SOURCE: Cleco Corp.

Cleco Corp.

November 02, 2009 06:00 ET

Cleco Corp. Posts 2009 Third-Quarter Earnings of $59.8 Million

PINEVILLE, LA--(Marketwire - November 2, 2009) - Cleco Corp. (NYSE: CNL)

    Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures

                                                  Diluted EPS
                                    Three months ended   Nine months ended
                                         Sept. 30,           Sept. 30,
                                    --------------------------------------
Subsidiary                            2009      2008      2009      2008
                                    --------- --------  --------  --------
Cleco Power LLC                     $    0.66 $   0.53  $   1.47  $   1.51
Cleco Midstream Resources LLC(1)         0.14     0.08     (0.08)    (0.05)
Corporate and Other(1,2)                 0.13     0.03      0.13      0.03
                                    --------- --------  --------  --------
  Operational earnings per share
   (Non-GAAP)                            0.93     0.64      1.52      1.49
Adjustments(3)                           0.06    (0.02)     0.03     (0.02)
                                    --------- --------  --------  --------
  Earnings per share applicable to
   common stock                     $    0.99 $   0.62  $   1.55  $   1.47

GAAP refers to United States generally accepted accounting principles

(1) Includes affiliate interest charges/interest income on affiliate debt
    related to Cleco's investment in Acadia ($0.01 per share for the
    quarters ended September 30, 2009 and 2008; $0.04 per share and $0.05
    per share for the nine months ended September 30, 2009 and 2008,
    respectively)
(2) Includes dividends on preferred stock
(3) Refer to "Operational Earnings Adjustments" on page 5 of this news
    release


"The numbers speak for themselves. We had a strong third quarter," said Mike Madison, president and chief executive officer of Cleco Corp. "In just the past three weeks, we've seen results from the execution of our strategy which will bring lasting shareholder value. We've received approval to implement our new retail rate plan, a plan that is expected to increase the earnings of Cleco while at the same time decreasing bills for our retail customers. That plan will go into effect when Rodemacher Unit 3 begins commercial operation later this year. However, we didn't stop there. Last week we announced that Acadia Power Partners reached an agreement with Entergy Louisiana to sell them the remaining 50 percent of the Acadia plant and further reduce our risk to the merchant power market. Once again, we are doing what we said we would do."

Recent Developments:

--  The Louisiana Public Service Commission (LPSC) approved Cleco Power's
    new retail rate plan on October 14, 2009.
--  Construction of Rodemacher Unit 3 is effectively complete; tuning and
    testing are in progress.
--  Definitive agreements have been executed for Entergy Louisiana to
    purchase the remaining 50 percent of the Acadia power station; the
    completion of this transaction is subject to regulatory approval.
--  The LPSC approved the Acadia/Cleco Power bridge tolling agreement
    covering 50 percent of the Acadia power station on October 14, 2009.
--  Construction has begun on the Acadiana Load Pocket transmission
    project.
    

Financial Highlights:


Third Quarter 2009

--  Reports third quarter earnings applicable to common stock of $59.8
    million, or $0.99 per share, compared to $37.1 million, or $0.62 per share
    for the third quarter of 2008.
    

Year-to-date 2009

--  Reports earnings applicable to common stock for the first nine months
    of 2009 of $93.5 million, or $1.55 per share, compared to $88.6 million, or
    $1.47 per share for the first nine months of last year.
    

Earnings Guidance

--  Reaffirming 2009 earnings target in the range of $1.62 to $1.72 per
    share.  Those targets assume normal weather for the remainder of the year
    and the continuation of the current rate plan through the in-service date
    of Rodemacher Unit 3, which is expected in late December 2009.
--  Midstream's earnings estimate assumes continued performance by
    Evangeline's tolling counterparty and is based on assumptions about
    Acadia's plant operations and meeting the obligations under third-party
    forward sales agreements.
    

