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Cleco Corporation posts 2012 third-quarter earnings of $63.8 million, or $1.05 per diluted share; Company raises earnings guidance to $2.40 - $2.46 per share

PINEVILLE, La., Oct. 30, 2012 - Cleco Corporation (NYSE: CNL) posted earnings for the third-quarter of 2012 of $63.8 million, or $1.05 per diluted share, compared to $65.8 million recorded in the third quarter of 2011.

"We produced solid operational earnings for the third quarter of $1.05 per share or within three cents of last year's results despite a cooler summer than last year.  Year-to-date, we are five cents per share higher than last year," said Bruce Williamson, president and CEO of Cleco Corporation. 

"During 2012, we have made up for less favorable weather through an ongoing expense management program which we instituted last year and adjustments to our formula rate plan which allow us to recover the costs of various projects as they are completed.  Additionally, we benefited from lower interest expense and some favorable tax settlements," said Williamson.  "We also responded to Hurricane Isaac, which at its peak left more than 95,000 of our customers without power.  The storm caused about $21 million in damage to our system.  Approximately 60 percent of the costs will be capitalized and recovered through future base rates.  The remaining maintenance expense will be recovered through our storm reserve account.

"As a result of our financial performance to date, we are raising our 2012 consolidated operational earnings guidance and tightening the range from $2.34 to $2.44 per diluted share to $2.40 to $2.46 per diluted share," said Williamson.  "We will discuss the specific drivers behind our revised guidance on our earnings conference call.

"We also are announcing today the selection of the Coughlin Power Station as the winning bidder in Cleco Power's long-term RFP for capacity and energy resources to meet the needs of our customers.  While executing a transfer of Coughlin from Cleco Midstream to Cleco Power is subject to final regulatory approvals, this announcement is a major milestone in fulfilling our goal to grow the company through secure, low-risk, regulated wholesale load.  In addition, Dixie Electric Membership Corporation (DEMCO) recently received approval of its contract with Cleco Power from the Louisiana Public Service Commission.  With the Coughlin transfer and the DEMCO contract on track, we are driving long-term earnings growth through Cleco Power," said Williamson.

Earnings Guidance:

Cleco has revised its 2012 consolidated operational earnings target to a range of $2.40 - $2.46 per diluted share.  This estimate assumes normal weather for the remainder of the year and continuous expense management.  This guidance excludes non-operational adjustments.  Please refer to "Operational Earnings Adjustments" in this news release for a description of these adjustments on Cleco's earnings per diluted share for the nine months ended Sept. 30, 2012 and 2011.

Financial Highlights:

Third Quarter 2012

  • Cleco reports third-quarter GAAP earnings applicable to common stock of $63.8 million, or $1.05 per diluted share, compared to $65.8 million, or $1.08 per diluted share for the third quarter of 2011. 

Year-to-Date 2012

  • Cleco reports GAAP earnings applicable to common stock for the first nine months of 2012 of $140.5 million, or $2.32 per diluted share, compared to $165.1 million, or $2.71 per diluted share for the first nine months of 2011. 

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 2012   2011   2012   2011
Cleco Power LLC   $0.94       $0.88       $2.01       $1.96  
Cleco Midstream Resources LLC 0.06     0.09     (0.01)     -  
Corporate and Other1 0.05     0.11     0.11     0.10  
Operational diluted earnings per share (Non-GAAP) 1.05     1.08     2.11     2.06  
Adjustments2 -     -     0.21     0.65  
Diluted earnings per share applicable to common stock   $1.05       $1.08       $2.32       $2.71  

GAAP refers to United States generally accepted accounting principles.

Includes preferred stock dividends and redemption costs for the nine months ended Sept. 30, 2011 
Refer to "Operational Earnings Adjustments" in this news release

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

  $1.08     2011 third-quarter operational diluted earnings per share
     
(0.04)     Non-fuel revenue
(0.03)     Rate refund accrual
(0.05)     Other expenses, net
0.03     Interest charges
0.02     AFUDC (allowance for funds used during construction)
0.13     Income taxes
  $0.06     Cleco Power results
     
(0.03)     Cleco Midstream results
     
(0.06)     Corporate and Other results
     
  $1.05     2012 third-quarter operational diluted earnings per share
     
-     Adjustments
     
  $1.05     2012 third-quarter reported GAAP diluted earnings per share

Cleco Power

  • Non-fuel revenue decreased earnings by $0.04 per share compared to the third quarter of 2011 primarily due to $0.04 per share from lower mineral lease payments and $0.02 per share from lower transmission revenue and the absence of a gain on the sale of Cleco Power's fuel oil inventory.  These amounts were partially offset by $0.02 per share of higher base revenue from adjustments to Cleco Power's formula rate plan.  

