Cleco Corp. (NYSE: CNL) reported today 2008 third-quarter net
income applicable to common stock of $37.1 million, down $30.9
million from the $68.0 million recorded in the third quarter of
2007. Included in third-quarter 2007 net income was a $24.1 million
gain from the Acadia settlement with Calpine.
On an earnings per share basis, Cleco recorded earnings of $0.62
per diluted share for the quarter, down $0.51 per share from the
$1.13 per share recorded in the third quarter of 2007. The Acadia
settlement contributed a net $0.41 per share to earnings in the
third quarter of 2007.
For the nine months ended Sept. 30, 2008, net income applicable
to common stock was $88.6 million, or $1.47 per diluted share, down
$0.87 per share from the $2.34 per share for the same period in
2007. Included in the first nine months of 2007 was $0.41 per share
from the Acadia settlement and $0.81 per share from the Calpine
bankruptcy claim.
"Although the credit markets are tight and the global economy as
a whole has weakened, the fundamentals of Cleco's core business
remain strong, and we are still on target to meet our financial
goals for the year," said Mike Madison, president and CEO of Cleco
Corp. "Since our last earnings update, we've recovered from
Hurricanes Gustav and Ike and have reached an agreement with the
Louisiana Public Service Commission (LPSC) on the handling of the
storm restoration costs. We also completed the fuel off-loading
facility for our Rodemacher Unit 3, an important milestone in our
largest solid-fuel generation project ever. Our storm cost recovery
plan, Rodemacher Unit 3 project and other major initiatives are
discussed in detail in our strategic update later in this
release."
Consolidated Diluted Earnings Per Share Allocated to Subsidiaries
Diluted EPS
---------------------
Three Months Ended
Sept. 30,
---------------------
Subsidiary 2008 2007
---------- ----------
Cleco Power LLC $ 0.51 $ 0.57
Cleco Midstream Resources LLC (excluding 2007 gain
from Acadia settlement, net of impairment on
investment) 0.08 0.10
Corporate and Other(1) 0.03 0.05
---------- ----------
Earnings excluding Acadia net gain $ 0.62 $ 0.72
Gain from Acadia settlement, net of impairment on
investment - 0.41
---------- ----------
Earnings applicable to common stock $ 0.62 $ 1.13
---------- ----------
(1) Includes dividends on preferred stock
Results for Third-Quarter 2008:
Major Reconciling Items for Third-Quarter EPS 2008 vs. 2007:
$ 1.13 2007 Third-Quarter Diluted EPS
Absence of 2007 gain from Acadia settlement preferred
(0.62) distribution (equity income)
Absence of 2007 gain from Acadia settlement guaranteed
(0.26) payment (other income)
Absence of 2007 impairment of investment in Acadia (equity
0.47 income)
------
$ 0.72
(0.03) Lower Cleco Power non-fuel revenue, net
(0.01) Lower storm surcharge collections
(0.04) Losses on energy hedging, net
(0.14) Higher Cleco Power expenses
Higher Cleco Power AFUDC (allowance for funds used during
0.16 construction)
Lower Cleco Midstream results (excluding 2007 gain from
(0.02) Acadia settlement)
(0.02) Lower corporate results
------
$ 0.62 2008 Third-Quarter Diluted EPS
Cleco Power's 2008 third-quarter earnings -- down $0.06 per
share in the quarter-to-quarter comparison
-- Kilowatt-hour sales were $0.05 per share lower compared with last
year's results. Lower retail sales resulted in a $0.06 per share decrease
in results, partially offset by a $0.01 per share increase in wholesale
customer revenue. Kilowatt-hour sales for the third quarter of 2008 were
down 5.7 percent from the same period a year ago largely due to extended
hurricane-related outages and cooler weather. Cooling-degree days for the
quarter were 5.0 percent above normal, but 3.8 percent below third-quarter
2007 levels.
(Million kWh) For the three months ended
Sept. 30,
-------------------------------
2008 2007 Change
--------- --------- --------
Electric Sales
Residential 1,144 1,170 (2.22)%
Commercial 721 733 (1.64)%
Industrial 762 786 (3.05)%
Other retail 36 35 2.86 %
--------- ---------
Total retail 2,663 2,724 (2.24)%
Sales for resale 153 165 (7.27)%
Unbilled (134) (44) (204.55)%
--------- ---------
Total retail and wholesale customer sales 2,682 2,845 (5.73)%
-- Transmission and miscellaneous revenue increased $0.02 per share
quarter over quarter.
