Cleco Corporation posts 2012 third-quarter earnings of $63.8 million, or $1.05 per diluted share; Company raises earnings guidance to $2.40 - $2.46 per share

Tue Oct 30, 2012 4:37pm EDT

* Reuters is not responsible for the content in this press release.

PINEVILLE, La., Oct. 30, 2012 - Cleco Corporation (NYSE: CNL) posted earnings for the third-quarter of 2012 of $63.8 million, or $1.05 per diluted share, compared to $65.8 million recorded in the third quarter of 2011.

"We produced solid operational earnings for the third quarter of $1.05 per share or within three cents of last year's results despite a cooler summer than last year.  Year-to-date, we are five cents per share higher than last year," said Bruce Williamson, president and CEO of Cleco Corporation. 

"During 2012, we have made up for less favorable weather through an ongoing expense management program which we instituted last year and adjustments to our formula rate plan which allow us to recover the costs of various projects as they are completed.  Additionally, we benefited from lower interest expense and some favorable tax settlements," said Williamson.  "We also responded to Hurricane Isaac, which at its peak left more than 95,000 of our customers without power.  The storm caused about $21 million in damage to our system.  Approximately 60 percent of the costs will be capitalized and recovered through future base rates.  The remaining maintenance expense will be recovered through our storm reserve account.

"As a result of our financial performance to date, we are raising our 2012 consolidated operational earnings guidance and tightening the range from $2.34 to $2.44 per diluted share to $2.40 to $2.46 per diluted share," said Williamson.  "We will discuss the specific drivers behind our revised guidance on our earnings conference call.

"We also are announcing today the selection of the Coughlin Power Station as the winning bidder in Cleco Power's long-term RFP for capacity and energy resources to meet the needs of our customers.  While executing a transfer of Coughlin from Cleco Midstream to Cleco Power is subject to final regulatory approvals, this announcement is a major milestone in fulfilling our goal to grow the company through secure, low-risk, regulated wholesale load.  In addition, Dixie Electric Membership Corporation (DEMCO) recently received approval of its contract with Cleco Power from the Louisiana Public Service Commission.  With the Coughlin transfer and the DEMCO contract on track, we are driving long-term earnings growth through Cleco Power," said Williamson.

Earnings Guidance:

Cleco has revised its 2012 consolidated operational earnings target to a range of $2.40 - $2.46 per diluted share.  This estimate assumes normal weather for the remainder of the year and continuous expense management.  This guidance excludes non-operational adjustments.  Please refer to "Operational Earnings Adjustments" in this news release for a description of these adjustments on Cleco's earnings per diluted share for the nine months ended Sept. 30, 2012 and 2011.

Financial Highlights:

Third Quarter 2012

  • Cleco reports third-quarter GAAP earnings applicable to common stock of $63.8 million, or $1.05 per diluted share, compared to $65.8 million, or $1.08 per diluted share for the third quarter of 2011. 

Year-to-Date 2012

  • Cleco reports GAAP earnings applicable to common stock for the first nine months of 2012 of $140.5 million, or $2.32 per diluted share, compared to $165.1 million, or $2.71 per diluted share for the first nine months of 2011. 

Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures
Diluted Earnings Per Share
For the three months
ended Sept. 30
For the nine months
ended Sept. 30
Subsidiary 2012 2011 2012 2011
Cleco Power LLC $0.94 $0.88 $2.01 $1.96
Cleco Midstream Resources LLC 0.06 0.09 (0.01) -
Corporate and Other1 0.05 0.11 0.11 0.10
Operational diluted earnings per share (Non-GAAP) 1.05 1.08 2.11 2.06
Adjustments2 - - 0.21 0.65
Diluted earnings per share applicable to common stock $1.05 $1.08 $2.32 $2.71

GAAP refers to United States generally accepted accounting principles.

