Cleco Corporation posts 2012 first-quarter operational earnings of $0.42 per diluted share; Company reaffirms 2012 earnings guidance

Wed May 2, 2012 4:42pm EDT

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News Release

PINEVILLE, La., May 2, 2012 - Cleco Corporation (NYSE: CNL) posted 2012 first-quarter earnings of $30.0 million, or $0.50 per diluted share, up $1.0 million from the $29.0 million recorded in the first quarter of 2011.  Operational earnings for the first quarter of 2012, which exclude amounts for the contractual expiration of underlying indemnifications related to the Acadia Unit 1 transaction and other nonoperational gains, were $24.9 million, or $0.42 per share, while operational earnings for the first quarter of 2011 were $28.4 million, or $0.47 per diluted share.

"Like much of the rest of the United States, the areas we serve experienced a very mild winter which negatively impacted our first quarter earnings by about $0.08 per diluted share when compared to normal weather," said Bruce Williamson, president and CEO of Cleco Corporation.  "However, through our continued focus on cost management, we are confident we can maintain our current earnings guidance range of $2.34 to $2.44 per diluted share."  This estimate assumes normal weather for the remaining nine months of the year, includes the results of the recently completed Cleco Power Request for Proposal and excludes other nonoperational adjustments.

"We also made substantial progress on key strategic initiatives in the first quarter of 2012," Williamson said.  "At the end of January, we announced our contract to begin serving Dixie Electric Membership Corporation starting in early 2014.  We see this type of wholesale contract as a template to work with progressive municipalities and cooperatives seeking to diversify their environmental, fuel and reliability risks.   Additionally, we announced that we received regulatory approval for a three-year power purchase agreement between Cleco Power and Cleco Evangeline.  This agreement allows us to address tighter environmental regulations and gives us flexibility to economically dispatch our fleet.  Significant progress also was made on environmental changes where needed, and we anticipate having all controls installed for the Cross-State Air Pollution Rule by 2012 and for the Mercury Air Toxics Standards by 2014, well in advance of the expected compliance dates.  Our largest-ever transmission upgrade project is substantially complete, and customers in the southern part of our service territory should see the full benefits of this project this summer.  Finally, we continue to find opportunities to lower our cost of debt with Cleco Power's anticipated refinancing of $50 million outstanding debt at significantly lower interest rates."  

Financial Highlights:

First Quarter 2012

  • Cleco reports first-quarter earnings applicable to common stock of $30.0 million, or $0.50 per diluted share, compared to $29.0 million, or $0.48 per diluted share for the first quarter of 2011. 

Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures
Diluted Earnings Per Share
Three months ended March 31
Subsidiary 2012 2011
Cleco Power LLC $0.44 $0.49
Cleco Midstream Resources LLC (0.05) (0.01)
Corporate and Other1 0.03 (0.01)
Operational diluted earnings per share (Non-GAAP) 0.42 0.47
Adjustments2 0.08 0.01
Diluted earnings per share applicable to common stock $0.50 $0.48

GAAP refers to United States generally accepted accounting principles.

1 Includes dividends on preferred stock for 2011 only
2 Refer to "Operational Earnings Adjustments" in this news release

Quarter-Over-Quarter Operational Diluted Earnings Per Share Reconciliation:

$0.47       2011 first-quarter operational diluted earnings per share
(0.04) Non-fuel revenue, net of rate refund accrual
(0.03)   Other expenses, net
0.06   Interest charges
(0.02)   AFUDC (allowance for funds used during construction)
(0.02)   Income taxes
$(0.05) Cleco Power results
(0.04) Cleco Midstream results
0.04 Corporate and Other results
$0.42 2012 first-quarter operational diluted earnings per share
0.08 Adjustments1
$0.50 Reported GAAP diluted earnings per share

1Refer to "Operational Earnings Adjustments" in this news release

Cleco Power

  • Non-fuel revenue decreased earnings by $0.04 per share compared to the first quarter of 2011 primarily due to $0.05 per share of lower electric sales resulting from milder winter weather.  Also contributing to the decrease was $0.02 per share of lower mineral lease payments.  Partially offsetting these decreases was $0.03 for the change in estimated accruals for a rate refund. 

