SOURCE: Cleco Corp.

August 05, 2008 16:30 ET

Cleco Corp. Posts 2008 Second-Quarter Net Income of $29.4 Million

PINEVILLE, LA--(Marketwire - August 5, 2008) - Cleco Corp. (NYSE: CNL) reported today 2008 second-quarter net income applicable to common stock of $29.4 million, up $14.3 million from the $15.1 million recorded in the second quarter of 2007, excluding the $48.1 million net gain from the settlement of claims against Calpine Energy Services L.P. and Calpine Corp. (collectively, CES) in 2007.

On an earnings per share basis, Cleco recorded earnings of $0.49 per diluted share for the quarter, up $0.24 per share from the $0.25 per share in the second quarter of 2007, excluding the net gain in second-quarter 2007 of $0.80 per share from the settlement of the CES claims.

For the six months ended June 30, 2008, net income applicable to common stock was $51.4 million, or $0.86 per diluted share, up $0.47 per share from the $0.39 per share for the same period in 2007, excluding the net gain in 2007 of $0.81 per share from the settlement of the CES claims.

Results for both the quarter and year-to-date comparisons were driven primarily by higher allowance for funds used during construction (AFUDC) from the Rodemacher Unit 3 project.

"Construction of our Rodemacher Unit 3 project continues to go well and has exceeded expectations," Cleco President and CEO Michael Madison said. "As a result of this progress, Cleco Power and Shaw amended the Engineering, Procurement and Construction (EPC) contract to move up the substantial completion date to June 30, 2009. As of June 30, 2008, we have spent roughly $772 million of the billion-dollar budget."

    Consolidated Diluted Earnings Per Share Allocated to Subsidiaries

                                                          Diluted EPS
                                                      --------------------
                                                       Three Months Ended
                                                            June 30,
                                                      --------------------
Subsidiary                                              2008       2007
                                                      ---------  ---------
Cleco Power LLC                                       $    0.54  $    0.31
Cleco Midstream Resources LLC (excluding 2007 gain
 from settlement of CES claims)                           (0.05)     (0.15)
Corporate and Other(1)                                       --       0.09
                                                      ---------  ---------
   Earnings excluding the 2007 gain from settlement
    of CES claims                                     $    0.49  $    0.25
Earnings from settlement of CES claims                       --       0.80
                                                      ---------  ---------
      Earnings applicable to common stock             $    0.49  $    1.05
                                                      ---------  ---------

(1) Includes dividends on preferred stock



Results for Second-Quarter 2008:

Major Reconciling Items for Second-Quarter EPS 2008 vs. 2007:


    $ 1.05         2007 Second-Quarter Diluted EPS
     (0.80)        Absence of the 2007 gain from settlement of CES claims
    ------
    $ 0.25

      0.06         Higher Cleco Power non-fuel revenue
     (0.02)        Lower storm surcharge collections
      0.04         Gains on energy hedging, net
     (0.01)        Higher Cleco Power expenses
      0.16         Higher Cleco Power AFUDC
      0.10         Lower Cleco Midstream losses (excluding gain from
                    settlement of CES claims)
     (0.09)        Lower corporate results
    ------
    $ 0.49         2008 Second-Quarter Diluted EPS



Cleco Power's 2008 second-quarter earnings -- up $0.23 per share in the
quarter-to-quarter comparison

--  Retail and wholesale sales contributed $0.05 per share compared with
    last year's results.   Residential and commercial kilowatt-hour sales
    provided roughly $0.03 per share, while market-based wholesale
    customers added $0.02 per share. Residential customers were impacted
    from 14 percent higher cooling degree-days in the quarter-to-quarter
    comparison.  Cooling degree-days were 17 percent above normal.



                                                 For the three months ended
                 (Million kWh)                            June 30,
                                                 --------------------------
                                                   2008     2007   Change
                                                 -------- -------- ------
Electric Sales
Residential                                           804      777      3 %
Commercial                                            599      594      1 %
Industrial                                            729      758     (4)%
Other retail                                           33       34     (3)%
                                                 -------- --------
Total retail                                        2,165    2,163     --
Sales for resale                                      103      117    (12)%
Unbilled                                              203      182     12 %
                                                 -------- --------
Total retail and wholesale customer sales           2,471    2,462     --

--  Transmission and miscellaneous revenue increased $0.01 per share
    quarter over quarter.
    
