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Cleco Corporation reports full-year 2012 operational earnings of $2.46 per share


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2013-02-19 22:37:47 -

* Sustainable cost management efforts helped offset below normal 2012 weather
  * Demonstrated growth through long-term regulated wholesale contract with
    Dixie Electric Membership Corporation (DEMCO)
  * Additional wholesale load justified adding generating capacity at Cleco
    Power with Coughlin Power Station selected as low-cost option
  * 2013 operational earnings guidance affirmed at $2.45 to $2.55 per diluted
    share

PINEVILLE, LA., Feb. 19, 2013 - Cleco Corporation (NYSE:CNL) posted 2012
earnings of $163.6 million, or $2.70 per diluted share, down $32.1 million from
the $195.7 million recorded in 2011. Fourth-quarter earnings were $23.1 million
or $0.38 per diluted share, down $7.5 million from the $30.6 million recorded in
the fourth quarter of 2011. Operational earnings 
for 2012, which exclude the Acadia Units 1 and 2 indemnifications and other nonoperational gains, were $149.1 million, or $2.46 per diluted share, while operational earnings for 2011 were $152.9 million or $2.51 per diluted share, which excludes the gains on the Acadia Unit 2 transaction and other nonoperational gains. "Our full-year operational earnings of $2.46 are at the top of our final 2012 guidance range of $2.40 to $2.46 per share.  We achieved this despite less than favorable weather through our focus on low-cost and reliable operations of our regulated utility business," said Bruce Williamson, president and CEO of Cleco Corporation. "During 2012, we focused the company on driving down many areas of our cost structure while maintaining operational reliability. In addition to our sustainable cost management program, we resolved a number of legacy tax issues in a positive fashion for our shareholders and customers. "In addition to delivering solid earnings per share, we positioned the company for the future through a number of strategic initiatives. These include advancing our utility's wholesale growth strategy with the signing of our largest ever long-term full-requirements wholesale power agreement with DEMCO.  We continued the path to winding down our Cleco Midstream business with the announcement that Coughlin Power Station was the winning bidder in Cleco Power's 2012 request for proposals for additional generation capacity," said Williamson. "In 2012, we also completed our transmission project in south Louisiana and settled our Federal Energy Regulatory Commission (FERC) transmission rate case. In addition, we used our strong cash flow to self-fund system improvement projects and environmental upgrades to our plants to help keep our fleet out in front of our competitors as our industry faces stricter environmental mandates.  "As we head into 2013, we are focused on three main areas," said Williamson. * "We will continue to deliver competitive, reliable energy to our customers by maintaining focus on our cost structure. * We will work closely with the Louisiana Public Service Commission on the transfer of Coughlin into Cleco Power and on several other regulatory issues that will provide certainty for our investors and customers. * We will seek additional long-term wholesale contracts modeled on the DEMCO contract, which includes capacity, energy and services and allows progressive municipalities and cooperatives to drive economic growth through stable electric rates." Earnings Guidance: Cleco is affirming its 2013 consolidated operational earnings in the range of $2.45 to $2.55 per diluted share.  This estimate assumes normal weather for the year and an estimated consolidated tax rate of 32 percent.  The guidance range excludes adjustments related to life insurance policies and expiring indemnifications.  Please refer to "Operational Earnings Adjustments" in this news release for a description of these adjustments. Financial Highlights: Fourth Quarter 2012 * Cleco reports fourth-quarter GAAP earnings applicable to common stock of $23.1 million, or $0.38 per diluted share, compared to $30.6 million, or $0.51 per diluted share for the fourth quarter of 2011. Year-to-Date 2012 * Cleco reports GAAP earnings applicable to common stock for 2012 of $163.6 million, or $2.70 per diluted share, compared to $195.7 million, or $3.22 per diluted share for 2011. Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures   Diluted Earnings Per Share ----------------------------------------------- For the three months For the year ended   ended Dec. 31   Dec. 31 ----------------------------------------------- Subsidiary 2012   2011   2012   2011 ----------- ------------ ----------- ---------- Cleco Power LLC   $0.41       $0.39       $2.42       $2.34 Cleco Midstream Resources LLC (0.05)     0.06     (0.07)     0.05 Corporate and Other(1) -     -     0.11     0.12 ----------- ------------ ----------- ---------- Operational diluted earnings per share (Non-GAAP) 0.36     0.45     2.46     2.51 Adjustments(2) 0.02     0.06     0.24     0.71 ----------- ------------ ----------- ---------- Diluted earnings per share applicable to common stock   $0.38       $0.51       $2.70       $3.22 GAAP refers to United States generally accepted accounting principles. (1 )Includes dividends and redemption costs on preferred stock (2 )Refer to "Operational Earnings Adjustments" in this news release Quarter-Over-Quarter Operational Diluted Earnings Per Share Reconciliation:   $0.45     2011 fourth-quarter operational diluted earnings per share 0.05     Non-fuel revenue 0.02     Rate refund accrual (0.04)     Other expenses, net 0.03     Interest charges 0.02     AFUDC (allowance for funds used during construction) (0.06)     Income taxes -----------   $0.02     Cleco Power results (0.11)     Cleco Midstream results -     Corporate and Other results -----------   $0.36     2012 fourth-quarter operational diluted earnings per share 0.02     Adjustments(1) -----------   $0.38     Reported GAAP diluted earnings per share (1)Refer to "Operational Earnings Adjustments" in this news release Cleco Power * Higher non-fuel revenue increased earnings by $0.05 per share compared to the fourth quarter of 2011 primarily due to $0.06 per share of higher base revenue due to an annual base rate adjustment related to the formula rate plan, favorable weather, and higher commercial sales.  This amount was partially offset by $0.01 per share of lower other net miscellaneous revenue. * Lower rate refund accrual increased earnings by $0.02 per share compared to the fourth quarter of 2011 primarily due to a change in estimated accruals. * Higher other expenses, net, decreased earnings by $0.04 per share compared to the fourth quarter of 2011 primarily due to $0.03 per share of higher depreciation and amortization expense and $0.01 per share of higher net other miscellaneous expenses. * Lower interest charges increased earnings by $0.03 per share compared to the fourth quarter of 2011 primarily due to $0.03 per share related to uncertain tax positions, $0.01 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. * Higher AFUDC increased earnings by $0.02 per share compared to the fourth quarter of 2011 primarily due to higher AFUDC related to the advanced metering infrastructure project and miscellaneous transmission projects. * Higher income taxes decreased earnings by $0.06 per share compared to the fourth quarter of 2011 primarily due to $0.04 per share for the loss of state tax benefits related to tax credits and other state attributes and $0.02 per share related to the absence of the settlement of the 2001 through 2003 IRS audit. Cleco Midstream Resources * Midstream's results decreased earnings by $0.11 per share compared to the fourth quarter of 2011 primarily due to $0.12 per share related to the absence of the settlement of the 2001 through 2003 IRS audit, partially offset by $0.01 per share of lower other miscellaneous expenses. For a discussion of other transactions affecting Cleco Midstream's results, please refer to "Operational Earnings Adjustments - Acadia Units 1 and 2 Indemnifications" below. Corporate and Other * Higher interest charges decreased earnings by $0.01 per share compared to the fourth quarter of 2011 primarily due to higher amounts related to uncertain tax positions. * Lower income taxes increased earnings by $0.01 per share compared to the fourth quarter of 2011 as a result of $0.02 per share for the loss of state tax benefits related to tax credits and other state attributes, and $0.01 per share for tax returns filed, partially offset by $0.01 per share related to the absence of the settlement of the 2001 through 2003 IRS audit, and $0.01 per share for tax credits. Year-Over-Year Operational Diluted Earnings Per Share Reconciliation:   $2.51     Year ended Dec. 31, 2011, operational diluted earnings per share (0.08)     Non-fuel revenue 0.06     Rate refund accrual (0.12)     Other expenses, net 0.16     Interest charges 0.03     