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Cleco Corporation posts 2012 second-quarter operational earnings of $39.4 million, or $0.64 per diluted share; Company reaffirms operational earnings guidance and increases dividend by eight percent

PINEVILLE, La., July 31, 2012 - Cleco Corporation (NYSE: CNL) posted 2012 second-quarter earnings of $46.7 million, or $0.77 per diluted share, down $23.5 million from the $70.2 million recorded in the second quarter of 2011.  Operational earnings for the second quarter of 2012, which excludes amounts for the contractual expiration of underlying indemnifications related to the Acadia Unit 2 transaction and other nonoperational gains, were $39.4 million, or $0.64 per diluted share, compared to $31.7 million, or $0.52 per diluted share for the second quarter of 2011.

"From a consolidated operational earnings viewpoint, we are pleased with our 2012 second-quarter and year-to-date results," said Bruce Williamson, president and CEO of Cleco Corporation.  "Although milder weather in the second quarter and first six months of the year negatively impacted earnings, our results improved overall.  Major factors contributing to the increase in operational earnings include lower operating expenses, a decrease in Cleco Power's 2012 rate refund accrual compared to the refund accrual in the second quarter of 2011 and lower interest charges.  These factors in combination with our ongoing, aggressive cost-management efforts are helping us overcome less-than-favorable weather and still deliver positive results.  As a result, we are reaffirming our 2012 consolidated operational earnings with a range of $2.34 per diluted share to $2.44 per diluted share."

"It is because of our confidence in our long-term position and Cleco's strong balance sheet that the board recently approved an eight percent increase in our quarterly dividend from $0.3125 per share to $0.3375 per share," said Williamson.  "This is the fourth dividend increase in the past three years.  Since 2010, Cleco has raised its dividend by a total of 50 percent from $0.90 per share to $1.35 per share.  With our new annual dividend rate and our reaffirmed earnings guidance, we expect to achieve a dividend payout ratio between 55 percent and 58 percent for 2012.  This puts us well within our goal of a long-term dividend payout ratio between 50 percent and 60 percent of our sustainable earnings."

Financial Highlights:

Second Quarter 2012

  • Cleco reports second-quarter earnings applicable to common stock of $46.7 million, or $0.77 per diluted share, compared to $70.2 million, or $1.15 per diluted share for the second quarter of 2011. 

Year-to-Date 2012

  • Cleco reports earnings applicable to common stock for the first six months of 2012 of $76.7 million, or $1.27 per diluted share, compared to $99.2 million, or $1.63 per diluted share for the first six months of 2011. 

Dividend:
On July 26, 2012, the board of directors of Cleco Corporation declared a dividend of $0.3375 per share of common stock payable on Aug. 15, 2012 to shareholders of record as of Aug. 7, 2012.  The eight percent increase will result in an annual dividend rate of $1.35 per share of Cleco common stock.

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 2012   2011   2012   2011
Cleco Power LLC   $0.60       $0.59       $1.06       $1.08  
Cleco Midstream Resources LLC (0.01)     (0.07)     (0.06)     (0.09)  
Corporate and Other1 0.05     -     0.07     (0.01)  
Operational diluted earnings per share (Non-GAAP) 0.64     0.52     1.07     0.98  
Adjustments2 0.13     0.63     0.20     0.65  
Diluted earnings per share applicable to common stock   $0.77       $1.15       $1.27       $1.63  

GAAP refers to United States generally accepted accounting principles.

Includes 2011 preferred stock dividends and redemption costs 
Refer to "Operational Earnings Adjustments" in this news release

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

  $0.52     2011 second quarter operational diluted earnings per share
     
(0.05)     Non-fuel revenue
0.05     Rate refund accrual
0.02     Other expenses, net
0.03     Interest charges
0.01     AFUDC (allowance for funds used during construction)
(0.05)     Income taxes
  $0.01     Cleco Power results
     
0.06     Cleco Midstream results
     
0.05     Corporate and Other results
     
  $0.64     2012 second-quarter operational diluted earnings per share
     
0.13     Adjustments1
     
  $0.77     2012 second-quarter reported GAAP diluted earnings per share

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

Cleco Power

  • Non-fuel revenue decreased earnings by $0.05 per share compared to the second quarter of 2011 primarily due to $0.03 per share from the absence of a gain on the sale of Cleco Power's fuel oil inventory and $0.02 per share primarily due to milder weather.   

  • Lower rate refund accrual increased earnings by $0.05 per share compared to the second quarter of 2011. 