--  Storm surcharge collections were down $0.02 per share due to the
    issuance of storm recovery bonds in March 2008. The Louisiana Public
    Service Commission (LPSC) issued a financing order in September 2007
    authorizing Cleco Power to securitize its unrecovered storm restoration
    costs resulting in a savings to customers. Prior to this, the LPSC
    authorized Cleco Power to recover restoration costs through an interim
    storm recovery plan.
    
--  Mark-to-market and realized gains on energy hedging positions tied to
    a fixed-price wholesale contract as compared to the same period of 2007
    contributed $0.04 per share, primarily due to increases in natural gas
    prices.
    
--  Other expenses were $0.01 per share lower compared to the same period
    last year, primarily due to the outage at Dolet Hills that occurred in
    second quarter of 2007, and lower professional fees, partially offset by a
    reclassification of recoverable fuel expense to nonrecoverable fuel
    expense.
    
--  Interest expense, net increased $0.02 per share compared to last
    year's results.  Of that, $0.02 per share was due to higher interest on
    solid waste disposal bonds and senior notes, and $0.02 per share related to
    the senior secured storm recovery bonds.  These were partially offset by
    $0.02 per share of lower interest expense related to the storm damage
    surcredit.
    
--  Capacity charges were up $0.02 per share, offset by $0.02 per share of
    lower other taxes quarter over quarter.
    
--  AFUDC, primarily associated with the Rodemacher Unit 3 project,
    contributed $0.16 per share more to results compared to second quarter of
    2007. The equity portion of AFUDC associated with the Rodemacher Unit 3
    project was up $0.13 per share, while the debt portion of AFUDC contributed
    $0.03 per share more than in the second quarter of 2007.
    

Cleco Midstream Resources' 2008 second-quarter results, excluding the gain from the settlement of CES claims -- up $0.10 per share in the quarter-to-quarter comparison

Evangeline was up $0.04 per share for the second quarter of 2008 compared to the same period a year ago, primarily due to the absence of replacement power purchased for the 2007 outage. Excluding the 2007 gain from the settlement of CES claims, Acadia had lower losses of $0.05 per share compared to the same period last year with $0.04 per share due to lower interest paid to the holding company and $0.01 per share from the absence of the 2007 parts write-offs. Lower administrative costs contributed $0.01 per share compared to the same period last year.

Other

Corporate earnings decreased $0.09 per share in the quarter-to-quarter comparison, primarily due to $0.08 per share of lower affiliate interest received from Acadia, $0.01 per share of higher taxes, and $0.02 per share reduction in the cash surrender values of corporate life insurance policies. These decreases were partially offset by $0.02 per share of lower interest expense related to the May 2008 repayment of $100 million of corporate debt.

    Consolidated Diluted Earnings Per Share Allocated to Subsidiaries


                                                          Diluted EPS
                                                      --------------------
                                                        Six Months Ended
                                                            June 30,
                                                      --------------------
Subsidiary                                              2008       2007
                                                      ---------  ---------
Cleco Power LLC                                       $    1.00  $    0.52
Cleco Midstream Resources LLC (excluding 2007 gain
 from settlement of CES claims)                           (0.12)     (0.23)
Corporate and Other(1)                                    (0.02)      0.10
                                                      ---------  ---------
   Earnings excluding the 2007 gain from settlement
    of CES claims                                     $    0.86  $    0.39
Earnings from settlement of CES claims                       --       0.81
                                                      ---------  ---------
   Earnings applicable to common stock                $    0.86  $    1.20
                                                      ---------  ---------

(1) Includes dividends on preferred stock



Results for Six Months ended June 30, 2008:

Major Reconciling Items for Six Months ended June 30, EPS 2008 vs. 2007:


    $ 1.20         Six Months ended June 30, 2007 Diluted EPS
     (0.81)        Absence of the 2007 gain from settlement of CES claims
    ------
    $ 0.39

      0.07         Higher Cleco Power non-fuel revenue
     (0.01)        Lower storm surcharge collections
      0.04         Gains on energy hedging, net
      0.05         Lower Cleco Power expenses
      0.33         Higher Cleco Power AFUDC
      0.11         Lower Cleco Midstream losses (excluding gain from
                    settlement of CES claims)
     (0.12)        Lower corporate results
    ------
    $ 0.86         Six Months ended June 30, 2008 Diluted EPS


Cleco Power's Six Months ended June 30, 2008 earnings -- up $0.48 per share
year over year

--  Retail and wholesale sales added $0.05 per share compared to last
    year's results.   Residential and commercial kilowatt-hour sales
    provided roughly $0.03 per share, while market-based wholesale
    customers added $0.02 per share.  Residential customers were impacted
    from 12 percent higher cooling degree-days in the year-to-year
    comparison.  Cooling degree-days were 20 percent above normal for the
    first half of 2008.


