Cleco Corp. (NYSE: CNL)
Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures
Diluted EPS
------------------------------
Three months Twelve months
ended Dec. 31, ended Dec. 31,
-------------- --------------
Subsidiary 2009 2008 2009 2008
------ ------ ------ ------
Cleco Power LLC $ 0.35 $ 0.33 $ 1.84 $ 1.89
Cleco Midstream Resources LLC(1) (0.21) (0.12) (0.29) (0.17)
Corporate and Other(1),(2) 0.01 (0.04) 0.18 0.03
------ ------ ------ ------
Operational earnings per share (Non-GAAP) 0.15 0.17 1.73 1.75
Adjustments(3) 0.06 0.05 0.03 (0.05)
------ ------ ------ ------
Earnings per share applicable to common
stock $ 0.21 $ 0.22 $ 1.76 $ 1.70
GAAP refers to United States generally accepted accounting principles
(1) Includes affilate interest charges/interest income on affiliate debt
related to Cleco's investment in Acadia ($0.01 per share and $0.02 per
share for the quarters ended December 31, 2009 and 2008, respectively;
$0.05 per share and $0.07 per share for the twelve months ended December
31, 2009 and 2008, respectively)
(2) Includes dividends on preferred stock
(3) Refer to "Operational Earnings Adjustments" on page 5 of this news
release
"Cleco delivered solid earnings in 2009 in the face of a tough
economic environment," said Mike Madison, president and chief
executive officer of Cleco Corporation. "2009 was a defining year
for Cleco with several key initiatives coming together. The
foundation of our growth strategy is now firmly in place.
"Rodemacher Unit 3, the largest generation project in our
history, achieved full commercial operation earlier this month.
This unit is expected to provide stable, low cost power to our
customers for decades to come. We also have received approval from
our regulators to transfer half of the Acadia plant to Cleco Power.
The addition of these two facilities to the Cleco Power generation
fleet creates the efficient diversified portfolio we hoped to
achieve," Madison said.
Recent Developments:
-- Rodemacher Unit 3 achieved full commercial operation on Feb. 12, 2010,
and our new rates that the Louisiana Public Service Commission (LPSC)
approved in October 2009 are now in effect.
-- On Feb. 22, 2010, the Cleco Evangeline LLC (Evangeline) tolling
agreement was terminated for consideration of $188.6 million.
-- Evangeline executed a new tolling agreement with the same counterparty
for the period Mar. 1, 2010, through Dec. 31, 2011.
-- The LPSC and the Federal Energy Regulatory Commission (FERC) approved
the transfer of 50 percent of the Acadia Power Station to Cleco Power.
This transaction closed on Feb. 23, 2010.
-- Entergy Louisiana's acquisition of the remaining 50 percent of the
Acadia Power Station is progressing as expected.
Dividend Guidance:
The Board of Directors of Cleco Corporation has approved a
dividend policy that will increase its quarterly dividend rate from
$0.225 per common share to $0.25 per common share beginning with
the dividend payable May 15, 2010. The 11 percent increase in the
dividend, subject to the board's official declaration of the
dividend in April, will result in an annual dividend rate of $1.00
per common share.
"With the completion of the Rodemacher Unit 3 construction and
the associated increase in Cleco's earnings power, we are now in a
position to increase the common dividend," Madison said. "This
dividend increase is a step toward achieving our longer term goal
of a dividend payout level in the range of 50 percent to 60 percent
of sustainable earnings. This action on the dividend underscores
management's and the board's confidence in the outlook for our
business and our focus on our shareholders' total return."
The declaration of dividend payments is at the board's sole
discretion and future dividend increases are subject to numerous
factors that ordinarily affect dividend policy, including the
result of Cleco's operations and its financial position as well as
general economic and business conditions.
Earnings Guidance:
Cleco is targeting consolidated 2010 earnings in the range of
$2.05 - $2.15 per share. The 2010 consolidated earnings estimate
includes normal weather and excludes one-time results of the
Evangeline transaction and the Acadia transactions.
Financial Highlights:
Fourth Quarter 2009
-- Cleco reports fourth quarter earnings applicable to common stock of
$12.8 million, or $0.21 per diluted share, compared to $13.5 million,
or $0.22 per diluted share, for the fourth quarter of 2008.
Year-to-date 2009
-- Cleco reports earnings applicable to common stock for 2009 of $106.3
million, or $1.76 per diluted share, compared to $102.1 million, or
$1.70 per diluted share for 2008.
Quarter-Over-Quarter Operational EPS Reconciliation:
$ 0.17 2008 Fourth-Quarter Diluted Operational EPS
0.02 Non-fuel revenue
0.02 Energy hedging, net
0.01 Income taxes
(0.09) Other expenses, net
0.06 AFUDC (allowance for funds used during construction)
-------
0.02 Cleco Power results
(0.09) Cleco Midstream results
0.05 Corporate results
-------
0.15 2009 Fourth-Quarter Diluted Operational EPS
0.06 Adjustments(1)
-------
$ 0.21 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 fourth
quarter of 2008 primarily due to higher residential usage and new
service to a wholesale customer that began in April 2009. 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
decrease.
