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Cleco Corp. Posts 2011 Second-Quarter Earnings of $70.2 Million or $1.15 Per Diluted Share; Company Raises 2011 Earnings Guidance to $2.30 - $2.40 Per Share

  • Higher operating and maintenance expenses reduced second quarter operational earnings of $0.52 per diluted share compared to $0.56 per diluted share for the same period in 2010[1]
  • Higher expenses, lower AFUDC, offset by revenue, reduced the first six months' operational earnings of $0.99 per diluted share compared to $1.14 per diluted share for the same period in 2010[1]

PINEVILLE, La., Aug. 3, 2011 - Cleco Corp. (NYSE: CNL) today announced results for the second quarter of 2011.

 

"With a full six months of new retail rates during 2011, we delivered strong regulated earnings, and as a result, we increased our customer refund accrual by more than $5 million.  We are pleased to share this success with our customers, and we are raising our 2011 earnings guidance from a range of $2.25 per share to $2.35 per share to a range of $2.30 per share to $2.40 per share," said Bruce Williamson, president and CEO of Cleco Corp.

"Our financial results for the quarter and the first six months of the year reflect the significant investments we've made in Cleco Power's infrastructure and the successful sale of Acadia Unit 2 to Entergy Louisiana.  We continue to make steady progress on our strategic initiatives and our plan to reduce our exposure to the merchant power business," said Williamson.

 

[1] See "Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures" for a reconciliation of operational diluted earnings per share (Non-GAAP) to diluted earnings per share applicable to common stock (GAAP) in this news release

 

 

 

Earnings Guidance:

 

Cleco has revised its 2011 consolidated operational earnings target to a range of $2.30 - $2.40 per diluted share.  This estimate assumes normal weather for the last two quarters of the year and includes positive impacts from mineral lease payments and amounts anticipated in the second half of the year for new markets tax credits.  This estimate excludes adjustments related to life insurance policies and the gain relating to the Acadia Unit 2 transaction.  Please refer to "Operational Earnings Adjustments" in this news release for a description of these adjustments on the company's earnings per diluted share in the three and six months ended June 30, 2011 and 2010.

 

 

Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures

 
  Diluted Earnings Per Share
  Three months ended June 30  
Subsidiary 2011   2010  
   Cleco Power LLC $   0.59   $   0.64  
   Cleco Midstream Resources LLC (0.07)      (0.03)  
   Corporate and Other[1]     -   (0.05)  
Operational diluted earnings per share (Non-GAAP) 0.52   0.56  
   Adjustments[2] 0.63   0.02  
Diluted earnings per share applicable to common stock $   1.15   $   0.58  

                                              
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

 

 

Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures

 
  Diluted Earnings Per Share
  Six months ended June 30  
Subsidiary 2011   2010  
   Cleco Power LLC $   1.08   $   1.18  
   Cleco Midstream Resources LLC (0.08)   (0.07)  
   Corporate and Other[1] (0.01)   0.03  
Operational diluted earnings per share (Non-GAAP) 0.99   1.14  
   Adjustments[2] 0.64   1.92  
Diluted earnings per share applicable to common stock $   1.63   $   3.06  

                                              

 

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

 

 

Financial Highlights:

 

Second Quarter 2011

  • Cleco reports second-quarter earnings applicable to common stock of $70.2 million or $1.15 per diluted share compared to $35.2 million or $0.58 per diluted share for the second quarter of 2010.

 

Year-to-Date 2011

  • Cleco reports earnings applicable to common stock for the first six months of 2011 of $99.2 million, or $1.63 per diluted share, compared to $185.1 million, or $3.06 per diluted share for the first six months of 2010.

