WGL Holdings, Inc. Reports Second Quarter Fiscal Year 2013 Financial Results; Raised Fiscal Year 201

WGL Holdings, Inc. Reports Second Quarter Fiscal Year 2013 Financial Results; Raised Fiscal Year 2013 Non-GAAP Guidance

• Consolidated earnings per share up —— $1.73 per share vs. $1.44 per share for the same quarter of the prior year

• Consolidated non-GAAP operating earnings per share up —— $1.75 per share vs. $1.58 per share for the same quarter of prior year

• Earnings Guidance for fiscal year 2013 —— raised to a range from $2.42 to $2.54 per share for non-GAAP operating earnings and updating GAAP earnings to a range of $2.30 to $2.42 per share

WASHINGTON--(BUSINESS WIRE)-- WGL Holdings, Inc. (NYS: WGL) :

Consolidated Results

WGL Holdings, Inc. (NYS: WGL) , the parent company of Washington Gas Light Company (Washington Gas) and other energy-related subsidiaries, today reported net income determined in accordance with generally accepted accounting principles in the United States of America (GAAP) for the quarter ended March 31, 2013 of $89.5 million, or $1.73 per share, compared to net income of $74.2 million, or $1.44 per share, reported for the quarter ended March 31, 2012.

For the first six months of fiscal year 2013, we reported net income determined in accordance with GAAP of $141.9 million, or $2.74 per share, compared to net income of $124.6 million, or $2.42 per share, reported for the comparative period of fiscal year 2012. Our operations are seasonal and, accordingly, our operating results for the three and six months ended March 31, 2013, are not indicative of the results expected for the 12 months ending September 30, 2013.

Financial performance is also evaluated based on non-GAAP operating earnings (loss). Non-GAAP operating earnings (loss) excludes the effects of: (i) unrealized mark-to-market gains (losses) on energy-related derivatives for our regulated utility and retail energy marketing segments; (ii) certain gains and losses associated with optimizing the utility segment's system capacity assets; (iii) changes in the measured value of our inventory for our wholesale energy solutions segment; (iv) the financial effects of warm or cold weather that exceeds weather protection for our regulated utility segment and (v) certain unusual transactions. Refer to "Use of Non-GAAP Operating Earnings (Loss)" and supporting reconciliations attached to this news release for a detailed discussion of management's use of non-GAAP operating earnings, as well as reconciliations of net income determined in accordance with GAAP to non-GAAP operating earnings (loss) for both our consolidated and segment results.

For the quarter ended March 31, 2013, non-GAAP operating earnings were $90.7 million, or $1.75 per share, an increase of $9.4 million, or $0.17 per share, over non-GAAP operating earnings of $81.3 million, or $1.58 per share, for the same quarter of the prior fiscal year. For the six months ended March 31, 2013, non-GAAP operating earnings were $149.6 million, or $2.89 per share, an increase of $10.2 million, or $0.19 per share, over non-GAAP operating earnings of $139.4 million, or $2.70 per share, for the same period of the prior fiscal year.

"I am happy to announce second quarter non-GAAP earnings per share of $1.75, an increase of 11% over the prior year," said Terry McCallister, Chairman and Chief Executive Officer of WGL Holdings. "Earnings improved in both our utility and non-utility businesses for the quarter, reflecting our continued effective execution against our long range goals. For the full year we are increasing our guidance for non-GAAP earnings, primarily driven by lower O&M spending in our utility operations. Another significant event occurred on April 26, as we filed a rate case with the Maryland Public Service Commission requesting a revenue increase of $30.7 million. This request reflects recent increases in our pipeline replacement spending in Maryland as well as higher O&M costs. This action supports our plans to maintain a strong earnings contribution from our utility business as we increase replacement spending to ensure a safe and reliable distribution system."

Second Quarter Results by Business Segment

Regulated Utility

For the quarter ended March 31, 2013, our regulated utility segment reported net income of $77.1 million, or $1.49 per share, an increase of $4.7 million, or $0.09 per share, compared to a net income of $72.4 million, or $1.40 per share, reported for the same quarter of the prior fiscal year. After adjustments, non-GAAP operating earnings for the regulated utility segment were $81.1 million, or $1.57 per share, for the quarter ended March 31, 2013, compared to non-GAAP operating earnings of $77.0 million, or $1.49 per share, for the same quarter of the prior fiscal year.

