Dominion Resources (NYSE:D) announced its first-quarter results before the market opened on Monday. The power and pipeline company's earnings nearly topped the high end of its guidance range, which was enough to beat analysts' consensus estimate by a few pennies. Those solid results put the company on pace to meet its full-year guidance.
A look at the numbers
Dominion reported operating earnings of $584 million, or $0.99 per share. While that was less than the $607 million, or $1.04 per share, it earned in the first quarter of last year, it was $0.03 per share better than Wall Street was expecting. Furthermore, it was just a penny off the high end of the company's guidance range for operating earnings of $0.85-$1 per share.
There are a couple of reasons why Dominion's earnings fell year over year. First, the company recorded a gain on the sale of assets in its Blue Racer venture in 2014, which helped tilt the comparison scale higher. In addition, Dominion experienced lower merchant generation margins and a higher effective tax rate in the first quarter of 2015. However, these weaknesses were partially offset by additional earnings from the company's Marcellus farmout transactions and higher revenue from growth projects that are now in service.
Dominion has several additional projects in the pipeline to drive incremental bottom-line growth in the years ahead. The company said in its earnings release that construction is about 60% complete on its Brunswick County, Va., natural-gas combined cycle facility. The project is expected to come online by the middle of next year. Dominion also recently announced plans for a gas-fired combined cycle facility in Greensville County, Va., that should be operational in 2018, and has plans to build a utility-scale solar project in Virginia.
In addition, Dominion is moving forward with two key natural-gas infrastructure projects. The company noted in its release that it is moving to commence construction of its Atlantic Coast Pipeline project. It expects to file the project with the Federal Energy Regulatory Commission later this year. Finally, Dominion is about 80% complete with the engineering and construction of the Cove Point Liquefaction project, which is on time and on budget.
A look ahead
For the second quarter, Dominion forecast operating earnings of $0.65-$0.75 per share. That would be well above the $0.62 per share it earned in the second quarter of last year. Driving this expected earnings growth will be growth projects that have gone into service over the past year, as well as a return to normal weather and the absence of a planned refueling at its Millstone nuclear power plant that affected results in the second quarter of last year.
Given its solid first-quarter results and strong outlook for the second quarter, Dominion affirmed its full-year guidance for operating earnings of $3.50-$3.85.
Overall, Dominion reported a solid quarter. It nearly hit the top end of its guidance range, which was enough to beat analysts' expectations. The company remains confident it will meet its guidance for the year and has several major projects in the pipeline to drive strong growth beyond 2015.