 

 

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

 

$   0.56   2010 second-quarter operational diluted earnings per share
     
(0.01)   Non-fuel revenue, net of rate refund accrual
(0.06)   Other expenses, net
0.01   AFUDC (allowance for funds used during construction)
0.01   Income taxes
$   (0.05)   Cleco Power results
     
(0.04)   Cleco Midstream results
     
0.05   Corporate results
     
$   0.52   2011 second-quarter operational diluted earnings per share
     
0.63   Adjustments[1]
     
$   1.15   Reported GAAP diluted earnings per share

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

 

 

Cleco Power

  • Non-fuel revenue decreased earnings by $0.01 per share compared to the second quarter of 2010 primarily due to the estimated accrual for a rate refund of $0.05 per share, partially offset by $0.03 per share related to sales of fuel oil and $0.01 per share of higher electric sales, generally resulting from favorable weather.
  • Other expenses, net, were $0.06 per share higher compared to the second quarter of 2010 primarily due to $0.05 per share of higher employee benefit costs and administrative expenses and higher generating station maintenance work, primarily from an outage at Acadia Unit 1 and higher general maintenance work at Madison Unit 3.  Interest charges increased $0.02 per share primarily due to the November 2010 issuance of $250.0 million senior notes, partially offset by the repayment of insured quarterly notes and a bank term loan in October 2010 and November 2010, respectively.  These increases were partially offset by $0.01 per share due to the absence of expenses related to fixed-price power that was provided to a wholesale customer in the second quarter of 2010. 
  • AFUDC equity, primarily associated with the Acadiana Load Pocket transmission project, increased earnings by $0.01 per share compared to the second quarter of 2010.
  • Lower income taxes increased earnings by $0.01 per share compared to the second quarter of 2010 as the result of a $0.04 per share tax impact of a valuation allowance for capital loss carryforwards recorded in 2010 and reversed in 2011, partially offset by $0.03 per share to record tax expense at the annual projected effective tax rate. 

 

Cleco Midstream Resources

  • Evangeline's results decreased earnings by $0.03 per share compared to the second quarter of 2010 primarily due to higher maintenance expenses resulting from an outage.
  • Higher other expenses at Acadia decreased earnings $0.01 per share compared to the second quarter of 2010.

 

For a discussion of other transactions affecting the results of Cleco Midstream, please refer to "Operational Earnings Adjustments - Gains from Evangeline and Acadia Units 1 and 2 Transactions" in this news release.

 

 

Corporate and Other

  • Lower income taxes increased earnings by $0.04 per share compared to the second quarter of 2010 as the result of $0.03 per share to record tax expense at the consolidated projected annual effective tax rate and $0.01 per share for miscellaneous tax items.
  • Lower other miscellaneous expenses increased earnings by $0.01 per share compared to the second quarter of 2010.

 

 

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

 

$   1.14   Six months ended June 30, 2010, operational diluted earnings per share
     
0.19   Non-fuel revenue, net of rate refund accrual
(0.17)   Other expenses, net
(0.15)   AFUDC
0.03   Income taxes
$   (0.10)   Cleco Power results
     
(0.01)   Cleco Midstream results
     
(0.04)   Corporate results
     
$   0.99   Six months ended June 30, 2011, operational diluted earnings per share
     
0.64   Adjustments[1]
     
$   1.63   Reported GAAP diluted earnings per share

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

 

Cleco Power

  • Non-fuel revenue increased earnings by $0.19 per share compared to the first six months of 2010 primarily due to $0.26 per share related to the base rate increase that became effective in February 2010, which included Madison Unit 3 and the investment in Acadia Unit 1.  Also included in revenue were amounts related to the completed portions of the Acadiana Load Pocket transmission project.  Partially offsetting this increase was $0.06 per share of lower electric sales, primarily related to milder winter weather in the first quarter of 2011.  Also contributing to the increase in non-fuel revenue was $0.04 per share from sales of fuel oil and higher mineral lease payments.  Partially offsetting this increase was the estimated accrual for a rate refund of $0.05 per share.
  • Other expenses, net were $0.17 per share higher compared to the first six months of 2010 primarily due to $0.11 per share of higher generating station operating and maintenance expenses, primarily as a result of Madison Unit 3 being placed in service and the acquisition of Acadia Unit 1 both in the first quarter of 2010, and higher employee benefit costs and administrative expenses.  Partially offsetting these increases were lower professional fees.  Also contributing to the increase was $0.05 per share of higher depreciation expense, $0.05 per share of higher interest charges and $0.01 per share of higher taxes other than income taxes.  Partially offsetting these increases were $0.03 per share of lower capacity payments and $0.02 per share from the absence of expenses related to fixed-price power that was provided to a wholesale customer during the first six months of 2010.
  • AFUDC, primarily associated with the first quarter 2010 completion of the Madison Unit 3 project, reduced earnings $0.15 per share compared to the first six months of 2010.
  • Lower income taxes increased earnings by $0.03 per share compared to the first six months of 2010 due to the absence in 2011 of $0.03 per share of tax expense resulting from healthcare legislation changes affecting Medicare Part D, $0.04 per share for the tax impact of a valuation allowance for capital loss carryforwards recorded in 2010 and reversed in 2011, and $0.01 per share to record tax expense at the annual projected effective tax rate.  Partially offsetting these increases was the absence in 2011 of the $0.05 per share reduction in tax expense that occurred as a result of the implementation of new retail base rates.