For the six months ended March 31, 2013, our regulated utility segment reported net income of $115.8 million, or $2.24 per share, compared to net income of $116.8 million, or $2.27 per share, reported for the six months ended March 31, 2012. After adjustments, non-GAAP operating earnings for the regulated utility segment were $125.1 million, or $2.42 per share, for the six months ended March 31, 2013, compared to non-GAAP operating earnings of $121.1 million, or $2.35 per share, for the same period of the prior fiscal year.

For both the three and six months ended March 31, 2013, higher non-GAAP operating earnings reflect: (i) higher revenues due to an increase in average active customer meters; (ii) higher margins associated with our asset optimization program; (iii) favorable effects of changes in natural gas consumption patterns due to shifts in weather patterns; (iv) lower bad debt expense due to a reduction in customer delinquencies and charge-offs and (v) lower income tax expense due to a lower effective tax rate. Partially offsetting these favorable variances were decreases in the recovery of carrying costs on lower average storage gas inventory balances and higher depreciation expense due to the growth in our investment in utility plant. For the six-month period only, non-GAAP earnings were also higher due to higher revenues related to the timing of rate relief in Maryland.

Retail Energy-Marketing

For the quarter ended March 31, 2013, the retail energy-marketing segment reported net income of $21.7 million, or $0.42 per share, an increase of $17.2 million, or $0.33 per share, over net income of $4.5 million, or $0.09 per share, reported for the same quarter of the prior fiscal year. Non-GAAP operating earnings for the retail energy-marketing segment were $11.6 million, or $0.22 per share, for the quarter ended March 31, 2013, an increase of $6.3 million, or $0.12 per share, over non-GAAP operating earnings of $5.3 million, or $0.10 per share, for the same quarter of the prior fiscal year. Non-GAAP operating earnings reflect higher realized electric margins due to increased sales volumes associated with colder winter weather and favorable timing of margin recognition in the current period versus the same quarter of the prior year, partially offset by higher electricity supply charges from the regional power grid operator, PJM. The increase in natural gas sales margins for the quarter was primarily attributable to a more favorable pattern of margin recognition in the current quarter due to higher levels of storage withdrawals at favorable spreads. In addition, gas margins increased due to higher retail sales volumes resulting from colder weather and higher margins on portfolio optimization activities. Operating expenses declined primarily due to lower customer acquisition expenses and lower charges from Maryland and Pennsylvania utilities related to Purchase of Receivables (POR) programs.

For the six months ended March 31, 2013, the retail energy-marketing segment reported net income of $34.7 million, or $0.67 per share, an increase of $29.4 million, or $0.57 per share, over net income of $5.3 million, or $0.10 per share, reported for the same period of the prior fiscal year. Non-GAAP operating earnings for the retail energy-marketing segment were $23.6 million, or $0.46 per share, for the six months ended March 31, 2013, an increase of $5.2 million, or $0.10 per share, over non-GAAP operating earnings of $18.4 million, or $0.36 per share, for the same period of the prior fiscal year. The increase in non-GAAP operating earnings reflects higher realized gas margins attributable to higher sales volumes due to colder weather, higher unit margins on portfolio optimization activity and favorable price and timing conditions in the current period versus the same quarter of the prior year. Realized electric margins were lower on a different pattern of annual margin recognition in the current year vs. the prior year and higher electricity supply charges from PJM, partially offset by higher sales volumes in the current year. Operating expenses in the six-month period declined primarily due to lower customer acquisition expenses and lower charges from Maryland and Pennsylvania utilities related to POR programs.

The pattern of margin recognition that the retail energy-marketing segment realizes in a given quarter varies from year to year.

Commercial Energy Systems

For the quarter ended March 31, 2013, the commercial energy systems segment reported net income of $0.6 million compared to net income of $0.4 million for the same quarter last year. For the six months ended March 31, 2013, the commercial energy systems segment reported net income of $1.7 million, or $0.03 per share, compared to net income of $0.7 million, or $0.01 per share, for the same period last year. Net income was higher primarily due to higher revenue from commercial solar projects and higher returns on investments from our alternative energy assets partially offset by lower project work for government agency customers. There were no non-GAAP adjustments for this segment for any of the periods presented.

Wholesale Energy Solutions

For the quarter ended March 31, 2013, the wholesale energy solutions segment reported a net loss of $(9.4) million, or $(0.18) per share, compared to a net loss of $(2.7) million, or $(0.05) per share, for the same quarter of the prior fiscal year. Non-GAAP net losses for the wholesale energy solutions segment were $(2.1) million, or $(0.04) per share, compared to a loss of $(1.1) million, or $(0.02) per share, for the same period of the prior fiscal year. Non-GAAP operating earnings were lower than prior year primarily due to compressed transportation and storage spreads.

