Cleco Corp. (NYSE: CNL)
Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures
Diluted EPS
Three months ended Nine months ended
Sept. 30, Sept. 30,
--------------------------------------
Subsidiary 2009 2008 2009 2008
--------- -------- -------- --------
Cleco Power LLC $ 0.66 $ 0.53 $ 1.47 $ 1.51
Cleco Midstream Resources LLC(1) 0.14 0.08 (0.08) (0.05)
Corporate and Other(1,2) 0.13 0.03 0.13 0.03
--------- -------- -------- --------
Operational earnings per share
(Non-GAAP) 0.93 0.64 1.52 1.49
Adjustments(3) 0.06 (0.02) 0.03 (0.02)
--------- -------- -------- --------
Earnings per share applicable to
common stock $ 0.99 $ 0.62 $ 1.55 $ 1.47
GAAP refers to United States generally accepted accounting principles
(1) Includes affiliate interest charges/interest income on affiliate debt
related to Cleco's investment in Acadia ($0.01 per share for the
quarters ended September 30, 2009 and 2008; $0.04 per share and $0.05
per share for the nine months ended September 30, 2009 and 2008,
respectively)
(2) Includes dividends on preferred stock
(3) Refer to "Operational Earnings Adjustments" on page 5 of this news
release
"The numbers speak for themselves. We had a strong third
quarter," said Mike Madison, president and chief executive officer
of Cleco Corp. "In just the past three weeks, we've seen results
from the execution of our strategy which will bring lasting
shareholder value. We've received approval to implement our new
retail rate plan, a plan that is expected to increase the earnings
of Cleco while at the same time decreasing bills for our retail
customers. That plan will go into effect when Rodemacher Unit 3
begins commercial operation later this year. However, we didn't
stop there. Last week we announced that Acadia Power Partners
reached an agreement with Entergy Louisiana to sell them the
remaining 50 percent of the Acadia plant and further reduce our
risk to the merchant power market. Once again, we are doing what we
said we would do."
Recent Developments:
-- The Louisiana Public Service Commission (LPSC) approved Cleco Power's
new retail rate plan on October 14, 2009.
-- Construction of Rodemacher Unit 3 is effectively complete; tuning and
testing are in progress.
-- Definitive agreements have been executed for Entergy Louisiana to
purchase the remaining 50 percent of the Acadia power station; the
completion of this transaction is subject to regulatory approval.
-- The LPSC approved the Acadia/Cleco Power bridge tolling agreement
covering 50 percent of the Acadia power station on October 14, 2009.
-- Construction has begun on the Acadiana Load Pocket transmission
project.
Financial Highlights:
Third Quarter 2009
-- Reports third quarter earnings applicable to common stock of $59.8
million, or $0.99 per share, compared to $37.1 million, or $0.62 per share
for the third quarter of 2008.
Year-to-date 2009
-- Reports earnings applicable to common stock for the first nine months
of 2009 of $93.5 million, or $1.55 per share, compared to $88.6 million, or
$1.47 per share for the first nine months of last year.
Earnings Guidance
-- Reaffirming 2009 earnings target in the range of $1.62 to $1.72 per
share. Those targets assume normal weather for the remainder of the year
and the continuation of the current rate plan through the in-service date
of Rodemacher Unit 3, which is expected in late December 2009.
-- Midstream's earnings estimate assumes continued performance by
Evangeline's tolling counterparty and is based on assumptions about
Acadia's plant operations and meeting the obligations under third-party
forward sales agreements.
Quarter-Over-Quarter Operational EPS Reconciliation:
$ 0.64 2008 Third-Quarter Diluted Operational EPS
0.02 Non-fuel revenue
0.05 Energy hedging, net
0.10 Income taxes
(0.05) Other expenses, net
0.01 AFUDC (allowance for funds used during construction)
---------
0.13 Cleco Power results
0.06 Cleco Midstream results
0.10 Corporate results
---------
0.93 2009 Third-Quarter Diluted Operational EPS
0.06 Adjustments(1)
---------
$ 0.99 Reported GAAP earnings per share
(1) Refer to "Operational Earnings Adjustments" on page 5 of this news
release
Cleco Power
-- Non-fuel revenue increased $0.02 per share compared to the third
quarter of 2008 primarily due to higher residential usage per customer, new
service to a wholesale customer that began in April 2009, and the absence
of hurricane-related outages. Partially offsetting these increases were
lower sales to industrial customers which was largely the result of
decreased production at one of Cleco Power's largest industrial customers
and the start of a large industrial customer cogenerating a portion of its
electricity requirements. Lower miscellaneous revenue also contributed to
the decreases.