 

Cleco Midstream Resources

  • Evangeline's results decreased $0.05 per share compared to the first six months of 2010primarily due to higher maintenance expenses and lower tolling revenue resulting from the Evangeline restructuring and pricing of the new tolling agreement.  Partially offsetting this decrease was lower interest charges.
  • Acadia's results increased $0.05 per share compared to the first six months of 2010primarily due to lower maintenance expenses related to outages and the sale of Acadia Units 1 and 2, and the contractual expiration of an underlying indemnification related to the sale of Acadia Unit 1.
  • Higher other expenses at Midstream decreased results $0.01 per share compared to the first six months of 2010.

 

For a discussion of other transactions affecting the results of Cleco Midstream, please refer to "Operational Earnings Adjustments - Gains from Evangeline and Acadia Units 1 and 2 Transactions" below.

 

 

Corporate and Other

  • Higher income taxes decreased earnings by $0.03 per share compared to the first six months of 2010 as a result of $0.06 per share to record tax expense at the annual projected effective tax rate, partially offset by $0.03 per share for miscellaneous tax items.
  • Higher other miscellaneous expenses decreased earnings by $0.01 per share compared to the first six months of 2010.

 

 

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.

 

 

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

 

  Diluted Earnings Per Share
  Three months ended June 30
  2011   2010
Operational diluted earnings per share $   0.52   $   0.56
      Tax levelization -   0.02
      Gain from Acadia Unit 2 transaction 0.63      -
Reported GAAP diluted earnings per share applicable to common stock $   1.15   $   0.58

 

  Diluted Earnings Per Share
  Six months ended June 30
  2011   2010
Operational diluted earnings per share $   0.99   $   1.14
      Life insurance policy adjustments 0.01   -
      Gain from Evangeline transaction -   1.51
      Gain from Acadia Unit 1 transaction -   0.41
      Gain from Acadia Unit 2 transaction 0.63      -
Reported GAAP diluted earnings per share applicable to common stock $   1.63   $   3.06

 

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

 

 

Life Insurance Policy Adjustments

 

Cleco has life insurance policies covering certain members of management.  These assets are acquired at fair value and adjusted for changes in market value and any payments/redemptions of cash surrender values.  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. 

 

Tax Levelization

 

Generally accepted accounting principles require 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, quarterly, 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. The resulting adjustment for this item had no impact for the second quarter of 2011. During the second quarter of 2010, Cleco recorded a $0.02 per share benefit from the levelization of its annual tax rate to bring the actual tax rate in line with the projected annual effective tax rate. 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.

 

Gains from Evangeline and Acadia Units 1 and 2 Transactions

 

On Feb. 22, 2010, the then existing Evangeline tolling agreement was terminated and a new tolling agreement was executed with the same counterparty resulting in the recognition of a gain of $1.51 per share for 2010.  On Feb. 23, 2010, Cleco Power's acquisition of Acadia Unit 1 and half of Acadia Power Station's common facilities was completed resulting in the recognition of a gain of $0.41 per share for 2010.  On April 29, 2011, the sale of Acadia Unit 2 and Acadia Power Station's remaining common facilities was completed resulting in the recognition of a gain of $0.63 per share for 2011.  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 second-quarter and year-to-date 2011 results during a conference call scheduled for 11 a.m. Eastern time (10 a.m. Central time) Thursday, Aug. 4, 2011.  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.comby selecting "Investor Relations" and then "Q2 2011 Cleco Corp. Earnings Conference Call."