Quarter-Over-Quarter Operational EPS Reconciliation:

$  0.64      2008 Third-Quarter Diluted Operational EPS

   0.02      Non-fuel revenue
   0.05      Energy hedging, net
   0.10      Income taxes
  (0.05)     Other expenses, net
   0.01      AFUDC (allowance for funds used during construction)
---------
   0.13      Cleco Power results

   0.06      Cleco Midstream results

   0.10      Corporate results
---------
   0.93      2009 Third-Quarter Diluted Operational EPS

   0.06      Adjustments(1)
---------

$  0.99      Reported GAAP earnings per share

(1) Refer to "Operational Earnings Adjustments" on page 5 of this news
    release

Cleco Power

--  Non-fuel revenue increased $0.02 per share compared to the third
    quarter of 2008 primarily due to higher residential usage per customer, new
    service to a wholesale customer that began in April 2009, and the absence
    of hurricane-related outages.  Partially offsetting these increases were
    lower sales to industrial customers which was largely the result of
    decreased production at one of Cleco Power's largest industrial customers
    and the start of a large industrial customer cogenerating a portion of its
    electricity requirements.  Lower miscellaneous revenue also contributed to
    the decreases.
    
--  Net realized and mark-to-market gains on energy hedging positions tied
    to a fixed-price wholesale contract increased earnings by $0.05 per share
    compared to the third quarter of 2008.
    
--  Income taxes increased earnings by $0.10 per share compared to the
    third quarter of 2008 as a result of an additional state tax benefit from a
    change in accounting method received on the 2008 tax returns which were
    filed in 2009, and a decrease in the annual projected effective tax rate
    mainly due to an increase in equity AFUDC as a percent of total income.
    
--  Other expenses were $0.05 per share higher compared to the third
    quarter of 2008 primarily due to higher general liability expense, higher
    employee benefit costs and administrative expenses, and higher capacity
    payments and other net miscellaneous expenses.
    
--  The debt portion of AFUDC, primarily associated with the Rodemacher
    Unit 3 project, contributed an additional $0.01 per share as compared to
    the third quarter of 2008.
    

Cleco Midstream Resources

--  Evangeline was up $0.05 per share compared to the third quarter of
    2008 primarily due to lower maintenance expenses and the absence of
    replacement power purchases.
    
--  Acadia was up $0.01 per share compared to the third quarter of 2008
    primarily due to higher net revenue from Acadia's short-term tolling
    agreement with Cleco Power and lower depreciation expense.
    

Corporate and Other

--  Income taxes increased earnings by $0.05 per share compared to the
    third quarter of 2008 due to a decrease in the annual projected effective
    consolidated tax rate mainly due to an increase in equity AFUDC as a
    percent of total income.
    
--  Interest expense decreased $0.04 per share compared to the third
    quarter of 2008 primarily due to the favorable settlement of a franchise
    tax lawsuit.
    
--  Lower other miscellaneous expenses, net increased earnings by $0.01
    per share.
    

Year-Over-Year Operational EPS Reconciliation:

$  1.49      Nine Months ended Sept. 30, 2008 Diluted Operational EPS

  (0.03)     Non-fuel revenue
  (0.02)     Energy hedging, net
  (0.14)     Interest expense
   0.08      Income taxes
  (0.08)     Other expenses, net
   0.15      AFUDC
---------
  (0.04)     Cleco Power results

  (0.03)     Cleco Midstream results

   0.10      Corporate results
---------
   1.52      Nine Months ended Sept. 30, 2009 Diluted Operational EPS

   0.03      Adjustments(1)
---------

$  1.55      Reported GAAP earnings per share

(1) Refer to "Operational Earnings Adjustments" on page 5 of this news
    release

Cleco Power

--  Although industrial sales were lower, overall base revenue was
    essentially the same in the year-to-year comparison.  Lower industrial
    sales were the result of decreased production at one of Cleco Power's large
    industrial customers and the start of a large industrial customer
    cogenerating a portion of its electricity requirements.  Heating-degree
    days for the period were 9 percent below 2008 levels while cooling-degree
    days were 2 percent above 2008 levels.  Contributing to the $0.03 per share
    decrease in non-fuel revenue for the year was lower miscellaneous revenue.
    
--  Mark-to-market and realized losses on energy hedging positions tied to
    a fixed-price wholesale contract increased $0.02 per share year over year.
    
--  Interest expense increased $0.14 per share compared to the first nine
    months of 2008 primarily due to the issuances of senior notes, Gulf
    Opportunity Zone bonds, senior secured storm recovery bonds, and solid-
    waste disposal bonds.
    
--  Income taxes increased earnings by $0.08 per share year over year as a
    result of an additional state tax benefit from a change in accounting
    method received on the 2008 tax returns which were filed in 2009, and a
    decrease in the annual projected effective tax rate mainly due to an
    increase in equity AFUDC as a percent of total income.
    
