Cleco Corp. (NYSE: CNL)
Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures
Diluted Earnings Per
Share
--------------------
Three months ended
Sept. 30
--------------------
Subsidiary 2010 2009
--------- ----------
Cleco Power LLC $ 0.86 $ 0.66
Cleco Midstream Resources LLC(1) 0.09 0.14
Corporate and Other(1),(2) (0.12) 0.13
--------- ----------
Operational diluted earnings per share (Non-GAAP) 0.83 0.93
Adjustments(3) (0.01) 0.06
--------- ----------
Diluted earnings per share applicable to common stock $ 0.82 $ 0.99
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 Sept. 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
--------------------
Nine months ended
Sept. 30
--------------------
Subsidiary 2010 2009
--------- ---------
Cleco Power LLC $ 2.04 $ 1.47
Cleco Midstream Resources LLC(1) (excluding 2010
gains from the Evangeline and Acadia transactions) 0.01 (0.08)
Corporate and Other(1),(2) (0.11) 0.13
--------- ---------
Operational diluted earnings per share (Non-GAAP) 1.94 1.52
Adjustments(3) 1.93 0.03
--------- ---------
Diluted earnings per share applicable to common stock $ 3.87 $ 1.55
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 and $0.04 per
share for the nine months ended Sept. 30, 2010 and 2009, respectively)
(2) Includes dividends on preferred stock
(3) Refer to "Operational Earnings Adjustments" in this news release
"We could not be more pleased with our year-to-date results and
our outlook. Our overall earnings growth, excluding the one-time
gains from the Evangeline and Acadia transactions, reflects the
significant investments we have made in our electrical system to
continue meeting our customers' needs," said Mike Madison,
president and chief executive officer of Cleco Corp. "The
successful recovery of those investments is having a very positive
impact on our earnings primarily because of our new rates and
favorable weather during the year. In fact, we set new winter and
summer peak loads this year."
"The results of the third quarter follow strong first- and
second-quarter 2010 earnings. Due to our strong performance thus
far this year, we are increasing our 2010 earnings guidance. In
addition, we anticipate refunding an estimated $6.3 million,
subject to state regulatory approval, to our retail customers next
year in accordance with the terms of our Formula Rate Plan. This is
good news for our shareholders and our customers."
Earnings Guidance:
Cleco has revised its consolidated 2010 GAAP earnings target
(excluding the one-time results of the Evangeline and Acadia
transactions) from a range of $2.10 - $2.20 per share to a range of
$2.15 - $2.25 per share. This revised estimate assumes normal
weather for the fourth quarter of 2010.
Financial Highlights:
Third Quarter 2010
- Cleco reports third-quarter earnings applicable to common stock
of $49.6 million, or $0.82 per diluted share, compared to $59.8
million, or $0.99 per diluted share, for the third quarter of
2009.
Year-to-Date 2010
- Cleco reports earnings applicable to common stock for the first
nine months of 2010 of $234.7 million, or $3.87 per diluted share,
compared to $93.5 million, or $1.55 per diluted share, for the
first nine months of 2009.
Quarter-Over-Quarter
Operational Earnings Per Share Reconciliation:
$ 0.93 2009 third-quarter diluted operational earnings per share
0.71 Non-fuel revenue, net of rate refund accrual
(0.03) Income taxes
(0.14) Other expenses, net
(0.34) AFUDC (allowance for funds used during construction)
-------
$ 0.20 Cleco Power results
(0.05) Cleco Midstream results
(0.25) Corporate results
-------
$ 0.83 2010 third-quarter diluted operational earnings per share
(0.01) Adjustments(1)
-------
$ 0.82 Reported GAAP diluted earnings per share
(1) Refer to "Operational Earnings Adjustments" in this news release
Cleco Power
- Non-fuel revenue, net of rate refund accruals,
increased earnings by $0.71 per share compared to the third quarter
of 2009. The impact of the retail base rate increase that
became effective upon the commercial operation of Madison Unit 3 in
February 2010 contributed approximately $0.52 per share, while the
impact from warmer weather contributed approximately $0.22 per
share. Mineral lease bonus payments, higher transmission revenue,
and customer fees also contributed $0.03 per share. These increases
were partially offset by $0.06 per share as a result of recording
an estimated accrual for a rate refund based on actual results for
the twelve months ended Sept. 30, 2010.
