UtiliCorp Expects 15% Growth
After last year's phenomenal earnings growth rate of 26%, UtiliCorp United's CEO thinks the energy services provider has never been stronger, and said last week that the company's diverse portfolio should guarantee earnings of at least 15% for the next several years. Rick C. Green Jr. stressed, though, that diversity did not necessarily mean adding more assets, just doing well with the ones the company already holds.
CEO Green, speaking to analysts at a meeting in Kansas City, MO, said the market was "finally starting to recognize" UtiliCorp's strength, a recognition that he said was not recognized by investors more than a year ago.
"Not quite a year ago, our stock traded at an all time low," Green said. "By the end of the year, it was trading at $31 a share, and it continues to trade at $31 a share." Pointing to the company's recent completion of a successful equity offering, Green said there continues to be a "strong demand on the institutional side" for UtiliCorp's diverse products and limited strategies. In February, UtiliCorp announced that it saw a 56% increase in sales in 2000 along with its strong earnings rise. The company set records for earnings before interest and taxes, net income and sales in 2000.
Green noted that the company's success rested not in its portfolio, per se, but rather in its "limited number of strategies," which he said it had "gotten very good" at fulfilling. "As you invest in your businesses, you find there is a lot of opportunity in the daily course of business to monetize your assets. We've had an ongoing stream of profit over the years."
Three key strategies are pushing UtiliCorp's future: to become a premier global energy merchant; to develop risk energy products; and to become a leading service provider. With that small strategy base, Green said that the company's risk energy market has grown "phenomenally," and now considers itself a world class manager of energy assets.
"One of the keys to grow profit has been our attitude toward running the business," he said. "For three years we had 8% growth and in 2000 we had 26% growth, with more customers and more market share. That has given us the confidence that our bar going forward is 15% and we are confident that we can do that into the future."
Stressing that its broadband strategy had been in place "for several years," Green said that UtiliCorp wants to become more unregulated as it moves forward, and energy services will be key to this. "We want to become an unregulated company...by plan and by choice," he said. "We've spent a lot more time growing our merchant and international businesses. Broadband has the potential to grow and would continue to cause the regulated part of the business to become a smaller portion of the business."
Last year, on March 31, 2000, the company had total assets of $7.5 billion and annual sales of $19.6 billion. It now serves about 4 million customers across the United States and in Canada, the United Kingdom, New Zealand and Australia. For 1999 it was ranked the second-largest wholesale marketer of electricity in the United States and the third-largest marketer of natural gas.
Carolyn Davis, Houston
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