Cleco Corp. (NYSE: CNL)
- Second-quarter GAAP earnings of $0.58 per diluted share
- First six months of 2010 GAAP earnings of $3.06 per diluted
share
- Revised consolidated 2010 GAAP earnings target (excluding the
one-time results of the Evangeline transaction and each of the
Acadia transactions) to $2.10 - $2.20 per share
Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures
Diluted Earnings Per
Share
------------------------
Three months ended
June 30
------------------------
Subsidiary 2010 2009
----------- -----------
Cleco Power LLC $ 0.64 $ 0.50
Cleco Midstream Resources LLC(1) (0.03) (0.08)
Corporate and Other(1,2) (0.05) 0.01
----------- -----------
Operational earnings per share (Non-GAAP) 0.56 0.43
Adjustments(3) 0.02 0.02
----------- -----------
Earnings per share applicable to common stock $ 0.58 $ 0.45
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 June 30, 2009
(2) Includes dividends on preferred stock
(3) Refer to "Operational Earnings Adjustments" in this news release
Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures
Diluted Earnings Per
Share
------------------------
SIx months ended June 30
------------------------
Subsidiary 2010 2009
----------- -----------
Cleco Power LLC $ 1.18 $ 0.75
Cleco Midstream Resources LLC(1) (excluding
2010 gains from the Evangeline and Acadia
transactions) (0.07) (0.22)
Corporate and Other(1,2) 0.03 0.02
----------- -----------
Operational earnings per share (Non-GAAP) 1.14 0.55
Adjustments(3) 1.92 0.01
----------- -----------
Earnings per share applicable to common stock $ 3.06 $ 0.56
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 $0.02 per share for the
six months ended June 30, 2009
(2) Includes dividends on preferred stock
(3) Refer to "Operational Earnings Adjustments" in this news release
"We had a great second quarter primarily due to favorable
weather and new base rates which went into effect when our
600-megawatt solid-fuel unit commenced commercial operations," said
Mike Madison, president and chief executive officer of Cleco Corp.
"Our strategy to strengthen the basic infrastructure of our core
business, Cleco Power, is working. For the past several years, we
have invested approximately $1.3 billion to transform Cleco Power's
generating fleet. Today, we have one of the most diversified fleets
in the southeast region which will serve our customers well for
years to come."
Earnings Guidance:
Cleco has revised its consolidated 2010 GAAP earnings target
(excluding the one-time results of the Evangeline transaction and
each of the Acadia transactions) from a range of $2.05 - $2.15 per
share to a range of $2.10 - $2.20 per share. This revised estimate
assumes normal weather for the third and fourth quarters of
2010.
Financial Highlights:
Second Quarter 2010
- Cleco reports second-quarter earnings applicable to common
stock of $35.2 million, or $0.58 per diluted share, compared to
$27.0 million, or $0.45 per diluted share, for the second quarter
of 2009.
Year-to-Date 2010
- Cleco reports earnings applicable to common stock for the first
six months of 2010 of $185.1 million, or $3.06 per diluted share,
compared to $33.7 million, or $0.56 per diluted share, for the
first six months of last year.
Quarter-Over-Quarter
Operational Earnings Per Share Reconciliation:
$ 0.43 2009 second-quarter diluted operational earnings per share
0.64 Non-fuel revenue
0.06 Income taxes
(0.21) Other expenses, net
(0.35) AFUDC (allowance for funds used during construction)
-------
$ 0.14 Cleco Power results
0.05 Cleco Midstream results
(0.06) Corporate results
-------
$ 0.56 2010 second-quarter diluted operational earnings per share
0.02 Adjustments(1)
-------
$ 0.58 Reported GAAP diluted earnings per share
(1) Refer to "Operational Earnings Adjustments" in this news release
Cleco Power
- Non-fuel revenue increased $0.64 per share
compared to the second quarter of 2009. The impact of the
retail base rate increase that became effective upon the commercial
operation of Madison Unit 3 was approximately $0.57 per share,
while the impact from warmer weather was approximately $0.06 per
share. Also contributing to the increase was $0.01 per share of
higher transmission revenue and customer fees.
