Cascade Natural Gas Corporation Announces Fiscal Year First Quarter Ea

    Business Editors

    SEATTLE--(BUSINESS WIRE)--Jan. 24, 2005--Cascade Natural Gas Corporation (NYSE:CGC) reports fiscal year 2005 first quarter earnings of $6.6 million, or $0.59 per share, compared to $7.9 million, or $0.71 per share, for the first quarter of fiscal year 2004. Included in earnings are mark-to-market valuations on derivatives used to hedge gas supply prices, which negatively affected fiscal 2005 first quarter earnings by $0.04 per share and positively affected fiscal 2004 first quarter earnings by $0.02 per share.

    Financial and Operating Highlights

    Operating Margin (revenue minus gas cost and revenue taxes) was down $1.8 million from the fiscal 2004 first quarter. Residential and commercial margins were up $92,000. A 4.4% increase in the number of customers contributed $990,000 in additional margin, but the gain was largely offset by 8% warmer weather, as measured by average degree-days.
    Industrial operating margin (excluding a negative effect of $668,000 in 2005 and a positive effect of $406,000 in 2004 from mark-to-market derivative valuations) was lower by $805,000 in the fiscal 2005 first quarter. Gas management service revenue accounted for $740,000 of the decline due to fewer customers and lower margin on gas supply sales than last year.
    Electric generation operating margin was down $234,000 in the quarter. The lower margin is attributable to adequate supplies of lower cost hydroelectric power and weaker demand resulting, in part, from the high wholesale price of natural gas.
    Overall operating margin in the fiscal year 2004 first quarter included a $250,000 accrual for Oregon earnings sharing.

    Cost of Operations

    Cost of Operations (operating expense, depreciation and amortization, and property and miscellaneous taxes) was up $455,000 in the first quarter comparison to fiscal year 2004. Depreciation and amortization accounted for $284,000 of the increase consistent with a $38 million increase to plant-in-service. Operating expense increased $142,000 or 1.4%.

    Capital Spending and Cash Flow

    Capital spending in the quarter was $7.8 million compared to $10.2 million in the first quarter of fiscal year 2004. The $2.4 million decline reflects the September 2004 completion of the automated meter-reading project. The total fiscal year 2005 capital budget is $28.4 million. To refinance long-term debt maturities, the Company is finalizing a $30 million, 30-year debt issue.

    Fiscal Year Guidance and Other

    Management reaffirms previously provided fiscal year 2005 earnings guidance of $1.15 to $1.20. Projections do not include any effects of mark-to-market valuations or costs associated with replacing retiring officers.
    The Company previously announced its declaration of a regular quarterly cash dividend of $0.24 per common share, payable February 15 to shareholders of record at January 14, 2005.
    The Company will host a live web-cast to discuss the quarterly results January 25 at 7:30 a.m. Pacific Time. To listen to the call, log on to our web site, cngc.com and select "Investors", then click the live web-cast icon.
    Cascade Natural Gas Corporation is a local distribution company providing natural gas service to approximately 225,000 residential, commercial, and large industrial customers in the states of Washington and Oregon.

    Forward looking statement

    Statements contained in this report that are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual future results to differ materially. Such risks and uncertainties with respect to the Company include, among others, its ability to successfully implement internal performance goals, competition from alternative forms of energy and other sellers of energy, consolidation in the energy industry, performance issues with key natural gas suppliers, the capital-intensive nature of the Company's business, regulatory issues, including the need for adequate and timely rate relief to recover capital and operating costs and to sustain dividend levels, the weather, increasing competition brought on by deregulation initiatives at the federal and state regulatory levels, the potential loss of large volume industrial customers due to "bypass" or the shift by such customers to special competitive contracts at lower per unit margins, exposure to environmental cleanup requirements, and economic conditions, particularly in the Company's service area.

Cascade Natural Gas Corporation Financial Highlights - (Thousands, except per share amounts) First Quarter Fiscal 2005

Fiscal Year 2005 -------------------------------------------------- Three Months Ended ---------------------------------------- Year to Dec 31 Mar 31 Jun 30 Sep 30 Date ------------ --------- -------- -------- --------- Revenues $104,613 $104,613 Operating Margin 28,922 28,922 Cost of Operations 15,584 15,584 ------------ --------- -------- -------- ---------

Operating Income (Loss) 13,338 0 0 0 13,338 Interest and Other 2,894 2,894 Income Taxes 3,812 3,812 ------------ --------- -------- -------- ---------

Net Income (Loss) $6,632 $- $- $- $6,632

Common Shares Outstanding: End of Period 11,292 11,292 Average 11,279 11,279

Earnings (Loss) Per Share Basic $0.59 $0.59 Diluted $0.59 $0.59

Dividends Paid per share $0.24 $0.24

Capital Expenditures (net) $7,770 $7,770

Book Value Per Share $10.89 $10.89

Market Closing Price $21.20 $21.20

Active Customers (End of Period) 225 225

Gas Deliveries (Therms): Residential & Commercial 82,643 82,643 Industrial & Other 227,779 227,779

Degree Days 5-Year Average 2,091 2,091 Actual 1,945 1,945

Colder (warmer) than 5-year avg. (7%) (7%)

Colder (warmer) than prior year (8%) (8%)

Fiscal Year 2004 -------------------------------------------------- Three Months Ended ---------------------------------------- Year Ended Dec 31 Mar 31 Jun 30 Sep 30 Sep 30 ------------ --------- -------- -------- --------- Revenues $104,884 $119,454 $52,077 $41,663 $318,078 Operating Margin 30,693 32,142 16,637 14,336 93,808 Cost of Operations 15,129 15,460 14,696 15,276 60,561 ------------ --------- -------- -------- ---------

Operating Income (Loss) 15,564 16,682 1,941 (940) 33,247 Interest and Other 3,116 3,121 3,099 3,050 12,386 Income Taxes 4,543 4,892 (492) (1,384) 7,559 ------------ --------- -------- -------- ---------

Net Income (Loss) $7,905 $8,669 $(666) $(2,606) $13,302

Common Shares Outstanding: End of Period 11,181 11,210 11,241 11,268 11,268 Average 11,158 11,196 11,227 11,254 11,209

Earnings (Loss) Per Share Basic $0.71 $0.77 $(0.06) $(0.23) $1.19 Diluted $0.71 $0.77 $(0.06) $(0.23) $1.19

Dividends Paid per share $0.24 $0.24 $0.24 $0.24 $0.96

Capital Expenditures (net) $10,216 $9,672 $9,557 $9,575 $39,020

Book Value Per Share $10.62 $11.19 $10.93 $10.52 $10.52

Market Closing Price $21.09 $21.79 $22.07 $21.23 $21.23

Active Customers (End of Period) 216 218 215 214 214

Gas Deliveries (Therms): Residential & Commercial 86,070 96,038 33,746 21,900 237,754 Industrial & Other 260,887 223,894 182,387 229,431 896,599

Degree Days 5-Year Average 2,044 2,275 874 229 5,422 Actual 2,106 2,249 661 196 5,212

Colder (warmer) than 5-year avg. 3% (1%) (24%) (14%) (4%)

Colder (warmer) than prior year 4% 10% (20%) 40% 3%

--30--APS/se*

CONTACT: Cascade Natural Gas Corporation J. D. Wessling, 206/624-3900

KEYWORD: WASHINGTON INDUSTRY KEYWORD: OIL/GAS ENERGY UTILITIES EARNINGS CONFERENCE CALLS SOURCE: Cascade Natural Gas Corporation

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