Cleco Corp. (NYSE: CNL)
Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures
Diluted EPS
------------------
Three months ended
March 31
------------------
Subsidiary 2010 2009
-------- --------
Cleco Power LLC $ 0.53 $ 0.25
Cleco Midstream Resources LLC(1) (excluding 2010 gains
from the Evangeline and Acadia transactions) (0.03) (0.14)
Corporate and Other(1,2) 0.05 -
-------- --------
Operational earnings per share (Non-GAAP) 0.55 0.11
Adjustments(3) 1.93 -
-------- --------
Earnings per share applicable to common stock $ 2.48 $ 0.11
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 of $0.01 per share for the
quarter ended March 31, 2009
(2) Includes dividends on preferred stock
(3) Refer to "Operational Earnings Adjustments" in this news release
"We are very pleased with our first quarter results. They
reflect not only a colder than normal winter, but our success in
completing a number of strategic initiatives," said Mike Madison,
president and chief executive officer of Cleco Corp. "Cleco Power
had sales increases of over 17 percent from last year and set an
all-time peak of 2,310 megawatts on January 11, 2010. Cleco Power
also brought Rodemacher Unit 3 into commercial operation and
implemented our new retail rates. Cleco Midstream saw improved
operational performance and recorded gains from the restructuring
of the Evangeline tolling agreement and the sale of Acadia Unit
1."
Recent Developments:
On April 30, 2010, Cleco's Board of Directors approved, subject
to regulatory approval, a $73 million advanced metering technology
project for the installation of "smart electric meters" that enable
two-way communication capabilities between a home or business and a
utility company. Funding for the project will include a $20 million
grant from the Department of Energy. The project will still require
Louisiana Public Service Commission approval.
Dividend:
On April 30, 2010, Cleco's Board of Directors officially
declared a dividend payment of $0.25 per share of common stock
payable on May 15, 2010. In January 2010, the Board approved a
dividend policy which included an 11 percent increase in quarterly
common stock dividends from $0.225 per share to $0.25 per share.
The 11 percent increase will result in an annual dividend rate of
$1.00 per share of Cleco common stock, subject to the Board's
official declaration of each future dividend.
Earnings Guidance:
Cleco is reaffirming the consolidated 2010 earnings target 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:
First Quarter 2010
-- Cleco reports first-quarter earnings applicable to common stock of
$150.0 million, or $2.48 per diluted share, compared to $6.6 million,
or $0.11 per diluted share, for the first quarter of 2009.
Quarter-Over-Quarter Operational EPS Reconciliation:
$ 0.11 2009 First-Quarter Diluted Operational EPS
0.45 Non-fuel revenue
0.01 Energy hedging, net
0.06 Income taxes
(0.09) Other expenses, net
(0.15) AFUDC (allowance for funds used during construction)
---------
$ 0.28 Cleco Power results
0.11 Cleco Midstream results
0.05 Corporate results
---------
$ 0.55 2010 First-Quarter Diluted Operational EPS
1.93 Adjustments(1)
---------
$ 2.48 Reported GAAP diluted earnings per share
(1) Refer to "Operational Earnings Adjustments" in this news release
Cleco Power
-- Non-fuel revenue increased $0.45 per share compared to the first quarter
of 2009 primarily due to higher electric sales to retail and wholesale
customers. The impact of the base rate increase that became effective
upon the commercial operation of Rodemacher Unit 3 was approximately
$0.27 per share while the impact from colder winter weather and new
service to a wholesale customer was approximately $0.16 per share.
Also contributing to the increase was $0.02 per share related to the
receipt of mineral lease bonus payments.
-- Lower realized and mark-to-market losses on energy hedging positions
tied to a fixed-price wholesale contract increased earnings by $0.01
per share compared to the first quarter of 2009.
-- Income taxes increased earnings by $0.06 per share compared to the first
quarter of 2009 as a result of a $0.09 per share increase in state
flow-through tax benefits, which included a $0.05 per share adjustment
related to the implementation of the new rates. Partially offsetting
this was a $0.03 per share adjustment for Medicare Part D resulting
from the recently enacted health care legislation.
-- Other expenses, net were $0.09 per share higher compared to the first
quarter of 2009 primarily due to higher depreciation expense resulting
from Rodemacher Unit 3 being placed in service and the acquisition of
Acadia Unit 1 along with higher operating and maintenance expenses.
