In 2012, pre-tax earnings from the equity investment in GenConn were $15.3
million, compared to $11.3 million, in 2011. For the fourth quarter 2012,
pre-tax earnings were $3.4 million, compared to $3.1 million, in the fourth
quarter of 2011.

                            Electric transmission

The electric transmission business earned $32.0 million, or $0.63 per diluted
share, in 2012, an increase of $0.7 million, or $0.02 per diluted share,
compared to 2011. Earnings for the fourth quarter 2012 were $8.6 million, or
$0.17 per diluted share, an increase of $0.5 million, or $0.01 per diluted
share. The increase in earnings for the year and the fourth quarter was
primarily attributable to income earned on an increase in transmission rate
base and increased transmission investments, partially offset by a decrease in
allowance for funds used during construction.

Gas distribution

The gas distribution companies earned $32.2 million, or $0.63 per diluted
share, in 2012, a decrease of $11.6 million, or $0.23 per diluted share,
compared to 2011.

The decrease in earnings was due to a combination of reduced sales volume,
increased operation and maintenance expenses and the absence of a settlement
that increased earnings in 2011. The reduced sales volume, caused by warmer
weather and reduced customer usage in 2012 compared to 2011, resulted in an
$11.1 million decrease in gross margin, which is equivalent to approximately
$0.13 per diluted share. Temperatures were warmer in 2012, compared to 2011,
which resulted in a 10.8% fewer heating degree days. Compared to normal
temperatures, there was a 16.4% fewer heating degree days in 2012. The decline
in sales volume discussed above was slightly offset by customer growth that
increased gross margin by approximately $3.7 million, or $0.04 per diluted
share.

The increase in operation and maintenance expenses in 2012 compared to 2011
was primarily due to increased expenses for shared corporate services,
uncollectible and depreciation. The 2012 allocation of corporate expenses to
the operating companies reflects further integration of the gas companies into
UIL, which increased the gas companies allocated share of corporate costs
compared to the prior year. Uncollectible expense increased during 2012
compared to 2011 due to increased customer account write off activity.
Depreciation expense also increased, primarily due to the implementation of
new depreciation and amortization rates resulting from the settlement of the
rate case appeals in 2011.

In addition, full year 2011 earnings included earnings of $2.2 million,
pre-tax, from the recovery of carrying charges relating to the settlement
mentioned above.

Earnings for the fourth quarter 2012 were $14.3 million, or $0.28 per diluted
share, an increase of $0.2 million, compared to the fourth quarter of 2011.
Gross margin in fourth quarter 2012 increased by $6.7 million, or
approximately $0.08 per diluted share, due to increased sales volume caused by
colder weather in the fourth quarter 2012, compared to the fourth quarter
2011, which resulted in 12.8% more heating degree days. Although temperatures
were colder in the fourth quarter 2012, compared to the same period in 2011,
temperatures were still warmer than normal. There was a 7.2% fewer heating
degree days in the fourth quarter of 2012, compared to normal temperatures.

The increase in earnings in the fourth quarter of 2012 due to the increased
gross margin was partially offset by the absence of weather insurance that was
recorded in the fourth quarter of 2011 and the increase in shared services
allocations from UIL corporate.

Corporate

UIL Corporate incurred net after-tax costs of $13.3 million, or $0.27 per
diluted share, in 2012, an increase of $0.3 million, or $0.01 per diluted
share, compared to 2011. The increase in costs was primarily due to increased
interest expense on short-term borrowings.

For the fourth quarter of 2012, UIL Corporate incurred net after-tax costs of
$3.5 million, or $0.07 per diluted share, a decrease of $0.1 million, compared
to the fourth quarter of 2011.

Looking Forward

UIL’s consolidated earnings per share for 2013 are expected to be in range of
$2.05 - $2.25 per diluted share, compared to actual 2012 consolidated earnings
of $2.02 per diluted share. Expected earnings for 2013 are detailed in the
table below, followed by a discussion by business.