 

Cleco Corp. is a regional energy company headquartered in Pineville, La. It operates a regulated electric utility company, Cleco Power LLC, which serves about 279,000 retail customers across Louisiana.  Cleco also operates a wholesale energy business, Cleco Midstream Resources LLC.  For more information about Cleco, visit www.cleco.com.

 

 

 

  For the three months ended June 30
(Unaudited) (million kWh)   (thousands)
  2011   2010   Change   2011   2010   Change
Electric Sales                      
   Residential 871   854   2.0 %   $   69,338   $   62,012   11.8 %
   Commercial 648   627   3.3 %   44,309   39,140   13.2 %
   Industrial 597   543   9.9 %   21,205   19,050   11.3 %
   Other retail 33   34   (2.9)%   2,418   2,249   7.5 %
   Surcharge -   -   -   2,833   1,660   70.7 %
   Other    -      -   -   (1,585)   (1,704)   7.0 %
     Total retail 2,149   2,058   4.4 %   138,518   122,407   13.2 %
   Sales for resale 397   426   (6.8)%   11,039   10,673   3.4 %
   Unbilled 204   251   (18.7)%   8,377   23,977   (65.1)%
Total retail and wholesale
customer sales
2,750   2,735   0.5 %   $   157,934   $   157,057   0.6 %

 

  For the six months ended June 30
(Unaudited) (million kWh)   (thousands)
  2011   2010   Change   2011   2010   Change
Electric Sales                      
        Residential 1,831   1,893   (3.3)%   $   136,527   $   108,509   25.8 %
        Commercial 1,242   1,219   1.9 %   88,401   68,703   28.7 %
        Industrial 1,151   1,087   5.9 %   41,855   33,211   26.0 %
        Other retail 66   69   (4.3)%   4,884   4,006   21.9 %
        Surcharge -   -   -   4,550   5,855   (22.3)%
        Other    -      -   -   (3,295)   (2,679)   (23.0)%
                Total retail 4,290   4,268   0.5 %   272,922   217,605   25.4 %
        Sales for resale 843   902   (6.5)%   22,978   19,456   18.1 %
        Unbilled 39   127   (69.3)%   (3,893)   34,944   (111.1)%
Total retail and wholesale
customer sales
5,172   5,297   (2.4)%   $   292,007   $   272,005   7.4 %

 

 




CLECO CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Thousands, except share and per share amounts)
(Unaudited)

 
For the three months ended June 30 2011   2010
Operating revenue      
   Electric operations $   260,485   $   261,101
   Tolling operations 4,222   4,399
   Other operations 12,983   10,245
   Affiliate revenue     55      158
     Gross operating revenue 277,745   275,903
     Electric customer credits (4,822)       -
     Operating revenue, net 272,923   275,903
Operating expenses      
   Fuel used for electric generation 78,268   81,558
   Power purchased for utility customers 25,477   24,508
   Other operations 31,671   29,845
   Maintenance 28,269   21,633
   Depreciation 29,985   29,798
   Taxes other than income taxes 9,464   8,565
   Gain on sale of assets (506)   (98)
     Total operating expenses 202,628   195,809
Operating income 70,295   80,094
Interest income 170   80
Allowance for other funds used during construction 876   359
Equity income (loss) from investees, before tax 61,440   (1,129)
Other income 1,050   266
Other expense (1,344)    (2,577)
Interest charges      
   Interest charges, including amortization of debt expenses,
     premium, and discount, net of capitalized interest
25,935   24,663
   Allowance for borrowed funds used during construction (316)   (145)
     Total interest charges 25,619   24,518
Income before income taxes 106,868   52,575
Federal and state income tax expense 36,520   17,389
Net income 70,348   35,186
Preferred dividends requirements, net of tax 15   12
Preferred stock redemption costs, net of tax 112      -
Net income applicable to common stock $   70,221   $   35,174
       
