Cleco Corp. Posts 2010 First Quarter Earnings of $150.0 Million Includes $116.5 million of one-time gains from Evangeline and Acadia transactions
PINEVILLE, La., - Cleco Corp. (NYSE: CNL)
"We are very pleased with our first quarter results. They reflect not only a colder than
normal winter, but our success in completing a number of strategic initiatives," said Mike Madison, president and chief executive officer of Cleco Corp. "Cleco Power had sales increases of over 17 percent from last year and set an all-time peak of 2,310 megawatts on January 11, 2010. Cleco Power also brought Rodemacher Unit 3 into commercial operation and implemented our new retail rates. Cleco Midstream saw improved operational performance and recorded gains from the restructuring of the Evangeline tolling agreement and the sale of Acadia Unit 1."
Recent Developments:
On April 30, 2010, Cleco's Board of Directors approved, subject to regulatory approval, a $73 million advanced metering technology project for the installation of "smart electric meters" that enable two-way communication capabilities between a home or business and a utility company. Funding for the project will include a $20 million grant from the Department of Energy. The project will still require Louisiana Public Service Commission approval.
Dividend:
On April 30, 2010, Cleco's Board of Directors officially declared a dividend payment of $0.25 per share of common stock payable on May 15, 2010. In January 2010, the Board approved a dividend policy which included an 11 percent increase in quarterly common stock dividends from $0.225 per share to $0.25 per share. The 11 percent increase will result in an annual dividend rate of $1.00 per share of Cleco common stock, subject to the Board's official declaration of each future dividend.
Earnings Guidance:
Cleco is reaffirming the consolidated 2010 earnings target in the range of $2.05 - $2.15 per share. The 2010 consolidated earnings estimate includes normal weather and excludes one-time results of the Evangeline transaction and the Acadia transactions.
Financial Highlights:
First Quarter 2010
Cleco reports first-quarter earnings applicable to common stock of $150.0 million, or $2.48 per diluted share, compared to $6.6 million, or $0.11 per diluted share, for the first quarter of 2009.
Cleco Power
Non-fuel revenue increased $0.45 per share compared to the first quarter of 2009 primarily due to higher electric sales to retail and wholesale customers. The impact of the base rate increase that became effective upon the commercial operation of Rodemacher Unit 3 was approximately $0.27 per share while the impact from colder winter weather and new service to a wholesale customer was approximately $0.16 per share. Also contributing to the increase was $0.02 per share related to the receipt of mineral lease bonus payments.
Lower 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 quarter of 2009.
Income taxes increased earnings by $0.06 per share compared to the first quarter of 2009 as a result of a $0.09 per share increase in state flow-through tax benefits, which included a $0.05 per share adjustment related to the implementation of the new rates. Partially offsetting this was a $0.03 per share adjustment for Medicare Part D resulting from the recently enacted health care legislation.
Other expenses, net were $0.09 per share higher compared to the first quarter of 2009 primarily due to higher depreciation expense resulting from Rodemacher Unit 3 being placed in service and the acquisition of Acadia Unit 1 along with higher operating and maintenance expenses.
AFUDC, primarily associated with the completion of the Rodemacher Unit 3 project, reduced earnings $0.15 per share compared to the first quarter of 2009. The equity portion of AFUDC associated with the Rodemacher Unit 3 project was down $0.12 per share, while the debt portion of AFUDC was down $0.03 per share compared to the first quarter of 2009.
Cleco Midstream Resources
Evangeline was up $0.07 per share compared to the first quarter 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 was up $0.04 per share compared to the first quarter of 2009 primarily due to lower depreciation expense resulting from certain Acadia assets meeting the criteria of assets held for sale and higher tolling revenue from the interim tolling agreement with Cleco Power.
For a discussion of other transactions affecting the results of Cleco Midstream, please refer to "Operational Earnings Adjustments - Gains from Evangeline and Acadia Transactions" below.
Corporate and Other
Income taxes increased earnings by $0.09 per share compared to the first quarter of 2009 primarily due to the adjustment to record tax expense at the projected annual effective consolidated tax rate. The consolidated projected annual effective tax rate is 35.6% for 2010. In the first quarter of 2010, Cleco had a disproportionate level of earnings at Midstream arising primarily from the Evangeline and Acadia transactions which were taxed at higher rates. Accordingly, a favorable adjustment of $0.07 per share was recorded in the first quarter of 2010 at the corporate level to bring the consolidated effective tax rate back to 35.6%. In the first quarter of 2009, a corresponding unfavorable adjustment of $0.02 per share was recorded.
Higher other miscellaneous expenses decreased earnings by $0.04 per share compared to the first quarter of 2009 primarily due to the absence of adjustments related to amended franchise tax returns filed in 2009.
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.
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 increased earnings by $0.01 per share for the first quarter of 2010 and had no impact for the first quarter 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.
Gains from Evangeline and Acadia Transactions
On Feb. 22, 2010, the existing Evangeline tolling agreement was terminated and a new tolling agreement was executed with the same counterparty and resulted in the recognition of a gain of $1.51 per share for the first quarter of 2010. On Feb. 23, 2010, Cleco Power's acquisition of one of Acadia's two 580-megawatt units, the related materials and supplies, and half of its common facilities was completed and also resulted in the recognition of a gain of $0.41 per share for the first quarter 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 first-quarter 2010 results during a conference call scheduled for 11 a.m. Eastern time (10 a.m. Central time) Thursday, May 6, 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 Corporation First-Quarter 2010 Earnings Conference Call."
Please note: In addition to historical financial information, this news release contains forward-looking statements about future results and circumstances, including, without limitation, statements regarding the completion of the Acadia/Entergy Louisiana transaction. 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/Entergy Louisiana transaction, the impact of the global economic downturn, 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.