-- AFUDC, primarily associated with the completion of the Rodemacher Unit 3
project, reduced earnings $0.15 per share compared to the first quarter
of 2009. The equity portion of AFUDC associated with the Rodemacher
Unit 3 project was down $0.12 per share, while the debt portion of AFUDC
was down $0.03 per share compared to the first quarter of 2009.
Cleco Midstream Resources
-- Evangeline was up $0.07 per share compared to the first quarter of 2009
primarily due to lower maintenance expenses resulting from the absence
of a 2009 outage and lower interest charges. Partially offsetting this
increase was lower tolling revenue resulting from the Evangeline
restructuring and the pricing of the new tolling agreement.
-- Acadia was up $0.04 per share compared to the first quarter of 2009
primarily due to lower depreciation expense resulting from certain
Acadia assets meeting the criteria of assets held for sale and higher
tolling revenue from the interim tolling agreement with Cleco Power.
For a discussion of other transactions affecting the results of
Cleco Midstream, please refer to "Operational Earnings Adjustments
-- Gains from Evangeline and Acadia Transactions" below.
Corporate and Other
-- Income taxes increased earnings by $0.09 per share compared to the first
quarter of 2009 primarily due to the adjustment to record tax expense
at the projected annual effective consolidated tax rate. The
consolidated projected annual effective tax rate is 35.6% for 2010.
In the first quarter of 2010, Cleco had a disproportionate level of
earnings at Midstream arising primarily from the Evangeline and Acadia
transactions which were taxed at higher rates. Accordingly, a favorable
adjustment of $0.07 per share was recorded in the first quarter of 2010
at the corporate level to bring the consolidated effective tax rate back
to 35.6%. In the first quarter of 2009, a corresponding unfavorable
adjustment of $0.02 per share was recorded.
-- Higher other miscellaneous expenses decreased earnings by $0.04 per
share compared to the first quarter of 2009 primarily due to the
absence of adjustments related to amended franchise tax returns filed in
2009.
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
Diluted EPS
-----------------
Three months
ended
March 31
-----------------
2010 2009
-------- --------
Operational earnings per share $ 0.55 $ 0.11
Company/trust-owned life insurance policy adjustments 0.01 -
Gain from Evangeline transaction 1.51 -
Gain from Acadia transaction 0.41 -
-------- --------
Reported GAAP earnings per share $ 2.48 $ 0.11
Reconciling adjustments from operational earnings per share to
GAAP earnings per share are as follows:
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 first quarter of 2010
and had no impact for the first quarter of 2009. 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.
Gains from Evangeline and Acadia Transactions
On Feb. 22, 2010, the existing Evangeline tolling agreement was
terminated and a new tolling agreement was executed with the same
counterparty and resulted in the recognition of a gain of $1.51 per
share for the first quarter of 2010. On Feb. 23, 2010, Cleco
Power's acquisition of one of Acadia's two 580-megawatt units, the
related materials and supplies, and half of its common facilities
was completed and also resulted in the recognition of a gain of
$0.41 per share for the first quarter of 2010. Because these are
one-time gains, management does not consider these adjustments to
be components of operational earnings.
Cleco management will discuss the company's first-quarter 2010
results during a conference call scheduled for 11 a.m. Eastern time
(10 a.m. Central time) Thursday, May 6, 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 First-Quarter 2010 Earnings Conference Call."
Cleco Corp. is a regional energy company headquartered in
Pineville, La. It operates a regulated electric utility company,
Cleco Power LLC, which serves about 277,000 retail customers across
Louisiana. Cleco also operates a wholesale energy business, Cleco
Midstream Resources LLC, which includes the pending sale of Acadia
Power Station Unit 2. This year marks the 75th anniversary of Cleco
Power serving Louisiana customers. For more information about
Cleco, visit www.cleco.com.