-- Net realized and mark-to-market gains on energy hedging positions tied
to a fixed-price wholesale contract increased earnings by $0.02 per
share compared to the fourth quarter of 2008.
-- Income taxes increased earnings by $0.01 per share compared to the
fourth quarter of 2008 as a result of an increase in state flow-through
tax benefits.
-- Other expenses, net were $0.09 per share higher compared to the fourth
quarter of 2008 primarily due to higher generating station maintenance
work performed during 2009 and higher interest related to uncertain tax
positions.
-- AFUDC, primarily associated with the Rodemacher Unit 3 project,
contributed an additional $0.06 per share compared to the fourth
quarter of 2008. The equity portion of AFUDC associated with the
Rodemacher Unit 3 project was up $0.04 per share, while the debt
portion of AFUDC contributed $0.02 per share more than the fourth
quarter of 2008.
Cleco Midstream Resources
-- Evangeline was down $0.08 per share compared to the fourth quarter of
2008 primarily due to higher interest charges related to uncertain tax
positions, partially offset by lower maintenance expenses resulting
from the facility's fourth quarter 2008 planned outage.
-- Acadia was down $0.02 per share compared to the fourth quarter of 2008
primarily due to higher removal and retirement costs and higher turbine
and general maintenance expenses, partially offset by lower
depreciation expense resulting from certain Acadia assets meeting the
criteria of assets held for sale.
-- Lower other operating expenses increased Midstream's results by $0.01
per share compared to the fourth quarter of 2008.
Corporate and Other
-- Interest expense decreased $0.07 per share compared to the fourth
quarter of 2008 primarily due to lower interest related to uncertain
tax positions.
-- Higher other miscellaneous expenses, net decreased earnings by $0.02
per share.
Year-Over-Year Operational EPS Reconciliation:
$ 1.75 Twelve Months ended Dec. 31, 2008 Diluted Operational EPS
(0.01) Non-fuel revenue
(0.20) Interest expense, net
0.06 Income taxes
(0.11) Other expenses, net
0.21 AFUDC
-------
(0.05) Cleco Power results
(0.12) Cleco Midstream results
0.15 Corporate results
-------
1.73 Twelve Months ended Dec. 31, 2009 Diluted Operational EPS
0.03 Adjustments(1)
$ 1.76 Reported GAAP earnings per share
(1) Refer to "Operational Earnings Adjustments" on page 5 of this news
release
Cleco Power
-- Non-fuel revenue decreased $0.01 per share in the year-to-year
comparison. Miscellaneous revenue decreased $0.04 per share primarily
from lower transmission, customer fee and pole attachment revenue.
Partially offsetting this decrease was a $0.03 per share increase in
retail and wholesale customer sales mainly from a new wholesale
customer that began taking service in April 2009 and an increase in the
number of customers served. Partially offsetting these increases were
lower industrial sales from one of Cleco Power's large industrial
customers and a large industrial customer starting to cogenerate a
portion of its electricity requirements.
-- Interest expense, net increased $0.20 per share year over year
primarily due to the issuances of senior notes, Gulf Opportunity Zone
bonds, senior secured storm recovery bonds, and solid-waste disposal
bonds. Also reducing earnings was lower average investment balances
and lower investment earnings, lower recovery of interest costs
relating to lower deferred lignite mining costs, and higher interest
related to uncertain tax positions.
-- Income taxes increased earnings by $0.06 per share year over year
largely as a result of an increase in state flow-through tax benefits.
-- Other expenses, net increased $0.11 per share year over year primarily
due to higher generating station maintenance work, 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 $0.21 per share compared to 2008. 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 $0.07 per
share more than in 2008.
Cleco Midstream Resources
-- Evangeline was down $0.07 per share compared to the same period last
year primarily due to higher interest related to uncertain tax
positions, partially offset by lower maintenance expenses and the
absence in 2009 of replacement power purchases resulting from
Evangeline's 2008 unplanned outage.
-- Acadia was down $0.06 per share compared to the same period of 2008
primarily due to higher expenses from outages at the facility during
2009 and higher legal fees associated with the sale transactions.
These decreases were partially offset by net revenue from Acadia's
short-term tolling agreement with Cleco Power and lower depreciation
expense resulting from certain Acadia assets meeting the criteria of
assets held for sale.
-- Lower other operating expenses increased Midstream's results by $0.01
per share year over year.