For the six months ended March 31, 2013, the wholesale energy solutions segment reported a net loss of $(8.1) million, or $(0.16) per share, compared to net income of $2.5 million, or $0.05 per share, for the same period of the prior fiscal year. Wholesale energy solutions reported non-GAAP operating earnings of $1.4 million, or $0.03 per share, compared to a non-GAAP operating loss of $(0.1) million for the same period of the prior fiscal year. Non-GAAP operating earnings were higher than in the prior year principally due to an increase in storage margins driven by the segment's ongoing investments in low-cost storage capacity.

Earnings Outlook

We are updating our GAAP earnings estimate for fiscal year 2013 to a range of $2.30 per share to $2.42 per share. This estimate includes projected fiscal year 2013 earnings from our regulated utility segment in a range of $1.65 per share to $1.71 per share and projected fiscal year 2013 earnings from our non-utility business segments in a range of $0.65 per share to $0.71 per share.

We are raising our non-GAAP consolidated earnings estimate for fiscal year 2013 to a range of $2.42 per share to $2.54 per share. This estimate includes projected fiscal year 2013 non-GAAP operating earnings from our regulated utility segment in a range of $1.79 per share to $1.85 per share, and projected fiscal year 2013 non-GAAP operating earnings from our non-utility business segments in a range of $0.63 per share to $0.69 per share. Refer to the "Reconciliation of GAAP Earnings Guidance to Non-GAAP Earnings Guidance" attached to this press release for a reconciliation of our GAAP earnings per share estimate to our estimate based on non-GAAP operating earnings per share.

We assume no obligation to update this guidance. The absence of any statement by us in the future should not be presumed to represent an affirmation of this earnings guidance. For the assumptions underlying this guidance, please refer to the slides accompanying our webcast that will be posted to the WGL Holdings website, www.wglholdings.com.

Other Information

We will hold a conference call at 10:30 a.m. Eastern Time on May 2, 2013, to discuss our second quarter fiscal year 2013 financial results. The live conference call will be available to the public via a link located on the WGL Holdings website, www.wglholdings.com. To hear the live webcast, click on the "Webcast" link located on the home page of the referenced site. The webcast and related slides will be archived on the WGL Holdings website through June 2, 2013.

Headquartered in Washington, D.C., WGL Holdings, Inc. has four operating segments: (i) the regulated utility segment which primarily consists of Washington Gas, a natural gas utility that serves over one million customers throughout metropolitan Washington, D.C., and the surrounding region; (ii) the retail energy-marketing segment which consists of Washington Gas Energy Services, Inc., a third-party marketer that competitively sells natural gas and electricity; (iii) the commercial energy systems segment which consists of Washington Gas Energy Systems, Inc., a provider of design-build energy efficiency solutions to government and commercial clients, commercial solar projects, and the operations of WGSW, a holding company formed to invest in alternative energy assets and (iv) the wholesale energy solutions segment which consists of Capitol Energy Ventures Corp., an asset optimization business that acquires, manages and optimizes natural gas storage and transportation assets. Additional information about WGL Holdings, Inc. is available on our website, www.wglholdings.com.

Unless otherwise noted, earnings per share amounts are presented on a diluted basis, and are based on weighted average common and common equivalent shares outstanding.

Please see the attached comparative statements for additional information on our operating results. Also attached to this news release are reconciliations of net income determined in accordance with GAAP to non-GAAP operating earnings (loss) for both our consolidated and segment results, as well as reconciliations of our GAAP earnings guidance to our non-GAAP earnings guidance.

Forward-Looking Statements

This news release and other statements by us include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the outlook for earnings, revenues and other future financial business performance or strategies and expectations.Forward-looking statements are typically identified by words such as, but not limited to, "estimates," "expects," "anticipates," "intends," "believes," "plans," and similar expressions, or future or conditional verbs such as "will," "should," "would," and "could."Although we believe such forward-looking statements are based on reasonable assumptions, we cannot give assurance that every objective will be achieved.Forward-looking statements speak only as of today, and we assume no duty to update them.Factors that could cause actual results to differ materially from those expressed or implied include, but are not limited to, general economic conditions and the factors discussed under the "Risk Factors" heading in our most recent annual report on Form 10-K and other documents we have filed with, or furnished to, the U.S. Securities and Exchange Commission.