                                                 For the six months ended
                 (Million kWh)                            June 30,
                                                 --------------------------
                                                   2008     2007   Change
                                                 -------- -------- ------
Electric Sales
   Residential                                      1,644    1,619      2 %
   Commercial                                       1,153    1,137      1 %
   Industrial                                       1,416    1,468     (4)%
   Other retail                                        65       67     (3)%
                                                 -------- --------
      Total retail                                  4,278    4,291     --
   Sales for resale                                   173      219    (21)%
   Unbilled                                           147      112     31 %
                                                 -------- --------
Total retail and wholesale customer sales           4,598    4,622     (1)%

--  Transmission and miscellaneous revenue increased $0.02 per share year
    over year.
    
--  Storm surcharge collections were down $0.01 per share due to the
    issuance of storm recovery bonds in March 2008. The LPSC issued a financing
    order in September 2007 authorizing Cleco Power to securitize its
    unrecovered storm restoration costs. Prior to this, the LPSC authorized
    Cleco Power to recover restoration costs through an interim storm recovery
    plan.
    
--  Mark-to-market and realized gains on energy hedging positions tied to
    a fixed-price wholesale contract as compared to the same period of 2007
    contributed $0.04 per share, primarily due to increases in natural gas
    prices.
    
--  Amortization decreased $0.02 per share primarily due to lower
    amortization of storm damages.
    
--  Interest expense, net increased $0.04 per share year over year. The
    increase resulted from $0.03 per share of higher interest on solid waste
    disposal bonds and senior notes, and $0.03 per share on the storm recovery
    bonds, while interest income was $0.01 per share lower compared to last
    year for the same period.  These increases were partially offset by $0.03
    per share of lower interest expense related to the storm damage surcredit.
    
--  Other expenses were $0.07 per share lower compared to the same period
    last year.  Lower employee compensation and benefits and professional fees
    contributed $0.07 per share.  Other taxes were $0.03 per share lower and
    the absence of the Dolet Hills outage improved results by $0.01 per share.
    Offsetting these amounts were $0.04 per share primarily from higher
    expenses related to capacity contracts, increases in transmission and
    distribution expenses, and a reclassification from recoverable fuel expense
    to nonrecoverable fuel expense.
    
--  AFUDC, primarily associated with the Rodemacher Unit 3 project,
    contributed $0.33 per share more compared to the first half of 2007. The
    equity portion of AFUDC associated with the Rodemacher Unit 3 project was
    up $0.27 per share, while the debt portion of AFUDC contributed $0.06 per
    share.
    

Cleco Midstream Resources' Six Months ended June 30, 2008 results, excluding the gain from the settlement of CES claims -- up $0.11 per share year over year

Excluding the 2007 gain from the settlement of CES claims of $0.81 per share, Acadia had lower losses of $0.07 per share, largely due to lower interest paid to the holding company. Evangeline was up $0.03 primarily due to the absence of replacement power purchased for the 2007 outage partially offset by higher turbine maintenance expenses. Lower administrative expenses added $0.01 per share in the year to year comparison.

Other

Corporate earnings decreased $0.12 per share in the year-to-year comparison. Of that, $0.14 was due to lower affiliate interest income received from Acadia, partially offset by $0.02 per share of lower interest expense due to the payoff of $100 million of senior corporate notes in May 2008. Decreases in cash surrender values of corporate life insurance policies of $0.03 per share were offset by $0.02 per share from the absence of the 2007 Federal Energy Regulatory Commission penalty and $0.01 per share related to the conversion of preferred stock to common shares.

Earnings Guidance

"We are maintaining our 2008 earnings target at a range of $1.60 to $1.70 per share," Madison said. "Those targets assume 2008 capital expenditures of about $265 million on the Rodemacher project (including AFUDC), normal weather for the remainder of the year, and the continuation of our current rate plan. Cleco Midstream earnings targets assume continued performance by Evangeline's tolling counterparty and are based on assumptions about Acadia's plant operations and market conditions," said Madison.