-- Storm surcharge collections were down $0.01 per share due to the
issuance of storm recovery bonds in March 2008.
-- Mark-to-market and realized losses on energy hedging positions tied to
a fixed-price wholesale contract were $0.04 per share higher as compared to
the same period of 2007.
-- Interest expense increased $0.08 per share compared to last year's
results. Of that, $0.05 per share was due to higher interest on solid-
waste disposal bonds and senior notes, $0.02 per share was related to the
senior secured storm recovery bonds, and $0.03 per share related to the
carrying cost of the tax benefits of Hurricanes Katrina and Rita storm
damage costs, partially offset by $0.02 per share of lower interest related
to draws against Cleco Power's credit facility.
-- Adjustments/true-ups related to income taxes reduced earnings by $0.07
per share.
-- Other expenses were $0.01 per share lower compared to the same period
last year.
-- AFUDC, primarily associated with the Rodemacher Unit 3 project,
contributed an additional $0.16 per share as compared to the third quarter
of 2007. The equity portion of AFUDC associated with the Rodemacher Unit 3
project was up $0.14 per share, while the debt portion of AFUDC contributed
$0.02 per share more than in the third quarter of 2007.
Cleco Midstream Resources' results for third-quarter 2008,
excluding the 2007 gain from the Acadia settlement, net of
impairment on investment -- down $0.02 per share in the
quarter-to-quarter comparison
Evangeline was down $0.03 per share for the third quarter of
2008 compared to the same period a year ago, primarily due to
higher maintenance expenses and write-offs of obsolete equipment,
both related to an unplanned 2008 outage. Excluding the 2007 gain
from the Acadia settlement and impairment of investment, Acadia had
lower losses of $0.01 per share compared to the same period last
year due to $0.04 per share of lower interest paid to the holding
company, partially offset by $0.03 per share for a break-up fee
paid to Acadia Power Holdings (APH) in 2007 related to the sale of
Calpine's interest in the Acadia project.
Other
Corporate earnings decreased $0.02 per share in the
quarter-to-quarter comparison, primarily due to $0.04 per share of
lower affiliate interest received from Acadia, $0.01 per share of
lower interest income, and $0.02 per share reduction in the cash
surrender values of corporate life insurance policies. These
decreases were partially offset by $0.02 per share of lower
interest expense related to the May 2008 repayment of $100 million
of corporate debt and $0.03 per share of adjustments/true-ups
related to income taxes.
Consolidated Diluted Earnings Per Share Allocated to Subsidiaries
Diluted EPS
------------------
Nine Months Ended
Sept. 30,
------------------
Subsidiary 2008 2007
-------- --------
Cleco Power LLC $ 1.51 $ 1.09
Cleco Midstream Resources LLC (excluding 2007 gains
from the Calpine bankruptcy claim, net, and Acadia
settlement, net of impairment on investment) (0.05) (0.13)
Corporate and Other(1) 0.01 0.16
-------- --------
Earnings excluding Acadia net gain $ 1.47 $ 1.12
Gain from Calpine bankrupcty claim, net - 0.81
Gain from Acadia settlement, net of impairment on
investment - 0.41
-------- --------
Earnings applicable to common stock $ 1.47 $ 2.34
-------- --------
(1) Includes dividends on preferred stock
Results for Nine Months ended Sept. 30, 2008:
Major Reconciling Items for Nine Months ended Sept. 30, EPS 2008 vs. 2007:
$ 2.34 Nine Months ended Sept. 30, 2007 Diluted EPS
Absence of 2007 gain from Calpine bankruptcy claim (equity
(0.81) income)
Absence of 2007 gain from Acadia settlement preferred
(0.62) distribution (equity income)
Absence of 2007 gain from Acadia settlement guaranteed
(0.26) payment (other income)
Absence of 2007 impairment of investment in Acadia (equity
0.47 income)
------
$ 1.12
0.04 Higher Cleco Power non-fuel revenue
(0.03) Lower storm surcharge collections
(0.06) Higher Cleco Power expenses
(0.01) Conversion of ESOP preferred shares to common shares
0.48 Higher Cleco Power AFUDC
Lower Cleco Midstream losses (excluding gains from the
Calpine bankruptcy claim and Acadia settlement, net of
0.08 impairment of investment)
(0.15) Lower corporate results
------
$ 1.47 Nine Months ended Sept. 30, 2008 Diluted EPS
Cleco Power's Nine Months ended Sept. 30, 2008 earnings -- up
$0.42 per share year over year
-- Revenue from wholesale customers added $0.03 per share compared to
last year's results while other retail sales were down $0.02 per share
compared to last year's results. Lower retail sales generally resulted
from milder winter weather and extended hurricane-related outages. Heating-
degree days for the period were lower than 2007 levels by 9.5 percent.