  • Rate refund accrual decreased earnings by $0.03 per share compared to the third quarter of 2011 primarily due to the absence of a 2011 decrease in the customer credit accrual and an increase in the current year estimated accrual. 

  • Other expenses, net, decreased earnings by $0.05 per share compared to the third quarter of 2011 primarily due to $0.03 per share of higher depreciation expense and $0.02 per share from higher net non-recoverable wholesale power capacity charges. 

  • Lower interest charges increased earnings by $0.03 per share compared to the third 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 $0.02 per share compared to the third quarter of 2011 primarily due to higher AFUDC related to the advanced metering infrastructure project and miscellaneous transmission projects. 

  • Lower income taxes increased earnings by $0.13 per share compared to the third quarter of 2011 primarily due to $0.06 per share for tax returns filed, $0.05 per share for settlements with taxing authorities, and $0.03 per share for tax credits.  These amounts were partially offset by $0.01 per share for miscellaneous tax items. 

Cleco Midstream Resources

  • Midstream's results decreased earnings by $0.03 per share compared to the third quarter of 2011 primarily due to $0.06 per share of higher operating and maintenance expenses and $0.03 per share of higher income taxes.  These amounts were partially offset by $0.05 per share of higher tolling revenue and $0.01 per share for lower interest charges related to uncertain tax positions. 

Corporate and Other

  • Higher income taxes decreased earnings by $0.06 per share compared to the third quarter of 2011 as a result of $0.07 per share for tax returns filed and $0.01 per share to record tax expense at the consolidated projected annual effective tax rate, partially offset by $0.02 per share for tax credits and miscellaneous tax items. 

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

  $2.06       Nine months ended Sept. 30, 2011, operational diluted earnings per share
     
(0.15)     Non-fuel revenue
0.04     Rate refund accrual
(0.07)     Other expenses, net
0.13     Interest charges
0.01     AFUDC
0.09     Income taxes
  $0.05     Cleco Power results
     
(0.01)     Cleco Midstream results
     
0.01     Corporate and Other results
     
  $2.11     Nine months ended Sept. 30, 2012, operational diluted earnings per share
     
0.21     Adjustments1
     
  $2.32     Nine months ended Sept. 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 $0.15 per share compared to the first nine months of 2011 primarily due to $0.06 per share from lower mineral lease payments, $0.05 per share from the absence of a gain on the sale of Cleco Power's fuel oil inventory, and $0.11 per share largely attributable to milder weather.  Partially offsetting this decrease was $0.07 per share related to adjustments to Cleco Power's formula rate plan. 

  • Lower rate refund accrual increased earnings by $0.04 per share compared to the first nine months of 2011.

  • Other expenses, net, decreased earnings by $0.07 per share compared to the first nine months of 2011 primarily due to $0.07 per share of higher depreciation expense and $0.05 per share of higher net non-recoverable wholesale power purchases and other capacity charges.  Partially offsetting these decreases were $0.04 per share of lower other operations and maintenance expenses and $0.01 per share of higher royalty income.   

  • Lower interest charges increased earnings by $0.13 per share compared to the first nine months of 2011 primarily due to $0.09 per share related to uncertain tax positions, $0.07 per share related to reacquired debt in October and December 2011, and $0.02 per share related to the retirement of pollution control bonds in January and May 2012.  Partially offsetting these amounts were $0.05 per share related to the issuance of private placement notes in December 2011 and May 2012. 

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

  • Lower income taxes increased earnings by $0.09 per share compared to the first nine months of 2011 primarily due to $0.07 per share for tax returns filed, $0.03 per share for settlements with taxing authorities, and $0.02 per share for tax credits.  These amounts were partially offset by $0.02 per share related to the absence in 2012 of the valuation allowance reversal in 2011 and $0.01 per share for miscellaneous tax items. 

