Weighed down by debt payoffs and restructuring costs, Pepco (NYSE:POM) revealed a worse-than-expected third-quarter profit, however the electricity supplier said sales gained significantly on hotter-than-usual weather, sending shares up nearly 2%.
The Washington DC-based company posted net earnings of $21 million, or 9 cents a share, compared with $104 million, or 47 cents a share, in the same quarter last year.
Excluding special items, such as debt extinguishment and restructuring costs, the company would have earned $116 million, or 52 cents a share, ahead of average analyst estimates of 39 cents.
The electricity supplier attributed the earnings growth to higher distribution revenue, due primarily to warmer weather that boosted sales, lower interest expense and favorable income tax adjustments.
“Our earnings from continuing operations for the quarter reflect strong power delivery results driven by our infrastructure investments, regulatory outcomes, and the impact of hot summer weather on electric distribution sales,” said Pepco CEO Joseph M. Rigby. “The pay down of Pepco Holdings debt with the proceeds from the Conectiv Energy transaction lowered interest expense and strengthened our balance sheet.”
In July, the company completed the sale of Conectiv Energy’s wholesale power generation business, and the liquidation of all of Conectiv Energy’s remaining assets and businesses.
Revenue for Pepco was $2.1 billion, beating the Street's view of $1.63 billion.
Given the strong power delivery results, Pepco raised its fiscal 2010 guidance to a range of $1 to $1.10 a share, from its earlier view of 80 cents to 95 cents a share.