The Empire District Electric Company
The Empire District Electric — Empire District Electric — Q1 2016 Earnings Presentation
32 slides from The Empire District Electric's earnings presentation, May 6, 2016
Slide 1: Forward Looking Statements
Forward Looking Statements Certain matters discussed in this presentation are “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about
Slide 2: Index
Index Index Merger Update . . . . . • . . . . . . . . . 3 • First Quarter Update. . . . . . . . . . 7 • Regulatory Update . . . . . . . . . . 13 • Supplemental Materials . . . . . . 17 o Who We Are . . . . . . . . . . . . . . . . . 18 o Growth . . . . . . . . . . . . . . . . . . . . . . 20 Financial
Slide 3: Algonquin Power & Utilities Corp. to Acquire The Empire District Electric Company
Algonquin Power & Utilities Corp. to Acquire The Empire District Electric Company “Algonquin Power & Utilities Corp. (“APUC”) and The Empire District Electric Company (“Empire”) announced that a subsidiary of Liberty Utilities Co. (“Liberty Utilities”), APUC’s wholly owned regulated utility business
Slide 4: Tentative Transaction Approval Timeline
Tentative Transaction Approval Timeline Obtain approvals from state regulatory commissions in Missouri (procedural schedule approved), filed with State and authorizing transaction received) and other Federal agencies (1) agencies 1 Missouri procedural schedule sets technical conferences to begin May
Slide 5: Transaction Highlights
Transaction Highlights Y $34.00 purchase price • Represents 50% premium to unaffected December 10, 2015 closing price of $22.65 Y Joplin headquarters for Liberty Utilities Central Region (“Liberty Central”) • • Subsidiary of Liberty Utilities Liberty Central will serve approximately 338,000 customer
Slide 6: Overview of Liberty Utilities Central Region
Overview of Liberty Utilities Central Region Empire’s service area complements Algonquin’s Omaha IA NE IL IN Kansas City Jefferson City KS St. Louis MO KY Joplin OK AR TN Oklahoma City 6
Slide 7: First Quarter Update
Elk River Wind Farm – Meeting renewable energy standards First Quarter Update 7
Slide 8: First Quarter Highlights
First Quarter Highlights 8 •Quarter Drivers: oIncreased Missouri customer rates oMild weather oIncreased depreciation and amortization, interest expense and AFUDC oMerger related costs •Twelve Month Ended Drivers: oIncreased Missouri customer rates oCustomer growth oMilder weather and other volumetr
Slide 9: First Quarter Highlights: Quarter ended March 31, 2016 EPS
Electric Rates $ 0.11 Electric Weather & Other (0.10) Electric Customer Growth 0.01 Fuel & Other 0.02 Gas Segment (0.01) TOTAL $ 0.03 Production Operations $ 0.02 General Labor Costs (0.02) All Other 0.01 TOTAL $ 0.01 First Quarter Highlights Quarter ended March 31, 2016: Consolidated Basic EPS Afte
Slide 10: First Quarter Highlights: Twelve Months Ended March 31, 2016 EPS
Electric Rates $ 0.26 Electric Weather & Other (0.15) Electric Customer Growth 0.02 Fuel & Other 0.07 Nonregulated Segment 0.01 Gas Segment (0.03) TOTAL $ 0.18 Production Maintenance $ (0.05) General Labor Costs (0.04) Transmission Operations (0.01) Healthcare (0.01) Distribution Maintenance 0.02 Cu
Slide 11: 2016 Earnings Drivers
2016 Earnings Drivers Earnings Per Share $1.60 $1.50 Guidance Range $1.38 to $1.54 $1.40 Range adjusted 2/26/16 (1) 1.44 $1.30 $1.20 $1.10 $1.00 2015 Actual 2016 Guidance Range Estimate 2016 • • Guidance: Full year of Asbury AQCS cost recovery in customer rates Rates in effect late September 2016 fo
Slide 12: Return on Equity
Return on Equity 10.0% Quarterly ROE* – Trailing 12-Month Basis 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 20
Slide 13: Regulatory Update
Leading by example – adopting electric plug-in technologies for vehicle fleet Regulatory Update 13
Slide 14: Missouri Rate Case Projected Timeline
Missouri Rate Case Projected Timeline(1) (Docket No. ER-2016-0023) March 31 d Hearings Rates Mid-1 Assumes customary 11-month Missouri procedural schedule 14 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 Riverton 12 Combined Cycle Conversion Filed October 2015 Riverton 12 Rates Realized True-Up Date Testi
Slide 15: Missouri Rate Case Highlights
Missouri Rate Case Highlights (Docket No. ER-2016-0023) • • • • • • • • • Requested increase of $33.4 million, or 7.3% above current rates Test year ending June 30, 2015; expense true up through March 31, 2016 Seeks recovery of Riverton 12 Combined Cycle Conversion investment Requested Return on Equ
Slide 16: Other Regulatory
Other Regulatory • Missouri o o Kansas o Filed Integrated Resource Plan (IRP) April 1, 2016 Solar Rebates; at March 31, 2016, received over $10M in rebate applications; Deferred on Balance Sheet $6.2M • Asbury Cost Recovery Tariff Rider approved April 15, 2015, increasing annual base revenues $0.78
Slide 17: Supplemental Materials
Asbury Generating Station – environmentally compliant base-load generation Supplemental Materials • • • • • Who We Are Growth Financial Operations Contacts 17
