Warm weather, a sluggish economy and poor results at a subsidiary all contributed to Avista Corp. announcing a 22 percent decline in 2012 earnings.
Avista announced early Wednesday that the Spokane-based company had net income of $78.2 million last year, or $1.32 per share. In 2011, Avista had net income of $100.2 million, or $1.72 per share.
Avista’s fourth-quarter income was $15.9 million compared with fourth-quarter 2011 income of $24.6 million.
Jittery investors drove down Avista’s stock price nearly 1 percent by the end of the trading day, to $25.94 a share. Trading volume was more than double the average.
CEO Scott Morris told analysts in an early-morning conference call that 2012 was a challenge. Results were below the company’s expectations, but he said Avista expects a rebound in its fortunes this year.
Avista Corp. operates a regulated utility that provides electricity and natural gas to customers in three states. It also owns an unregulated subsidiary called Ecova, formerly Advantage IQ, which is where many of the 2012 financial setbacks originated, the company said in its earnings release.
Two acquisitions at the end of 2011 and in early 2012 increased Ecova’s revenues, although not as much as expected, Morris said. The acquisitions also increased operating expenses, he said.
The subsidiary, which provides energy, data and expense management services, had income of 3 cents a share in 2012 versus income of 16 cents a share the year before.
Morris, however, said the company is “confident that Ecova is back on track. We know that we missed in 2012. Quarter by quarter, we’ve got to meet our commitments to the market and we plan on doing that.”
Avista Utilities was affected by warmer-than-usual weather, the company’s earnings release said. In the last three months of 2012 alone, warm weather decreased the utility’s earnings by 10 cents a share. In addition, Avista paid $7.3 million in severance to 55 people under a voluntary program to cut expenses, said company spokeswoman Jessie Wuerst.
Rate increases offset those factors, the earnings release said.
Morris also told analysts that the economy in the company’s service territory is recovering more slowly than the national economy, a trend Avista expects to continue in 2013.
“Instead of sitting by and waiting for the economy to recover,” he said, “we’re looking for some other opportunities that are very close to the core” business of Avista Utilities.
Avista will spend $2 million to $3 million this year on market development, he said.
One business line that holds promise is providing compressed natural gas for trucks, buses and cars. The company has a CNG fueling station at its Mission Avenue headquarters and expects to open a second facility in Spokane Valley in early summer that will be open to the public, Wuerst said. Avista is in discussions with Waste Management about providing compressed natural gas for garbage trucks, she said.
The company could open CNG fueling stations in Coeur d’Alene and Klamath Falls, Ore., by early next summer, Wuerst said.
Morris also mentioned liquified natural gas as another area of potential interest to Avista, but Wuerst said the company currently is in the early stages of any foray into that business.
“There are opportunities to work with entities who might use LNG,” she said. “We have a lot of expertise in working with natural gas and the natural gas markets. We’re just seeing where those opportunities are.”
Morris reiterated to analysts that Avista expects its earnings to rebound in 2013; the company projects annual earnings in the range of $1.70 to $1.90 per share.