-- Net realized and mark-to-market gains on energy hedging positions tied
to a fixed-price wholesale contract increased earnings by $0.05 per share
compared to the third quarter of 2008.
-- Income taxes increased earnings by $0.10 per share compared to the
third quarter of 2008 as a result of an additional state tax benefit from a
change in accounting method received on the 2008 tax returns which were
filed in 2009, and a decrease in the annual projected effective tax rate
mainly due to an increase in equity AFUDC as a percent of total income.
-- Other expenses were $0.05 per share higher compared to the third
quarter of 2008 primarily due to higher general liability expense, higher
employee benefit costs and administrative expenses, and higher capacity
payments and other net miscellaneous expenses.
-- The debt portion of AFUDC, primarily associated with the Rodemacher
Unit 3 project, contributed an additional $0.01 per share as compared to
the third quarter of 2008.
Cleco Midstream Resources
-- Evangeline was up $0.05 per share compared to the third quarter of
2008 primarily due to lower maintenance expenses and the absence of
replacement power purchases.
-- Acadia was up $0.01 per share compared to the third quarter of 2008
primarily due to higher net revenue from Acadia's short-term tolling
agreement with Cleco Power and lower depreciation expense.
Corporate and Other
-- Income taxes increased earnings by $0.05 per share compared to the
third quarter of 2008 due to a decrease in the annual projected effective
consolidated tax rate mainly due to an increase in equity AFUDC as a
percent of total income.
-- Interest expense decreased $0.04 per share compared to the third
quarter of 2008 primarily due to the favorable settlement of a franchise
tax lawsuit.
-- Lower other miscellaneous expenses, net increased earnings by $0.01
per share.
Year-Over-Year Operational EPS Reconciliation:
$ 1.49 Nine Months ended Sept. 30, 2008 Diluted Operational EPS
(0.03) Non-fuel revenue
(0.02) Energy hedging, net
(0.14) Interest expense
0.08 Income taxes
(0.08) Other expenses, net
0.15 AFUDC
---------
(0.04) Cleco Power results
(0.03) Cleco Midstream results
0.10 Corporate results
---------
1.52 Nine Months ended Sept. 30, 2009 Diluted Operational EPS
0.03 Adjustments(1)
---------
$ 1.55 Reported GAAP earnings per share
(1) Refer to "Operational Earnings Adjustments" on page 5 of this news
release
Cleco Power
-- Although industrial sales were lower, overall base revenue was
essentially the same in the year-to-year comparison. Lower industrial
sales were the result of decreased production at one of Cleco Power's large
industrial customers and the start of a large industrial customer
cogenerating a portion of its electricity requirements. Heating-degree
days for the period were 9 percent below 2008 levels while cooling-degree
days were 2 percent above 2008 levels. Contributing to the $0.03 per share
decrease in non-fuel revenue for the year was lower miscellaneous revenue.
-- Mark-to-market and realized losses on energy hedging positions tied to
a fixed-price wholesale contract increased $0.02 per share year over year.
-- Interest expense increased $0.14 per share compared to the first nine
months of 2008 primarily due to the issuances of senior notes, Gulf
Opportunity Zone bonds, senior secured storm recovery bonds, and solid-
waste disposal bonds.
-- Income taxes increased earnings by $0.08 per share year over year as a
result of an additional state tax benefit from a change in accounting
method received on the 2008 tax returns which were filed in 2009, and a
decrease in the annual projected effective tax rate mainly due to an
increase in equity AFUDC as a percent of total income.
