Vectren 2013 Annual Report Download - page 52

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50
Results of Operations of the Nonutility Group
The Nonutility Group operates in three primary business areas: Infrastructure Services, Energy Services, and Coal Mining.
Infrastructure Services provides underground pipeline construction and repair services. Energy Services provides performance
contracting and sustainable infrastructure services. Coal Mining owns, and through its contract miners, mines and then sells
coal. There are also other legacy businesses that have invested in energy-related opportunities and services, real estate, and a
leveraged lease, among other investments. The Nonutility Group supports the Company’s regulated utilities by providing
infrastructure services and coal. Prior to June 18, 2013, the Company, through Enterprises, was involved in nonutility activities
in its Energy Marketing business area. Energy Marketing marketed and supplied natural gas and provided energy management
services through ProLiance and in 2011, through Vectren Source. Pursuant to service contracts, Energy Marketing provided the
Company's Indiana regulated utilities natural gas supply services. The Nonutility Group results were losses of $4.5 million for
the year ended December 31, 2013, and earnings of $21.7 million and $23.8 million for the years ended December 31, 2012
and 2011, respectively. Nonutility Group earnings, excluding the results from Energy Marketing, for the years ended December
31, 2013, 2012, and 2011, follow:
Year Ended December 31,
(In millions, except per share amounts) 2013 2012 2011
NET INCOME EXCLUDING ENERGY MARKETING RESULTS $ 33.0 $ 39.3 $ 28.0
CONTRIBUTION TO VECTREN BASIC EPS, EXCLUDING ENERGY
MARKETING RESULTS $ 0.41 $ 0.47 $ 0.34
NET INCOME (LOSS) ATTRIBUTED TO:
Infrastructure Services $ 49.0 $ 40.5 $ 14.9
Energy Services 1.0 5.7 6.7
Coal Mining (16.0) (3.5) 16.6
Other Businesses (1.0) (3.4) (10.2)
Infrastructure Services
Infrastructure Services provides underground pipeline construction and repair services through wholly-owned subsidiaries Miller
Pipeline, LLC (Miller) and Minnesota Limited, LLC (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, 2013 were $49.0
million, compared to $40.5 million in 2012 and $14.9 million in 2011. The increased earnings in 2013 reflect the continuation of
strong demand for infrastructure services. Total Infrastructure Services gross revenues in 2013 were $784 million, compared to
gross revenues of $664 million in 2012 and $421 million in 2011. Construction activity generally is expected to remain strong as
utilities, municipalities and pipeline operators replace their aging natural gas and oil pipelines and related infrastructure. In
addition, construction activity is expected to be favorably impacted as pipeline operators construct new pipelines due to the
continued strong demand for shale gas and oil infrastructure.
Backlog represents the amount of gross revenue the Company expects to realize from work to be performed in the future on
uncompleted contracts, including new contractual agreements on which work has not begun. Infrastructure Services operates
primarily under two types of contracts, blanket contracts and fixed price contracts. Using blanket contracts, customers are not
contractually committed to specific volumes or specific time frames for project completion. These contracts are typically
awarded on an annual basis. Under fixed price contracts, customers are contractually committed to a specific service to be
performed for a specific price, whether in total for a project or on a per unit basis. At December 31, 2013, Infrastructure Services
had an estimated backlog of blanket contracts of $458 million and a backlog of fixed price contracts of $77 million, for a total
backlog of $535 million. The estimated backlog at December 31, 2012 was $278 million for blanket contracts and $101 million
for fixed price contracts, for a total of $379 million.
The backlog amounts above reflect estimates of revenues to be realized under blanket contracts. Projects included in backlog
can be subject to delays or cancellation as a result of regulatory requirements, adverse weather conditions, customer
requirements, among other factors, which could cause actual revenue amounts to differ significantly from the estimates and/or
revenues to be realized in periods other than originally expected.