Vectren 2012 Annual Report Download - page 51

49
Results of Operations of the Nonutility Group
The Nonutility Group operates in four primary business areas: Infrastructure Services, Energy Services, Coal Mining, and
Energy Marketing. Infrastructure Services provides underground pipeline construction and repair services. Energy Services
provides performance contracting and renewable energy services. Coal Mining owns mines and sells coal. Energy Marketing
markets and supplies natural gas and provides energy management services. There are also other legacy businesses that have
invested in energy-related opportunities and services, real estate, and a leveraged lease, among other investments. Pursuant
to service contracts, the Nonutility Group provides the Company’s regulated utilities natural gas supply services, coal, and
infrastructure services. Nonutility Group earnings for the years ended December 31, 2012, 2011, and 2010, follow:
Year Ended December 31,
(In millions, except per share amounts) 2012 2011 2010
NET INCOME $ 21.7 $ 23.8 $ 9.8
CONTRIBUTION TO VECTREN BASIC EPS $ 0.26 $ 0.29 $ 0.12
NET INCOME (LOSS) ATTRIBUTED TO:
Infrastructure Services $ 40.5 $ 14.9 $ 3.1
Energy Services 5.7 6.7 6.4
Coal Mining (3.5) 16.6 11.9
Energy Marketing
Vectren Source — 18.7 3.7
ProLiance (17.6) (22.9) (7.9)
Other Businesses (3.4) (10.2) (7.4)
Infrastructure Services
Infrastructure Services provides underground pipeline construction and repair services through wholly-owned subsidiaries Miller
Pipeline (Miller) and Minnesota Limited, Inc. (Minnesota Limited) which was acquired on March 31, 2011. Inclusive of holding
company costs, earnings from Infrastructure Services' operations for the year ended December 31, 2012 were $40.5 million,
compared to $14.9 million in 2011 and $3.1 million in 2010. The increases in earnings reflect increased demand across all
infrastructure business areas. Results in 2012 were further favorably impacted by warm, dry weather resulting in favorable
construction conditions. For the nine months owned in 2011, Minnesota Limited contributed earnings of $9.4 million. The
remainder of the increase in 2011 compared to 2010, totaling $2.4 million, relates to Miller’s ongoing operations. Revenues in
2012 were $664 million, compared to revenues in 2011 of $442 million, including $21 million from Minnesota Limited prior to its
acquisition. Infrastructure Services' revenues in 2010 totaled $236 million. Construction activity generally is expected to remain
strong as utilities and pipeline operators replace their aging natural gas and oil pipeline infrastructure and due to the continued
strong demand for shale gas and oil infrastructure. As an example, in the fourth quarter of 2012, Infrastructure Services was
awarded a contract to construct an approximately 80 mile natural gas pipeline in the Bakken Shale area of North Dakota. It is
expected this work will be completed by the end of the second quarter of 2013.
Acquisition of Minnesota Limited
On March 31, 2011, the Company purchased Minnesota Limited, excluding certain assets. Minnesota Limited is a specialty
contractor focusing on natural gas and oil transmission pipeline construction and maintenance; pump station, compressor
station, terminal and refinery construction; and hydrostatic testing. Minnesota Limited is headquartered in Big Lake, Minnesota
and the majority of its customers are generally located in the northern Midwest region. The purchase price was approximately
$83.4 million and included $14.8 million of net working capital, $34.4 million of property plant and equipment and $39.4 million of
intangible assets, including goodwill.
Energy Services
Energy Services provides energy performance contracting and renewable energy services through Energy Systems Group, LLC
(ESG). Inclusive of holding company costs, Energy Services’ operations contributed earnings of $5.7 million in 2012, compared
to $6.7 million in 2011 and $6.4 million in 2010.