-- Other expenses, net increased $0.08 per share year over year primarily
due to higher general liability expense, higher employee benefit costs and
administrative expenses, and higher other net miscellaneous expenses.
-- AFUDC, primarily associated with the Rodemacher Unit 3 project,
contributed an additional $0.15 per share as compared to the first nine
months of 2008. The equity portion of AFUDC associated with the Rodemacher
Unit 3 project was up $0.10 per share, while the debt portion of AFUDC
contributed $0.05 per share more than in the first nine months of 2008.
Cleco Midstream Resources
-- Evangeline was up $0.01 per share compared to the same period last
year primarily due to the absence of replacement power purchases resulting
from Evangeline's 2008 unplanned outage and lower gas tax expenses and
interest charges. Partially offsetting these increases were higher
maintenance expenses resulting from the outage at the facility during 2009.
-- Acadia was down $0.03 per share compared to the same period of 2008.
Of that, $0.05 per share was due to higher expenses from an unplanned
outage at the facility and $0.01 per share was due to higher legal fees.
These decreases were partially offset by $0.02 per share of net revenue
from Acadia's short-term tolling agreement with Cleco Power and $0.01 per
share of lower depreciation expense.
-- Other miscellaneous items reduced Midstream's results by $0.01 per
share year over year.
Corporate and Other
-- Lower interest charges resulting from the repayment of $100 million of
senior notes in May 2008 and the favorable settlement of a franchise tax
lawsuit increased results by $0.07 per share and lower other net expenses
increased results by $0.03 per share compared to the first nine months of
last year.
Operational Earnings Adjustments:
Cleco's management uses operational earnings per share to
evaluate the operations of Cleco and to establish goals for
management and employees. Management believes this presentation is
appropriate and enables investors to more accurately compare
Cleco's operational financial performance over the periods
presented. Operational earnings as presented here may not be
comparable to similarly titled measures used by other companies.
The following table provides a reconciliation of operational
earnings per share to reported GAAP earnings per share.
Reconciliation of Operational EPS to Reported GAAP EPS
Three months ended Nine months ended
Sept. 30, Sept. 30,
--------------------------------------
2009 2008 2009 2008
--------- -------- --------- --------
Operational earnings per share $ 0.93 $ 0.64 $ 1.52 $ 1.49
Tax levelization 0.04 (0.01) - -
Company/trust-owned life
insurance policy adjustments 0.02 (0.01) 0.03 (0.02)
--------- -------- --------- --------
Reported GAAP earnings per share $ 0.99 $ 0.62 $ 1.55 $ 1.47
Reconciling adjustments from operational earnings to GAAP
earnings are as follows:
Tax Levelization
Generally accepted accounting principles require companies to
apply an effective tax rate to interim periods that is consistent
with a company's estimated annual effective tax rate. As a result,
quarterly, Cleco projects the effective tax rate for the year and
then raises or lowers the tax expense recorded in that quarter to
reflect the projected annual tax rate. The resulting incremental
adjustment to bring the taxes in line with the expected annual tax
rate increased earnings by $0.04 per share for the third quarter of
2009 and decreased earnings by $0.01 per share for the third
quarter of 2008. While this adjustment has no impact on Cleco's
annual earnings, the interim impact is greater in the current year
as the projected increased income from equity AFUDC for Rodemacher
Unit 3, as a percentage of total book income, has a significant
impact on Cleco's projected annual effective tax rate. This
incremental adjustment is not related to the third quarter
operational results because it reflects the effect of the change in
tax rates on operational earnings for the entire year.
COLI/TOLI Adjustments
Cleco has both Company-Owned Life Insurance and Trust-Owned Life
Insurance (COLI/TOLI) policies covering certain members of
management. These policies are payable to Cleco upon death of the
insured. COLI/TOLI assets are acquired at fair value, and adjusted
for changes in market value and any payments/redemptions of cash
surrender values. The resulting adjustments for these items
increased earnings by $0.02 per share for the third quarter of 2009
and decreased earnings by $0.01 per share for the third quarter of
2008. The adjustments increased earnings by $0.03 per share for the
first nine months of 2009 and decreased earnings by $0.02 per share
for the same period last year. Cleco is unable to predict changes
in the market values and amounts of cash surrender values of these
policies. As a result, management does not consider these
adjustments to be a component of operational earnings.