Average number of basic common shares outstanding 60,655,538   60,431,930
Average number of diluted common shares outstanding 61,023,439   60,705,269
Basic earnings per share      
   Net income applicable to common stock $   1.16   $   0.58
Diluted earnings per share      
   Net income applicable to common stock $   1.15   $   0.58
Cash dividends paid per share of common stock $   0.28   $   0.25

 

 









CLECO CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Thousands, except share and per share amounts)
(Unaudited)

 
For the six months ended June 30 2011   2010
Operating revenue      
   Electric operations $   498,953   $   513,899
   Tolling operations 7,003   11,863
   Other operations 25,711   21,119
   Affiliate revenue 202   1,307
     Gross operating revenue 531,869   548,188
     Electric customer credits (5,256)      -
     Operating revenue, net 526,613   548,188
Operating expenses      
   Fuel used for electric generation 175,236   176,140
   Power purchased for utility customers 33,926   72,727
   Other operations 59,336   56,499
   Maintenance 45,078   35,470
   Depreciation 59,084   54,051
   Taxes other than income taxes 18,924   17,367
   Gain on sale of assets (496)   (57)
     Total operating expenses 391,088   412,197
Operating income 135,525   135,991
Interest income 285   242
Allowance for other funds used during construction 2,854   10,165
Equity income from investees, before tax 62,052   36,718
Gain on toll settlement -   148,402
Other income 2,254   807
Other expense (2,661)   (2,962)
Interest charges      
   Interest charges, including amortization of debt expenses,
premium, and discount, net of capitalized interest
53,263   50,670
   Allowance for borrowed funds used during construction (1,031)   (3,718)
     Total interest charges 52,232   46,952
Income before income taxes 148,077   282,411
Federal and state income tax expense 48,714   97,256
Net income 99,363   185,155
Preferred dividends requirements, net of tax 26   23
Preferred stock redemption costs, net of tax 112      -
Net income applicable to common stock $   99,225   $   185,132
       
Average number of basic common shares outstanding 60,613,371   60,374,233
Average number of diluted common shares outstanding 60,797,545   60,519,066
Basic earnings per share      
   Net income applicable to common stock $   1.64   $   3.07
Diluted earnings per share      
   Net income applicable to common stock $   1.63   $   3.06
Cash dividends paid per share of common stock $   0.53   $   0.475

 

 

CLECO CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)

 
  At June 30, 2011   At Dec. 31, 2010
Assets      
Current Assets      
   Cash and cash equivalents $   162,126   $   191,128
   Accounts receivable, net 97,050   92,197
   Other current assets 304,562   325,525
     Total Current Assets 563,738   608,850
Property, plant and equipment, net 2,811,522   2,784,225
Equity investment in investees 13,083   86,732
Prepayments, deferred charges and other 670,376   681,603
   Total Assets $   4,058,719   $   4,161,410
Liabilities      
Current Liabilities      
   Short-term debt $   -   $   150,000
   Long-term debt due within one year 12,683   12,269
   Accounts payable 114,781   125,923
   Other current liabilities 250,558   189,489
     Total Current Liabilities 378,022   477,681
Deferred credits 906,276   965,813
Long-term debt, net 1,387,346   1,399,709
   Total Liabilities 2,671,644   2,843,203
Shareholders' Equity      
   Preferred stock -   1,029
   Common shareholders' equity 1,398,182   1,328,816
   Accumulated other comprehensive loss (11,107)   (11,638)
Total Shareholders' Equity 1,387,075   1,318,207
   Total Liabilities and Shareholders' Equity $   4,058,719   $   4,161,410

 

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 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 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.

                                          ###



Analyst Contact:
Cleco Corp.
Russell Davis
(318) 484-7501
Russell.Davis@cleco.com

Investor Contact:
Cleco Corp.
Rodney Hamilton
(318) 484-7593
Rodney.Hamilton@cleco.com

Media Contact:
Cleco Corp.
Fran Phoenix
(318) 484-7467

HUG#1536098

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