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Oct 30, 2013

Cleco Corporation announces third-quarter earnings of $1.09 per diluted share

  • Narrows guidance range to $2.50 - $2.55 per diluted share from $2.45 - $2.55 per diluted share  

  • Receives Federal Energy Regulatory Commission (FERC) approval for Coughlin transfer 

PINEVILLE, La. - Cleco Corporation (NYSE: CNL) posted 2013 third-quarter earnings of $66.4 million, or $1.09 per diluted share, up from $63.8 million, or $1.05 per diluted share recorded in the third quarter of 2012.

"I'm pleased to report we had another strong quarter, continuing to deliver strong earnings while making progress on key initiatives," said Bruce Williamson, president and CEO of Cleco Corporation. "A warmer September helped drive third-quarter earnings and built on revenues generated from normal weather in July and August.  Our continued focus on safe, reliable and efficient operation of our business has enabled us to better serve our customers and added to our year-to-date earnings performance.

"During the quarter, we received FERC approval for the transfer of Coughlin Power Station from Cleco Midstream to Cleco Power," said Williamson. "We continue working through the state regulatory process to finalize the Coughlin transaction and advance the request to extend our formula rate plan that includes the rate treatment for Coughlin. We remain confident we will successfully execute the final steps of this regulatory process by the first half of next year.

"With our third-quarter performance, we anticipate our full-year 2013 results will be in the top half of our original earnings range, so we are narrowing our earnings guidance to $2.50 to $2.55 from $2.45 to $2.55," said Williamson. "We continue to remain strong financially as we enter the fourth quarter, and we will complete the year with a continued focus on strong operational performance."

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

2013

2012

2013

2012

Cleco Power LLC

$1.04

$0.94

$2.03

$2.01

Cleco Midstream Resources LLC

0.02

0.06

0.03

(0.01)

Corporate and Other

0.03

0.05

0.07

0.11

Operational diluted earnings per share (Non-GAAP)

1.09

1.05

2.13

2.11

Adjustments1

-

-

0.10

0.21

Diluted earnings per share applicable to common stock

$1.09

$1.05

$2.23

$2.32

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

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

$1.05

2012 third-quarter operational diluted earnings per share

0.22

Non-fuel revenue

(0.06)

Other expenses, net

0.03

Interest charges

(0.01)

AFUDC (allowance for funds used during construction)

(0.08)

Income taxes

$0.10

Cleco Power results

(0.04)

Cleco Midstream results

(0.02)

Corporate and Other results

$1.09

2013 third-quarter operational diluted earnings per share

-

Adjustments1

$1.09

2013 third-quarter 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 $0.22 per share compared to the third quarter of 2012 primarily due to $0.07 per share from adjustments to Cleco Power's formula rate plan, $0.06 per share due to an adjustment to customer surcredits, and $0.05 per share from favorable weather.  Also contributing to this increase was $0.04 per share of higher transmission revenue. 

  • Higher other expenses, net, decreased earnings by $0.06 per share compared to the third quarter of 2012 primarily due to $0.07 per share of higher depreciation expense and $0.03 per share of higher property taxes.  These amounts were partially offset by $0.03 per share of lower net nonrecoverable wholesale fuel expenses and $0.01 per share of lower other miscellaneous expenses. 

  • Lower interest charges increased earnings by $0.03 per share compared to the third quarter of 2012 primarily due to $0.02 per share for an adjustment to customer surcredits from a tax settlement and $0.01 per share related to the refinancing of debt in 2013. 

  • Lower AFUDC decreased earnings by $0.01 per share compared to the third quarter of 2012 primarily due to the timing of capital expenditures relating to transmission projects.   

  • Higher income taxes decreased earnings by $0.08 per share compared to the third quarter of 2012 primarily due to $0.05 per share for the absence of favorable 2012 settlements with taxing authorities, $0.02 per share for a decrease in tax credits, and $0.01 per share for adjustments for tax returns as filed. 

Cleco Midstream Resources

  • Midstream's results decreased earnings by $0.04 per share compared to the third quarter of 2012 primarily due to $0.03 per share related to an increase in the liability for uncertain tax positions and $0.02 per share of lower tolling revenue. These amounts were partially offset by $0.01 per share of lower maintenance expenses at Evangeline.    

Corporate and Other

  • Higher other miscellaneous expenses decreased earnings by $0.02 per share compared to the third quarter of 2012

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

$2.11

Nine months ended Sept. 30, 2012, operational diluted earnings per share

0.37

Non-fuel revenue

(0.02)

Rate refund accrual

(0.22)

Other expenses, net

0.01

Interest charges

(0.03)

AFUDC

(0.09)

Income taxes

$0.02

Cleco Power results

0.04

Cleco Midstream results

(0.04)

Corporate and Other results

$2.13

Nine months ended Sept. 30, 2013, operational diluted earnings per share

0.10

Adjustments1

$2.23

Nine months ended Sept. 30, 2013, 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 $0.37 per share compared to the first nine months of 2012 primarily due to $0.15 per share from adjustments to Cleco Power's formula rate plan, $0.10 per share from increased sales due primarily to colder winter weather in the first quarter of 2013 and higher industrial sales, $0.06 per share due to an adjustment to customer surcredits, and $0.07 per share from higher transmission revenue.  Partially offsetting these increases were $0.01 per share of lower other miscellaneous revenue. 