(Million kWh) For the nine months ended
Sept. 30,
---------------------------
2008 2007 Change
--------- --------- -------
Electric Sales
Residential 2,789 2,789 -
Commercial 1,874 1,869 0.27 %
Industrial 2,177 2,255 (3.46)%
Other retail 101 102 (0.98)%
--------- ---------
Total retail 6,941 7,015 (1.05)%
Sales for resale 327 384 (14.84)%
Unbilled 12 67 (82.09)%
--------- ---------
Total retail and wholesale customer sales 7,280 7,466 (2.49)%
--------- ---------
-- Transmission and miscellaneous revenue increased $0.03 per share year
over year.
-- Storm surcharge collections were down $0.03 per share due to the
issuance of storm recovery bonds in March 2008.
-- Interest expense increased $0.11 per share year over year. The
increase resulted from $0.09 per share of higher interest on solid-waste
disposal bonds and senior notes, $0.05 per share on the storm recovery
bonds, and $0.04 per share related primarily to the carrying cost of the
tax benefits of Hurricanes Katrina and Rita storm damage costs. These
increases were partially offset by a $0.05 per share true-up of lower
interest expense related to the storm damage surcredit and $0.02 per share
of lower interest related to the repayment of medium-term notes in 2007.
-- Adjustments/true-ups related to income taxes reduced earnings by $0.06
per share.
-- Other expenses were $0.11 per share lower compared to the same period
last year. Lower employee compensation and benefits and professional fees
contributed $0.06 per share. Other taxes, depreciation expense, and
generation maintenance work collectively were $0.07 per share lower.
Offsetting this amount was $0.02 per share of higher expenses related to
capacity contracts.
-- The 2007 conversion of shares of ESOP preferred stock to shares of
common stock resulted in a $0.01 per share dilution.
-- AFUDC, primarily associated with the Rodemacher Unit 3 project,
contributed an additional $0.48 per share as compared to the first nine
months of 2007. The equity portion of AFUDC associated with the Rodemacher
Unit 3 project was up $0.41 per share, while the debt portion of AFUDC
contributed $0.07 per share.
Cleco Midstream Resources' results for Nine Months ended Sept.
30, 2008, excluding the 2007 gains from the Calpine bankruptcy
claim, net and Acadia settlement, net of impairment on investment
-- up $0.08 per share year over year
Excluding the 2007 gains from the Calpine bankruptcy claim and
the Acadia settlement, net of impairment of investment of $1.22 per
share, Acadia had lower losses of $0.08 per share largely due to
$0.11 per share of lower interest paid to the holding company. This
was partially offset by $0.03 per share related to the break-up fee
paid to APH in 2007 related to the sale of Calpine's interest in
Acadia. Evangeline was down $0.02 per share primarily due to higher
maintenance expenses. Lower administrative and other miscellaneous
expenses added $0.02 per share in the year-to-year comparison.
Other
Corporate earnings decreased $0.15 per share in the year-to-year
comparison. Of that, $0.11 per share was due to lower affiliate
interest income received from Acadia, $0.03 per share was related
to decreases in cash surrender values of corporate life insurance
policies, and $0.05 per share was related to lower interest income
from temporary investments and higher taxes. Partially offsetting
these decreases were $0.02 per share of lower interest expense due
to the payoff of $100 million of senior corporate notes in May
2008, $0.01 per share from the absence of the 2007 Federal Energy
Regulatory Commission penalty, and $0.01 per share due to the
absence of preferred dividends previously paid on shares of
preferred stock converted to shares of common stock.
Earnings Guidance
"With the planned fall outage at Evangeline, we are maintaining
our 2008 earnings target in the range of $1.60 to $1.70 per share,"
said Madison. "Those targets assume 2008 capital expenditures of
about $265 million on the Rodemacher Unit 3 project (including
AFUDC), normal weather for the remainder of the year, and the
continuation of our current rate plan. Cleco Midstream earnings
targets, in addition to the planned fall outage at Evangeline,
assume continued performance by Evangeline's tolling counterparty
and assumptions about Acadia's plant operations and market
conditions."
