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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., Oct., 30, 2013 - 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  

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

1Refer 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

1Refer 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  

 


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