Corporate and Other
-- Lower interest charges resulting from uncertain tax positions, the
repayment of $100 million of senior notes in May 2008, and the
favorable settlement of a franchise tax lawsuit increased results by
$0.15 per share compared to 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 Twelve months
ended Dec. 31, ended Dec. 31,
-------------- --------------
2009 2008 2009 2008
------- ------ ------- ------
Operational earnings per share $ 0.15 $ 0.17 $ 1.73 $ 1.75
Tax levelization 0.05 0.07 - -
Company/trust-owned life insurance policy
adjustments 0.01 (0.02) 0.03 (0.05)
------- ------ ------- ------
Reported GAAP earnings per share $ 0.21 $ 0.22 $ 1.76 $ 1.70
Reconciling adjustments from operational earnings per share to
GAAP earnings per share 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. During the fourth quarter of
2009, Cleco recorded a $0.05 per share benefit from the
levelization of its annual tax rate after taking into consideration
the effect of a late Rodemacher Unit 3 commercial operation date.
This $0.05 per share adjustment during the fourth quarter brings
Cleco's projected annual tax rate at the end of the third quarter
in line with its actual annual tax rate at the end of the year. In
2008, the levelization adjustment was an increase of $0.07 per
share for the fourth quarter related to various changes from the
third quarter 2008 projected annual tax rate. This incremental
adjustment is not related to the fourth 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 $0.01 per share for the fourth quarter of
2009 and decreased earnings by $0.02 per share for the fourth
quarter of 2008. The adjustments increased earnings by $0.03 per
share for 2009 and decreased earnings by $0.05 per share for 2008.
Cleco is unable to predict changes in the market values and amounts
of cash surrender values of these policies and management does not
consider these adjustments to be a component of operational
earnings.
Cleco management will discuss the company's annual and
fourth-quarter 2009 results during a conference call scheduled for
11 a.m. Eastern time (10 a.m. Central time) Friday, Feb. 26, 2010.
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 Fourth-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 277,000 customers across Louisiana. Cleco
also operates a wholesale energy business with 1,065 megawatts of
nameplate generating capacity, which includes Entergy Louisiana's
pending acquisition of Acadia Power Station Unit 2. For more
information about Cleco, visit www.cleco.com.
Financial tables follow:
For the three months ended Dec. 31,
------------------------------------------------
(Unaudited) (million kWh) (thousands)
------------------- --------------------------
2009 2008 Change 2009 2008 Change
----- ----- ------ -------- -------- -------
Electric Sales
Residential 823 757 8.7 % $ 35,186 $ 32,765 7.4 %
Commercial 602 576 4.5 % 23,582 22,968 2.7 %
Industrial 599 721 (16.9)% 12,911 13,980 (7.6)%
Other retail 34 33 3.0 % 1,426 1,383 3.1 %
Storm surcharge - - - 4,987 5,464 (8.7)%
----- ----- ------ -------- --------
Total retail 2,058 2,087 (1.4)% 78,092 76,560 2.0 %
Sales for resale 128 114 12.3 % 7,337 4,256 72.4 %
Unbilled (38) 4 * (1,275) 371 (443.7)%
----- ----- ------ -------- --------
Total retail and
wholesale customer
sales 2,148 2,205 (2.60)% $ 84,154 $ 81,187 3.7 %
*Not meaningful
For the twelve months ended Dec. 31,
-----------------------------------------------
(Unaudited) (million kWh) (thousands)
------------------ --------------------------
2009 2008 Change 2009 2008 Change
----- ----- ------ --------- --------- ------
Electric Sales
Residential 3,637 3,545 2.6 % $ 157,672 $ 154,001 2.4 %
Commercial 2,484 2,450 1.4 % 95,453 94,226 1.3 %
Industrial 2,232 2,898 (23.0)% 50,957 55,560 (8.3)%
Other retail 136 134 1.5 % 5,715 5,589 2.3 %
Storm surcharge - - - 19,661 21,105 (6.8)%
----- ----- --------- ---------
Total retail 8,489 9,027 (6.0)% 329,458 330,481 (0.3)%
Sales for resale 560 441 27.0 % 23,371 19,685 18.7 %
Unbilled 60 16 275.0 % 2,262 1,954 15.8 %
----- ----- --------- ---------
Total retail and
wholesale customer
sales 9,109 9,484 (4.00)% $ 355,091 $ 352,120 0.8 %
CLECO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the three months ended Dec. 31, 2009 2008
---------- ----------
Operating revenue
Electric operations $ 181,178 $ 229,573
Other operations 7,971 6,942
Affiliate revenue 2,947 2,670
---------- ----------
Total operating revenue 192,096 239,185
Operating expenses
Fuel used for electric generation 48,243 73,566
Power purchased for utility customers 52,697 79,016
Other operations 31,497 29,068
Maintenance 15,523 11,632
Depreciation 19,971 19,906
Taxes other than income taxes 7,135 7,151
Gain on sale of assets - (11)
---------- ----------
Total operating expenses 175,066 220,328