1 Includes preferred stock dividends and redemption costs for the nine months ended Sept. 30, 2011
2 Refer to "Operational Earnings Adjustments" in this news release

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

$1.08 2011 third-quarter operational diluted earnings per share
(0.04) Non-fuel revenue
(0.03)   Rate refund accrual
(0.05)   Other expenses, net
0.03   Interest charges
0.02   AFUDC (allowance for funds used during construction)
0.13   Income taxes
$0.06 Cleco Power results
(0.03) Cleco Midstream results
(0.06) Corporate and Other results
$1.05 2012 third-quarter operational diluted earnings per share
- Adjustments
$1.05 2012 third-quarter reported GAAP diluted earnings per share

Cleco Power

  • Non-fuel revenue decreased earnings by $0.04 per share compared to the third quarter of 2011 primarily due to $0.04 per share from lower mineral lease payments and $0.02 per share from lower transmission revenue and the absence of a gain on the sale of Cleco Power's fuel oil inventory.  These amounts were partially offset by $0.02 per share of higher base revenue from adjustments to Cleco Power's formula rate plan.  

  • Rate refund accrual decreased earnings by $0.03 per share compared to the third quarter of 2011 primarily due to the absence of a 2011 decrease in the customer credit accrual and an increase in the current year estimated accrual. 

  • Other expenses, net, decreased earnings by $0.05 per share compared to the third quarter of 2011 primarily due to $0.03 per share of higher depreciation expense and $0.02 per share from higher net non-recoverable wholesale power capacity charges. 

  • Lower interest charges increased earnings by $0.03 per share compared to the third quarter of 2011 primarily due to $0.02 per share related to uncertain tax positions, $0.02 per share related to reacquired debt in October and December 2011, and $0.01 per share related to the retirement of pollution control bonds in January and May 2012.  The issuance of private placement notes in December 2011 and May 2012 partially offset these amounts by $0.02 per share. 

  • AFUDC increased earnings by $0.02 per share compared to the third quarter of 2011 primarily due to higher AFUDC related to the advanced metering infrastructure project and miscellaneous transmission projects. 

  • Lower income taxes increased earnings by $0.13 per share compared to the third quarter of 2011 primarily due to $0.06 per share for tax returns filed, $0.05 per share for settlements with taxing authorities, and $0.03 per share for tax credits.  These amounts were partially offset by $0.01 per share for miscellaneous tax items. 

Cleco Midstream Resources

  • Midstream's results decreased earnings by $0.03 per share compared to the third quarter of 2011 primarily due to $0.06 per share of higher operating and maintenance expenses and $0.03 per share of higher income taxes.  These amounts were partially offset by $0.05 per share of higher tolling revenue and $0.01 per share for lower interest charges related to uncertain tax positions. 

Corporate and Other

  • Higher income taxes decreased earnings by $0.06 per share compared to the third quarter of 2011 as a result of $0.07 per share for tax returns filed and $0.01 per share to record tax expense at the consolidated projected annual effective tax rate, partially offset by $0.02 per share for tax credits and miscellaneous tax items. 

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

$2.06     Nine months ended Sept. 30, 2011, operational diluted earnings per share
(0.15) Non-fuel revenue
0.04   Rate refund accrual
(0.07)   Other expenses, net
0.13   Interest charges
0.01   AFUDC
0.09   Income taxes
$0.05 Cleco Power results
(0.01) Cleco Midstream results
0.01 Corporate and Other results
$2.11 Nine months ended Sept. 30, 2012, operational diluted earnings per share
0.21 Adjustments1
$2.32 Nine months ended Sept. 30, 2012, reported GAAP diluted earnings per share

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

Cleco Power

  • Non-fuel revenue decreased earnings by $0.15 per share compared to the first nine months of 2011 primarily due to $0.06 per share from lower mineral lease payments, $0.05 per share from the absence of a gain on the sale of Cleco Power's fuel oil inventory, and $0.11 per share largely attributable to milder weather.  Partially offsetting this decrease was $0.07 per share related to adjustments to Cleco Power's formula rate plan. 