- Income taxes decreased earnings by $0.03 per
share compared to the third quarter of 2009 due to $0.02 per
share to record tax expense at the annual projected effective tax
rate and $0.01 per share for miscellaneous tax items.
- Other expenses were $0.14 per share higher
compared to the third quarter of 2009 primarily due to $0.15
per share of higher operating and maintenance expenses and $0.08
per share of higher depreciation expense both largely resulting
from Madison Unit 3 being placed in service and the acquisition of
Acadia Unit 1, both in the first quarter of 2010, and $0.03 per
share of higher other miscellaneous expenses. These increases were
partially offset by $0.08 per share of lower capacity payments made
during the third quarter of 2010, primarily due to the commencement
of commercial operations at Madison Unit 3 and the acquisition of
Acadia Unit 1 in the first quarter of 2010, and $0.04 per share of
lower interest charges.
- AFUDC, primarily associated with the first
quarter 2010 completion of Madison Unit 3, reduced earnings by
$0.34 per share compared to the third quarter of 2009. The
equity portion of AFUDC associated with the Madison Unit 3 project
decreased $0.28 per share, while the debt portion of AFUDC
decreased $0.06 per share compared to the third quarter of
2009.
Cleco Midstream Resources
- Evangeline's results decreased earnings by
$0.12 per share compared to the third quarter of 2009
primarily due to lower tolling revenue resulting from the
Evangeline restructuring and pricing of the new tolling agreement.
This decrease was partially offset by lower interest charges.
- Acadia's results increased earnings by $0.07
per share compared to the third quarter of 2009 primarily from
the contractual expiration of an underlying indemnification related
to the sale of Acadia Unit 1 and lower depreciation expense
resulting from certain Acadia assets meeting the criteria of assets
held for sale.
Corporate and Other
- Higher income taxes decreased earnings by
$0.12 per share compared to the third quarter of 2009 as a
result of $0.10 per share to record tax expense at the annual
projected effective tax rate and $0.02 per share for miscellaneous
tax items.
- Higher interest charges decreased earnings by
$0.11 per share compared to the third quarter of 2009
primarily due to the absence of a 2009 favorable settlement of a
franchise tax lawsuit and net interest charges related to uncertain
tax positions.
- Higher other miscellaneous expenses decreased
earnings by $0.02 per share compared to the third quarter of
2009.
Year-Over-Year
Operational Earnings Per Share Reconciliation:
$ 1.52 Nine months ended Sept. 30, 2009, diluted operational earnings
per share
1.81 Non-fuel revenue, net of rate refund accrual
0.01 Energy hedging, net
0.03 Income taxes
(0.45) Other expenses, net
(0.83) AFUDC
-------
$ 0.57 Cleco Power results
0.09 Cleco Midstream results
(0.24) Corporate results
-------
$ 1.94 Nine months ended Sept. 30, 2010, diluted operational earnings
per share
1.93 Adjustments(1)
-------
$ 3.87 Reported GAAP diluted earnings per share
(1) Refer to "Operational Earnings Adjustments" in this news release
Cleco Power
- Non-fuel revenue, net of rate refund accruals,
increased earnings by $1.81 per share compared to the first nine
months of 2009. The impact of the retail base rate increase
that became effective upon the commercial operation of Madison Unit
3 in February 2010 contributed approximately $1.36 per share. The
impact from favorable weather was approximately $0.36 per share,
while the impact from new service to a wholesale customer was
approximately $0.08 per share. Mineral lease bonus payments and
higher transmission revenue contributed $0.07 per share. These
increases were partially offset by $0.06 per share as a result of
recording an estimated accrual for a rate refund based on actual
results for the twelve months ended Sept. 30, 2010.
