Progress Energy Inc. reported third-quarter earnings Wednesday that fell far short of Wall Street expectations, hurt by cool summer weather and the cost of restoring electricity after Hurricane Isabel.
The Raleigh, N.C., utility and parent of Progress Energy Florida of St. Petersburg recorded net income of $319-million, or $1.34 a share, in the quarter ended Sept. 30.
That's up from $151.9-million, or 71 cents a share, during the same period last year, but the year-earlier figures were weighed down by a one-time, after-tax charge of $224.8-million to write down poorly performing investments in telecom interests.
Excluding one-time charges and other items, Progress reported third quarter earnings of $306.2-million, or $1.28 a share, 12 cents short of the Thomson Financial/First Call consensus analyst estimate, and down from $333.5-million, or $1.54 a share a year earlier.
Citing mild weather and a slower-than-expected economic recovery, Progress lowered its earnings target for 2003 to a range of $3.50 to $3.60 a share, down from a previous range of $3.60 to $3.80. The company reported net income of $3.81 a share in 2002. The new range excludes 6 cents in storm-recovery costs the company hopes to eventually pass on to North Carolina customers if state regulators approve.
Progress Energy Florida posted a third-quarter net income of $114.3-million, falling from $123.8-million a year earlier on increased pension costs and a decline in the tax benefit passed on by the parent company for interest paid on debt. These factors were partly offset by customer growth and a fall in interest expenses.
Progress Energy Carolinas recorded a net income of $160-million, down from $179.3-million on cool summer temperatures and $15-million in storm costs from Hurricane Isabel.
During a conference call Wednesday with reporters, Progress chief financial officer Peter Scott welcomed the Internal Revenue Service national office's decision Tuesday to uphold federal tax credits for the company's Colona synthetic fuel operations in eastern Kentucky even though the IRS' own auditors recommended against it.
Progress has reaped more than $1-billion, more than any other company, from the controversial synfuels credits. While an IRS audit of the Colona operations isn't yet complete, Tuesday's decision "was an incredibly important step in getting there," Scott said.
Keith Ashdown, vice president of policy and communications for the Washington, D.C., watchdog group Taxpayers for Common Sense was disappointed, but not surprised by the IRS finding.
"There was a parade of political pressure being put on the IRS," Ashdown said, "and it looks like the companies that have been ripping off taxpayers have won."
Despite Progress' poor third-quarter results and lowered earnings outlook, news of the IRS' synfuel finding buoyed Progress' shares Wednesday. The company's stock closed at $43.79, up 84 cents, or 2 percent.