Cleco Midstream Resources

  • Midstream's results decreased earnings by $0.01 per share compared to the first nine months of 2011 primarily due to $0.05 per share of higher operating and maintenance expenses and $0.04 per share of higher income taxes related to tax returns filed.  These amounts were partially offset by $0.05 per share of higher tolling revenue and $0.03 per share primarily from lower interest related to uncertain tax positions. 

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

Corporate and Other

  • Lower interest charges increased earnings by $0.02 per share compared to the first nine months of 2011 primarily due to the repayment of a bank term loan in April 2011. 

  • Higher income taxes decreased earnings by $0.01 per share compared to the first nine months of 2011 primarily due to $0.07 per share for tax returns filed and $0.03 per share to record tax expense at the consolidated projected annual effective tax rate.  These amounts were partially offset by $0.08 per share for tax credits and $0.01 per share for miscellaneous tax items. 

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
  2012   2011   2012   2011
Operational diluted earnings per share   $1.05       $1.08       $2.11       $2.06  
Life insurance policies -     (0.02)     0.02     -  
Tax levelization -     0.01     -     -  
Gain from Acadia Unit 2 transaction -     -     -     0.63  
Acadia Unit 1 indemnifications -     0.01     0.07     0.02  
Acadia Unit 2 indemnifications -     -     0.12     -  
Reported GAAP diluted earnings per share applicable to common stock   $1.05       $1.08       $2.32       $2.71  

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 2011, 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.

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 changes in the probability of a claim arising.  During the third quarter of 2011, the contractual expiration of the underlying indemnifications increased earnings by $0.01 per share.  The resulting adjustment for this item had no impact for the third quarter of 2012.  During the nine months ended September 30, 2012 and 2011, the contractual expiration of the underlying indemnifications increased earnings $0.19 per share and $0.02 per share, respectively.

Cleco management will discuss the company's third-quarter 2012 results during a conference call scheduled for 7:30 a.m. Central time (8:30 a.m. Eastern time) Thursday, November 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 "Q3 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 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:
Robbyn Cooper
(318) 484-7136

  For the three months ended Sept. 30  
(Unaudited) (million kWh)     (thousands)      
  2012   2011   Change   2012   2011   Change
Electric Sales                      
Residential 1,202     1,274     (5.7)%       $96,954       $99,144     (2.2)%  
Commercial 784     796     (1.5)%     50,145     48,732     2.9%  
Industrial 582     619     (6.0)%     21,993     22,468     (2.1)%  
Other retail 36     36     -     2,669     2,600     2.7%  
Surcharge -     -     -     1,950     2,983     (34.6)%  
Other -     -     -     (1,566)     (1,578)     0.8%  
Total retail 2,604     2,725     (4.4)%     172,145     174,349     (1.3)%  
Sales for resale 616     652     (5.5)%     12,459     11,455     8.8%  
Unbilled (69)     (129)     (46.5)%     (4,328)     (7,645)     43.4%  
Total retail and wholesale
customer sales
3,151     3,248     (3.0)%       $180,276       $178,159     1.2%  

  For the nine months ended Sept. 30  
(Unaudited) (million kWh)     (thousands)      
  2012   2011   Change   2012   2011   Change
Electric Sales                      
Residential 2,834     3,105     (8.7)%       $219,494       $235,672     (6.9)%  
Commercial 2,021     2,037     (0.8)%     136,208     137,133     (0.7)%  
Industrial 1,710     1,770     (3.4)%     63,217     64,323     (1.7)%  
Other retail 101     103     (1.9)%     7,436     7,484     (0.6)%  
Surcharge -     -     -     6,801     7,534     (9.7)%  
Other -     -     -     (4,686)     (4,875)     3.9%  
Total retail 6,666     7,015     (5.0)%     428,470     447,271     (4.2)%  
Sales for resale 1,472     1,495     (1.5)%     35,954     34,433     4.4%  
Unbilled 11     (90)     112.2%     1,376     (11,538)     111.9%  
Total retail and wholesale
customer sales
8,149     8,420     (3.2)%       $465,800       $470,166     (0.9)%  

CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the three months ended Sept. 30 2012   2011
Operating revenue      
Electric operations   $282,894       $324,532  
Tolling operations -     9,133  
Other operations 15,408     16,064  
Affiliate revenue -     -  
Gross operating revenue 298,302     349,729  
Electric customer credits (930)     1,852  
Operating revenue, net 297,372     351,581  
Operating expenses      
Fuel used for electric generation 79,701     122,774  
Power purchased for utility customers 19,364     25,473  
Other operations 30,517     32,138  
Maintenance 20,059     14,587  
Depreciation 34,931     31,237  
Taxes other than income taxes 9,455     9,845  
(Gain) loss on sales of assets (2)     27  
Total operating expenses 194,025     236,081  
Operating income 103,347     115,500  
Interest income 132     509  
Allowance for other funds used during construction 1,882     902  
Equity loss from investees, before tax -     (1)  
Other income 1,834     2,128  
Other expense (1,232)     (2,680)  
Interest charges      
Interest charges, including amortization of debt expense, premium, and discount, net 22,610     26,105  
Allowance for borrowed funds used during construction (644)     (326)  
Total interest charges 21,966     25,779  
Income before income taxes 83,997     90,579  
Federal and state income tax expense 20,179     24,737  
Net income applicable to common stock   $63,818       $65,842  
       
Average number of basic common shares outstanding 60,346,476     60,467,595  
Average number of diluted common shares outstanding 60,599,203     60,873,311  
Basic earnings per share      
Net income applicable to common stock   $1.06       $1.09  
Diluted earnings per share      
Net income applicable to common stock   $1.05       $1.08  
Cash dividends paid per share of common stock   $0.3375       $0.28  
 

CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the nine months ended Sept. 30 2012   2011
Operating revenue      
Electric operations   $720,776       $823,484  
Tolling operations -     16,137  
Other operations 38,464     41,775  
Affiliate revenue -     202  
Gross operating revenue 759,240     881,598  
Electric customer credits 1,025     (3,405)  
Operating revenue, net 760,265     878,193  
Operating expenses      
Fuel used for electric generation 207,764     298,009  
Power purchased for utility customers 44,069     60,590  
Other operations 86,901     90,281  
Maintenance 61,478     59,666  
Depreciation 99,028     91,749  
Taxes other than income taxes 29,198     28,770  
Gain on sales of assets (57)     (468)  
Total operating expenses 528,381     628,597  
Operating income 231,884     249,596  
Interest income 163     794  
Allowance for other funds used during construction 4,298     3,757  
Equity income from investees, before tax 1     62,051  
Other income 24,223     3,330  
Other expense (2,718)     (2,861)  
Interest charges      
Interest charges, including amortization of debt expense, premium, and discount, net 64,671     79,368  
Allowance for borrowed funds used during construction (1,466)     (1,357)  
Total interest charges 63,205     78,011  
Income before income taxes 194,646     238,656  
Federal and state income tax expense 54,110     73,451  
Net income 140,536     165,205  
Preferred dividends requirements -     26  
Preferred stock redemption costs -     112  
Net income applicable to common stock   $140,536       $165,067  
       
Average number of basic common shares outstanding 60,375,538     60,549,860  
Average number of diluted common shares outstanding 60,626,471     60,830,251  
Basic earnings per share      
Net income applicable to common stock   $2.33       $2.73  
Diluted earnings per share      
Net income applicable to common stock   $2.32       $2.71  
Cash dividends paid per share of common stock   $0.9625       $0.81  
 

CLECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)
  At Sept. 30, 2012   At Dec. 31, 2011
Assets      
Current assets      
Cash and cash equivalents   $68,364       $93,576  
Accounts receivable, net 83,969     79,864  
Other current assets 307,124     283,345  
Total current assets 459,457     456,785  
Property, plant and equipment, net 2,974,303     2,893,899  
Equity investment in investees 14,541     14,540  
Prepayments, deferred charges and other 658,592     684,978  
Total assets   $4,106,893       $4,050,202  
Liabilities      
Current liabilities      
Long-term debt due within one year   $90,937       $24,258  
Accounts payable 104,435     129,308  
Other current liabilities 114,480     167,436  
Total current liabilities 309,852     321,002  
Deferred credits 1,058,003     972,287  
Long-term debt, net 1,237,184     1,337,056  
Total liabilities 2,605,039     2,630,345  
Shareholders' equity      
Common shareholders' equity 1,527,629     1,447,996  
Accumulated other comprehensive loss (25,775)     (28,139)  
Total shareholders' equity 1,501,854     1,419,857  
Total liabilities and shareholders' equity   $4,106,893       $4,050,202  

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