- Income taxes increased earnings by $0.06 per
share compared to the second quarter of 2009 due to $0.03 per
share to record tax expense at the annual projected effective tax
rate, $0.03 per share in state flow-through tax benefits, and $0.02
per share in miscellaneous items. Partially offsetting this
increase was $0.02 per share for a valuation allowance on the
deferred tax asset for a capital loss carryforward.
- Other expenses, net were $0.21 per share
higher compared to the second quarter of 2009 primarily due to
$0.10 per share of higher operating and maintenance expenses, $0.09
per share of higher depreciation expense resulting from Madison
Unit 3 being placed in service in the first quarter of 2010 and the
acquisition of Acadia Unit 1 in the first quarter of 2010, $0.05
per share of higher interest charges, and $0.01 per share related
to amortization of an acquisition adjustment related to the
acquisiton of Acadia Unit 1. Partially offsetting these increases
was $0.04 per share of lower capacity payments made during the
second quarter of 2010 primarily due to the commencement of
commercial operations at Madison Unit 3 and the acquisition of
Acadia Unit 1.
- AFUDC, primarily associated with the first
quarter 2010 completion of Madison Unit 3, reduced earnings $0.35
per share compared to the second quarter of 2009. The equity
portion of AFUDC associated with the Madison Unit 3 project
decreased $0.29 per share, while the debt portion of AFUDC
decreased $0.06 per share compared to the second quarter of
2009.
Cleco Midstream Resources
- Evangeline's results decreased $0.04 per share
compared to the second quarter of 2009 primarily due to lower
tolling revenue resulting from the Evangeline restructuring and the
pricing of the new tolling agreement. Partially offsetting this
decrease was lower maintenance expenses and lower interest
charges.
- Acadia's results increased $0.08 per share
compared to the second quarter of 2009 primarily from lower
removal and asset retirement costs and lower turbine and general
maintenance expenses. Also contributing to the increase was lower
depreciation expense resulting from certain Acadia assets meeting
the criteria of assets held for sale. These increases were
partially offset by lower tolling revenue from the absence of the
interim tolling agreement with Cleco Power during the second
quarter of 2010.
- Lower other expenses at Midstream increased
results $0.01 per share compared to the second quarter of
2009.
Corporate and Other
- Income taxes decreased earnings by $0.02 per
share compared to the second quarter of 2009 primarily to
record tax expense at the annual projected consolidated effective
tax rate.
- Higher other miscellaneous expenses decreased
earnings by $0.04 per share compared to the second quarter of
2009 primarily due to higher interest charges, lower interest
income, and higher charitable donations.
Year-Over-Year
Operational Earnings Per Share Reconciliation:
$ 0.55 Six months ended June 30, 2009, diluted operational earnings
per share
1.09 Non-fuel revenue
0.01 Energy hedging, net
0.13 Income taxes
(0.31) Other expenses, net
(0.49) AFUDC
-------
$ 0.43 Cleco Power results
0.15 Cleco Midstream results
0.01 Corporate results
-------
$ 1.14 Six months ended June 30, 2010, diluted operational earnings
per share
1.92 Adjustments(1)
-------
$ 3.06 Reported GAAP diluted earnings per share
(1) Refer to "Operational Earnings Adjustments" in this news release
Cleco Power
- Non-fuel revenue increased $1.09 per share
compared to the first six months of 2009. The impact of the
retail base rate increase that became effective upon the commercial
operation of Madison Unit 3 was approximately $0.84 per share,
while the impact from favorable weather and new service to a
wholesale customer was approximately $0.22 per share. Also
contributing to the increase was $0.03 per share primarily related
to the receipt of mineral lease bonus payments and higher
transmission revenue.
- Lower net realized and mark-to-market losses
on energy hedging positions tied to a fixed-price wholesale
contract increased earnings by $0.01 per share year over
year.
- Income taxes increased earnings by $0.13 per
share compared to the first six months of 2009 due to $0.06
per share in state flow-through tax benefits, $0.05 per share
related to the implementation of new retail rates, $0.04 per share
to record tax expense at the annual projected effective tax rate,
and $0.03 per share in miscellaneous items. Partially offsetting
this increase was $0.03 per share for Medicare Part D resulting
from health care legislation enacted in the first quarter of 2010,
and $0.02 per share for a valuation allowance on the deferred tax
asset for a capital loss carryforward.