----------------------------------------------------------------------
Cleco management will discuss the company's third-quarter 2009
results during a conference call scheduled for 4:30 p.m. Eastern
time (3:30 p.m. Central time) Monday, Nov. 2, 2009. The call will
be webcast 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 2009 Earnings Conference Call."
Cleco Corp. is a regional energy company headquartered in
Pineville, La. It operates a regulated electric utility company
that serves approximately 276,000 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:
For the three months ended Sept. 30,
--------------------------------------------------------
(million kWh) (thousands)
-------------------------- --------------------------
2009 2008 Change 2009 2008 Change
-------- -------- ------ -------- -------- ------
Electric Sales
Residential 1,207 1,144 5.5 % $ 53,970 $ 51,490 4.8 %
Commercial 743 721 3.1 % 25,802 25,195 2.4 %
Industrial 577 762 (24.3)% 12,912 14,585 (11.5)%
Other retail 36 36 - 1,491 1,469 1.5 %
Storm surcharge - - - 5,054 5,455 (7.4)%
-------- -------- -------- --------
Total retail 2,563 2,663 (3.8)% 99,229 98,194 1.1 %
Sales for
resale 199 153 30.1 % 7,435 5,759 29.1 %
Unbilled (95) (134) 29.1 % (3,466) (4,863) 28.7 %
-------- -------- -------- --------
Total retail
and wholesale
customer sales 2,667 2,682 (0.6)% $103,198 $ 99,090 4.1 %
For the nine months ended Sept. 30,
--------------------------------------------------------
(million kWh) (thousands)
-------------------------- --------------------------
2009 2008 Change 2009 2008 Change
-------- -------- ------ -------- -------- ------
Electric Sales
Residential 2,814 2,789 0.9 % $122,486 $121,236 1.0 %
Commercial 1,882 1,874 0.4 % 71,871 71,258 0.9 %
Industrial 1,633 2,177 (25.0)% 38,046 41,580 (8.5)%
Other retail 103 101 2.0 % 4,288 4,205 2.0 %
Storm surcharge - - - 14,674 15,641 (6.2)%
-------- -------- ------ -------- -------- ------
Total retail 6,432 6,941 (7.3)% 251,365 253,920 (1.0)%
Sales for
resale 432 327 32.1 % 16,034 15,430 3.9 %
Unbilled 98 12 716.7 % 3,538 1,583 123.5 %
-------- -------- ------ -------- -------- ------
Total retail
and wholesale
customer sales 6,962 7,280 (4.4)% $270,937 $270,933 -
CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(UNAUDITED)
For the three months ended Sept. 30, 2009 2008
---------- ----------
Operating revenue
Electric operations $ 228,952 $ 333,936
Other operations 9,859 7,004
Affiliate revenue 2,689 2,735
---------- ----------
Total operating revenue 241,500 343,675
Operating expenses
Fuel used for electric generation 74,585 93,717
Power purchased for utility customers 61,943 150,502
Other operations 26,667 24,822
Maintenance 10,452 10,754
Depreciation 19,620 19,283
Taxes other than income taxes 7,479 9,033
Loss on sale of assets 77 -
---------- ----------
Total operating expenses 200,823 308,111
---------- ----------
Operating income 40,677 35,564
Interest income 369 1,669
Allowance for other funds used during construction 17,813 17,786
Equity income from investees 15,587 9,662
Other income 2,079 937
Other expense (849) (2,276)
Interest charges
Interest charges, including amortization of debt
expenses, premium and discount, net of
capitalized interest 17,361 20,619
Allowance for borrowed funds used during
construction (6,523) (4,923)
---------- ----------
Total interest charges 10,838 15,696
---------- ----------
Income before income taxes 64,838 47,646
Federal and state income tax expense 4,983 10,513
---------- ----------
Net income 59,855 37,133
Preferred dividends requirements, net of tax 12 12
---------- ----------
Net income applicable to common stock $ 59,843 $ 37,121
========== ==========
Average shares of common stock outstanding
Basic 60,234,243 60,031,962
Diluted 60,556,768 60,291,616
Basic earnings per share
From continuing operations $ 0.99 $ 0.62