  • Lower rate refund accrual increased earnings by $0.04 per share compared to the first nine months of 2011. 

  • Other expenses, net, decreased earnings by $0.07 per share compared to the first nine months of 2011 primarily due to $0.07 per share of higher depreciation expense and $0.05 per share of higher net non-recoverable wholesale power purchases and other capacity charges.  Partially offsetting these decreases were $0.04 per share of lower other operations and maintenance expenses and $0.01 per share of higher royalty income.   

  • Lower interest charges increased earnings by $0.13 per share compared to the first nine months of 2011 primarily due to $0.09 per share related to uncertain tax positions, $0.07 per share related to reacquired debt in October and December 2011, and $0.02 per share related to the retirement of pollution control bonds in January and May 2012.  Partially offsetting these amounts were $0.05 per share related to the issuance of private placement notes in December 2011 and May 2012. 

  • AFUDC increased earnings by $0.01 per share compared to the first nine months of 2011 primarily due to higher AFUDC related to the advanced metering infrastructure project and miscellaneous transmission projects. 

  • Lower income taxes increased earnings by $0.09 per share compared to the first nine months of 2011 primarily due to $0.07 per share for tax returns filed, $0.03 per share for settlements with taxing authorities, and $0.02 per share for tax credits.  These amounts were partially offset by $0.02 per share related to the absence in 2012 of the valuation allowance reversal in 2011 and $0.01 per share for miscellaneous tax items. 

Cleco Midstream Resources

  • Midstream's results decreased earnings by $0.01 per share compared to the first nine months of 2011 primarily due to $0.05 per share of higher operating and maintenance expenses and $0.04 per share of higher income taxes related to tax returns filed.  These amounts were partially offset by $0.05 per share of higher tolling revenue and $0.03 per share primarily from lower interest related to uncertain tax positions. 

For a discussion of other transactions affecting Cleco Midstream's results, please refer to "Operational Earnings Adjustments - Gain from Acadia Unit 2 Transaction and Acadia Units 1 and 2 Indemnifications" below.

Corporate and Other

  • Lower interest charges increased earnings by $0.02 per share compared to the first nine months of 2011 primarily due to the repayment of a bank term loan in April 2011. 

  • Higher income taxes decreased earnings by $0.01 per share compared to the first nine months of 2011 primarily due to $0.07 per share for tax returns filed and $0.03 per share to record tax expense at the consolidated projected annual effective tax rate.  These amounts were partially offset by $0.08 per share for tax credits and $0.01 per share for miscellaneous tax items. 

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 diluted earnings as presented here may not be comparable to similarly titled measures used by other companies.  The following table provides a reconciliation of operational diluted earnings per share to reported GAAP diluted earnings per share.

Reconciliation of Operational Diluted Earnings Per Share to Reported GAAP Diluted Earnings Per Share

Diluted Earnings Per Share
For the three months
ended Sept. 30
For the nine months
ended Sept. 30
2012 2011 2012 2011
Operational diluted earnings per share $1.05 $1.08 $2.11 $2.06
Life insurance policies - (0.02) 0.02 -
Tax levelization - 0.01 - -
Gain from Acadia Unit 2 transaction - - - 0.63
Acadia Unit 1 indemnifications - 0.01 0.07 0.02
Acadia Unit 2 indemnifications - - 0.12 -
Reported GAAP diluted earnings per share applicable to common stock $1.05 $1.08 $2.32 $2.71

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 that 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.  

Tax Levelization

GAAP requires companies to apply an effective tax rate to interim periods that is consistent with the company's estimated annual effective tax rate.  As a result, on a quarterly basis, 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 quarter of 2011, Cleco recorded a $0.01 per share expense from the levelization of its annual tax rate to bring the actual tax rate in line with the projected annual effective tax rate.  The resulting adjustment for this item had no impact for the third quarter of 2012.  The incremental adjustment for tax levelization is not related to the current quarter's operational earnings because it reflects the effect of the change in tax rates on operational earnings for the prior quarter.