AFUDC (allowance for funds used during construction) 0.03     Income taxes -----------   $0.08     Cleco Power results (0.12)     Cleco Midstream results (0.01)     Corporate and Other results -----------   $2.46     Year ended Dec. 31, 2012, operational diluted earnings per share 0.24     Adjustments(1) -----------   $2.70     Reported GAAP diluted earnings per share (1)Refer to "Operational Earnings Adjustments" in this news release Cleco Power * Lower non-fuel revenue decreased earnings by $0.08 per share compared to 2011 primarily due to $0.09 per share relating to milder weather, $0.06 per share from lower mineral lease payments, and $0.05 per share from the absence of a gain on the sale of Cleco Power's fuel oil inventory.  These amounts were partially offset by $0.11 per share from an annual base rate adjustment related to the formula rate plan and $0.01 per share of higher other miscellaneous revenue. * Lower rate refund accrual increased earnings by $0.06 per share compared to 2011 primarily due to a change in estimated accruals. * Higher other expenses, net, decreased earnings by $0.12 per share compared to 2011 primarily due to $0.10 per share of higher depreciation and amortization expense, $0.07 per share of higher net non-recoverable wholesale power purchases and other capacity charges, and $0.02 per share of higher other taxes, primarily due to property taxes.  These amounts were partially offset by $0.05 per share of lower other operations and maintenance expenses, and $0.02 per share of higher royalty income. * Lower interest charges increased earnings by $0.16 per share compared to 2011 primarily due to $0.12 per share related to uncertain tax positions, $0.08 per share related to reacquired debt in October and December 2011, and $0.03 per share related to the retirement of pollution control bonds in January and May 2012.  Partially offsetting these amounts were $0.07 per share related to the issuance of private placement notes in December 2011 and May 2012. * Higher AFUDC increased earnings by $0.03 per share compared to 2011 primarily due to higher AFUDC accruals related to the advanced metering infrastructure project and miscellaneous transmission projects. * Lower income taxes increased earnings by $0.03 per share compared to 2011 primarily due to $0.04 per share for tax returns filed, $0.03 per share for the settlement of legacy tax issues, and $0.03 per share for tax credits. These amounts were partially offset by $0.03 per share for the loss of state tax benefits related to tax credits and other state attributes, $0.02 per share related to the absence of the settlement of the 2001 through 2003 IRS audit, and $0.02 per share related to the absence in 2012 of the valuation allowance reversal in 2011. Cleco Midstream Resources * Midstream's results decreased earnings by $0.12 per share compared to 2011 primarily due to $0.12 from the absence of the settlement of the 2001 through 2003 IRS audit and $0.07 per share of higher operating and maintenance expenses.  These amounts were partially offset by $0.07 per share of higher tolling revenue. 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 * Higher income taxes decreased earnings by $0.01 per share compared to 2011 primarily due to $0.06 per share for tax returns filed and $0.01 per share related to the absence of the settlement of the 2001 through 2003 IRS audit. These amounts were partially offset by $0.06 per share for tax credits. 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 per share 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 For the year ended   ended Dec. 31   Dec. 31 -----------------------------------------------   2012   2011   2012   2011 ----------- ------------ ----------- ---------- Operational diluted earnings per share   $0.36       $0.45       $2.46       $2.51 Life insurance policies -     0.06     0.02     0.06 Gain on Acadia Unit 2 transaction -     -     -     0.63 Acadia Unit 1 indemnifications -     -     0.08     0.02 Acadia Unit 2 indemnifications 0.02     -     0.14     - ----------- ------------ ----------- ---------- Reported GAAP diluted earnings per share applicable to common stock   $0.38       $0.51       $2.70       $3.22 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. 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 fourth quarter of 2012, the contractual expiration of the underlying indemnifications increased earnings by $0.02 per share.  The resulting adjustment for this item had no impact for the fourth quarter of 2011.  