Strategic Update

"We continue to meet and exceed our operational targets with respect to each of our major initiatives," said Madison.

"Our Rodemacher Unit 3 project is on schedule to meet its original commercial operations date of October 2009, and could possibly be on as early as June 30, 2009 as evidenced by the amendment of the EPC contract with Shaw. Construction continues to proceed exceptionally well, but there is still much to accomplish with regard to the start-up and commissioning of the unit.

"Equally important, in July 2008 we filed our first full rate case in over 20 years. Our filing enables us to maintain the parallel paths between the Rodemacher 3 project and the rate case," Madison said.

"Also, in the regulatory arena, the long-term RFP process is on track to select winning bids this month although results will not likely be public until late 2008 or early 2009," Madison noted.

"Finally, we continue to move forward in collaboration with our neighboring utilities, as well as the Southwest Power Pool, and the Louisiana Public Service Commission to develop a comprehensive transmission solution for the southern part of our service territory," Madison concluded.

Cleco management will discuss the company's second-quarter 2008 results during a conference call scheduled for 11 a.m. EDT (10 a.m. CDT) Wednesday, Aug. 6, 2008. The call will be broadcast live on the Internet. A replay will be available for 12 months. Investors may access the webcast through the company's Web site at www.cleco.com by selecting "For Investors" and then "Cleco Corporation Second-Quarter 2008 Earnings Conference Call."

Cleco Corp. is a regional energy company headquartered in Pineville, La. It operates a regulated electric utility company that serves 273,000 customers across Louisiana. Cleco also operates a wholesale energy business with approximately 1,350 megawatts of nameplate generating capacity. For more information about Cleco, visit www.cleco.com.

Financial tables follow:

                             CLECO CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME
              (Thousands, except share and per share amounts)
                                (UNAUDITED)


For the three months ended June 30,                     2008       2007
                                                      ---------  ---------

Operating revenue
   Electric operations                                $ 259,581  $ 251,909
   Other operations                                      12,758      7,971
   Affiliate revenue                                      2,448      1,621
                                                      ---------  ---------
      Operating revenue                                 274,787    261,501
Operating expenses
   Fuel used for electric generation                     22,887     51,312
   Power purchased for utility customers                151,949    115,592
   Other operations                                      22,862     24,722
   Maintenance                                           14,589     14,939
   Depreciation                                          19,336     19,990
   Taxes other than income taxes                          9,455      9,867
                                                      ---------  ---------
      Total operating expenses                          241,078    236,422
                                                      ---------  ---------
Operating income                                         33,709     25,079
Interest income                                           1,258      2,589
Allowance for other funds used during construction       14,993      7,032
Equity (loss) income from investees                      (2,365)    71,282
Other income                                                 91        582
Other expense                                            (1,377)      (416)
Interest charges
   Interest charges, including amortization of debt
    expenses, premium and discount, net of
    capitalized interest                                 14,947     14,377
   Allowance for borrowed funds used during
    construction                                         (5,026)    (2,388)
                                                      ---------  ---------
      Total interest charges                              9,921     11,989
                                                      ---------  ---------
Income before income taxes                               36,388     94,159
Federal and state income tax expense                      6,999     30,968
                                                      ---------  ---------

Net income                                               29,389     63,191
Preferred dividends requirements, net of tax                 12         12
                                                      ---------  ---------

Net income applicable to common stock                 $  29,377  $  63,179
                                                      =========  =========

Average shares of common stock outstanding
   Basic                                             59,998,227 59,489,725
   Diluted                                           60,168,947 59,798,877

Basic earnings per share
   From continuing operations                        $     0.49 $     1.06
   Net income applicable to common stock             $     0.49 $     1.06

Diluted earnings per share
   From continuing operations                        $     0.49 $     1.05
   Net income applicable to common stock             $     0.49 $     1.05
Cash dividends paid per share of common stock        $    0.225 $    0.225





                             CLECO CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME
              (Thousands, except share and per share amounts)
                                (UNAUDITED)


For the six months ended June 30,                       2008       2007
                                                      ---------  ---------