  • Other expenses, net, increased earnings by $0.02 per share compared to the second quarter of 2011 primarily due to $0.05 per share of lower other operations and maintenance expenses, partially offset by $0.02 per share of higher depreciation expense and $0.01 per share of higher capacity charges.   

  • Lower interest charges increased earnings by $0.03 per share compared to the second quarter of 2011 primarily due to $0.02 per share related to uncertain tax positions, $0.02 per share related to reacquired debt in October and December 2011, and $0.01 per share related to the retirement of pollution control bonds in January and May 2012.  The issuance of private placement notes in December 2011 and May 2012 partially offset these amounts by $0.02 per share. 

  • AFUDC increased earnings by $0.01 per share compared to the second quarter of 2011 primarily due to higher AFUDC related to the advanced metering infrastructure project and miscellaneous transmission projects. 

  • Higher income taxes decreased earnings by $0.05 per share compared to the second quarter of 2011 primarily due to $0.02 per share related to the absence in 2012 of the valuation allowance reversal in 2011, $0.02 per share for miscellaneous tax items, and $0.01 per share to record tax expense at the projected annual effective tax rate.   

Cleco Midstream Resources

  • Evangeline's results increased earnings by $0.04 per share compared to the second quarter of 2011 primarily due to higher tolling revenue resulting from the power purchase agreements with Cleco Power that began in 2012 as compared to the tolling agreement with J.P. Morgan Ventures Energy Corporation in 2011.  Also contributing to the increase were lower interest charges related to uncertain tax positions.  

  • Acadia's results increased earnings by $0.02 per share compared to the second quarter of 2011 primarily due to the absence of operating expenses following the 2011 disposition of Acadia Unit 2.  

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

Corporate and Other

  • Lower income taxes increased earnings by $0.05 per share compared to the second quarter of 2011 as a result of $0.03 per share for higher tax credits and $0.02 per share to record tax expense at the consolidated projected annual effective tax rate. 

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

  $0.98     Six months ended June 30, 2011, operational diluted earnings per share
     
(0.11)     Non-fuel revenue
0.07     Rate refund accrual
(0.02)     Other expenses, net
0.10     Interest charges
(0.06)     Income taxes
  $(0.02)     Cleco Power results
     
0.03     Cleco Midstream results
     
0.08     Corporate and Other results
     
  $1.07     Six months ended June 30, 2012, operational diluted earnings per share
     
0.20     Adjustments1
     
  $1.27     Six months ended June 30, 2012, reported GAAP diluted earnings per share

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

Cleco Power

  • Non-fuel revenue decreased earnings by $0.11 per share compared to the first six months of 2011 primarily due to $0.06 per share from milder winter weather and $0.05 per share from lower mineral lease payments, lower transmission revenue, and the absence of a gain on the sale of Cleco Power's fuel oil inventory.   

  • Lower rate refund accrual increased earnings by $0.07 per share compared to the first six months of 2011. 

  • Other expenses, net, decreased earnings by $0.02 per share compared to the first six months of 2011 primarily due to $0.03 per share of higher depreciation expense, $0.02 per share of higher capacity charges, and $0.01 per share of higher other miscellaneous expenses.  Partially offsetting these increases were $0.04 per share of lower other operations and maintenance expenses.   

  • Lower interest charges increased earnings by $0.10 per share compared to the first six months of 2011 primarily due to $0.07 per share related to uncertain tax positions and $0.04 per share related to reacquired debt in October and December 2011.  Also contributing to the increase was $0.01 per share related to the retirement of pollution control bonds in January and May 2012 and $0.01 per share of lower other net miscellaneous interest charges.  Partially offsetting these amounts was $0.03 per share related to the issuance of private placement notes in December 2011 and May 2012. 

  • Higher income taxes decreased earnings by $0.06 per share compared to the first six months of 2011 primarily due to $0.02 per share related to the absence in 2012 of the valuation allowance reversal in 2011, $0.02 per share for miscellaneous tax items, $0.01 per share for lower tax credits, and $0.01 per share to record tax expense at the projected annual effective tax rate.   

Cleco Midstream Resources

  • Evangeline's results increased earnings by $0.02 per share compared to the first six months of 2011 primarily due to lower interest related to uncertain tax positions and higher tolling revenue resulting from the power purchase agreements with Cleco Power that began in 2012 as compared to the tolling agreement with J.P. Morgan Ventures Energy Corporation in 2011.  

  • Acadia's results increased earnings by $0.01 per share compared to the first six months of 2011 primarily due to the absence of operating expenses following the 2011 disposition of Acadia Unit 2.  