"We are very pleased with our first quarter results. They reflect not only a colder than
normal winter, but our success in completing a number of strategic initiatives," said Mike Madison, president and chief executive officer of Cleco Corp. "Cleco Power had sales increases of over 17 percent from last year and set an all-time peak of 2,310 megawatts on January 11, 2010. Cleco Power also brought Rodemacher Unit 3 into commercial operation and implemented our new retail rates. Cleco Midstream saw improved operational performance and recorded gains from the restructuring of the Evangeline tolling agreement and the sale of Acadia Unit 1."
Recent Developments:
On April 30, 2010, Cleco's Board of Directors approved, subject to regulatory approval, a $73 million advanced metering technology project for the installation of "smart electric meters" that enable two-way communication capabilities between a home or business and a utility company. Funding for the project will include a $20 million grant from the Department of Energy. The project will still require Louisiana Public Service Commission approval.
Dividend:
On April 30, 2010, Cleco's Board of Directors officially declared a dividend payment of $0.25 per share of common stock payable on May 15, 2010. In January 2010, the Board approved a dividend policy which included an 11 percent increase in quarterly common stock dividends from $0.225 per share to $0.25 per share. The 11 percent increase will result in an annual dividend rate of $1.00 per share of Cleco common stock, subject to the Board's official declaration of each future dividend.
Earnings Guidance:
Cleco is reaffirming the consolidated 2010 earnings target in the range of $2.05 - $2.15 per share. The 2010 consolidated earnings estimate includes normal weather and excludes one-time results of the Evangeline transaction and the Acadia transactions.
Financial Highlights:
First Quarter 2010
Cleco reports first-quarter earnings applicable to common stock of $150.0 million, or $2.48 per diluted share, compared to $6.6 million, or $0.11 per diluted share, for the first quarter of 2009.
Cleco Power
Non-fuel revenue increased $0.45 per share compared to the first quarter of 2009 primarily due to higher electric sales to retail and wholesale customers. The impact of the base rate increase that became effective upon the commercial operation of Rodemacher Unit 3 was approximately $0.27 per share while the impact from colder winter weather and new service to a wholesale customer was approximately $0.16 per share. Also contributing to the increase was $0.02 per share related to the receipt of mineral lease bonus payments.
Lower 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 quarter of 2009.
Income taxes increased earnings by $0.06 per share compared to the first quarter of 2009 as a result of a $0.09 per share increase in state flow-through tax benefits, which included a $0.05 per share adjustment related to the implementation of the new rates. Partially offsetting this was a $0.03 per share adjustment for Medicare Part D resulting from the recently enacted health care legislation.
Other expenses, net were $0.09 per share higher compared to the first quarter of 2009 primarily due to higher depreciation expense resulting from Rodemacher Unit 3 being placed in service and the acquisition of Acadia Unit 1 along with higher operating and maintenance expenses.
AFUDC, primarily associated with the completion of the Rodemacher Unit 3 project, reduced earnings $0.15 per share compared to the first quarter of 2009. The equity portion of AFUDC associated with the Rodemacher Unit 3 project was down $0.12 per share, while the debt portion of AFUDC was down $0.03 per share compared to the first quarter of 2009.
Cleco Midstream Resources
Evangeline was up $0.07 per share compared to the first quarter 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 was up $0.04 per share compared to the first quarter of 2009 primarily due to lower depreciation expense resulting from certain Acadia assets meeting the criteria of assets held for sale and higher tolling revenue from the interim tolling agreement with Cleco Power.
For a discussion of other transactions affecting the results of Cleco Midstream, please refer to "Operational Earnings Adjustments - Gains from Evangeline and Acadia Transactions" below.
Corporate and Other
Income taxes increased earnings by $0.09 per share compared to the first quarter of 2009 primarily due to the adjustment to record tax expense at the projected annual effective consolidated tax rate. The consolidated projected annual effective tax rate is 35.6% for 2010. In the first quarter of 2010, Cleco had a disproportionate level of earnings at Midstream arising primarily from the Evangeline and Acadia transactions which were taxed at higher rates. Accordingly, a favorable adjustment of $0.07 per share was recorded in the first quarter of 2010 at the corporate level to bring the consolidated effective tax rate back to 35.6%. In the first quarter of 2009, a corresponding unfavorable adjustment of $0.02 per share was recorded.
Higher other miscellaneous expenses decreased earnings by $0.04 per share compared to the first quarter of 2009 primarily due to the absence of adjustments related to amended franchise tax returns filed in 2009.
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.
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 increased earnings by $0.01 per share for the first quarter of 2010 and had no impact for the first quarter 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.
Gains from Evangeline and Acadia Transactions
On Feb. 22, 2010, the existing Evangeline tolling agreement was terminated and a new tolling agreement was executed with the same counterparty and resulted in the recognition of a gain of $1.51 per share for the first quarter of 2010. On Feb. 23, 2010, Cleco Power's acquisition of one of Acadia's two 580-megawatt units, the related materials and supplies, and half of its common facilities was completed and also resulted in the recognition of a gain of $0.41 per share for the first quarter 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 first-quarter 2010 results during a conference call scheduled for 11 a.m. Eastern time (10 a.m. Central time) Thursday, May 6, 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 Corporation First-Quarter 2010 Earnings Conference Call."
Please note: In addition to historical financial information, this news release contains forward-looking statements about future results and circumstances, including, without limitation, statements regarding the completion of the Acadia/Entergy Louisiana transaction. 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/Entergy Louisiana transaction, the impact of the global economic downturn, 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.