During the year ended December 31, 2012 and 2011, the contractual expiration of the underlying indemnifications increased earnings $0.22 per share and $0.02 per share, respectively. Cleco management will discuss the company's fourth-quarter 2012 results during a conference call scheduled for 7:30 a.m. Central time (8:30 a.m. Eastern time) Wednesday, February 20, 2013.  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 "Q4 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 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.  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 9 generating units with a total nameplate capacity of 2,565 megawatts and serves approximately 283,000 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 Dec. 31 ---------------------------------------------------------------------- (Unaudited) (million kWh)     (thousands) ----------------------------- ----------------------------------------   2012   2011   Change   2012   2011   Change --------- --------- --------- -------------- -------------- ---------- Electric Sales Residential 790     772     2.3%       $61,884       $58,404     6.0 % Commercial 634     613     3.4%     44,884     42,652     5.2 % Industrial 601     596     0.8%     22,457     21,642     3.8 % Other retail 32     32     -     2,472     2,331     6.0 % Surcharge -     -     -     2,333     3,161     (26.2)% Other -     -     -     (1,565)     (1,552)     (0.8)% --------- --------- -------------- -------------- Total retail 2,057     2,013     2.2%     132,465     126,638     4.6 % Sales for resale 461     393     17.3%     11,813     11,200     5.5 % Unbilled (54)     (49)     10.2%     (3,501)     (2,980)     (17.5)% --------- --------- -------------- -------------- Total retail and wholesale customer sales 2,464     2,357     4.5%       $140,777       $134,858     4.4 %   For the year ended Dec. 31 ------------------------------------------------------------------------- (Unaudited) (million kWh)     (thousands) -------------------------------- ----------------------------------------   2012   2011   Change   2012   2011   Change ---------- ---------- ---------- -------------- -------------- ---------- Electric Sales Residential 3,624     3,877     (6.5)%       $281,378       $294,076     (4.3)% Commercial 2,655     2,650     0.2 %     181,093     179,786     0.7 % Industrial 2,311     2,366     (2.3)%     85,675     85,965     (0.3)% Other retail 133     134     (0.7)%     9,908     9,815     0.9 % Surcharge -     -     -     9,133     10,695     (14.6)% Other -     -     -     (6,252)     (6,426)     2.7 % ---------- ---------- -------------- -------------- Total retail 8,723     9,027     (3.4)%     560,935     573,911     (2.3)% Sales for resale 1,934     1,888     2.4 %     47,767     45,633     4.7 % Unbilled (43)     (139)     69.1 %     (2,125)     (14,520)     85.4 % ---------- ---------- -------------- -------------- Total retail and wholesale customer sales 10,614     10,776     (1.5)%       $606,577       $605,024     0.3 % CLECO CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Thousands, except share and per share amounts) (Unaudited) For the three months ended Dec. 31 2012   2011 ------------------------------------------------------------------------------- Operating revenue Electric operations   $223,393       $228,472 Tolling operations -     2,868 Other operations 11,693     11,187 ---------------------------- Gross operating revenue 235,086     242,527 Electric customer credits (1,655)     (3,406) ---------------------------- Operating revenue, net 233,431     239,121 Operating expenses Fuel used for electric generation 72,789     85,245 Power purchased for utility customers 9,065     9,872 Other operations 33,996     33,569 Maintenance 25,010     22,411 Depreciation 33,380     30,829 Taxes other than income taxes 9,317     7,587 Loss on sales of assets 108     959 ---------------------------- Total operating expenses 183,665     190,472 ---------------------------- Operating income 49,766     48,649 Interest income 183     97 Allowance for other funds used during construction 2,414     1,190 Equity loss from investees, before tax (1)     - Other income 4,894     5,584 Other expense (1,976)     (2,785) Interest charges Interest charges, including amortization of debt expense, premium, and discount, net 21,777     (6,923) Allowance for borrowed funds used during construction (826)     (430) ---------------------------- Total interest charges 20,951     (7,353) ---------------------------- Income before income taxes 34,329     60,088 Federal and state income tax expense 11,217     29,445 ---------------------------- Net income applicable to common stock   $23,112       $30,643 ---------------------------- Average number of basic common shares outstanding 60,353,185     60,282,040 Average number of diluted common shares outstanding 60,625,139     60,557,515 Basic earnings per share Net income applicable to common stock   $0.38       $0.51 Diluted earnings per share Net income applicable to common stock   $0.38       $0.51 Cash dividends paid per share of common stock   $0.3375       $0.3125 CLECO CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Thousands, except share and per share amounts) (Unaudited) For the year ended Dec. 31 2012   2011 ------------------------------------------------------------------------------- Operating revenue Electric operations   $944,169       $1,051,956 Tolling operations -     19,004 Other operations 50,158     52,962 Affiliate revenue -     202 ------------------------------ Gross operating revenue 994,327     1,124,124 Electric customer credits (630)     (6,811) ------------------------------ Operating revenue, net 993,697     1,117,313 Operating expenses Fuel used for electric generation 280,553     383,254 Power purchased for utility customers 53,134     70,462 Other operations 120,898     123,849 Maintenance 86,488     82,076 Depreciation 132,407     122,578 Taxes other than income taxes 38,515     36,356 Loss on sales of assets 51     491 ------------------------------ Total operating expenses 712,046     819,066 ------------------------------ Operating income 281,651     298,247 Interest income 346     891 Allowance for other funds used during construction 6,711     4,947 Equity income from investees, before tax -     62,050 Other income 29,117     8,914 Other expense (4,694)     (5,646) Interest charges Interest charges, including amortization of debt expense, premium, and discount, net 86,448     72,445 Allowance for borrowed funds used during construction (2,292)     (1,787) ------------------------------ Total interest charges 84,156     70,658 ------------------------------ Income before income taxes 228,975     298,745 Federal and state income tax expense 65,327     102,897 ------------------------------ Net income 163,648     195,848 Preferred dividends requirements -     26 Preferred stock redemption costs -     112 ------------------------------ Net income applicable to common stock   $163,648       $195,710 ------------------------------ Average number of basic common shares outstanding 60,370,588     60,488,740 Average number of diluted common shares outstanding 60,628,129     60,833,564 Basic earnings per share Net income applicable to common stock   $2.71       $3.24 Diluted earnings per share Net income applicable to common stock   $2.70       $3.22 Cash dividends paid per share of common stock   $1.30       $1.1225 CLECO CORPORATION CONSOLIDATED BALANCE SHEETS (Thousands) (Unaudited) At Dec. At Dec.   31, 2012   31, 2011 --------------------------------------------------------------------------- Assets Current assets Cash and cash equivalents   $31,020       $93,576 Accounts receivable, net 77,034     79,864 Other current assets 339,284     283,345 -------------------------------- Total current assets 447,338     456,785 Property, plant and equipment, net 3,009,461     2,893,899 Equity investment in investees 14,540     14,540 Prepayments, deferred charges and other 676,010     684,978 -------------------------------- Total assets   $4,147,349       $4,050,202 -------------------------------- Liabilities Current liabilities Long-term debt due within one year   $91,140       $26,099 Accounts payable 102,695     127,467 Other current liabilities 100,795     167,436 -------------------------------- Total current liabilities 294,630     321,002 Deferred credits 1,096,248     972,287 Long-term debt, net 1,257,258     1,337,056 -------------------------------- Total liabilities 2,648,136     2,630,345 -------------------------------- Shareholders' equity Common shareholders' equity 1,531,583     1,447,996 Accumulated other comprehensive loss (32,370)     (28,139) -------------------------------- Total shareholders' equity 1,499,213     1,419,857 -------------------------------- Total liabilities and shareholders' equity   $4,147,349       $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#1679442]


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