Strategic Update
"In September, Hurricanes Gustav and Ike caused widespread
damage and outages across our service territory. Once again, our
emergency plan preparation, our crews, and outside help enabled us
to quickly restore power," said Madison.
Cleco Power estimates its storm costs from Gustav and Ike to be
approximately $85 million. The LPSC has approved the company's
request to capitalize approximately $45 million of this estimate
and take the remaining $40 million in O&M expenses from the
company's storm damage cost reserve, leaving approximately $19
million in the reserve for future storm damage. The capital
expenditures are expected to be funded significantly by the
storm-related tax benefits.
"We are less than 12 months away from the commercial operation
date of our Rodemacher Unit 3 project," said Madison. "You may
recall, Cleco Power signed an amendment to the Engineering,
Procurement and Construction contract with the contractor moving
the substantial completion date from September 30, 2009, to June
30, 2009. Nevertheless, there is still much to do with regard to
startup of the unit."
"As our Rodemacher Unit 3 project nears completion, we also are
working with the LPSC to implement our new rate plan proposal so
our new rates go into effect when the unit comes on-line," said
Madison. "The plan we're proposing allows us to recover the $1
billion capital cost of the project, cover our increased business
costs, and still lower customers' bills. A decision from the LPSC
is expected in May 2009."
"As to the 2007 long-term request for proposal (RFP) for up to
600 megawatts of additional capacity, our goal is to have an
agreement in hand by the end of the year or the first part of
2009," said Madison. "We will then file for approval with the LPSC.
This RFP will help us secure the additional capacity we will need
after Rodemacher Unit 3 begins commercial operations."
"Finally, Cleco Power and two of our neighboring utilities have
signed a memorandum of understanding to upgrade our interconnected
transmission systems in south Louisiana," said Madison. "The joint
project will greatly improve electric service reliability and is
anticipated to go before the LPSC for approval in the first quarter
of 2009."
Cleco management will discuss the company's third-quarter 2008
results during a conference call scheduled for 11 a.m. EST (10 a.m.
CST) Thursday, Nov. 6, 2008. The call will be broadcast live on the
Internet. A replay will be available for 12 months. Investors may
access the webcast through the company's Web site at www.cleco.com
by selecting "For Investors" and then "Cleco Corporation
Third-Quarter 2008 Earnings Conference Call."
Cleco Corp. is a regional energy company headquartered in
Pineville, La. It operates a regulated electric utility company
that serves 273,000 customers across Louisiana. Cleco also operates
a wholesale energy business with approximately 1,350 megawatts of
nameplate generating capacity. For more information about Cleco,
visit www.cleco.com.
Financial tables follow:
CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(UNAUDITED)
For the three months ended Sept. 30, 2008 2007
----------- -----------
Operating revenue
Electric operations $ 333,936 $ 300,862
Other operations 7,004 9,238
Affiliate revenue 2,735 1,591
----------- -----------
Operating revenue 343,675 311,691
Operating expenses
Fuel used for electric generation 93,717 97,863
Power purchased for utility customers 150,502 108,649
Other operations 24,822 23,454
Maintenance 10,754 10,205
Depreciation 19,283 19,739
Taxes other than income taxes 9,033 10,620
----------- -----------
Total operating expenses 308,111 270,530
----------- -----------
Operating income 35,564 41,161
Interest income 1,669 2,873
Allowance for other funds used during
construction 17,786 9,552
Equity income from investees 9,662 27,726
Other income 937 28,402
Other expense (2,276) (1,284)
Interest charges
Interest charges, including amortization of
debt expenses, premium and discount, net of
capitalized interest 20,619 13,752
Allowance for borrowed funds used during
construction (4,923) (3,444)
----------- -----------
Total interest charges 15,696 10,308
----------- -----------
Income before income taxes 47,646 98,122
Federal and state income tax expense 10,513 30,077
----------- -----------
Net income 37,133 68,045
Preferred dividends requirements, net of tax 12 12
----------- -----------
Net income applicable to common stock $ 37,121 $ 68,033
=========== ===========
Average shares of common stock outstanding
Basic 60,031,962 59,669,692
Diluted 60,291,616 59,947,916
Basic earnings per share
From continuing operations $ 0.62 $ 1.14
Net income applicable to common stock $ 0.62 $ 1.14
Diluted earnings per share
From continuing operations $ 0.62 $ 1.13