Category                             Approximate Net   EPS - diluted^(3)
                                       Income^(2)
                                                      
Electric distribution, CTA & other     $46 - $54           $0.90 - $1.05
Electric transmission                  $30 - $36           $0.60 - $0.70
                                                           
Total Electric^(1)                     $79 - $87           $1.55 - $1.70
                                                           
Gas distribution                       $33 - $38           $0.65 - $0.75
UIL Corporate                          ($11) - ($9)        ($0.21) - ($0.18)
                                                           
Total UIL^(1)                          $105 - $115         $2.05 - $2.25
                                                           
^(1) Expectations are not expected to be additive
^(2) Rounded to the nearest million
^(3) Assumes approximately 51.2 million average shares outstanding


Detailed assumptions for each business unit follow. Below are highlights
affecting 2013 guidance:

  *Normal weather – warmer weather in 2012 negatively impacted earnings by
    $0.14 per diluted share, net of weather insurance
  *Pension expense increase due to higher discount rate – approximately
    ($0.12) per diluted share
  *Growth from gas heating conversions – approximately $0.10 per diluted
    share
  *Decline in CTA earnings – approximately ($0.03) per diluted share

United Illuminating (UI)

UI is projected to earn within a range of $1.55 to $1.70 per diluted share,
compared to 2012 earnings of $1.66 per diluted share.

UI’s Distribution, CTA and other will be impacted by several challenges in
2013 including:

  *The ability to earn on increasing rate base and increased capital
    expenditures for infrastructure replacement and system hardening
  *Increased total pension and postretirement costs of approximately $4.2
    million, pre-tax, or $0.05 per diluted share, primarily driven by lower
    discount rates as of December 31, 2012
  *Lower CTA earnings of $0.03 per diluted share in 2013 as compared to 2012,
    as the CTA rate base will be fully amortized during the fourth quarter of
    2013
  *Higher UIL corporate charges for earned returns on shared capital assets
    of approximately $0.06 per diluted share, (while unfavorable for electric
    distribution, there is an earnings offset in UIL corporate)

On February 15, 2013, UI filed a rate request with PURA to recover an
additional $95 million in revenue requirements over a two-year period,
beginning July 1, 2013. These projections assume that UI would have the
opportunity to earn its allowed return on equity (ROE) for the second half of
2013 after a rate case decision is issued.

UI’s transmission business is projected to earn within a range of $0.60 to
$0.70 per diluted share, compared to a 2012 actual result of $0.63 per diluted
share. This projection assumes that the transmission business earns its
allowed return. Transmission earnings are primarily driven by increased rate
base and earnings from increased investments in the New England East-West
Solution (NEEWS).

Gas Distribution

Gas distribution is projected to earn within a range of $0.65 to $0.75 per
diluted share, compared to 2012 earnings of $0.63 per diluted share. These
projections reflect the following:

  *Continuing progress in our strategic growth plan of converting customers
    to natural gas; assumes incremental conversions targeting 12,200 in 2013
    plus revenue growth from the conversions completed in 2011 and 2012;
    expected to add approximately $0.10 per diluted share
  *Assumes normal weather in 2013. In 2012, earnings were negatively impacted
    by the warmest winter heating season on record resulting in an unfavorable
    variance compared to normal weather, net of insurance, of approximately
    $0.14 per diluted share
  *Net use per customer is assumed to be essentially flat year over year,
    although it has been trending downward in recent years. The average
    normalized net use per customer has declined on an average of 1.5%
    annually since 2009, when rates were established
  *Increased pension and postretirement costs of approximately $6.0 million,
    pre-tax, or $0.07 per diluted share, primarily driven by lower discount
    rates as of December 31, 2012
  *Higher allocation of UIL corporate charges for earned returns on shared
    capital assets of approximately $0.05 per diluted share, (while
    unfavorable for the gas companies, there is an earnings offset in UIL
    corporate)
  *Increased costs for shared corporate costs of approximately $0.04 per
    diluted share due to a revised allocation methodology, which reflects the
    full integration of the gas companies into UIL

As a result of the factors noted above and the declining sales volume due to
the decreased net use per customer, UIL is considering its options regarding
CNG and SCG, including possible regulatory requests.