- Other expenses, net were $0.31 per share
higher compared to the first six months of 2009 primarily due
to $0.13 per share of higher depreciation expense resulting from
Madison Unit 3 being placed in service in the first quarter of 2010
and the acquisition of Acadia Unit 1 in the first quarter of 2010,
along with $0.13 per share of higher operating and maintenance
expenses. Also contributing to the increases were $0.06 per share
of higher interest charges. Partially offsetting these increases
was $0.01 per share of lower other net miscellaneous expenses.
- AFUDC, primarily associated with the first
quarter 2010 completion of the Madison Unit 3 project, reduced
earnings $0.49 per share compared to the first six months of
2009. The equity portion of AFUDC associated with the Madison
Unit 3 project decreased $0.40 per share, while the debt portion of
AFUDC decreased $0.09 per share compared to the first six months of
2009.
Cleco Midstream Resources
- Evangeline's results increased $0.03 per share
compared to the first six months 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's results increased $0.10 per share
compared to the first six months of 2009 primarily due to
lower depreciation expense resulting from certain Acadia assets
meeting the criteria of assets held for sale, lower removal and
asset retirement costs, and lower legal fees.
- Lower other expenses at Midstream increased
results $0.02 per share compared to the first six months of
2009.
For a discussion of other transactions affecting the results of
Cleco Midstream, please refer to "Operational Earnings Adjustments
-- Gains from Evangeline and Acadia Unit 1 Transactions" below.
Corporate and Other
- Income taxes increased earnings by $0.09 per
share compared to the first six months of 2009 as a result of
the adjustment to record tax expense at the annual projected
consolidated effective tax rate. The projected consolidated
effective tax rate is 34.37 percent for 2010. In the first six
months of 2010, Cleco had a disproportionate level of earnings at
Midstream arising primarily from the Evangeline transaction which
was taxed at a rate higher than the projected effective tax rate.
Accordingly, a favorable adjustment of $0.05 per share was recorded
in the first six months of 2010 at the corporate level to bring the
consolidated effective tax rate back to 34.37 percent. In the first
six months of 2009, a corresponding unfavorable adjustment of $0.04
per share was recorded.
- Higher other miscellaneous expenses decreased
earnings by $0.08 per share compared to the first six months of
2009 primarily due to the absence of adjustments related to
amended franchise tax returns filed in 2009, higher interest
charges, lower interest income, and higher other net miscellaneous
expenses.
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 Earnings Per Share to
Reported GAAP Earnings Per Share
Diluted Earnings Per Share
------------------------
Three months ended
June 30
------------------------
2010 2009
----------- -----------
Operational earnings per share $ 0.56 $ 0.43
Company/trust-owned life insurance policy
adjustments - 0.02
Tax levelization 0.02 -
----------- -----------
Reported GAAP earnings per share $ 0.58 $ 0.45
Diluted Earnings Per Share
------------------------
Six months ended
June 30
------------------------
2010 2009
----------- -----------
Operational earnings per share $ 1.14 $ 0.55
Company/trust-owned life insurance policy
adjustments - 0.01
Gain from Evangeline transaction 1.51 -
Gain from Acadia Unit 1 transaction 0.41 -
----------- -----------
Reported GAAP earnings per share $ 3.06 $ 0.56
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 had no
impact for the second quarter of 2010 and increased earnings by
$0.02 per share for the second quarter of 2009. These adjustments
had no impact for the first six months of 2010 and increased
earnings by $0.01 per share for the first six months 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.
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 annual effective tax rate and then
adjusts the tax expense recorded in that quarter to reflect the
projected annual effective tax rate. During the second quarter of
2010, Cleco recorded a $0.02 per share benefit from the
levelization of its annual tax rate to bring the actual tax rate in
line with the projected annual effective tax rate. During the
second quarter of 2009, there was no change to the projected annual
effective tax rate; therefore, no tax levelization adjustment was
necessary. The incremental adjustment for tax levelization is not
related to operational earnings because it reflects the effect of
the change in tax rates on operational earnings for the entire
year.