--  Other expenses, net increased $0.08 per share year over year primarily
    due to higher general liability expense, higher employee benefit costs and
    administrative expenses, and higher other net miscellaneous expenses.
    
--  AFUDC, primarily associated with the Rodemacher Unit 3 project,
    contributed an additional $0.15 per share as compared to the first nine
    months of 2008.  The equity portion of AFUDC associated with the Rodemacher
    Unit 3 project was up $0.10 per share, while the debt portion of AFUDC
    contributed $0.05 per share more than in the first nine months of 2008.
    

Cleco Midstream Resources

--  Evangeline was up $0.01 per share compared to the same period last
    year primarily due to the absence of replacement power purchases resulting
    from Evangeline's 2008 unplanned outage and lower gas tax expenses and
    interest charges. Partially offsetting these increases were higher
    maintenance expenses resulting from the outage at the facility during 2009.
    
--  Acadia was down $0.03 per share compared to the same period of 2008.
    Of that, $0.05 per share was due to higher expenses from an unplanned
    outage at the facility and $0.01 per share was due to higher legal fees.
    These decreases were partially offset by $0.02 per share of net revenue
    from Acadia's short-term tolling agreement with Cleco Power and $0.01 per
    share of lower depreciation expense.
    
--  Other miscellaneous items reduced Midstream's results by $0.01 per
    share year over year.
    

Corporate and Other

--  Lower interest charges resulting from the repayment of $100 million of
    senior notes in May 2008 and the favorable settlement of a franchise tax
    lawsuit increased results by $0.07 per share and lower other net expenses
    increased results by $0.03 per share compared to the first nine months of
    last year.
    

Operational Earnings Adjustments:

Cleco's management uses operational earnings per share to evaluate the operations of Cleco and to 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 EPS to Reported GAAP EPS

                                    Three months ended   Nine months ended
                                         Sept. 30,           Sept. 30,
                                    --------------------------------------
                                      2009      2008      2009      2008
                                    --------- --------  --------- --------
Operational earnings per share      $    0.93 $   0.64  $    1.52 $   1.49
  Tax levelization                       0.04    (0.01)         -        -
  Company/trust-owned life
   insurance policy adjustments          0.02    (0.01)      0.03    (0.02)
                                    --------- --------  --------- --------
Reported GAAP earnings per share    $    0.99 $   0.62  $    1.55 $   1.47

Reconciling adjustments from operational earnings to GAAP earnings are as follows:

Tax Levelization

Generally accepted accounting principles require companies to apply an effective tax rate to interim periods that is consistent with a company's estimated annual effective tax rate. As a result, quarterly, Cleco projects the effective tax rate for the year and then raises or lowers the tax expense recorded in that quarter to reflect the projected annual tax rate. The resulting incremental adjustment to bring the taxes in line with the expected annual tax rate increased earnings by $0.04 per share for the third quarter of 2009 and decreased earnings by $0.01 per share for the third quarter of 2008. While this adjustment has no impact on Cleco's annual earnings, the interim impact is greater in the current year as the projected increased income from equity AFUDC for Rodemacher Unit 3, as a percentage of total book income, has a significant impact on Cleco's projected annual effective tax rate. This incremental adjustment is not related to the third quarter operational results because it reflects the effect of the change in tax rates on operational earnings for the entire year.

COLI/TOLI Adjustments

Cleco has both Company-Owned Life Insurance and Trust-Owned Life Insurance (COLI/TOLI) policies covering certain members of management. These policies are payable to Cleco upon death of the insured. COLI/TOLI assets are acquired at fair value, and adjusted for changes in market value and any payments/redemptions of cash surrender values. The resulting adjustments for these items increased earnings by $0.02 per share for the third quarter of 2009 and decreased earnings by $0.01 per share for the third quarter of 2008. The adjustments increased earnings by $0.03 per share for the first nine months of 2009 and decreased earnings by $0.02 per share for the same period last year. Cleco is unable to predict changes in the market values and amounts of cash surrender values of these policies. As a result, management does not consider these adjustments to be a component of operational earnings.

----------------------------------------------------------------------

Cleco management will discuss the company's third-quarter 2009 results during a conference call scheduled for 4:30 p.m. Eastern time (3:30 p.m. Central time) Monday, Nov. 2, 2009. 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 Web site at www.cleco.com by selecting "For Investors" and then "Cleco Corporation Third-Quarter 2009 Earnings Conference Call."