For the three months ended March 31
---------------------------------------------------------
(Unaudited) (million kWh) (thousands)
---------------------- ---------------------------------
2010 2009 Change 2010 2009 Change
----- ----- ------- ----------- ---------- -------
Electric Sales
Residential 1,040 816 27.5 % $ 46,498 $ 32,195 44.4 %
Commercial 591 542 9.0 % 29,563 22,950 28.8 %
Industrial 544 587 (7.3)% 14,160 12,820 10.5 %
Other retail 35 33 6.1 % 1,757 1,387 26.7 %
Surcharge - - - 4,195 5,214 (19.5)%
Other - - - (975) - -
----- ----- ----------- ----------
Total retail 2,210 1,978 11.7 % 95,198 74,566 27.7 %
Sales for
resale 190 89 113.5 % 8,783 3,111 182.3 %
Unbilled (124) (132) 6.1 % 10,967 (4,859) 325.7 %
----- ----- ----------- ----------
Total retail and
wholesale
customer sales 2,276 1,935 17.6 % $ 114,948 $ 72,818 57.9 %
CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the three months ended March 31 2010 2009
---------- ----------
Operating revenue
Electric operations $ 252,798 $ 202,865
Tolling operations 7,464 -
Other operations 10,876 7,109
Affiliate revenue 1,149 2,962
---------- ----------
Total operating revenue 272,287 212,936
Operating expenses
Fuel used for electric generation 94,582 88,303
Power purchased for utility customers 48,219 45,718
Other operations 26,654 24,951
Maintenance 13,837 10,559
Depreciation 24,253 19,134
Taxes other than income taxes 8,802 7,033
Loss on sales of assets 39 -
---------- ----------
Total operating expenses 216,386 195,698
---------- ----------
Operating income 55,901 17,238
Interest income 162 411
Allowance for other funds used during construction 9,805 16,991
Equity income (loss) from investees 37,847 (11,751)
Gain on toll settlement 148,402 -
Other income 1,079 1,285
Other expense (925) (1,095)
Interest charges
Interest charges, including amortization of
debt expenses, premium and discount, net of
capitalized interest 26,007 21,316
Allowance for borrowed funds used during
construction (3,572) (6,213)
---------- ----------
Total interest charges 22,435 15,103
---------- ----------
Income before income taxes 229,836 7,976
Federal and state income tax expense 79,866 1,326
---------- ----------
Net income 149,970 6,650
Preferred dividends requirements, net of tax 12 12
---------- ----------
Net income applicable to common stock $ 149,958 $ 6,638
========== ==========
Average shares of common stock outstanding
Basic 60,326,020 60,097,929
Diluted 60,581,060 60,366,170
Basic earnings per share
Net income applicable to common stock $ 2.49 $ 0.11
Diluted earnings per share
Net income applicable to common stock $ 2.48 $ 0.11
Cash dividends paid per share of common stock $ 0.225 $ 0.225
CLECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)
At March 31, At Dec. 31,
2010 2009
----------- -----------
Assets
Current Assets
Cash and cash equivalents $ 92,222 $ 145,193
Accounts receivable, net 79,814 70,557
Other current assets 257,532 278,175
----------- -----------
Total Current Assets 429,568 493,925
Property, plant and equipment, net 2,742,051 2,247,030
Equity investment in investees 83,030 251,617
Prepayments, deferred charges and other 683,580 702,275
----------- -----------
Total Assets $ 3,938,229 $ 3,694,847
----------- -----------
Liabilities
Current Liabilities
Short-term debt $ 150,000 $ -
Long-term debt due within one year 11,869 11,478
Accounts payable 61,937 114,541
Other current liabilities 216,009 115,785
----------- -----------
Total Current Liabilities 439,815 241,804
Deferred credits 990,542 1,016,672
Long-term debt, net 1,253,695 1,320,299
----------- -----------
Total Liabilities 2,684,052 2,578,775
----------- -----------
Shareholders' Equity
Preferred stock 1,029 1,029
Common shareholders' equity 1,264,523 1,126,334
Accumulated other comprehensive loss (11,375) (11,291)
----------- -----------
Total Shareholders' Equity 1,254,177 1,116,072
----------- -----------
Total Liabilities and Shareholders' Equity $ 3,938,229 $ 3,694,847
=========== ===========
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 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, 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 and Quarterly Report on
Form 10-Q. Actual results may differ materially from those
indicated in such forward-looking statements.
Analyst Contact: Cleco Corporation Russell Davis (318) 484-7501
Email Contact Investor Contact: Cleco Corporation Rodney Hamilton
(318) 484-7593 Email Contact Media Contact: Cleco Corporation Fran
Phoenix (318) 484-7467
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