Gain from Acadia Unit 2 Transaction

On April 29, 2011, the disposition of Acadia Unit 2 and half of Acadia Power Station's common facilities was completed resulting in the recognition of a gain of $0.63 per share for 2011.  Because this is a one-time gain, management does not consider this adjustment to be a component of operational earnings.

Acadia Units 1 and 2 Indemnifications

Acadia Power Partners, LLC provided limited guarantees and indemnifications to Cleco Power and Entergy Louisiana when they acquired Acadia Units 1 and 2 in February 2010 and April 2011, respectively.  Acadia Power Partners, LLC and Acadia Power Holdings will reduce the indemnification liabilities either through expiration of the contractual life or through changes in the probability of a claim arising.  During the third quarter of 2011, the contractual expiration of the underlying indemnifications increased earnings by $0.01 per share.  The resulting adjustment for this item had no impact for the third quarter of 2012.  During the nine months ended September 30, 2012 and 2011, the contractual expiration of the underlying indemnifications increased earnings $0.19 per share and $0.02 per share, respectively.

Cleco management will discuss the company's third-quarter 2012 results during a conference call scheduled for 7:30 a.m. Central time (8:30 a.m. Eastern time) Thursday, November 1, 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 "Q3 2012 Cleco Corporation Earnings Conference Call."

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 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 Reports on Form 10-Q.  Actual results may differ materially from those indicated in such forward-looking statements.

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:
Tom Miller
(318) 484-7642
Media Contact:
Robbyn Cooper
(318) 484-7136

For the three months ended Sept. 30
(Unaudited) (million kWh) (thousands)
2012 2011 Change 2012 2011 Change
Electric Sales
Residential 1,202 1,274 (5.7)% $96,954 $99,144 (2.2)%
Commercial 784 796 (1.5)% 50,145 48,732 2.9%
Industrial 582 619 (6.0)% 21,993 22,468 (2.1)%
Other retail 36 36 - 2,669 2,600 2.7%
Surcharge - - - 1,950 2,983 (34.6)%
Other - - - (1,566) (1,578) 0.8%
Total retail 2,604 2,725 (4.4)% 172,145 174,349 (1.3)%
Sales for resale 616 652 (5.5)% 12,459 11,455 8.8%
Unbilled (69) (129) (46.5)% (4,328) (7,645) 43.4%
Total retail and wholesale
customer sales
3,151 3,248 (3.0)% $180,276 $178,159 1.2%

For the nine months ended Sept. 30
(Unaudited) (million kWh) (thousands)
2012 2011 Change 2012 2011 Change
Electric Sales
Residential 2,834 3,105 (8.7)% $219,494 $235,672 (6.9)%
Commercial 2,021 2,037 (0.8)% 136,208 137,133 (0.7)%
Industrial 1,710 1,770 (3.4)% 63,217 64,323 (1.7)%
Other retail 101 103 (1.9)% 7,436 7,484 (0.6)%
Surcharge - - - 6,801 7,534 (9.7)%
Other - - - (4,686) (4,875) 3.9%
Total retail 6,666 7,015 (5.0)% 428,470 447,271 (4.2)%
Sales for resale 1,472 1,495 (1.5)% 35,954 34,433 4.4%
Unbilled 11 (90) 112.2% 1,376 (11,538) 111.9%
Total retail and wholesale
customer sales
8,149 8,420 (3.2)% $465,800 $470,166 (0.9)%

CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the three months ended Sept. 30 2012 2011
Operating revenue
Electric operations $282,894 $324,532
Tolling operations - 9,133
Other operations 15,408 16,064
Affiliate revenue - -
Gross operating revenue 298,302 349,729
Electric customer credits (930) 1,852
Operating revenue, net 297,372 351,581
Operating expenses
Fuel used for electric generation 79,701 122,774
Power purchased for utility customers 19,364 25,473
Other operations 30,517 32,138
Maintenance 20,059 14,587
Depreciation 34,931 31,237
Taxes other than income taxes 9,455 9,845
(Gain) loss on sales of assets (2) 27
Total operating expenses 194,025 236,081
Operating income 103,347 115,500
Interest income 132 509
Allowance for other funds used during construction 1,882 902
Equity loss from investees, before tax - (1)
Other income 1,834 2,128
Other expense (1,232) (2,680)
Interest charges
Interest charges, including amortization of debt expense, premium, and discount, net 22,610 26,105
Allowance for borrowed funds used during construction (644) (326)
Total interest charges 21,966 25,779
Income before income taxes 83,997 90,579
Federal and state income tax expense 20,179 24,737
Net income applicable to common stock $63,818 $65,842
Average number of basic common shares outstanding 60,346,476 60,467,595
Average number of diluted common shares outstanding 60,599,203 60,873,311
Basic earnings per share
Net income applicable to common stock $1.06 $1.09
Diluted earnings per share
Net income applicable to common stock $1.05 $1.08
Cash dividends paid per share of common stock $0.3375 $0.28

CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the nine months ended Sept. 30 2012 2011
Operating revenue
Electric operations $720,776 $823,484
Tolling operations - 16,137
Other operations 38,464 41,775
Affiliate revenue - 202
Gross operating revenue 759,240 881,598
Electric customer credits 1,025 (3,405)
Operating revenue, net 760,265 878,193
Operating expenses
Fuel used for electric generation 207,764 298,009
Power purchased for utility customers 44,069 60,590
Other operations 86,901 90,281
Maintenance 61,478 59,666
Depreciation 99,028 91,749
Taxes other than income taxes 29,198 28,770
Gain on sales of assets (57) (468)
Total operating expenses 528,381 628,597
Operating income 231,884 249,596
Interest income 163 794
Allowance for other funds used during construction 4,298 3,757
Equity income from investees, before tax 1 62,051
Other income 24,223 3,330
Other expense (2,718) (2,861)
Interest charges
Interest charges, including amortization of debt expense, premium, and discount, net 64,671 79,368
Allowance for borrowed funds used during construction (1,466) (1,357)
Total interest charges 63,205 78,011
Income before income taxes 194,646 238,656
Federal and state income tax expense 54,110 73,451
Net income 140,536 165,205
Preferred dividends requirements - 26
Preferred stock redemption costs - 112
Net income applicable to common stock $140,536 $165,067
Average number of basic common shares outstanding 60,375,538 60,549,860
Average number of diluted common shares outstanding 60,626,471 60,830,251
Basic earnings per share
Net income applicable to common stock $2.33 $2.73
Diluted earnings per share
Net income applicable to common stock $2.32 $2.71
Cash dividends paid per share of common stock $0.9625 $0.81

CLECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)
At Sept. 30, 2012 At Dec. 31, 2011
Assets
Current assets
Cash and cash equivalents $68,364 $93,576
Accounts receivable, net 83,969 79,864
Other current assets 307,124 283,345
Total current assets 459,457 456,785
Property, plant and equipment, net 2,974,303 2,893,899
Equity investment in investees 14,541 14,540
Prepayments, deferred charges and other 658,592 684,978
Total assets $4,106,893 $4,050,202
Liabilities
Current liabilities
Long-term debt due within one year $90,937 $24,258
Accounts payable 104,435 129,308
Other current liabilities 114,480 167,436
Total current liabilities 309,852 321,002
Deferred credits 1,058,003 972,287
Long-term debt, net 1,237,184 1,337,056
Total liabilities 2,605,039 2,630,345
Shareholders' equity
Common shareholders' equity 1,527,629 1,447,996
Accumulated other comprehensive loss (25,775) (28,139)
Total shareholders' equity 1,501,854 1,419,857
Total liabilities and shareholders' equity $4,106,893 $4,050,202




This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: Cleco Corp. via Thomson Reuters ONE

HUG#1653794