UIL Corporate

UIL Corporate costs are primarily interest expense on UIL debt and certain
other unallocated corporate costs. Projected 2013 costs are in the range of
($0.21) to ($0.18) per diluted share compared to 2012 actual costs of ($0.27)
per diluted share. The improvement is primarily due to the returns on
corporate capital assets, primarily software systems used by, and charged to,
the operating companies.

Full year and fourth quarter 2012 conference call

UIL Holdings will conduct a webcast conference call with financial analysts on
Friday, February 22, 2013, beginning at 10:00 a.m. eastern time. UIL Holdings’
executive management will present an overview of the financial results
followed by a question and answer session. Interested parties, including
analysts, investors and the media, may listen live via the internet by logging
onto the Investors section of UIL’s website at http://www.uil.com.
Institutional investors can access the call via Thomson Street Events
(www.streetevents.com), a password-protected event management site.

Headquartered in New Haven, Connecticut, UIL Holdings Corporation (NYSE: UIL)
is a diversified energy delivery company serving a total of approximately
700,000 electric and natural gas utility customers in 66 communities across
two states, with combined total assets of over $4 billion.

UIL Holdings is the parent company for The United Illuminating Company (UI),
Connecticut Natural Gas Corporation (CNG), The Southern Connecticut Gas
Company (SCG), and The Berkshire Gas Company (Berkshire), each more than 100
years old. UI provides for the transmission and delivery of electricity and
other energy related services for Connecticut’s Greater New Haven and
Bridgeport areas. SCG and CNG are natural gas distribution companies that
serve customers in Connecticut, while Berkshire serves natural gas customers
in western Massachusetts. UIL Holdings employs more than 1,850 people in the
New England region. For more information on UIL Holdings, visit
http://www.uil.com.

Use of Non-GAAP Measures

UIL Holdings believes that a breakdown, presented on a net income and per
share basis is useful in understanding the change in the consolidated results
of operations for UIL Holdings from one reporting period to another. UIL
Holdings presents such per share amounts by taking the pretax amounts
determined in accordance with generally accepted accounting principles (GAAP),
and applying UIL Holdings' combined effective statutory federal and state tax
rate and then dividing the results by the average number of shares of UIL
Holdings common stock outstanding for the periods presented. Any such amounts
provided are provided for informational purposes only and are not intended to
be used to calculate "Pro-forma" amounts.

UIL Holdings also believes earnings per share (EPS) information as presented
in its earnings guidance is useful in understanding the earnings expectations
for the business as a whole. The amounts presented in the earnings guidance
show the EPS for each of UIL Holdings’ lines of business. EPS is calculated by
dividing the 2013 net income for each line of business by the average number
of shares of UIL Holdings common stock outstanding for 2013. Total
consolidated EPS is a GAAP-basis presentation.

Forward-Looking Statements

Certain statements contained herein, regarding matters that are not historical
facts, are forward-looking statements (as defined in the Private Securities
Litigation Reform Act of 1995). These include statements regarding
management’s intentions, plans, beliefs, expectations or forecasts for the
future. Such forward-looking statements are based on UIL Holdings’
expectations and involve risks and uncertainties; consequently, actual results
may differ materially from those expressed or implied in the statements. Such
risks and uncertainties include, but are not limited to, general economic
conditions, legislative and regulatory changes, changes in demand for
electricity, gas and other products and services, unanticipated weather
conditions, changes in accounting principles, policies or guidelines, and
other economic, competitive, governmental, and technological factors affecting
the operations, markets, products and services of UIL Holdings’ subsidiaries,
The United Illuminating Company, The Southern Connecticut Gas Company,
Connecticut Natural Gas Corporation and The Berkshire Gas Company. The
foregoing and other factors are discussed and should be reviewed in UIL
Holdings’ most recent Annual Report on Form 10-K and other subsequent periodic
filings with the Securities and Exchange Commission. Forward-looking
statements included herein speak only as of the date hereof and UIL Holdings
undertakes no obligation to revise or update such statements to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events or circumstances.

