WGL Holdings, Inc. Reports Third Quarter Fiscal Year 2013 Financial Results; Affirms Fiscal Year 201

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

• Consolidated earnings per share —— $(0.19) per share vs. $0.14 per share for the same quarter of the prior year

• Consolidated non-GAAP operating earnings per share —— $(0.03) per share vs. $0.08 per share for the same quarter of prior year

• Earnings Guidance for fiscal year 2013 —— affirming a range from $2.42 to $2.54 per share for non-GAAP operating earnings and updating GAAP earnings to a range of $2.16 to $2.28 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 a net loss determined in accordance with generally accepted accounting principles in the United States of America (GAAP) for the quarter ended June 30, 2013 of $(10.0) million, or $(0.19) per share, compared to net income of $7.5 million, or $0.14 per share, reported for the quarter ended June 30, 2012.

For the nine months of fiscal year 2013, we reported net income determined in accordance with GAAP of $131.9 million, or $2.55 per share, compared to net income of $132.1 million, or $2.56 per share, reported for the comparative period of fiscal year 2012. Our operations are seasonal and, accordingly, our operating results for the three and nine months ended June 30, 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) adjusts for the effects of applying GAAP to certain transactions or classes of transactions that are not representative of the on-going operating earnings of the company. 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 June 30, 2013, non-GAAP operating losses were $(1.6) million, or $(0.03) per share, compared to non-GAAP operating earnings of $4.0 million, or $0.08 per share, for the same quarter of the prior fiscal year. For the nine months ended June 30, 2013, non-GAAP operating earnings were $148.0 million, or $2.86 per share, an increase of $4.6 million, or $0.08 per share, over non-GAAP operating earnings of $143.4 million, or $2.78 per share, for the same period of the prior fiscal year.

"I am pleased to announce third quarter and year to date results that leave us positioned to deliver on our long-term 7% earnings growth plan," said Terry McCallister, Chairman and Chief Executive Officer of WGL Holdings. "For the remainder of fiscal year 2013, we are affirming our previously announced range of corporate non-GAAP guidance. Although our non-utility businesses will be challenged to meet our expectations this year, mostly due to underperformance at our wholesale solutions business, our regulated utility is on pace to exceed our expectations this year. The recent decision in the District of Columbia rate case, continued success in deploying solar solutions and our announced participation in the Constitution Pipeline are all examples of our focus on driving earnings growth from regulated and utility-like investments."

Third Quarter Results by Business Segment

Regulated Utility Segment

We typically report a net loss for quarters ending June 30 because of the seasonal nature of our utility operations and the corresponding reduced demand for natural gas during this period. For the quarter ended June 30, 2013, our regulated utility segment reported a seasonal net loss of $(4.3) million, or $(0.08) per share, compared to a net loss of $(5.8) million, or $(0.11) per share, reported for the same quarter of the prior fiscal year. After adjustments, non-GAAP operating losses for the regulated utility segment were $(3.1) million, or $(0.06) per share, for the quarter ended June 30, 2013, compared to non-GAAP operating losses of $(4.1) million, or $(0.08) per share, for the same quarter of the prior fiscal year. Non-GAAP operating earnings reflecthigher revenues from customer growth and rate mechanisms, such as asset optimization sharing and accelerated pipeline replacement surcharges. Partially offsetting these favorable variances were certain increased operating costs, such as employee benefit expenses.

For the nine months ended June 30, 2013, our regulated utility segment reported net income of $111.5 million, or $2.15 per share, compared to net income of $110.9 million, or $2.15 per share, reported for the nine months ended June 30, 2012. After adjustments, non-GAAP operating earnings for the regulated utility segment were $122.0 million, or $2.36 per share, for the nine months ended June 30, 2013, compared to non-GAAP operating earnings of $117.1 million, or $2.27 per share, for the same period of the prior fiscal year. Non-GAAP operating earnings reflect higher revenues from customer growth, and rate mechanisms, such as asset optimization sharing and accelerated pipeline replacement surcharges. Lower interest expense and a lower effective tax rate also contributed to higher earnings. For the year to date period, higher operating costs from employee benefits and other items were partially offset by lower uncollectible expense.