- 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 compared to the
first nine months of 2009.
- Income taxes increased earnings by $0.03 per
share compared to the first nine months of 2009 due to $0.05
per share related to the implementation of new retail rates and
$0.03 per share for miscellaneous tax items. These increases were
partially offset by $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 the tax impact of a valuation allowance for
capital loss carryforwards.
- Other expenses were $0.45 per share higher
compared to the first nine months of 2009 primarily due to
$0.21 per share of higher depreciation expense resulting from
Madison Unit 3 being placed in service and the acquisition of
Acadia Unit 1, both in the first quarter of 2010, along with $0.27
per share of higher operating and maintenance expenses. These
increases were partially offset by $0.03 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 by $0.83 per share compared to the first nine months of
2009. The equity portion of AFUDC associated with the Madison
Unit 3 project decreased earnings by $0.68 per share, while the
debt portion of AFUDC decreased earnings by $0.15 per share
compared to the first nine months of 2009.
Cleco Midstream Resources
- Evangeline's results decreased earnings by
$0.10 per share compared to the first nine months of 2009
primarily due to lower tolling revenue resulting from the
Evangeline restructuring and pricing of the new tolling agreement.
This decrease was partially offset by lower interest charges and
lower maintenance expenses resulting from the absence of a 2009
outage.
- Acadia's results increased earnings by $0.18
per share compared to the first nine 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, the contractual expiration of an
underlying indemnification related to the sale of Acadia Unit 1,
and lower legal fees.
- Lower other expenses at Midstream increased
results by $0.01 per share compared to the first nine 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
- Higher income taxes decreased earnings by
$0.03 per share compared to the first nine months of 2009 due
to $0.01 per share to record tax expense at the annual projected
effective tax rate, $0.01 per share for Medicare Part D resulting
from health care legislation enacted in the first quarter of 2010,
and $0.01 per share for miscellaneous tax items.
- Higher interest charges decreased earnings by
$0.13 per share compared to the first nine months of 2009
primarily due to the absence of a 2009 favorable settlement of a
franchise tax lawsuit and net interest charges related to uncertain
tax positions.
- Higher other miscellaneous expenses decreased
earnings by $0.08 per share compared to the first nine months of
2009 primarily due to the absence of adjustments related to
amended franchise tax returns filed in 2009, 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 Diluted
Earnings Per Share
Diluted Earnings Per
Share
--------------------
Three months ended
Sept. 30
--------------------
2010 2009
--------- ----------
Operational earnings per share $ 0.83 $ 0.93
Company/trust-owned life insurance policy
adjustments 0.01 0.02
Tax levelization (0.02) 0.04
--------- ----------
Reported GAAP diluted earnings per share applicable
to common stock $ 0.82 $ 0.99
Diluted Earnings Per
Share
---------------------
Nine months ended
Sept. 30
---------------------
2010 2009
---------- ----------
Operational earnings per share $ 1.94 $ 1.52
Company/trust-owned life insurance policy
adjustments 0.01 0.03
Gain from Evangeline transaction 1.51 -
Gain from Acadia Unit 1 transaction 0.41 -
---------- ----------
Reported GAAP diluted earnings per share applicable
to common stock $ 3.87 $ 1.55
Reconciling adjustments from operational earnings per share to
GAAP diluted 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 third quarter of 2010
and increased earnings by $0.02 per share for the third quarter of