The following are summaries of UIL Holdings’ unaudited consolidated financial
information for the full years of 2011 and 2012:

UIL HOLDINGS CORPORATION
CONSOLIDATED STATEMENT OF INCOME
For the Years Ended December 31, 2012 and 2011
(In Thousands except per share amounts)

                                                2012           2011
                                                                 
Operating Revenues                               $ 1,486,501    $ 1,570,094 
                                                                 
Operating Expenses
Operation
Purchased power                                    154,546         180,149
Natural gas purchased                              370,234         429,079
Operation and maintenance                          356,277         381,814
Transmission wholesale                             79,469          77,997
Depreciation and amortization                      181,348         167,462
Taxes - other than income taxes                    114,037         114,211
Acquisition-related costs                         -             -         
Total Operating Expenses                          1,255,911     1,350,712 
Operating Income                                  230,590       219,382   
                                                                 
Other Income and (Deductions), net                25,246        26,932    
                                                                 
Interest Charges, net
Interest on long-term debt                         86,469          87,394
Other interest, net                               3,636         5,216     
                                                   90,105          92,610
Amortization of debt expense and redemption       2,437         2,775     
premiums
Total Interest Charges, net                       92,542        95,385    
                                                                 
                                                                 
Income Before Income Taxes, Equity Earnings        163,294         150,929
                                                                 
Income Taxes                                      74,866        62,501    
                                                                 
Income Before Equity Earnings                      88,428          88,428
Income from Equity Investments                    15,273        11,282    
                                                                 
Net Income                                         103,701         99,710
Less:
Preferred Stock Dividends of Subsidiary,          64            54        
Noncontrolling Interests
                                                                 
Net Income attributable to UIL Holdings          $ 103,637      $ 99,656    
                                                                 
Average Number of Common Shares Outstanding -      50,831          50,609
Basic
Average Number of Common Shares Outstanding -      51,108          50,926
Diluted
                                                                
Earnings Per Share of Common Stock - Basic       $ 2.04         $ 1.96      
                                                                 
Earnings Per Share of Common Stock - Diluted     $ 2.02         $ 1.95      
                                                                 
Cash Dividends Declared per share of Common      $ 1.728        $ 1.728     
Stock


UIL HOLDINGS CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Years Ended December 31, 2012, 2011 and 2010
(Thousands of Dollars)

                                                 2012            2011
                                                                 
Net Income                                       $ 103,701       $ 99,710
Other Comprehensive Income (Loss), net            (74       )    (541      )
Comprehensive Income                               103,627         99,169
Less:
Preferred Stock Dividends of Subsidiary,          64            54        
Noncontrolling Interests
Comprehensive Income attributable to UIL         $ 103,563      $ 99,115    
Holdings


UIL HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)

                                                December 31,   December 31,
(thousands of dollars)                          2012           2011
ASSETS
Current assets                                   $ 626,709       $ 667,228
Other investments                                  148,730         153,653
Net property, plant and equipment                  2,787,354       2,570,355
Regulatory assets                                  1,017,220       983,222
Goodwill                                           266,205         266,797
Deferred charges and other assets                 113,880       103,354   
Total Assets                                     $ 4,960,098    $ 4,744,609 
                                                                             
                                                                             
                                                                             
LIABILITIES AND CAPITALIZATION
Current liabilities                              $ 625,056       $ 641,868
Noncurrent liabilities                             708,968         650,555
Deferred income taxes                              456,411         388,553
Regulatory liabilities                            452,416       420,175   
Total Liabilities                                  2,242,851       2,101,151
                                                                             
Long-term debt, net of unamortized discount        1,600,354       1,548,347
and premium
Preferred stock of subsidiary                      340             750
Net common stock equity                           1,116,553     1,094,361 
Total Capitalization                               2,717,247       2,643,458
                                                                          
Total Liabilities and Capitalization             $ 4,960,098    $ 4,744,609 

Contact:

UIL Holdings Corporation
Analyst:
Susan Allen, 203-499-2409
or
Media:
Michael West Jr., 203-499-3858
 
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