Net income applicable to common stock $ 0.62 $ 1.13
Cash dividends paid per share of common stock $ 0.225 $ 0.225
CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(UNAUDITED)
For the nine months ended Sept. 30, 2008 2007
----------- -----------
Operating revenue
Electric operations $ 803,397 $ 765,791
Other operations 29,826 26,478
Affiliate revenue 7,790 4,673
----------- -----------
Operating revenue 841,013 796,942
Operating expenses
Fuel used for electric generation 162,140 204,671
Power purchased for utility customers 392,245 308,388
Other operations 69,958 74,493
Maintenance 35,456 35,386
Depreciation 57,970 59,827
Taxes other than income taxes 27,320 30,286
Gain on sale of assets (99) -
----------- -----------
Total operating expenses 744,990 713,051
----------- -----------
Operating income 96,023 83,891
Interest income 4,544 8,030
Allowance for other funds used during
construction 46,462 21,715
Equity income from investees 2,723 97,608
Other income 1,094 28,644
Other expense (4,322) (2,536)
Interest charges
Interest charges, including amortization of
debt expenses, premium and discount, net of
capitalized interest 49,884 41,786
Allowance for borrowed funds used during
construction (14,526) (7,502)
----------- -----------
Total interest charges 35,358 34,284
----------- -----------
Income before income taxes 111,166 203,068
Federal and state income tax expense 22,573 63,187
----------- -----------
Net income 88,593 139,881
Preferred dividends requirements, net of tax 35 446
----------- -----------
Net income applicable to common stock $ 88,558 $ 139,435
=========== ===========
Average shares of common stock outstanding
Basic 59,975,190 58,914,141
Diluted 60,146,501 59,717,636
Basic earnings per share
From continuing operations $ 1.48 $ 2.35
Net income applicable to common stock $ 1.48 $ 2.35
Diluted earnings per share
From continuing operations $ 1.47 $ 2.34
Net income applicable to common stock $ 1.47 $ 2.34
Cash dividends paid per share of common stock $ 0.675 $ 0.675
CLECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(UNAUDITED)
At At
Sept. 30, December 31,
2008 2007
----------- -----------
Assets
Current Assets
Cash and cash equivalents $ 77,392 $ 129,013
Accounts receivable, net 100,990 87,983
Other current assets 228,779 188,520
----------- -----------
Total Current Assets 407,161 405,516
Property, plant and equipment, net 1,982,008 1,725,880
Equity investment in investees 257,613 258,101
Prepayments, deferred charges and other 449,039 317,126
----------- -----------
Total Assets $ 3,095,821 $ 2,706,623
----------- -----------
Liabilities
Current Liabilities
Long-term debt due within one year $ 63,546 $ 100,000
Accounts payable 166,143 129,946
Other current liabilities 133,763 127,521
----------- -----------
Total Current Liabilities 363,452 357,467
Deferred credits and other liabilities 677,915 568,684
Long-term debt, net 992,869 769,103
----------- -----------
Total Liabilities 2,034,236 1,695,254
----------- -----------
Shareholders' Equity
Preferred stock 1,029 1,029
Common shareholders' equity 1,069,176 1,018,731
Accumulated other comprehensive loss (8,620) (8,391)
----------- -----------
Total Shareholders' Equity 1,061,585 1,011,369
----------- -----------
Total Liabilities and Shareholders' Equity $ 3,095,821 $ 2,706,623
=========== ===========
Please note: In addition to historical financial information,
this news release contains forward-looking statements about future
results and circumstances, including, without limitation,
statements regarding the Rodemacher Unit 3 project and earnings
guidance. There are many risks and uncertainties with respect to
such forward-looking statements, including the weather and other
natural phenomena, state and federal legislative and regulatory
initiatives, the timing and extent of changes in commodity prices
and interest rates, the operating performance of Cleco Power's and
Cleco Midstream's facilities, the financial condition of the
company's tolling agreement counterparty, the performance of the
tolling agreement by such counterparty, construction and
operational startup of Rodemacher Unit 3, the continuation of the
existing rate plan, the outcome of Cleco Power's rate case, the
results of Cleco Power's long-term RFP, the implementation of the
south Louisiana joint transmission project, the impact of the
global financial and credit crisis, and other risks and
uncertainties more fully described in the company's latest Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q. Actual
results may differ materially from those indicated in such
forward-looking statements.
Investor Contacts: Cleco Corporation: Ryan Gunter (318) 484-7724
Rodney J. Hamilton (318) 484-7593 Media Contact: Cleco Corporation:
Fran Phoenix (318) 484-7467
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