  • Other expenses, net, decreased earnings by $0.03 per share compared to the first quarter of 2011 primarily due to $0.02 per share of higher depreciation expense and $0.01 per share of higher capacity charges, other operations expense, and other miscellaneous net expenses.   

  • Lower interest charges increased earnings by $0.06 per share compared to the first quarter of 2011 primarily due to $0.05 per share related to uncertain tax positions and $0.02 per share related to reacquired debt in October and December 2011.  Partially offsetting these amounts was $0.01 per share related to the issuance of private placement notes in December 2011. 

  • AFUDC decreased earnings by $0.02 per share compared to the first quarter of 2011 primarily due to lower AFUDC accruals related to the completion of Teche Unit 4 and decreased construction activity of the Acadiana Load Pocket project.   

  • Higher income taxes decreased earnings by $0.02 per share compared to the first quarter of 2011 primarily due to $0.01 per share for lower tax credits in 2012 and $0.01 per share of a higher adjustment to bring tax expense up to the projected annual effective tax rate.   

Cleco Midstream Resources

  • Evangeline's results decreased earnings by $0.02 per share compared to the first quarter of 2011 primarily due to lower tolling revenue resulting from the new power purchase agreement with Cleco Power that began in January 2012 as compared to the tolling agreement with J.P. Morgan Ventures Energy Corporation in 2011.  

  • Acadia's results decreased earnings by $0.02 per share compared to the first quarter of 2011 primarily due to the absence of operating results at Acadia Unit 2 and higher interest charges related to uncertain tax positions.  

For a discussion of other transactions affecting the results of Cleco Midstream, please refer to "Operational Earnings Adjustments - Acadia Unit 1 Indemnifications" below.

Corporate and Other

  • Lower interest charges increased earnings by $0.01 per share compared to the first quarter of 2011 primarily due to the repayment of a bank term loan in April 2011. 

  • Lower income taxes increased earnings by $0.02 per share compared to the first quarter of 2011 as a result of $0.03 per share for higher tax credits in 2012, partially offset by $0.01 per share of a higher adjustment to bring tax expense up to the consolidated projected annual effective tax rate. 

  • Lower other miscellaneous expenses increased earnings by $0.01 per share compared to the first quarter of 2011

Operational Earnings Adjustments:

Cleco's management uses operational earnings per share, which is a non-GAAP measure, to evaluate the operations of Cleco and 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 Diluted Earnings Per Share to Reported GAAP Diluted Earnings Per Share

Diluted Earnings Per Share
Three months ended March 31
2012 2011
Operational diluted earnings per share $0.42 $0.47
Life insurance policies 0.01 0.01
Acadia Unit 1 indemnifications 0.07 -
Reported GAAP diluted earnings per share applicable to common stock $0.50 $0.48

Reconciling adjustments from operational diluted earnings per share to GAAP diluted earnings per share are as follows:

Life Insurance Policies

Cleco has life insurance policies covering certain members of management.  These policies have a cash surrender value component which is carried as an asset and adjusted due to market changes, premium payments, or policy redemptions.  Cleco is unable to predict market changes and cash surrender value amounts of these policies, and management does not consider these adjustments to be a component of operational earnings.  

Acadia Unit 1 Indemnifications

Acadia Power Partners, LLC provided limited guarantees and indemnifications to Cleco Power when Cleco Power acquired Acadia Unit 1 in February 2010.  Acadia Power Partners, LLC and Acadia Power Holdings will reduce the indemnification liabilities either through expiration of the contractual life or through a reduction in the probability of a claim arising.   The contractual expiration of the underlying indemnifications increased earnings $0.07 per share for the first quarter of 2012.  The resulting adjustment for this item had no impact for the first quarter of 2011.

Cleco management will discuss the company's first-quarter 2012 results during a conference call scheduled for 9 a.m. Central time (10 a.m. Eastern time) Thursday, May 3, 2012.  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 website at www.cleco.com by selecting "Investor Relations" and then "Q1 2012 Cleco Corporation Earnings Conference Call."

Cleco Corporation is a regional energy company headquartered in Pineville, La. Cleco owns a regulated electric utility company, Cleco Power LLC, which owns nine generating units with a total nameplate capacity of 2,524 megawatts and serves approximately 281,000 customers in Louisiana through its retail business and 10 communities across Louisiana and Mississippi through wholesale power contracts.  Cleco also owns a wholesale energy business, Cleco Midstream Resources LLC, which owns two generating units with a total nameplate capacity of 775 megawatts.  For more information about Cleco, visit www.cleco.com.