Gains from Evangeline and Acadia Unit 1
Transactions
On Feb. 22, 2010, the existing Evangeline tolling agreement was
terminated and a new tolling agreement was executed with the same
counterparty, resulting in the recognition of a gain of $1.51 per
share for the first six months of 2010. On Feb. 23, 2010, Cleco
Power's acquisition of Acadia Unit 1, the related materials and
supplies, and half of Acadia Power Station's common facilities was
completed, resulting in the recognition of a gain of $0.41 per
share for the first six months 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 second-quarter 2010
results during a conference call scheduled for 11 a.m. Eastern time
(10 a.m. Central time) Thursday, Aug. 5, 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
Corp. Second-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
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 June 30
------------------------------------------------------
(Unaudited) (million kWh) (thousands)
-------------------- --------------------------------
2010 2009 Change 2010 2009 Change
----- ----- ------ ----------- ---------- -------
Electric Sales
Residential 854 791 8.0 % $ 62,012 $ 36,320 70.7 %
Commercial 627 596 5.2 % 39,140 23,119 69.3 %
Industrial 543 469 15.8 % 19,050 12,314 54.7 %
Other retail 34 34 - 2,249 1,410 59.5 %
Surcharge - - - 1,660 4,405 (62.3)%
Other - - - (1,704) - -
----- ----- ----------- ----------
Total retail 2,058 1,890 8.9 % 122,407 77,568 57.8 %
Sales for resale 110 144 (23.6)% 10,673 5,488 94.5 %
Unbilled 251 325 (22.8)% 23,977 11,864 102.1 %
----- ----- ----------- ----------
Total retail and
wholesale customer
sales 2,419 2,359 2.5 % $ 157,057 $ 94,920 65.5 %
For the six months ended June 30
-------------------------------------------------------
(Unaudited) (million kWh) (thousands)
-------------------- ---------------------------------
2010 2009 Change 2010 2009 Change
----- ----- ------ ----------- ----------- -------
Electric Sales
Residential 1,893 1,607 17.8 % $ 108,509 $ 68,516 58.4 %
Commercial 1,219 1,139 7.0 % 68,703 46,068 49.1 %
Industrial 1,087 1,056 2.9 % 33,211 25,133 32.1 %
Other retail 69 66 4.5 % 4,006 2,797 43.2 %
Surcharge - - - 5,855 9,620 (39.1)%
Other - - - (2,679) - -
----- ----- ----------- -----------
Total retail 4,268 3,868 10.3 % 217,605 152,134 43.0 %
Sales for resale 300 233 28.8 % 19,456 8,599 126.3 %
Unbilled 127 192 (33.9)% 34,944 7,005 398.8 %
----- ----- ----------- -----------
Total retail and
wholesale customer
sales 4,695 4,293 9.4 % $ 272,005 $ 167,738 62.2 %
CLECO CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the three months ended June 30 2010 2009
----------- -----------
Operating revenue
Electric operations $ 261,101 $ 195,651
Tolling operations 4,399 -
Other operations 10,245 8,712
Affiliate revenue 158 2,863
----------- -----------
Total operating revenue 275,903 207,226
----------- -----------
Operating expenses
Fuel used for electric generation 81,558 50,326
Power purchased for utility customers 24,508 56,547
Other operations 29,845 25,941
Maintenance 21,633 14,766
Depreciation 29,798 19,479
Taxes other than income taxes 8,565 8,300
Gain on sales of assets (98) -
----------- -----------
Total operating expenses 195,809 175,359
----------- -----------
Operating income 80,094 31,867
Interest income 80 271
Allowance for other funds used during
construction 359 17,538
Equity loss from investees (1,129) (3,125)
Other income 266 1,633
Other expense (2,577) (480)
Interest charges
Interest charges, including amortization of
debt expenses, premium, and discount, net
of capitalized interest 24,663 20,150
Allowance for borrowed funds used during
construction (145) (6,421)
----------- -----------
Total interest charges 24,518 13,729
----------- -----------
Income before income taxes 52,575 33,975
Federal and state income tax expense 17,389 6,949
----------- -----------
Net income 35,186 27,026
Preferred dividends requirements, net of tax 12 12
----------- -----------
Net income applicable to common stock $ 35,174 $ 27,014
=========== ===========
Average shares of common stock outstanding
