Exhibit 99.1
SEMCOENERGY NEWS
405 Water Street, Port Huron, MI 48060 RELEASE
FOR IMMEDIATE RELEASE
MEDIA CONTACT: FRANCIS R. LIEDER
Manager of Corporate Communications & Media Relations
Phone: 810-987-2200 ext. 4186
FAX:810-989-4098
ANALYSTS CONTACT: SEBASTIAN COPPOLA
Senior Vice President & Chief Financial Officer
Phone: 810-989-4101
Fax: 810-989-4099
SEMCO ENERGY, INC. REPORTS EARNINGS FOR THE SECOND QUARTER 2000
PORT HURON, MI, July 24, 2000 - SEMCO ENERGY (NYSE:SEN) today reported a
net loss of $3.1 million or $.17 per share for the second quarter of the year
2000, compared to net income of $.1 million or $.01 per share for the second
quarter of 1999.
The lower earnings for the second quarter of 2000 were primarily due to higher
interest expense related to the financing of the ENSTAR acquisition partially
offset by an overall increase in operating income.
William L. Johnson, Chairman, President and Chief Executive Officer, explained
that "the financing costs related to ENSTAR are incurred fairly evenly
throughout the year while the majority of the operating income for the Gas
Distribution business is earned during the first and fourth quarters of the
year. As a result, an increased loss for the second quarter of 2000 was
anticipated."
Johnson further stated that as the Company's Construction Services business
enters its profitable summer and fall construction season and the Gas
Distribution business moves into its heating season in the fourth quarter, the
Company should close out the year 2000 with strong operating results.
Net income for the first six months of 2000 was $8.9 million or $.50 per share
compared to $10.5 million or $.60 per share for the same period of 1999. The
effect of warmer weather during the first quarter of 2000 was the principal
reason for the decrease in earnings. On a weather-normalized basis, net income
for the first six months of 2000 would have been $12.3 million or $.69 per share
compared to $12.5 million or $.71 per share for the first six months of 1999.
SECOND QUARTER BUSINESS SEGMENT RESULTS:
GAS DISTRIBUTION
-----------------
The Gas Distribution business reported operating income of $5.3 million for
the second quarter of 2000 compared to $4.1 million for same period of 1999.
The increase in operating income is primarily attributed to the operations
of ENSTAR, which was acquired after the second quarter of 1999, the impact of
colder weather and new customers on sales, and lower expenses for the Michigan
operation. Partially offsetting this increase were income items recorded in the
second quarter of 1999 that did not recur in 2000 including profits on the sale
of excess gas in storage and prior year property tax refunds.
Although weather during the second quarter of 2000 was approximately 16
percent colder than during the second quarter of 1999, it was still 10 percent
warmer than normal, which reduced net income by approximately $.7 million or
$.04 per share. Volumes of gas sold and transported increased from 9.8 Bcf in
the second quarter of 1999 to 19.9 Bcf in the second quarter of 2000. The
increase was attributable primarily to ENSTAR and cooler temperatures in
Michigan.
ENGINEERING SERVICES
---------------------
The Engineering Services business reported operating income of $.1 million
in the second quarter of 2000 compared to an operating loss of $.5 million in
the second quarter of 1999. Revenues increased from $3.7 million in the second
quarter of 1999 to $6.0 million in 2000. The improvement in operating results
was primarily due to an increase in the number of available projects compared to
1999, when operating results were down because customers delayed various
projects due to lower oil prices and other factors. The Company anticipates that
the turnaround in business will continue, albeit at a moderate pace, as new or
delayed projects are released.
CONSTRUCTION SERVICES
----------------------
Construction Services reported an operating loss of $.6 million for the
second quarter of 2000 compared to operating income of $.3 million for the same
period in 1999. Revenues during the second quarter of 2000 more than doubled
when compared to the second quarter of 1999 primarily due to revenues from
recent acquisitions and an increase in construction projects.
The decrease in operating income was partially due to expected higher operating
costs related to revenue growth during the slow construction season in the first
half of the year. During this time of the year, costs frequently exceed
revenues as crews and equipment are staged at worksites and may not be 100
percent productive for a period of time. In contrast, during the summer and
fall construction season, revenues exceed construction costs, as crews are fully
productive.
The decrease in operating income also was due to higher fuel costs and operating
costs incurred on various construction projects delayed by rain and other
events. Work already has started on many of these projects and management
anticipates that all planned projects will be completed by year-end.
PROPANE, PIPELINES & STORAGE
-------------------------------
The Propane, Pipelines and Storage business reported operating income of
$.3 million for the second quarter of 2000, which was essentially unchanged from
the second quarter of 1999.
