Scana Misses on Earnings, Revs

Zacks Equity Research

Energy holding company, SCANA Corp. (SCG) reported lukewarm fourth-quarter 2013 results. The decrease was brought about by increases in operations and maintenance expenses, property taxes, depreciation and share dilution. This was, however, only partially offset by improved electric margins from customer growth and rate base increases.

Earnings per share came in at 73 cents, below the Zacks Consensus Estimate of 77 cents and missing the year-ago quarter’s figure of 78 cents.

Full-year 2013 earnings increased 7.6% year over year to $3.39 per share and lagged the Zacks Consensus Estimate of $3.40.

The company’s quarterly operating revenue decreased 0.5% year over year to $1,117.0 million and also came in below the Zacks Consensus Estimate of $1,197.0 million.  

Full-year 2013 revenue came in at $4,495.0 million, up 7.6% on an annualized basis. The results were also below the Zacks Consensus Estimate of $4,596.0 million.

Segment Performance

South Carolina Electric & Gas Company (SCE&G): Quarterly earnings from this segment, SCANA's principal subsidiary, were 51 cents per share, down from the year-ago level of 54 cents per share. This was due to increases in operating and maintenance expenses. The decrease was partially offset by higher margins from base rate increases, along with customer additions.
As of Dec 31, 2013, natural gas and electric customers of SCE&G increased 2.1% and 1.2% from a year ago to 325,000 and 675,000, respectively.

PSNC Energy: This segment recorded earnings of 16 cents per share versus 17 cents in the year-ago quarter. As of Dec 31, 2013, PSNC Energy’s customer base widened 2.3% year over year to 500,000.

SCANA Energy-Georgia: The segment – comprising SCANA’s retail natural gas marketing business in Georgia – posted earnings of 6 cents per share, flat year over year.

Corporate and Other, Net: This business segment was at a break-even point in the reported quarter versus earnings of 2 cents per share in the year-ago period.


SCANA affirmed its full-year 2014 earnings guidance range of $3.45–$3.65 per share.


We expect SCANA to benefit from the new electric generation plants within its service territory and nuclear expansion projects, going forward. The company is a stable, relatively strong and regulated integrated electric utility, supported by favorable regional demographics and electric utility rate.

On the flip side, we are apprehensive of the company’s sensitivity to changes in coal, gas, oil and other commodity prices. Construction costs and delays could affect the timing of rate base growth, earnings, cash flow and balance sheet quality.

SCANA currently holds a Zacks Rank #4 (Sell), implying that it is expected to underperform in the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at better-ranked electric utilities like CMS Energy Corp. (CMS), CPFL Energia S.A. (CPL), and DTE Energy Company (DTE) as attractive investments, all of which sport a Zacks Rank #2 (Buy).

Read the Full Research Report on SCG
Read the Full Research Report on CMS
Read the Full Research Report on CPL
Read the Full Research Report on DTE

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