Analyst Contact:
Russell Davis
(318) 484-7501
Media Contact:
Fran Phoenix
(318) 484-7467

Three months ended March 31
(Unaudited) (million kWh) (thousands)
2012 2011 Change 2012 2011 Change
Electric Sales
Residential 784 960 (18.3)% $56,390 $67,190 (16.1)%
Commercial 570 594 (4.0)% 41,747 44,092 (5.3)%
Industrial 550 554 (0.7)% 20,092 20,650 (2.7)%
Other retail 32 33 (3.0)% 2,360 2,466 (4.3)%
Surcharge - - - 2,815 1,717 63.9%
Other - - - (1,555) (1,711) 9.1%
Total retail 1,936 2,141 (9.6)% 121,849 134,404 (9.3)%
Sales for resale 390 446 (12.6)% 11,785 11,939 (1.3)%
Unbilled (88) (165) 46.7% (4,302) (12,269) 64.9%
Total retail and wholesale customer sales 2,238 2,422 (7.6)% $129,332 $134,074 (3.5)%

CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the three months ended March 31 2012 2011
Operating revenue
Electric operations $209,590 $238,468
Tolling operations - 2,781
Other operations 10,946 12,728
Affiliate revenue - 147
Gross operating revenue 220,536 254,124
Electric customer credits 2,237 (434)
Operating revenue, net 222,773 253,690
Operating expenses
Fuel used for electric generation 73,064 96,968
Power purchased for utility customers 8,637 9,048
Other operations 27,700 27,063
Maintenance 17,235 16,809
Depreciation 31,167 29,098
Taxes other than income taxes 10,030 9,460
(Gain) loss on sales of assets (33) 10
Total operating expenses 167,800 188,456
Operating income 54,973 65,234
Interest income 34 115
Allowance for other funds used during construction 1,017 1,978
Equity income from investees, before tax 1 611
Other income 9,375 1,205
Other expense (1,335) (1,318)
Interest charges
Interest charges, including amortization of debt expense, premium, and discount, net 20,968 27,328
Allowance for borrowed funds used during construction (344) (714)
Total interest charges 20,624 26,614
Income before income taxes 43,441 41,211
Federal and state income tax expense 13,410 12,195
Net income 30,031 29,016
Preferred dividends requirements - 12
Net income applicable to common stock $30,031 $29,004
Average number of basic common shares outstanding 60,372,567 60,576,004
Average number of diluted common shares outstanding 60,598,975 60,904,867
Basic earnings per share
Net income applicable to common stock $0.50 $0.48
Diluted earnings per share
Net income applicable to common stock $0.50 $0.48
Cash dividends paid per share of common stock $0.3125 $0.25

CLECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)
At March 31, 2012 At Dec. 31, 2011
Assets
Current assets
Cash and cash equivalents $47,249 $93,576
Accounts receivable, net 70,719 79,864
Other current assets 268,623 283,345
Total current assets 386,591 456,785
Property, plant and equipment, net 2,905,962 2,893,899
Equity investment in investees 14,541 14,540
Prepayments, deferred charges and other 677,603 684,978
Total assets $3,984,697 $4,050,202
Liabilities
Current liabilities
Long-term debt due within one year $13,540 $24,258
Accounts payable 73,484 129,308
Other current liabilities 156,005 167,436
Total current liabilities 243,029 321,002
Deferred credits 985,079 972,287
Long-term debt, net 1,319,631 1,337,056
Total liabilities 2,547,739 2,630,345
Shareholders' equity
Common shareholders' equity 1,460,299 1,447,996
Accumulated other comprehensive loss (23,341) (28,139)
Total shareholders' equity 1,436,958 1,419,857
Total liabilities and shareholders' equity $3,984,697 $4,050,202

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 results of Cleco Power's RFPs, the completion of the Acadiana Load Pocket project, 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 Report on Form 10-Q.  Actual results may differ materially from those indicated in such forward-looking statements.





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Source: Cleco Corp. via Thomson Reuters ONE

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