Operating revenue
   Electric operations                                $ 469,462  $ 464,929
   Other operations                                      22,821     17,240
   Affiliate revenue                                      5,054      3,082
                                                      ---------  ---------
      Operating revenue                                 497,337    485,251
Operating expenses
   Fuel used for electric generation                     68,423    106,808
   Power purchased for utility customers                241,743    199,739
   Other operations                                      45,138     51,038
   Maintenance                                           24,702     25,181
   Depreciation                                          38,686     40,088
   Taxes other than income taxes                         18,286     19,667
   Gain on sale of assets                                   (99)        --
                                                      ---------  ---------
      Total operating expenses                          436,879    442,521
                                                      ---------  ---------
Operating income                                         60,458     42,730
Interest income                                           2,875      5,157
Allowance for other funds used during construction       28,677     12,163
Equity (loss) income from investees                      (6,939)    69,883
Other income                                                157        872
Other expense                                            (2,046)    (1,882)
Interest charges
   Interest charges, including amortization of debt
    expenses, premium and discount, net of
    capitalized interest                                 29,265     28,034
   Allowance for borrowed funds used during
    construction                                         (9,603)    (4,059)
                                                      ---------  ---------
      Total interest charges                             19,662     23,975
                                                      ---------  ---------

Income before income taxes                               63,520    104,948
Federal and state income tax expense                     12,060     33,111
                                                      ---------  ---------

Net income                                               51,460     71,837
Preferred dividends requirements, net of tax                 23        435
                                                      ---------  ---------

Net income applicable to common stock                 $  51,437  $  71,402
                                                      =========  =========

Average shares of common stock outstanding
   Basic                                             59,948,801 58,585,451
   Diluted                                           60,068,682 59,586,444
Basic earnings per share
   From continuing operations                        $     0.86 $     1.21
   Net income applicable to common stock             $     0.86 $     1.21

Diluted earnings per share
   From continuing operations                        $     0.86 $     1.20
   Net income applicable to common stock             $     0.86 $     1.20
Cash dividends paid per share of common stock        $    0.450 $    0.450






                             CLECO CORPORATION
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                                (Thousands)
                                (UNAUDITED)

                                                  At June 30,  At December
                                                     2008       31, 2007
                                                  -----------  -----------
Assets
Current Assets
   Cash and cash equivalents                      $   150,769  $   129,013
   Accounts receivable, net                           129,488       87,983
   Other current assets                               235,242      188,520
                                                  -----------  -----------
      Total Current Assets                            515,499      405,516
Property, plant and equipment, net                  1,877,564    1,725,880
Equity investment in investees                        242,508      258,101
Prepayments, deferred charges and other               500,003      317,126
                                                  -----------  -----------
   Total Assets                                   $ 3,135,574  $ 2,706,623
                                                  -----------  -----------

Liabilities
Current Liabilities
   Long-term debt due within one year             $    58,350  $   100,000
   Accounts payable                                   143,542      129,946
   Other current liabilities                          230,753      127,521
                                                  -----------  -----------
      Total Current Liabilities                       432,645      357,467
Deferred credits and other liabilities                667,540      568,684
Long-term debt, net                                   998,090      769,103
                                                  -----------  -----------
   Total Liabilities                                2,098,275    1,695,254
                                                  -----------  -----------
Shareholders' Equity
   Preferred stock                                      1,029        1,029
   Common shareholders' equity                      1,044,713    1,018,731
   Accumulated other comprehensive loss                (8,443)      (8,391)
                                                  -----------  -----------
Total Shareholders' Equity                          1,037,299    1,011,369
                                                  -----------  -----------
   Total Liabilities and Shareholders' Equity     $ 3,135,574  $ 2,706,623
                                                  ===========  ===========

Please note: In addition to historical financial information, this news release contains forward-looking statements about future results and circumstances, including, without limitation, statements regarding the Rodemacher Unit 3 project and earnings guidance. There are many risks and uncertainties with respect to such forward-looking statements, including the weather and other natural phenomena, state and federal legislative and regulatory initiatives, the timing and extent of changes in commodity prices and interest rates, the operating performance of Cleco Power's and Cleco Midstream's facilities, the financial condition of the company's tolling agreement counterparty, the performance of the tolling agreement by such counterparty, construction and operational startup of Rodemacher Unit 3, the continuation of the existing rate plan, the outcome of Cleco Power's rate case, the results of Cleco Power's long-term RFP, 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.

Contact Information

  • Investor Contacts:
    Cleco Corporation:
    Ryan Gunter
    (318) 484-7724
    Rodney J. Hamilton
    (318) 484-7593

    Analyst Inquiries:
    Dresner Corporate Services:
    Kristine Walczak
    (312) 726-3600

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