  • Higher rate refund accrual decreased earnings by $0.02 per share compared to the first nine months of 2012 primarily due to the absence of the reversals of the 2012 cycle accrual and fuel audit reserves. 

  • Higher other expenses, net, decreased earnings by $0.22 per share compared to the first nine months of 2012 primarily due to $0.12 per share of higher depreciation expense, $0.06 per share of higher property taxes, $0.04 per share of higher maintenance expenses primarily related to outages, and $0.02 per share of higher other miscellaneous expenses.  These decreases were partially offset by $0.02 per share of lower net nonrecoverable wholesale fuel expenses.   

  • Lower interest charges increased earnings by $0.01 per share compared to the first nine months of 2012 primarily due to $0.03 per share related to the refinancing of debt in 2013 and $0.02 per share for an adjustment to customer surcredits due to a tax settlement, partially offset by $0.04 per share related to the absence of a favorable adjustment related to a tax settlement in 2012. 

  • Lower AFUDC decreased earnings by $0.03 per share compared to the first nine months of 2012 primarily due to the timing of capital expenditures relating to transmission projects. 

  • Higher income taxes decreased earnings by $0.09 per share compared to the first nine months of 2012 primarily due to $0.03 per share for the absence of favorable 2012 settlements with taxing authorities, $0.03 per share for a decrease in tax credits, $0.02 per share for a decrease in permanent tax deductions, and $0.01 per share for miscellaneous tax items. 

Cleco Midstream Resources

  • Midstream's results increased earnings by $0.04 per share compared to the first nine months of 2012 primarily due to $0.05 per share of higher tolling revenue due to the power purchase agreement with Cleco Power beginning May 2012, $0.02 per share of lower maintenance expense at Evangeline, and $0.01 per share of lower other miscellaneous expenses.  These increases were partially offset by $0.03 per share of higher tax expense due to an increase in the liability for uncertain tax positions and $0.01 per share primarily due to a loss on sale of assets at Evangeline. 

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 income taxes decreased earnings by $0.03 per share compared to the first nine months of 2012 primarily due to $0.06 per share for a decrease in tax credits, partially offset by $0.02 per share for adjustments for tax returns as filed and $0.01 per share for miscellaneous tax items. 

  • Higher other miscellaneous expenses decreased earnings by $0.01 per share compared to the first nine months of 2012

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

2013

2012

2013

2012

Operational diluted earnings per share

$1.09

$1.05

$2.13

$2.11

Life insurance policies

0.01

-

0.03

0.02

Tax levelization

(0.01)

-

-

-

Acadia Unit 1 indemnifications

-

-

-

0.07

Acadia Unit 2 indemnifications

-

-

0.07

0.12

Reported GAAP diluted earnings per share applicable to common stock

$1.09

$1.05

$2.23

$2.32

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 2013, 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.

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 reduce the indemnification liabilities either through expiration of the contractual life or through changes in the probability of a claim arising.  During the third quarters of 2013 and 2012, the contractual expiration of the underlying indemnifications had no impact on earnings.  The resulting adjustment for this item for the nine months ended September 30, 2013 and 2012, increased earnings by $0.07 and $0.19 per share, respectively.  

Cleco management will discuss the Company's third-quarter 2013 results during a conference call scheduled for 7:30 a.m. Central time (8:30 a.m. Eastern time) Thursday, Oct. 31, 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 "Q3 2013 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 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 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 Sept. 30

(Unaudited)

(million kWh)

(thousands)

2013

2012

Change

2013

2012

Change

Electric Sales

Residential

1,198

1,202

(0.3)%

$100,636

$96,954

3.8%

Commercial

793

784

1.1%

52,678

50,145

5.1%

Industrial

592

582

1.7%

23,875

21,993

8.6%

Other retail

35

36

(2.8)%

2,799

2,669

4.9%

Surcharge/Surcredit

-

-

-%

8,205

1,950

320.8%

Other

-

-

-%

(1,563)

(1,566)

0.2%

Total retail

2,618

2,604

0.5%

186,630

172,145

8.4%

Sales for resale

643

616

4.4%

13,657

12,459

9.6%

Unbilled

(45)

(69)

34.8%

(2,382)

(4,328)

45.0%

Total retail and wholesale
customer sales

3,216

3,151

2.1%

$197,905

$180,276

9.8%

 

For the nine months ended Sept. 30

(Unaudited)

(million kWh)

(thousands)