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

Corporate and Other

  • Lower income taxes increased earnings by $0.06 per share compared to the first six months of 2011 as a result of higher tax credits. 

  • Lower interest charges increased earnings by $0.01 per share compared to the first six months of 2011 primarily due to the repayment of a bank term loan in April 2011, partially offset by higher interest charges related to uncertain tax positions. 

  • Lower miscellaneous expenses increased earnings by $0.01 per share compared to the first six months of 2011. 

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 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
  For the three months
ended June 30
  For the six months
ended June 30
  2012   2011   2012   2011
Operational diluted earnings per share   $0.64       $0.52       $1.07       $0.98  
Life insurance policies -     -     0.01     0.01  
Tax levelization 0.01     -     -     -  
Gain from Acadia Unit 2 transaction -     0.63     -     0.63  
Acadia Unit 1 indemnifications -     -     0.07     0.01  
Acadia Unit 2 indemnifications 0.12     -     0.12     -  
Reported GAAP diluted earnings per share applicable to common stock   $0.77       $1.15       $1.27       $1.63  

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 which 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

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.  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 2011.  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.

Gain from Acadia Unit 2 Transaction

On April 29, 2011, the disposition of Acadia Unit 2 and half of Acadia Power Station's common facilities was completed resulting in the recognition of a gain of $0.63 per share for 2011.  Because this is a one-time gain, management does not consider this adjustment to be a component of operational earnings.

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 a reduction in the probability of a claim arising.  During the second quarter of 2012, the contractual expiration of the underlying indemnifications increased earnings $0.12 per share.  The resulting adjustment for this item had no impact for the second quarter of 2011.  During the six months ended June 30, 2012 and 2011, the contractual expiration of the underlying indemnifications increased earnings $0.19 per share and $0.01 per share, respectively.

Cleco management will discuss the company's second-quarter 2012 results during a conference call scheduled for 9 a.m. Central time (10 a.m. Eastern time) Wednesday, August 1, 2012.  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 2012 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 results of Cleco Power's RFPs, 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.

Cleco Corporation is a regional energy company headquartered in Pineville, La. Cleco owns a regulated electric utility company, Cleco Power LLC, which owns nine generating units with a total nameplate capacity of 2,524 megawatts and serves approximately 281,000 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:
Fran Phoenix
(318) 484-7467

  For the three months ended June 30
(Unaudited) (million kWh)   (thousands)
  2012   2011   Change   2012   2011   Change
Electric Sales                      
Residential 848     871     (2.6)%       $66,150       $69,338     (4.6)%  
Commercial 667     648     2.9 %     44,317     44,309     -  
Industrial 578     597     (3.2)%     21,132     21,205     (0.3)%  
Other retail 33     33     -     2,407     2,418     (0.5)%  
Surcharge -     -     -     2,036     2,833     (28.1)%  
Other -     -     -     (1,566)     (1,585)     1.2 %  
Total retail 2,126     2,149     (1.1)%     134,476     138,518     (2.9)%  
Sales for resale 466     397     17.4 %     11,710     11,039     6.1 %  
Unbilled 168     204     (17.6)%     10,006     8,377     19.4 %  
Total retail and wholesale
customer sales
2,760     2,750     0.4 %       $156,192       $157,934     (1.1)%  

  For the six months ended June 30
(Unaudited) (million kWh)   (thousands)
  2012   2011   Change   2012   2011   Change
Electric Sales                      
Residential 1,632     1,831     (10.9)%       $122,540       $136,527     (10.2)%  
Commercial 1,237     1,242     (0.4)%     86,064     88,401     (2.6)%  
Industrial 1,128     1,151     (2.0)%     41,224     41,855     (1.5)%  
Other retail 65     66     (1.5)%     4,767     4,884     (2.4)%  
Surcharge -     -     -     4,851     4,550     6.6 %  
Other -     -     -     (3,120)     (3,295)     5.3 %  
Total retail 4,062     4,290     (5.3)%     256,326     272,922     (6.1)%  
Sales for resale 856     843     1.5 %     23,495     22,978     2.2 %  
Unbilled 80     39     105.1 %     5,703     (3,893)     246.5 %  
Total retail and wholesale
customer sales
4,998     5,172     (3.4)%       $285,524       $292,007     (2.2)%  

CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the three months ended June 30 2012   2011
Operating revenue      
Electric operations   $228,293       $260,485  
Tolling operations -     4,222  
Other operations 12,111     12,983  
Affiliate revenue -     55  
Gross operating revenue 240,404     277,745  
Electric customer credits (281)     (4,822)  
Operating revenue, net 240,123     272,923  
Operating expenses      
Fuel used for electric generation 54,999     78,268  
Power purchased for utility customers 16,068     26,068  
Other operations 28,688     31,080  
Maintenance 24,184     28,269  
Depreciation 32,250     30,699  
Taxes other than income taxes 9,713     9,464  
Gain on sales of assets (22)     (506)  
Total operating expenses 165,880     203,342  
Operating income 74,243     69,581  
Interest income (3)     170  
Allowance for other funds used during construction 1,399     876  
Equity income from investees, before tax -     61,440  
Other income 13,014     1,050  
Other expense (831)     (630)  
Interest charges      
Interest charges, including amortization of debt expense, premium, and discount, net 21,094     25,935  
Allowance for borrowed funds used during construction (478)     (316)  
Total interest charges 20,616     25,619  
Income before income taxes 67,206     106,868  
Federal and state income tax expense 20,520     36,520  
Net income 46,686     70,348  
Preferred dividends requirements -     15  
Preferred stock redemption costs, net of tax -     112  
Net income applicable to common stock   $46,686       $70,221  
       
Average number of basic common shares outstanding 60,421,028     60,655,538  
Average number of diluted common shares outstanding 60,660,702     61,023,439  
Basic earnings per share      
Net income applicable to common stock   $0.77       $1.16  
Diluted earnings per share      
Net income applicable to common stock   $0.77       $1.15  
Cash dividends paid per share of common stock   $0.3125       $0.28  
 

CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the six months ended June 30 2012   2011
Operating revenue      
Electric operations   $437,883       $498,953  
Tolling operations -     7,003  
Other operations 23,056     25,711  
Affiliate revenue -     202  
Gross operating revenue 460,939     531,869  
Electric customer credits 1,955     (5,256)  
Operating revenue, net 462,894     526,613  
Operating expenses      
Fuel used for electric generation 128,063     175,236  
Power purchased for utility customers 24,705     35,116  
Other operations 56,385     58,146  
Maintenance 41,419     45,078  
Depreciation 64,097     60,512  
Taxes other than income taxes 19,743     18,924  
Gain on sales of assets (55)     (496)  
Total operating expenses 334,357     392,516  
Operating income 128,537     134,097  
Interest income 31     285  
Allowance for other funds used during construction 2,416     2,854  
Equity income from investees, before tax 1     62,052  
Other income 22,389     2,254  
Other expense (1,486)     (1,233)  
Interest charges      
Interest charges, including amortization of debt expense, premium, and discount, net 42,062     53,263  
Allowance for borrowed funds used during construction (822)     (1,031)  
Total interest charges 41,240     52,232  
Income before income taxes 110,648     148,077  
Federal and state income tax expense 33,930     48,714  
Net income 76,718     99,363  
Preferred dividends requirements -     26  
Preferred stock redemption costs, net of tax -     112  
Net income applicable to common stock   $76,718       $99,225  
       
Average number of basic common shares outstanding 60,387,388     60,613,371  
Average number of diluted common shares outstanding 60,625,377     60,797,545  
Basic earnings per share      
Net income applicable to common stock   $1.27       $1.64  
Diluted earnings per share      
Net income applicable to common stock   $1.27       $1.63  
Cash dividends paid per share of common stock   $0.625       $0.53  
 

CLECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)
  At June 30, 2012   At Dec. 31, 2011
Assets      
Current assets      
Cash and cash equivalents   $23,693       $93,576  
Accounts receivable, net 74,144     79,864  
Other current assets 283,402     283,345  
Total current assets 381,239     456,785  
Property, plant and equipment, net 2,935,392     2,893,899  
Equity investment in investees 14,541     14,540  
Prepayments, deferred charges and other 672,336     684,978  
Total assets   $4,003,508       $4,050,202  
Liabilities      
Current liabilities      
Long-term debt due within one year   $88,540       $24,258  
Accounts payable 90,549     129,308  
Other current liabilities 132,490     167,436  
Total current liabilities 311,579     321,002  
Deferred credits 991,228     972,287  
Long-term debt, net 1,244,434     1,337,056  
Total liabilities 2,547,241     2,630,345  
Shareholders' equity      
Common shareholders' equity 1,482,857     1,447,996  
Accumulated other comprehensive loss (26,590)     (28,139)  
Total shareholders' equity 1,456,267     1,419,857  
Total liabilities and shareholders' equity   $4,003,508       $4,050,202  

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