2009. These adjustments increased earnings by $0.01 per share the
first nine months of 2010 and increased earnings by $0.03 per share
for the first nine 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 third quarters of
2010 and 2009, Cleco recorded a $0.02 per share expense and a $0.04
per share benefit, respectively, from the levelization of its
annual tax rate to bring the actual tax rate in line with the
projected annual effective tax rate. 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 nine 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 nine 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 third-quarter 2010
results during a conference call scheduled for 11 a.m. Eastern time
(10 a.m. Central time) Monday, Nov. 1, 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. Third-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 Sept. 30
-------------------------------------------------------
(Unaudited) (million kWh) (thousands)
--------------------- --------------------------------
2010 2009 Change 2010 2009 Change
----- ----- ------- ---------- ---------- -------
Electric Sales
Residential 1,263 1,207 4.6 % $ 100,301 $ 53,970 85.8 %
Commercial 771 743 3.8 % 48,193 25,802 86.8 %
Industrial 592 577 2.6 % 22,563 12,912 74.7 %
Other retail 37 36 2.8 % 2,721 1,491 82.5 %
Surcharge - - - 1,350 5,054 (73.3)%
Other - - - (1,704) - -
----- ----- ---------- ----------
Total retail 2,663 2,563 3.9 % 173,424 99,229 74.8 %
Sales for resale 283 199 42.2 % 14,745 7,435 98.3 %
Unbilled (125) (95) (31.6)% (11,585) (3,466) (234.2)%
----- ----- ---------- ----------
Total retail and
wholesale
customer sales 2,821 2,667 5.8 % $ 176,584 $ 103,198 71.1 %
For the nine months ended Sept. 30
--------------------------------------------------------
(Unaudited) (million kWh) (thousands)
---------------------- --------------------------------
2010 2009 Change 2010 2009 Change
------ ------ ------ ---------- ----------- -------
Electric Sales
Residential 3,156 2,814 12.2 % $ 208,811 $ 122,486 70.5 %
Commercial 1,990 1,882 5.7 % 116,897 71,871 62.6 %
Industrial 1,679 1,633 2.8 % 55,774 38,046 46.6 %
Other retail 106 103 2.9 % 6,727 4,288 56.9 %
Surcharge - - - 7,205 14,674 (50.9)%
Other - - - (4,383) - -
------ ------ ---------- -----------
Total retail 6,931 6,432 7.8 % 391,031 251,365 55.6 %
Sales for resale 584 432 35.2 % 34,199 16,034 113.3 %
Unbilled 2 98 (98.0)% 23,359 3,538 560.2 %
------ ------ ---------- -----------
Total retail and
wholesale
customer sales 7,517 6,962 8.0 % $ 448,589 $ 270,937 65.6 %
CLECO CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the three months ended Sept. 30 2010 2009
----------- -----------
Operating revenue
Electric operations $ 325,629 $ 228,952
Tolling operations 11,153 -
Other operations 13,305 9,859
Affiliate revenue 119 2,689
----------- -----------
Gross operating revenue 350,206 241,500
Electric customer credits (6,314) -
----------- -----------
Operating revenue, net 343,892 241,500
Operating expenses
Fuel used for electric generation 100,587 74,585
Power purchased for utility customers 51,678 61,943
Other operations 30,288 26,667
Maintenance 23,362 10,452
Depreciation 28,847 19,620
Taxes other than income taxes 9,123 7,479
Loss on sales of assets 20 77
----------- -----------
Total operating expenses 243,905 200,823
----------- -----------
Operating income 99,987 40,677
Interest income 128 369
Allowance for other funds used during
construction 887 17,813
Equity income from investees 2,494 15,587
Other income 2,755 2,079
Other expense (1,416) (849)
Interest charges
Interest charges, including amortization of
debt expenses, premium, and discount, net
of capitalized interest 25,404 17,361
Allowance for borrowed funds used during
construction (336) (6,523)
----------- -----------
Total interest charges 25,068 10,838
----------- -----------
Income before income taxes 79,767 64,838
Federal and state income tax expense 30,155 4,983