Cleco Corp. is a regional energy company headquartered in Pineville, La. It operates a regulated electric utility company that serves approximately 276,000 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:

                           For the three months ended Sept. 30,
                --------------------------------------------------------
                       (million kWh)                  (thousands)
                --------------------------    --------------------------
                  2009      2008    Change      2009      2008    Change
                --------  --------  ------    --------  --------  ------
Electric Sales
  Residential      1,207     1,144     5.5 %  $ 53,970  $ 51,490     4.8 %
  Commercial         743       721     3.1 %    25,802    25,195     2.4 %
  Industrial         577       762   (24.3)%    12,912    14,585   (11.5)%
  Other retail        36        36       -       1,491     1,469     1.5 %
  Storm surcharge      -         -       -       5,054     5,455    (7.4)%
                --------  --------            --------  --------
    Total retail   2,563     2,663    (3.8)%    99,229    98,194     1.1 %
  Sales for
   resale            199       153    30.1 %     7,435     5,759    29.1 %
  Unbilled           (95)     (134)   29.1 %    (3,466)   (4,863)   28.7 %
                --------  --------            --------  --------
Total retail
 and wholesale
 customer sales    2,667     2,682    (0.6)%   $103,198  $ 99,090    4.1 %


                             For the nine months ended Sept. 30,
                --------------------------------------------------------
                       (million kWh)                  (thousands)
                --------------------------    --------------------------
                  2009      2008    Change      2009      2008    Change
                --------  --------  ------    --------  --------  ------
Electric Sales
  Residential      2,814     2,789     0.9 %  $122,486  $121,236     1.0 %
  Commercial       1,882     1,874     0.4 %    71,871    71,258     0.9 %
  Industrial       1,633     2,177   (25.0)%    38,046    41,580    (8.5)%
  Other retail       103       101     2.0 %     4,288     4,205     2.0 %
  Storm surcharge      -         -       -      14,674    15,641    (6.2)%
                --------  --------  ------    --------  --------  ------
    Total retail   6,432     6,941    (7.3)%   251,365   253,920    (1.0)%
  Sales for
   resale            432       327    32.1 %    16,034    15,430     3.9 %
  Unbilled            98        12   716.7 %     3,538     1,583   123.5 %
                --------  --------  ------    --------  --------  ------
Total retail
 and wholesale
 customer sales    6,962     7,280    (4.4)%  $270,937  $270,933       -




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

For the three months ended Sept. 30,                   2009        2008
                                                    ----------  ----------
Operating revenue
  Electric operations                               $  228,952  $  333,936
  Other operations                                       9,859       7,004
  Affiliate revenue                                      2,689       2,735
                                                    ----------  ----------
      Total operating revenue                          241,500     343,675
Operating expenses
  Fuel used for electric generation                     74,585      93,717
  Power purchased for utility customers                 61,943     150,502
  Other operations                                      26,667      24,822
  Maintenance                                           10,452      10,754
  Depreciation                                          19,620      19,283
  Taxes other than income taxes                          7,479       9,033
  Loss on sale of assets                                    77           -
                                                    ----------  ----------
      Total operating expenses                         200,823     308,111
                                                    ----------  ----------
Operating income                                        40,677      35,564
Interest income                                            369       1,669
Allowance for other funds used during construction      17,813      17,786
Equity income from investees                            15,587       9,662
Other income                                             2,079         937
Other expense                                             (849)     (2,276)
Interest charges
  Interest charges, including amortization of debt
   expenses, premium and discount, net of
   capitalized interest                                 17,361      20,619
  Allowance for borrowed funds used during
   construction                                         (6,523)     (4,923)
                                                    ----------  ----------
      Total interest charges                            10,838      15,696
                                                    ----------  ----------
Income before income taxes                              64,838      47,646
Federal and state income tax expense                     4,983      10,513
                                                    ----------  ----------
Net income                                              59,855      37,133
Preferred dividends requirements, net of tax                12          12
                                                    ----------  ----------
Net income applicable to common stock               $   59,843  $   37,121
                                                    ==========  ==========