Slide 18: Who We Are
• • • • • • 100% Regulated Electric and Gas Utility Over 100 years of operation Operations in four states: MO, KS, OK, AR plus FERC 218,000 customers 10,000 square mile service territory NYSE Ticker: EDE Kansas, 4.7% Arkansas, 3.3% Oklahoma, 2.7% Missouri, 85.9% FERC, 3.4% 2015 On-System Electric Re
Slide 19: Who We Are: Experienced Management Team
Who We Are Board of Directors • Experienced Management Team Brad Beecher President & CEO Laurie Delano VP - Finance & CFO Kelly Walters VP & COO - Electric Ron Gatz VP & COO - Gas Robert Sager Controller, Asst. Sec. & Asst. Treasurer Blake Mertens VP – Energy Supply & Delivery Operations • Executive
Slide 20: Growth: Capacity, Peak Demand and Capital Expenditures
Growth Capacity, Peak Demand & Total System Input1 5,584 1,600 5,494 6,000 5,486 5,452 5,371 5,330 5,315 5,282 5,263 5,233 1,400 62 5,000 177 169 162 86 86 1,200 4,000 1,162 1,159 1,152 1,149 1,142 1,000 3,000 1,085 1,080 800 2,000 600 1,000 1,100 1,255 1,255 1,257 1,409 1,392 1,391 1,377 1,326 1,28
Slide 21: Growth: Electric Customer Growth and Average Residential Rates
Growth Electric Customer Growth 2.5 2 1.5 1 0.5 0 -0.5 -1 -1.5 -2 Note: Impact of EF-5 tornado 2015 2 20042005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1 Source EIA 2 2015 EIA not yet available Industry Average 1 EDE Average Residential Rates 12.0 10.0 8.0 6.0 4.0 2.0 0.0 2015 2 2008 1 Source: E
Slide 22: Financial Historical Performance
Financial Historical Performance ($ in millions, except EPS and Book Value) TME 3-31-16 2015 2014 2013 2012 Gross Margin2 $418.0 $416.2 $410.2 $393.1 $359.6 Net Income $56.0 $56.6 $67.1 $63.4 $55.7 Return on Average Common Equity 7.0% 7.2% 8.6% 8.7% 7.9% Cash from Operations $181.5 $184.8 $151.2 $15
Slide 23: Financial: Total Return Performance
Financial 24 Index Value Index Period Ending 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Empire District Electric Company$ 100.00$ 98.06$ 99.50$ 115.97$ 158.30$ 156.20 S&P Electric Utilities Index$ 100.00$ 120.97$ 120.30$ 129.68$ 170.15$ 160.95 S&P 500$ 100.00$ 102.11$ 118.45$ 156.82$ 178.
Slide 24: Financial: Investment Grade Credit Ratings
Financial • • • • Strong Investment Grade Credit Target 50/50 capital structure March 2016 Moody’s reaffirmed credit ratings February 2016 Standard & Poor’s reaffirmed debt ratings; outlook changed to negative following merger announcement; re-affirmed debt ratings and outlook on April 29, 2016 25 S
Slide 25: Financial: Debt Maturities
Financial • Well-spaced debt maturities, upcoming maturity of $25M in late-2016 with expectation to pay off at maturity • $200M five-year revolving credit facility maturing October 19, 2019; $75M accordion Debt Maturities Credit Facility – $200M matures 10/2019 120 120 100 92 90 88 80 90 60 60 55 50
Slide 26: Financial: Revenue Source
Financial Revenue Source (LTM 12/31/15) Gas 7% Other 1% Electric 92% Total: $606 Million(1) (2) Gas Revenues by Customer (LTM 12/31/15) Electric Revenues by Customer (LTM 12/31/15) Industrial 1% Other 9% Industrial 16% Commercial 25% Commercial 31% Public Other 8% Wholesale On-system 3% Authorities
Slide 27: Operations: Generation Assets
Operations 1 2 3 4 4 5 6 8 3 9 Kansas Missouri 1 5 7 2 6 4 8 Oklahoma Arkansas 7 8 9 Wind Coal Natural Gas Hydro Notes: 1 2 3 4 5 Includes Riverton Unit 12 combined cycle unit placed in service May 1, 2016 Does not include 40% owned by Westar Elk River contracted through December 2025 Plum Point con
Slide 28: Operations: Diverse Generation Mix
Operations • Diverse Generation/Balanced Mix of Resources 2016 Capacity Mix (1) 2015 Energy Mix 1% 39% 4% 17% 22% 6% 24% 30% 1% 3% 3% 50% Coal-fired Coal-fired Coal PPA Wind PPA Hydro Gas-fired Simple Cycle Gas-fired Combined Cycle Coal PPA Wind PPA Hydro Gas-fired Simple Cycle Gas-fired Combined Cy
Slide 29: Executive Management and Investor Relations Team
Executive Management and Investor Relations Team Brad Beecher, President and CEO Laurie Delano, Vice President – Finance and CFO Dale Harrington, Corporate Secretary and Director of Investor Relations The Empire District Electric Company 602 S. Joplin Avenue Joplin, MO 64801 www.empiredistrict.com D
Slide 30: Additional Information and Where to Find It
Additional Information and Where to Find It The proposed transaction will be submitted to shareholders of Empire for their consideration at a special meeting to be held on June 16, 2016. In connection with the proposed transaction, on May 3, 2016, Empire filed a definitive proxy statement and a form
Slide 31: Making lives better every day with reliable energy and service
Making lives better every day with reliable energy and service SERVICES YOU COUNT ON 32 Asbury Generating Station – 2015 AQCS construction Photo by Randy Richardson, AQCS Construction Manager
Slide 32: Empire: Services You Count On
Empire District Electric — Q1 2016 Earnings Presentation on 6ix