Retail Energy-Marketing Segment

For the quarter ended June 30, 2013, the retail energy-marketing segment reported a net loss of $(4.2) million, or $(0.08) per share, compared to net income of $19.7 million, or $0.38 per share, reported for the same quarter of the prior fiscal year. Non-GAAP operating earnings for the retail energy-marketing segment were $6.2 million, or $0.12 per share, for the quarter ended June 30, 2013, compared to non-GAAP operating earnings of $9.0 million, or $0.17 per share, for the same quarter of the prior fiscal year. Non-GAAP operating earnings reflect lower realized electric margins due to higher supply charges from the regional power grid operator (PJM). Operating expenses were higher as a result of costs associated with a change in benefits plans and an increase in customer acquisition costs.

For the nine months ended June 30, 2013, the retail energy-marketing segment reported net income of $30.5 million, or $0.59 per share, an increase of $5.5 million, or $0.11 per share, over net income of $25.0 million, or $0.48 per share, reported for the same period of the prior fiscal year. Non-GAAP operating earnings for the retail energy-marketing segment were $29.9 million, or $0.58 per share, for the nine months ended June 30, 2013, an increase of $2.6 million, or $0.05 per share, over non-GAAP operating earnings of $27.3 million, or $0.53 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 volumes due to colder weather and higher unit margins on portfolio optimization activity. Realized electric margins were lower due to higher overall supply charges from PJM and unfavorable timing on margin recognition. Operating expenses declined primarily due to lower customer acquisition expenses and lower costs from Purchase of Receivables (POR) programs.

The quarterly pattern of margin recognition that the retail energy-marketing segment realizes varies from year to year.

Commercial Energy Systems Segment

For the quarter ended June 30, 2013, the commercial energy systems segment reported net income of $0.3 million, compared to $0.7 million, or $0.01 per share, for the same quarter of the prior fiscal year. Net income for the quarter declined due to lower income from government agency customers and the timing of revenues recognized from the sale of renewable energy credits. For the nine months ended June 30, 2013, the commercial energy systems segment reported net income of $1.9 million, or $0.04 per share, compared to net income of $1.5 million, or $0.03 per share, for the same period of the prior fiscal year. Net income for the nine months ended June 30, 2013, was higher primarily due to higher revenue and returns from our investments in commercial and residential solar assets. There were no non-GAAP adjustments for this segment for any of the periods presented.

Wholesale Energy Solutions Segment

For the quarter ended June 30, 2013, the wholesale energy solutions segment reported net income of $1.1 million, or $0.02 per share, compared to a net loss of $(6.0) million, or $(0.12) per share, for the same quarter of the prior fiscal year. Non-GAAP operating losses for the wholesale energy solutions segment were $(2.9) million, or $(0.06) per share, compared to non-GAAP operating losses of $(0.5) million, or $(0.01) per share, for the same period of the prior fiscal year.

For the nine months ended June 30, 2013, the wholesale energy solutions segment reported a net loss of $(7.0) million, or $(0.14) per share, compared to a net loss of $(3.4) million, or $(0.07) per share, for the same period of the prior fiscal year. Wholesale energy solutions reported non-GAAP operating losses of $(1.5) million, or $(0.03) per share, compared to a non-GAAP operating loss of $(0.7) million, or $(0.01) per share, for the same period of the prior fiscal year. The non-GAAP comparisons for both the quarter and year-to-date reflect compressed storage spreads and higher operation and maintenance expense as a result of new storage arrangements and consulting fees related to the investment in the Constitution Pipeline.

Other Activities

For the quarter ended June 30, 2013, other activities reported a net loss of $(2.8) million, or $(0.05) per share, compared to a net loss of $(1.1) million, or $(0.02) per share, for the same quarter of the prior fiscal year. Non-GAAP operating losses for other activities were $(2.2) million, or $(0.03) per share, compared to non-GAAP operating losses of $(1.1) million, or $(0.01) per share, for the same period of the prior fiscal year.

For the nine months ended June 30, 2013, other activities reported a net loss of $(5.0) million, or $(0.09) per share, compared to a net loss of $(1.8) million, or $(0.03) per share, for the same period of the prior fiscal year. Other activities reported non-GAAP operating losses of $(4.4) million, or $(0.09) per share, compared to a non-GAAP operating loss of $(1.8) million, or $(0.04) per share, for the same period of the prior fiscal year. The non-GAAP comparisons for both the quarter and year-to-date reflect our corporate branding initiative costs and an increase in our on-going business development activities as well as the timing of certain intercompany tax allocations.

Earnings Outlook

We are affirming our non-GAAP consolidated earnings estimate for fiscal year 2013 in a range of $2.42 per share to $2.54 per share and updating our GAAP earnings estimate for fiscal year 2013 to a range of $2.16 per share to $2.28 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 August 8, 2013, to discuss our third 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 September 6, 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.