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Cleco Corporation ends second quarter with operational earnings of $0.62 per diluted share

  • Receives state regulatory approval to join MISO
  • Affirms 2013 earnings guidance of $2.45 to $2.55 per diluted share 

PINEVILLE, La., July 31, 2013 - Cleco Corporation (NYSE: CNL) posted 2013 second-quarter operational earnings of $37.4 million, or $0.62 per share, down from $39.4 million, or $0.64 per diluted share recorded in the second quarter of 2012. Operational earnings exclude amounts for underlying indemnifications and other nonoperational adjustments. Generally accepted accounting principles (GAAP) earnings for the second quarter of 2013 were $42.0 million, or $0.69 per diluted share, down from $46.7 million, or $0.77 per diluted share recorded in the second quarter of 2012.

"In the second quarter, we experienced slightly milder weather compared to last year but saw revenues increase through expected rate adjustments in our formula rate plan and through increased transmission revenues associated with our recently completed transmission rate case," said Bruce Williamson, president and CEO of Cleco Corporation. "While we continued our management of controllable operating expenses, planned outages at our regulated generation facilities during the second quarter increased overall operating expenses and reduced operating earnings for the quarter.

 "On a strategic front, we received approval from the Louisiana Public Service Commission to join the Midcontinent Independent System Operator, Inc. (MISO), which provides growth possibilities through wholesale contracts and transmission and generation expansion," said Williamson. "In addition to MISO, we are progressing on our other key regulatory initiatives with filings made early in the second quarter regarding the transfer of Coughlin into Cleco Power and an extension to our formula rate plan.

"We are confident in our ability to manage costs and efficiently operate our utility; therefore, we are affirming our current earnings guidance range of $2.45 to $2.55 per diluted share for 2013," said Williamson. "We are focused on growing our company through Cleco Power, which provides low-risk earnings growth for our shareholders. This guidance assumes normal weather for the remainder of the year, minimal earnings contribution from Midstream and excludes non-operational adjustments."

Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures
         
  Diluted Earnings Per Share
  For the three months
ended June 30
  For the six months
ended June 30
Subsidiary 2013   2012   2013   2012
Cleco Power LLC   $0.57       $0.60       $1.03       $1.06  
Cleco Midstream Resources LLC 0.03     (0.01)     0.01     (0.06)  
Corporate and Other 0.02     0.05     0.02     0.07  
Operational diluted earnings per share (Non-GAAP) 0.62     0.64     1.06     1.07  
Adjustments1 0.07     0.13     0.08     0.20  
Diluted earnings per share applicable to common stock   $0.69       $0.77       $1.14       $1.27  

Refer to "Operational Earnings Adjustments" in this news release

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

  $0.64     2012 second-quarter operational diluted earnings per share
     
0.05     Non-fuel revenue
(0.10)     Other expenses, net
(0.01)     AFUDC (allowance for funds used during construction)
0.03     Income taxes
  $(0.03)     Cleco Power results
     
0.04     Cleco Midstream results
     
(0.03)     Corporate and Other results
     
  $0.62     2013 second-quarter operational diluted earnings per share
     
0.07     Adjustments1
     
  $0.69     2013 second-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 $0.05 per share compared to the second quarter of 2012 primarily due to $0.04 per share from adjustments to Cleco Power's formula rate plan.  Also contributing to this increase was $0.01 per share of higher transmission and other revenue. 

  • Higher other expenses, net, decreased earnings by $0.10 per share compared to the second quarter of 2012 primarily due to $0.04 per share from higher generation expenses relating to outages, $0.04 per share from higher consulting expenses, higher property taxes, and higher other miscellaneous expenses, and $0.02 per share of higher depreciation expense. 

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

  • Lower income taxes increased earnings by $0.03 per share compared to the second quarter of 2012 primarily due to the adjustment to record tax expense at the projected annual effective tax rate. 

Cleco Midstream Resources

  • Midstream's results increased earnings by $0.04 per share compared to the second quarter of 2012 primarily due to $0.03 per share of higher tolling revenue and $0.02 per share of lower maintenance expenses at Evangeline.  These amounts were partially offset by $0.01 per share of higher interest charges primarily related to uncertain tax positions. 

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 second quarter of 2012 primarily due to $0.03 per share for the adjustment to record tax expense at the consolidated projected annual effective tax rate and $0.01 per share for tax credits.  These amounts were partially offset by $0.01 per share for permanent tax deductions. 