Basic 60,431,930 60,175,528
Diluted 60,705,269 60,451,665
Basic earnings per share
Net income applicable to common stock $ 0.58 $ 0.45
Diluted earnings per share
Net income applicable to common stock $ 0.58 $ 0.45
Cash dividends paid per share of common stock $ 0.250 $ 0.225
CLECO CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the six months ended June 30 2010 2009
----------- -----------
Operating revenue
Electric operations $ 513,899 $ 398,517
Tolling operations 11,863 -
Other operations 21,119 15,820
Affiliate revenue 1,307 5,825
----------- -----------
Total operating revenue 548,188 420,162
----------- -----------
Operating expenses
Fuel used for electric generation 176,140 138,629
Power purchased for utility customers 72,727 102,265
Other operations 56,499 50,892
Maintenance 35,470 25,325
Depreciation 54,051 38,613
Taxes other than income taxes 17,367 15,333
Gain on sales of assets (57) -
----------- -----------
Total operating expenses 412,197 371,057
----------- -----------
Operating income 135,991 49,105
Interest income 242 682
Allowance for other funds used during
construction 10,165 34,529
Equity income (loss) from investees 36,718 (14,876)
Gain on toll settlement 148,402 -
Other income 807 2,674
Other expense (2,962) (1,332)
Interest charges
Interest charges, including amortization of
debt expenses, premium, and discount, net
of capitalized interest 50,670 41,466
Allowance for borrowed funds used during
construction (3,718) (12,634)
----------- -----------
Total interest charges 46,952 28,832
----------- -----------
Income before income taxes 282,411 41,950
Federal and state income tax expense 97,256 8,275
----------- -----------
Net income 185,155 33,675
Preferred dividends requirements, net of tax 23 23
----------- -----------
Net income applicable to common stock $ 185,132 $ 33,652
=========== ===========
Average shares of common stock outstanding
Basic 60,374,233 60,132,358
Diluted 60,519,066 60,279,903
Basic earnings per share
Net income applicable to common stock $ 3.07 $ 0.56
Diluted earnings per share
Net income applicable to common stock $ 3.06 $ 0.56
Cash dividends paid per share of common stock $ 0.475 $ 0.450
CLECO CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)
At June 30, At Dec. 31,
2010 2009
----------- -----------
Assets
Current Assets
Cash and cash equivalents $ 52,155 $ 145,193
Accounts receivable, net 78,866 70,557
Other current assets 285,793 278,175
----------- -----------
Total Current Assets 416,814 493,925
Property, plant and equipment, net 2,749,441 2,247,030
Equity investment in investees 84,401 251,617
Prepayments, deferred charges and other 676,455 702,275
----------- -----------
Total Assets $ 3,927,111 $ 3,694,847
----------- -----------
Liabilities
Current Liabilities
Short-term debt $ 150,000 $ -
Long-term debt due within one year 21,869 11,478
Accounts payable 85,532 114,541
Other current liabilities 184,775 115,785
----------- -----------
Total Current Liabilities 442,176 241,804
Deferred credits 990,999 1,016,672
Long-term debt, net 1,218,302 1,320,299
----------- -----------
Total Liabilities 2,651,477 2,578,775
----------- -----------
Shareholders' Equity
Preferred stock 1,029 1,029
Common shareholders' equity 1,285,930 1,126,334
Accumulated other comprehensive loss (11,325) (11,291)
----------- -----------
Total Shareholders' Equity 1,275,634 1,116,072
----------- -----------
Total Liabilities and Shareholders' Equity $ 3,927,111 $ 3,694,847
=========== ===========
Please note: In addition to historical financial information,
this news release contains forward-looking statements about future
results and circumstances. 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 Unit 2/Entergy Louisiana transaction, the impact of the
global economic environment, 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.
Analyst Contact: Cleco Corp. Russell Davis (318) 484-7501 Email
Contact Investor Contact: Cleco Corp. Rodney Hamilton (318)
484-7593 Email Contact Media Contact: Cleco Corp. Fran Phoenix
(318) 484-7467
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