CAPITAL INVESTMENTS
--------------------
For the second quarter of 2000 SEMCO ENERGY had capital expenditures for
property additions of $20.1 million in comparison to $7.7 million for the second
quarter of 1999. For the six months ended June 30, 2000, the Company had capital
expenditures for property additions of $29.1 million compared to $13.5 million
for the same period in 1999. The increased capital expenditures in 2000 are due
in large part to additional expenditures related to ENSTAR and certain
construction businesses, which were not part of the Company in early 1999.
Capital expenditures for business acquisitions during both the three months and
six months ended June 30, 2000 were $1.8 million compared to $2.1 million and
$4.0 million respectively, during the same periods in 1999.
SEMCO ENERGY, Inc. is a diversified energy and infrastructure company that
distributes natural gas to more than 350,000 customers combined in Michigan and
Alaska. It owns and operates businesses involved in gas engineering and quality
assurance services, pipeline construction services, propane distribution,
intrastate pipelines and natural gas storage in various regions of the United
States. In addition, it provides information technology and outsourcing
services, specializing in the mid-range computer market.
The following is a "Safe-harbor" statement under the Private Securities
Litigation Reform Act of 1995. This release contains forward-looking statements
that involve risks and uncertainties including, but not limited to, statements
involving the Company's expectations regarding operating revenues and expenses,
operating income, returns on invested assets, regulatory approval processes,
success in obtaining new business, success in integrating acquired businesses,
and other risks detailed from time to time in the Company's Securities and
Exchange Commission filings.
<TABLE>
<CAPTION>
SEMCO ENERGY, INC.
NEWS RELEASE STATISTICS (UNAUDITED)
(in thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30,
-------- -------- --------
2000 1999 2000 1999 2000 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL SUMMARY
-----------------
Operating Revenues (a). . . . . . . . . . . . . . . . . . . . $76,478 $51,229 $206,780 $235,109 $356,434 $534,844
Operating Expenses (a). . . . . . . . . . . . . . . . . . . . $71,805 $47,761 $175,838 $214,294 $304,417 $500,881
Operating Income. . . . . . . . . . . . . . . . . . . . . . . $ 4,673 $ 3,468 $ 30,942 $ 20,815 $ 52,017 $ 33,963
Other Income and (Deductions)
Business Divestitures (b) (c) . . . . . . . . . . . . . . . $ - $ - $ - $ 1,122 $ - $ 4,690
Interest Expense. . . . . . . . . . . . . . . . . . . . . . (9,405) (3,775) (18,101) (7,670) (31,006) (15,252)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 608 574 1,668 946 3,349 782
-------- -------- --------- --------- --------- ---------
Total Other Income and (Deductions) . . . . . . . . . . . $(8,797) $(3,201) $(16,433) $ (5,602) $(27,657) $ (9,780)
Income Taxes. . . . . . . . . . . . . . . . . . . . . . . . . $(1,807) $ 146 $ 4,832 $ 4,688 $ 7,549 $ 9,550
-------- -------- --------- --------- --------- ---------
Income before Dividends on Trust Preferred Securities . . . . $(2,317) $ 121 $ 9,677 $ 10,525 $ 16,811 $ 14,633
Dividends on Trust Preferred Securities, Net of Income Taxes. $ 757 $ - $ 757 $ - $ 757 $ -
-------- -------- --------- --------- --------- ---------
Net Income (loss) Available to Common Shareholders. . . . . . $(3,074) $ 121 $ 8,920 $ 10,525 $ 16,054 $ 14,633
======== ======== ========= ========= ========= =========
Net Income (Loss) - Weather Normalized. . . . . . . . . . . . $(2,401) $ 1,421 $ 12,325 $ 12,492 $ 21,132 $ 19,820
Earnings Per Share - Basic and Diluted. . . . . . . . . . . . $ (0.17) $ 0.01 $ 0.50 $ 0.60 $ 0.90 $ 0.85
Earnings Per Share - Basic and Diluted - Weather
Normalized. . . . . . . . . . . . . . . . . . . . . . . . . $ (0.13) $ 0.08 $ 0.69 $ 0.71 $ 1.18 $ 1.15
Cash Dividends Per Share (d). . . . . . . . . . . . . . . . . $ 0.210 $ 0.255 $ 0.415 $ 0.454 $ 0.824 $ 0.836
Average Number Of Common Shares Outstanding . . . . . . . . . 17,992 17,703 17,954 17,571 17,887 17,183
Return on Average Common Shareholders' Equity:
As Reported . . . . . . . . . . . . . . . . . . . . . . . . 11.6% 11.9%
Weather Normalized. . . . . . . . . . . . . . . . . . . . . 15.3% 16.1%
<FN>
(a) The decrease in operating revenues and expenses for the six months and twelve months ended June 30, 2000 is due
primarily to the energy marketing business, which was sold effective March 31, 1999, offset partially by the results
of new business acquisitions.