----------- -----------
Net income 49,612 59,855
Preferred dividends requirements, net of tax 12 12
----------- -----------
Net income applicable to common stock $ 49,600 $ 59,843
=========== ===========
Average shares of common stock outstanding
Basic 60,471,183 60,234,243
Diluted 60,825,298 60,556,768
Basic earnings per share
Net income applicable to common stock $ 0.82 $ 0.99
Diluted earnings per share
Net income applicable to common stock $ 0.82 $ 0.99
Cash dividends paid per share of common stock $ 0.25 $ 0.225
CLECO CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the nine months ended Sept. 30 2010 2009
----------- -----------
Operating revenue
Electric operations $ 839,528 $ 627,469
Tolling operations 23,016 -
Other operations 34,425 25,680
Affiliate revenue 1,426 8,513
----------- -----------
Gross operating revenue 898,395 661,662
Electric customer credits (6,314) -
----------- -----------
Operating revenue, net 892,081 661,662
----------- -----------
Operating expenses
Fuel used for electric generation 276,727 213,213
Power purchased for utility customers 124,404 164,209
Other operations 86,786 77,557
Maintenance 58,832 35,777
Depreciation 82,899 58,233
Taxes other than income taxes 26,490 22,812
(Gain) loss on sales of assets (37) 77
----------- -----------
Total operating expenses 656,101 571,878
----------- -----------
Operating income 235,980 89,784
Interest income 369 1,051
Allowance for other funds used during
construction 11,052 52,341
Equity income from investees 39,212 710
Gain on toll settlement 148,402 -
Other income 3,563 4,753
Other expense (4,379) (2,181)
Interest charges
Interest charges, including amortization of
debt expenses, premium, and discount, net
of capitalized interest 76,074 58,827
Allowance for borrowed funds used during
construction (4,054) (19,157)
----------- -----------
Total interest charges 72,020 39,670
----------- -----------
Income before income taxes 362,179 106,788
Federal and state income tax expense 127,411 13,258
----------- -----------
Net income 234,768 93,530
Preferred dividends requirements, net of tax 35 35
----------- -----------
Net income applicable to common stock $ 234,733 $ 93,495
=========== ===========
Average shares of common stock outstanding
Basic 60,405,388 60,167,644
Diluted 60,632,138 60,390,454
Basic earnings per share
Net income applicable to common stock $ 3.89 $ 1.55
Diluted earnings per share
Net income applicable to common stock $ 3.87 $ 1.55
Cash dividends paid per share of common stock $ 0.725 $ 0.675
CLECO CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)
At Sept. 30, At Dec. 31,
2010 2009
----------- -----------
Assets
Current Assets
Cash and cash equivalents $ 67,836 $ 145,193
Accounts receivable, net 107,196 70,557
Other current assets 276,095 278,175
----------- -----------
Total Current Assets 451,127 493,925
Property, plant and equipment, net 2,756,775 2,247,030
Equity investment in investees 87,095 251,617
Prepayments, deferred charges and other 668,543 702,275
----------- -----------
Total Assets $ 3,963,540 $ 3,694,847
----------- -----------
Liabilities
Current Liabilities
Short-term debt $ 150,000 $ -
Long-term debt due within one year 36,440 11,478
Accounts payable 107,071 114,541
Other current liabilities 186,574 115,785
----------- -----------
Total Current Liabilities 480,085 241,804
Deferred credits 984,015 1,016,672
Long-term debt, net 1,187,806 1,320,299
----------- -----------
Total Liabilities 2,651,906 2,578,775
----------- -----------
Shareholders' Equity
Preferred stock 1,029 1,029
Common shareholders' equity 1,322,059 1,126,334
Accumulated other comprehensive loss (11,454) (11,291)
----------- -----------
Total Shareholders' Equity 1,311,634 1,116,072
----------- -----------
Total Liabilities and Shareholders' Equity $ 3,963,540 $ 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. Robbyn Cooper
(318) 484-7136
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