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

     
  $1.07       Six months ended June 30, 2012, operational diluted earnings per share
     
0.14     Non-fuel revenue
(0.02)     Rate refund accrual
(0.13)     Other expenses, net
(0.03)     Interest charges
(0.01)     AFUDC
0.02     Income taxes
  $(0.03)     Cleco Power results
     
0.07     Cleco Midstream results
     
(0.05)     Corporate and Other results
     
  $1.06     Six months ended June 30, 2013, operational diluted earnings per share
     
0.08     Adjustments1
     
  $1.14     Six months ended June 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 $0.14 per share compared to the first six months of 2012 primarily due to $0.08 per share from adjustments to Cleco Power's formula rate plan, $0.05 per share from increased sales due primarily to weather, and $0.03 per share from higher transmission revenue.  Partially offsetting these increases were $0.01 per share from lower mineral lease payments and $0.01 per share from other revenue. 

  • Higher rate refund accrual decreased earnings by $0.02 per share compared to the first six 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 $0.13 per share compared to the first six months of 2012 primarily due to $0.05 per share of higher depreciation expense, $0.03 per share of higher generation maintenance expenses primarily related to outages, $0.03 per share of higher property taxes, $0.01 per share of higher consulting expenses, and $0.01 per share of higher other miscellaneous expenses.   

  • Higher interest charges decreased earnings by $0.03 per share compared to the first six months of 2012 primarily due to $0.05 per share from the absence of a favorable adjustment related to a tax settlement in 2012, partially offset by $0.01 per share related to reacquired debt and $0.01 per share related to the retirement of pollution control bonds. 

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

  • Lower income taxes increased earnings by $0.02 per share compared to the first six months of 2012 primarily due to $0.03 per share for the adjustment to record tax expense at the projected annual effective tax rate and $0.02 per share for settlements with taxing authorities, partially offset by $0.02 per share for permanent tax deductions and $0.01 per share for the flowthrough of tax benefits. 

Cleco Midstream Resources

  • Midstream's results increased earnings by $0.07 per share compared to the first six months of 2012 primarily due to higher tolling revenue due to the power purchase agreement with Cleco Power beginning May 2012 and the absence of availability penalties from 2012. 

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 $0.05 per share compared to the first six months of 2012 primarily due to $0.03 per share for the adjustment to record tax expense at the consolidated projected annual effective tax rate and $0.02 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 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 June 30
  For the six months
ended June 30
  2013   2012   2013   2012
Operational diluted earnings per share   $0.62       $0.64       $1.06       $1.07  
Life insurance policies -     -     0.01     0.01  
Tax levelization -     0.01     -     -  
Acadia Unit 1 indemnifications -     -     -     0.07  
Acadia Unit 2 indemnifications 0.07     0.12     0.07     0.12  
Reported GAAP diluted earnings per share applicable to common stock   $0.69       $0.77       $1.14       $1.27  

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 second quarter of 2012, Cleco recorded a $0.01 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 resulting adjustment for this item had no impact for the second quarter of 2013.  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 will reduce the indemnification liabilities either through expiration of the contractual life or through changes in the probability of a claim arising.  During the second quarters of 2013 and 2012, the contractual expiration of the underlying indemnifications increased earnings $0.07 and $0.12 per share, respectively.  The resulting adjustment for this item for the six months ended June 30, 2013 and 2012, increased earnings by $0.07 and $0.19 per share, respectively.  

Cleco management will discuss the company's second-quarter 2013 results during a conference call scheduled for 7:30 a.m. Central time (8:30 a.m. Eastern time) Thursday, August 1, 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 "Q2 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, visitwww.cleco.com.

Analyst Contact:
Tom Miller
(318) 484-7642
 
Media Contact:
Robbyn Cooper
(318) 484-7136

  For the three months ended June 30  
(Unaudited) (million kWh)     (thousands)      
  2013   2012   Change   2013   2012   Change
Electric Sales                      
Residential 801     848     (5.5)%       $64,815       $66,150     (2.0)%  
Commercial 632     667     (5.2)%     44,679     44,317     0.8%  
Industrial 575     578     (0.5)%     22,061     21,132     4.4%  
Other retail 33     33     -%     2,494     2,407     3.6%  
Surcharge -     -     -%     2,054     2,036     0.9%  
Other -     -     -%     (1,566)     (1,566)     -%  
Total retail 2,041     2,126     (4.0)%     134,537     134,476     -%  
Sales for resale 498     466     6.9%     13,299     11,710     13.6%  
Unbilled 215     168     28.0%     12,195     10,006     21.9%  
Total retail and wholesale
customer sales
2,754     2,760     (0.2)%       $160,031       $156,192     2.5%  

                       
  For the six months ended June 30  
(Unaudited) (million kWh)     (thousands)      
  2013     2012     Change   2013     2012     Change
Electric Sales                      
Residential 1,642     1,632     0.6%       $126,515       $122,540     3.2%  
Commercial 1,214     1,237     (1.9)%     88,728     86,064     3.1%  
Industrial 1,130     1,128     0.2%     43,186     41,224     4.8%  
Other retail 65     65     -%     5,061     4,767     6.2%  
Surcharge -     -     -%     4,291     4,851     (11.5)%  
Other -     -     -%     (3,131)     (3,120)     (0.4)%  
Total retail 4,051     4,062     (0.3)%     264,650     256,326     3.2%  
Sales for resale 939     856     9.7%     25,577     23,495     8.9%  
Unbilled 152     80     90.0%     8,007     5,703     40.4%  
Total retail and wholesale
customer sales
5,142     4,998     2.9%       $298,234       $285,524     4.5%  

CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the three months ended June 30 2013   2012
Operating revenue      
Electric operations   $252,765       $228,293  
Other operations 11,531     12,111  
Gross operating revenue 264,296     240,404  
Electric customer credits (402)     (281)  
Operating revenue, net 263,894     240,123  
Operating expenses      
Fuel used for electric generation 72,611     54,999  
Power purchased for utility customers 13,940     16,068  
Other operations 31,442     28,688  
Maintenance 26,310     24,184  
Depreciation 34,740     32,250  
Taxes other than income taxes 10,285     9,713  
Gain on sale of assets (188)     (22)  
Total operating expenses 189,140     165,880  
Operating income 74,754     74,243  
Interest income 257     (3)  
Allowance for other funds used during construction 413     1,399  
Other income 8,165     13,014  
Other expense (1,247)     (831)  
Interest charges      
Interest charges, including amortization of debt expense and premium, net 21,017     21,094  
Allowance for borrowed funds used during construction (129)     (478)  
Total interest charges 20,888     20,616  
Income before income taxes 61,454     67,206  
Federal and state income tax expense 19,422     20,520  
Net income applicable to common stock   $42,032       $46,686  
       
Average number of basic common shares outstanding 60,445,617     60,421,028  
Average number of diluted common shares outstanding 60,713,374     60,660,702  
Basic earnings per share      
Net income applicable to common stock   $0.70       $0.77  
Diluted earnings per share      
Net income applicable to common stock   $0.69       $0.77  
Cash dividends paid per share of common stock   $0.3625       $0.3125  
 

       
CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the six months ended June 30 2013   2012
Operating revenue      
Electric operations   $482,191       $437,883  
Other operations 23,074     23,056  
Gross operating revenue 505,265     460,939  
Electric customer credits (424)     1,955  
Operating revenue, net 504,841     462,894  
Operating expenses      
Fuel used for electric generation 157,976     128,063  
Power purchased for utility customers 18,796     24,705  
Other operations 58,363     56,385  
Maintenance 43,944     41,419  
Depreciation 68,773     64,097  
Taxes other than income taxes 22,919     19,743  
Loss (gain) on sale of assets 846     (55)  
Total operating expenses 371,617     334,357  
Operating income 133,224     128,537  
Interest income 457     31  
Allowance for other funds used during construction 1,577     2,416  
Equity income from investees, before tax -     1  
Other income 10,438     22,389  
Other expense (1,683)     (1,486)  
Interest charges      
Interest charges, including amortization of debt expense and premium, net 42,848     42,062  
Allowance for borrowed funds used during construction (504)     (822)  
Total interest charges 42,344     41,240  
Income before income taxes 101,669     110,648  
Federal and state income tax expense 32,503     33,930  
Net income applicable to common stock   $69,166       $76,718  
       
Average number of basic common shares outstanding 60,419,588     60,387,388  
Average number of diluted common shares outstanding 60,670,112     60,625,377  
Basic earnings per share      
Net income applicable to common stock   $1.15       $1.27  
Diluted earnings per share      
Net income applicable to common stock   $1.14       $1.27  
Cash dividends paid per share of common stock   $0.70       $0.625  
 

CLECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)
  At June 30, 2013   At Dec. 31, 2012
Assets      
Current assets      
Cash and cash equivalents   $7,567       $31,020  
Accounts receivable, net 89,425     77,034  
Other current assets 288,943     339,284  
Total current assets 385,935     447,338  
Property, plant and equipment, net 3,042,221     3,009,461  
Equity investment in investees 14,541     14,540  
Prepayments, deferred charges and other 673,439     676,010  
Total assets   $4,116,136       $4,147,349  
Liabilities      
Current liabilities      
Short-term debt   $3,000       $-  
Long-term debt due within one year 16,658     91,140  
Accounts payable 93,981     102,695  
Other current liabilities 120,177     100,795  
Total current liabilities 233,816     294,630  
Deferred credits 1,027,221     1,096,248  
Long-term debt, net 1,323,765     1,257,258  
Total liabilities 2,584,802     2,648,136  
Shareholders' equity      
Common shareholders' equity 1,561,209     1,531,583  
Accumulated other comprehensive loss (29,875)     (32,370)  
Total shareholders' equity 1,531,334     1,499,213  
Total liabilities and shareholders' equity   $4,116,136       $4,147,349  

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