(b) The six months and twelve months ended June 30, 1999 include a gain of $1,122 ($729 after taxes or $0.04 per share)
related to the divestiture of the Company's energy marketing business.
(c) The twelve months ended June 30, 1999 includes a gain related to the divestiture of the NOARK investment. After tax
adjustments, the gain had essentially no impact on net income for the twelve months ended June 30, 1999.
(d) The three months, six months and twelve months ended June 30, 1999 include a special one-time dividend of $0.05 per
share paid in May 1999.
</TABLE>
<TABLE>
<CAPTION>
SEMCO ENERGY, INC.
NEWS RELEASE STATISTICS (UNAUDITED)
(dollars in thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30,
-------- -------- --------
2000 1999 2000 1999 2000 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
BUSINESS SEGMENT INFORMATION
------------------------------
Operating Revenues
Gas Distribution. . . . . . . . . . . $ 49,928 $ 36,709 $ 161,616 $ 113,688 $ 264,758 $ 192,050
Engineering Services. . . . . . . . . 5,979 3,659 11,528 9,379 19,634 38,354
Construction Services . . . . . . . . 24,391 12,032 38,944 16,716 80,500 33,394
Propane,Pipelines & Storage . . . . . 1,228 1,284 3,289 3,228 6,345 6,111
Energy Marketing (e). . . . . . . . . - - - 96,904 - 278,190
Corporate and Other (f) . . . . . . . (5,048) (2,455) (8,597) (4,806) (14,803) (13,255)
----------- ----------- ----------- ----------- ----------- -----------
Total Operating Revenues. . . . . . $ 76,478 $ 51,229 $ 206,780 $ 235,109 $ 356,434 $ 534,844
=========== =========== =========== =========== =========== ===========
Operating Income (Loss)
Gas Distribution. . . . . . . . . . . $ 5,348 $ 4,064 $ 34,007 $ 21,931 $ 52,209 $ 30,260
Engineering Services. . . . . . . . . 142 (544) 212 (92) (208) 1,698
Construction Services . . . . . . . . (567) 321 (2,845) (925) 691 261
Propane, Pipelines & Storage. . . . . 276 371 748 1,167 1,922 2,004
Energy Marketing (e). . . . . . . . . - - - (341) - 2,269
Corporate and Other (f) . . . . . . . (526) (744) (1,180) (925) (2,597) (2,529)
----------- ----------- ----------- ----------- ----------- -----------
Total Operating Income. . . . . . . $ 4,673 $ 3,468 $ 30,942 $ 20,815 $ 52,017 $ 33,963
=========== =========== =========== =========== =========== ===========
OPERATING STATISTICS
--------------------
Gas Distribution:
Volumes Sold (MMcf) . . . . . . . . . 9,272 4,319 32,521 20,194 51,572 32,219
Volumes Transported (MMcf) . . . . . 10,654 5,527 26,664 14,821 44,260 26,905
Number of Customers at End of Period. 361,149 249,610 361,149 249,610 361,149 249,610
Degree Days . . . . . . . . . . . . . 1,024 734 4,164 3,973 6,841 6,061
Percent Colder (Warmer) Than Normal . (9.5)% (25.3)% (10.4)% (7.5)% (8.6)% (12.7)%
Increase (Decrease) From Normal In:
Net Income (in thousands) . . . . . $ (650) $ (1,200) $ (3,350) $ (1,800) $ (5,000) $ (4,950)
Earnings Per Share. . . . . . . . . $ (0.04) $ (0.07) $ (0.19) $ (0.10) $ (0.28) $ (0.29)
Engineering Services:
Billed Hours. . . . . . . . . . . . . 94,000 95,000 188,000 192,000 355,000 532,000
Construction Services:
Feet of Pipe Installed. . . . . . . . 1,930,000 1,479,000 2,927,000 2,176,000 6,959,000 5,039,000
Propane Distribution:
Volumes Sold (Gallons). . . . . . . . 639,000 591,000 2,312,000 2,235,000 4,409,000 4,048,000
Degree Days . . . . . . . . . . . . . 1,212 1,191 4,729 4,945 7,672 7,651
Percent Colder (Warmer) Than Normal . (12.3)% (14.6)% (11.5)% (8.0)% (12.1)% (12.9)%
Increase (Decrease) From Normal In:
Net Income (in thousands) . . . . . $ (23) $ (100) $ (55) $ (167) $ (78) $ (237)
Earnings Per Share. . . . . . . . . $ - $ - $ - $ (0.01) $ - $ (0.01)
<FN>
(e) The Energy Marketing business was sold effective March 31, 1999.
(f) Includes intercompany eliminations.
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