Average shares of common stock outstanding
  Basic                                             60,234,243  60,031,962
  Diluted                                           60,556,768  60,291,616
Basic earnings per share
  From continuing operations                        $     0.99  $     0.62
  Net income applicable to common stock             $     0.99  $     0.62
Diluted earnings per share
  From continuing operations                        $     0.99  $     0.62
  Net income applicable to common stock             $     0.99  $     0.62
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 nine months ended Sept. 30,                    2009        2008
                                                    ----------  ----------
Operating revenue
  Electric operations                               $  627,469  $  803,397
  Other operations                                      25,680      29,826
  Affiliate revenue                                      8,513       7,790
                                                    ----------  ----------
      Total operating revenue                          661,662     841,013
Operating expenses
  Fuel used for electric generation                    213,213     162,140
  Power purchased for utility customers                164,209     392,245
  Other operations                                      77,557      69,958
  Maintenance                                           35,777      35,456
  Depreciation                                          58,233      57,970
  Taxes other than income taxes                         22,812      27,320
  Loss (gain) on sales of assets                            77         (99)
                                                    ----------  ----------
      Total operating expenses                         571,878     744,990
                                                    ----------  ----------
Operating income                                        89,784      96,023
Interest income                                          1,051       4,544
Allowance for other funds used during construction      52,341      46,462
Equity income from investees                               710       2,723
Other income                                             4,753       1,094
Other expense                                           (2,181)     (4,322)
Interest charges
  Interest charges, including amortization of debt
   expenses, premium and discount, net of
   capitalized interest                                 58,827      49,884
  Allowance for borrowed funds used during
   construction                                        (19,157)    (14,526)
                                                    ----------  ----------
      Total interest charges                            39,670      35,358
                                                    ----------  ----------
Income before income taxes                             106,788     111,166
Federal and state income tax expense                    13,258      22,573
                                                    ----------  ----------
Net income                                              93,530      88,593
Preferred dividends requirements, net of tax                35          35
                                                    ----------  ----------
Net income applicable to common stock               $   93,495  $   88,558
                                                    ==========  ==========

Average shares of common stock outstanding
  Basic                                             60,167,644  59,975,190
  Diluted                                           60,390,454  60,146,501
Basic earnings per share                                              1.48
  From continuing operations                        $     1.55  $     1.48
  Net income applicable to common stock             $     1.55  $     1.48
Diluted earnings per share
  From continuing operations                        $     1.55  $     1.47
  Net income applicable to common stock             $     1.55  $     1.47
Cash dividends paid per share of common stock       $    0.675  $    0.675




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

                                                     At Sept.     At Dec.
                                                     30, 2009    31, 2008
                                                    ----------  ----------
Assets
Current Assets
   Cash and cash equivalents                        $   49,283  $   97,483
   Accounts receivable, net                             78,963      78,314
   Other current assets                                266,636     290,582
                                                    ----------  ----------
      Total Current Assets                             394,882     466,379
Property, plant and equipment, net                   2,208,553   2,045,286
Equity investment in investees                         262,472     249,144
Prepayments, deferred charges and other                663,311     580,395
                                                    ----------  ----------
   Total Assets                                     $3,529,218  $3,341,204
                                                    ----------  ----------
Liabilities
Current Liabilities
   Long-term debt due within one year               $   11,478  $   63,546
   Accounts payable                                     81,969     138,300
   Other current liabilities                           166,223     158,987
                                                    ----------  ----------
Total Current Liabilities                              259,670     360,833
Deferred credits and other liabilities                 914,214     812,687
Long-term debt, net                                  1,238,238   1,106,819
                                                    ----------  ----------
      Total Liabilities                              2,412,122   2,280,339
                                                    ----------  ----------
Shareholders' Equity
   Preferred stock                                       1,029       1,029
   Common shareholders' equity                       1,126,531   1,069,669
   Accumulated other comprehensive loss                (10,464)     (9,833)
                                                    ----------  ----------
Total Shareholders' Equity                           1,117,096   1,060,865
                                                    ----------  ----------
   Total Liabilities and Shareholders' Equity       $3,529,218  $3,341,204
                                                    ==========  ==========

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. 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 results of Cleco Power's 2007 long-term RFP, the completion of the Acadiana Load Pocket project, the completion of the Acadia/Cleco Power and Acadia/Entergy Louisiana transactions, the impact of the global financial crisis, 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:
    R. Russell Davis
    (318) 484-7501
    Rodney J. Hamilton
    (318) 484-7593

    Media Contact:
    Fran Phoenix
    (318) 484-7467