---------- ----------
Operating income 17,030 18,857
Interest income 461 872
Allowance for other funds used during construction 20,928 18,490
Equity loss from investees (18,134) (8,265)
Other income 827 168
Other expense (626) (3,648)
Interest charges
Interest charges, including amortization of
debt expenses, premium and discount, net of
capitalized interest 18,401 22,158
Allowance for borrowed funds used during
construction (7,016) (5,117)
---------- ----------
Total interest charges 11,385 17,041
---------- ----------
Income before income taxes 9,101 9,433
Federal and state income tax benefit (3,678) (4,116)
---------- ----------
Net income 12,779 13,549
Preferred dividends requirements, net of tax 12 12
---------- ----------
Net income applicable to common stock $ 12,767 $ 13,537
========== ==========
Average shares of common stock outstanding
Basic 60,254,541 60,039,943
Diluted 60,622,385 60,320,230
Basic earnings per share
Net income applicable to common stock $ 0.21 $ 0.22
Diluted earnings per share
Net income applicable to common stock $ 0.21 $ 0.22
Cash dividends paid per share of common stock $ 0.225 $ 0.225
CLECO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
For the twelve months ended Dec. 31, 2009 2008
----------- -----------
Operating revenue
Electric operations $ 808,646 $ 1,032,970
Other operations 33,651 36,768
Affiliate revenue 11,461 10,460
----------- -----------
Total operating revenue 853,758 1,080,198
Operating expenses
Fuel used for electric generation 261,456 235,706
Power purchased for utility customers 216,906 471,261
Other operations 109,060 99,028
Maintenance 51,300 47,089
Depreciation 78,204 77,876
Taxes other than income taxes 29,947 34,471
Loss (gain) on sales of assets 76 (110)
----------- -----------
Total operating expenses 746,949 965,321
----------- -----------
Operating income 106,809 114,877
Interest income 1,512 5,417
Allowance for other funds used during
construction 73,269 64,953
Equity loss from investees (17,423) (5,542)
Other income 5,581 1,263
Other expense (2,807) (7,970)
Interest charges
Interest charges, including amortization of
debt expenses, premium and discount, net of
capitalized interest 77,228 72,042
Allowance for borrowed funds used during
construction (26,173) (19,642)
----------- -----------
Total interest charges 51,055 52,400
----------- -----------
Income before income taxes 115,886 120,598
Federal and state income tax expense 9,579 18,457
----------- -----------
Net income 106,307 102,141
Preferred dividends requirements, net of tax 46 46
----------- -----------
Net income applicable to common stock $ 106,261 $ 102,095
=========== ===========
Average shares of common stock outstanding
Basic 60,187,894 59,990,229
Diluted 60,498,205 60,214,640
Basic earnings per share
Net income applicable to common stock $ 1.77 $ 1.70
Diluted earnings per share
Net income applicable to common stock $ 1.76 $ 1.70
Cash dividends paid per share of common stock $ 0.900 $ 0.900
CLECO CORPORATION
CONSOLIDATED BALANCE SHEETS
(Thousands)
At Dec. 31, At Dec. 31,
2009 2008
----------- -----------
Assets
Current Assets
Cash and cash equivalents $ 145,193 $ 97,483
Accounts receivable, net 70,557 78,314
Other current assets 278,175 290,582
----------- -----------
Total Current Assets 493,925 466,379
Property, plant and equipment, net 2,247,030 2,045,286
Equity investment in investees 251,617 249,144
Prepayments, deferred charges and other 702,275 580,395
----------- -----------
Total Assets $ 3,694,847 $ 3,341,204
----------- -----------
Liabilities
Current Liabilities
Long-term debt due within one year $ 11,478 $ 63,546
Accounts payable 114,541 138,300
Other current liabilities 115,785 158,987
----------- -----------
Total Current Liabilities 241,804 360,833
Deferred credits and other liabilities 1,016,672 812,687
Long-term debt, net 1,320,299 1,106,819
----------- -----------
Total Liabilities 2,578,775 2,280,339
----------- -----------
Shareholders' Equity
Preferred stock 1,029 1,029
Common shareholders' equity 1,126,334 1,069,669
Accumulated other comprehensive loss (11,291) (9,833)
----------- -----------
Total Shareholders' Equity 1,116,072 1,060,865
----------- -----------
Total Liabilities and Shareholders' Equity $ 3,694,847 $ 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 and completion
of the Acadia/Entergy Louisiana transaction. 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 costs of Rodemacher
Unit 3, the completion of the Acadiana Load Pocket project, the
completion of the Acadia/Entergy Louisiana transaction, the impact
of the global economic downturn, and other risks and uncertainties
more fully described in the company's latest Annual Report on Form
10-K. 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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