2013

2012

Change

2013

2012

Change

Electric Sales

Residential

2,839

2,834

0.2%

$227,151

$219,494

3.5%

Commercial

2,007

2,021

(0.7)%

141,406

136,208

3.8%

Industrial

1,723

1,710

0.8%

67,061

63,217

6.1%

Other retail

100

101

(1.0)%

7,860

7,436

5.7%

Surcharge/Surcredit

-

-

-%

12,496

6,801

83.7%

Other

-

-

-%

(4,694)

(4,686)

(0.2)%

Total retail

6,669

6,666

-%

451,280

428,470

5.3%

Sales for resale

1,583

1,472

7.5%

39,234

35,954

9.1%

Unbilled

107

11

872.7%

5,624

1,376

308.7%

Total retail and wholesale
customer sales

8,359

8,149

2.6%

$496,138

$465,800

6.5%

 

CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)

For the three months ended Sept. 30

2013

2012

Operating revenue

Electric operations

$314,766

$282,894

Other operations

14,843

15,408

Gross operating revenue

329,609

298,302

Electric customer credits

(846)

(930)

Operating revenue, net

328,763

297,372

Operating expenses

Fuel used for electric generation

101,752

79,701

Power purchased for utility customers

5,999

19,364

Other operations

30,057

30,517

Maintenance

20,427

20,059

Depreciation

41,756

34,931

Taxes other than income taxes

12,007

9,455

Gain on sale of assets

(29)

(2)

Total operating expenses

211,969

194,025

Operating income

116,794

103,347

Interest income

332

132

Allowance for other funds used during construction

1,303

1,882

Other income

2,837

1,834

Other expense

(1,456)

(1,232)

Interest charges

Interest charges, including amortization of debt expense and premium, net

19,436

22,610

Allowance for borrowed funds used during construction

(422)

(644)

Total interest charges

19,014

21,966

Income before income taxes

100,796

83,997

Federal and state income tax expense

34,389

20,179

Net income applicable to common stock

$66,407

$63,818

Average number of basic common shares outstanding

60,450,384

60,346,476

Average number of diluted common shares outstanding

60,748,647

60,599,203

Basic earnings per share

Net income applicable to common stock

$1.10

$1.06

Diluted earnings per share

Net income applicable to common stock

$1.09

$1.05

Cash dividends paid per share of common stock

$0.3625

$0.3375

 

CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)

For the nine months ended Sept. 30

2013

2012

Operating revenue

Electric operations

$796,957

$720,776

Other operations

37,917

38,464

Gross operating revenue

834,874

759,240

Electric customer credits

(1,270)

1,025

Operating revenue, net

833,604

760,265

Operating expenses

Fuel used for electric generation

259,728

207,764

Power purchased for utility customers

24,795

44,069

Other operations

88,420

86,901

Maintenance

64,372

61,478

Depreciation

110,529

99,028

Taxes other than income taxes

34,926

29,198

Loss (gain) on sale of assets

817

(57)

Total operating expenses

583,587

528,381

Operating income

250,017

231,884

Interest income

789

163

Allowance for other funds used during construction

2,880

4,298

Equity income from investees, before tax

-

1

Other income

12,282

24,223

Other expense

(2,146)

(2,718)

Interest charges

Interest charges, including amortization of debt expense and premium, net

62,284

64,671

Allowance for borrowed funds used during construction

(926)

(1,466)

Total interest charges

61,358

63,205

Income before income taxes

202,464

194,646

Federal and state income tax expense

66,892

54,110

Net income applicable to common stock

$135,572

$140,536

Average number of basic common shares outstanding

60,428,944

60,375,538

Average number of diluted common shares outstanding

60,694,632

60,626,471

Basic earnings per share

Net income applicable to common stock

$2.25

$2.33

Diluted earnings per share

Net income applicable to common stock

$2.23

$2.32

Cash dividends paid per share of common stock

$1.06

$0.9625

 

CLECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)

At Sept. 30, 2013

At Dec. 31, 2012

Assets

Current assets

Cash and cash equivalents

$46,800

$31,020

Accounts receivable, net

99,105

77,034

Other current assets

231,653

339,284

Total current assets

377,558

447,338

Property, plant and equipment, net

3,052,304

3,009,461

Equity investment in investees

14,541

14,540

Prepayments, deferred charges and other

683,114

676,010

Total assets

$4,127,517

$4,147,349

Liabilities

Current liabilities

Long-term debt due within one year

17,147

91,140

Accounts payable

86,768

102,695

Other current liabilities

140,880

100,795

Total current liabilities

244,795

294,630

Deferred credits

1,013,818

1,096,248

Long-term debt, net

1,290,990

1,257,258

Total liabilities

2,549,603

2,648,136

Shareholders' equity

Common shareholders' equity

1,607,239

1,531,583

Accumulated other comprehensive loss

(29,325)

(32,370)

Total shareholders' equity

1,577,914

1,499,213

Total liabilities and shareholders' equity

$4,127,517

$4,147,349