Net income applicable to common stock $ 0.99 $ 0.62
Diluted earnings per share
From continuing operations $ 0.99 $ 0.62
Net income applicable to common stock $ 0.99 $ 0.62
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, 2009 2008
---------- ----------
Operating revenue
Electric operations $ 627,469 $ 803,397
Other operations 25,680 29,826
Affiliate revenue 8,513 7,790
---------- ----------
Total operating revenue 661,662 841,013
Operating expenses
Fuel used for electric generation 213,213 162,140
Power purchased for utility customers 164,209 392,245
Other operations 77,557 69,958
Maintenance 35,777 35,456
Depreciation 58,233 57,970
Taxes other than income taxes 22,812 27,320
Loss (gain) on sales of assets 77 (99)
---------- ----------
Total operating expenses 571,878 744,990
---------- ----------
Operating income 89,784 96,023
Interest income 1,051 4,544
Allowance for other funds used during construction 52,341 46,462
Equity income from investees 710 2,723
Other income 4,753 1,094
Other expense (2,181) (4,322)
Interest charges
Interest charges, including amortization of debt
expenses, premium and discount, net of
capitalized interest 58,827 49,884
Allowance for borrowed funds used during
construction (19,157) (14,526)
---------- ----------
Total interest charges 39,670 35,358
---------- ----------
Income before income taxes 106,788 111,166
Federal and state income tax expense 13,258 22,573
---------- ----------
Net income 93,530 88,593
Preferred dividends requirements, net of tax 35 35
---------- ----------
Net income applicable to common stock $ 93,495 $ 88,558
========== ==========
Average shares of common stock outstanding
Basic 60,167,644 59,975,190
Diluted 60,390,454 60,146,501
Basic earnings per share 1.48
From continuing operations $ 1.55 $ 1.48
Net income applicable to common stock $ 1.55 $ 1.48
Diluted earnings per share
From continuing operations $ 1.55 $ 1.47
Net income applicable to common stock $ 1.55 $ 1.47
Cash dividends paid per share of common stock $ 0.675 $ 0.675
CLECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(UNAUDITED)
At Sept. At Dec.
30, 2009 31, 2008
---------- ----------
Assets
Current Assets
Cash and cash equivalents $ 49,283 $ 97,483
Accounts receivable, net 78,963 78,314
Other current assets 266,636 290,582
---------- ----------
Total Current Assets 394,882 466,379
Property, plant and equipment, net 2,208,553 2,045,286
Equity investment in investees 262,472 249,144
Prepayments, deferred charges and other 663,311 580,395
---------- ----------
Total Assets $3,529,218 $3,341,204
---------- ----------
Liabilities
Current Liabilities
Long-term debt due within one year $ 11,478 $ 63,546
Accounts payable 81,969 138,300
Other current liabilities 166,223 158,987
---------- ----------
Total Current Liabilities 259,670 360,833
Deferred credits and other liabilities 914,214 812,687
Long-term debt, net 1,238,238 1,106,819
---------- ----------
Total Liabilities 2,412,122 2,280,339
---------- ----------
Shareholders' Equity
Preferred stock 1,029 1,029
Common shareholders' equity 1,126,531 1,069,669
Accumulated other comprehensive loss (10,464) (9,833)
---------- ----------
Total Shareholders' Equity 1,117,096 1,060,865
---------- ----------
Total Liabilities and Shareholders' Equity $3,529,218 $3,341,204
========== ==========
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. 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 results of Cleco Power's 2007
long-term RFP, the completion of the Acadiana Load Pocket project,
the completion of the Acadia/Cleco Power and Acadia/Entergy
Louisiana transactions, the impact of the global financial 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: R. Russell Davis (318) 484-7501 Rodney J.
Hamilton (318) 484-7593 Media Contact: Fran Phoenix (318)
484-7467
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