SOURCE: Cleco Corp.

Cleco Corp.

August 05, 2009 17:13 ET

Cleco Corp. Posts 2009 Second-Quarter Earnings of $27.0 Million

Company Reaffirms 2009 Earnings Guidance

PINEVILLE, LA--(Marketwire - August 5, 2009) - Cleco Corp. (NYSE: CNL) reported today 2009 second-quarter net income applicable to common stock of $27.0 million, down $2.4 million from the $29.4 million recorded in the second quarter of 2008 and reaffirms its 2009 earnings guidance.

On an earnings per share basis, Cleco recorded earnings of $0.45 per diluted share, down $0.04 per share from the $0.49 per share recorded in the second quarter of 2008. Results for the quarter were driven by $0.03 per share of higher losses at Midstream primarily from unplanned outage expenses at Acadia and $0.04 per share of lower results at Cleco Power. Partially offsetting these decreases was a $0.03 per share contribution from Corporate.

For the six months ended June 30, 2009, net income applicable to common stock was $33.7 million, or $0.56 per diluted share, down $0.30 per share from the $0.86 per share for the same period in 2008. Results for the six month period were driven by $0.25 per share of lower results at Cleco Power primarily from increased interest charges, net losses relating to economic hedge transactions and operating and maintenance expenses, and $0.10 per share higher losses at Midstream primarily from outage expenses. Partially offsetting these decreases was a $0.05 per share contribution from Corporate.

"We're very close to accomplishing three of our top goals for the year," said Mike Madison, president and chief executive officer of Cleco Corp. "Rodemacher Unit 3 is on schedule to begin commercial operation in the fourth quarter of 2009, we've reached a settlement agreement with all parties on our rate case, and we have executed definitive agreements for the transfer of half of Acadia to Cleco Power."

These projects are discussed in more detail in the company's strategic update.


Consolidated Diluted Earnings Per Share Allocated to Subsidiaries

                                                            Diluted EPS
                                                        ------------------
                                                        three months ended
                                                              June 30
                                                        ------------------
Subsidiary                                                2009      2008
                                                        --------  --------
Cleco Power LLC                                         $   0.50  $   0.54
Cleco Midstream Resources LLC                              (0.08)    (0.05)
Corporate and Other(1)                                      0.03         -
                                                        --------  --------
  Earnings applicable to common stock                   $   0.45  $   0.49

(1) Includes dividends on preferred stock

Results for Second-Quarter 2009:

Major Reconciling Items for Second-Quarter EPS 2009 vs. 2008:

$ 0.49        2008 Second-Quarter Diluted EPS

  0.01        Non-fuel revenue
 (0.03)       Energy hedging, net
 (0.04)       Interest expense
 (0.02)       Income tax adjustments
 (0.01)       Other expenses, net
  0.05        AFUDC (allowance for funds used during construction)
  ----
 (0.04)       Cleco Power results

 (0.03)       Cleco Midstream results

  0.03        Corporate results
  ----
$ 0.45        2009 Second-Quarter Diluted EPS

Cleco Power's 2009 second-quarter earnings -- down $0.04 per share in the
quarter-to-quarter comparison

-- Non-fuel revenue increased $0.01 per share compared to the second
   quarter of 2008 primarily due to higher unbilled sales as a result of
   above normal temperatures in the latter part of the quarter, partially
   offset by lower billed sales to industrial customers.  Lower sales to
   industrial customers were largely the result of decreased production at
   one of Cleco Power's largest industrial customers and the start of a
   large industrial customer cogenerating its electricity requirements.
   Cooling degree days for the quarter were comparable to 2008 second-
   quarter levels and were 17 percent above normal, again reflecting the
   above normal temperatures in the latter part of the quarter.



                                                 For the three months ended
                  (Million kWh)                            June 30
                                                 --------------------------
                                                   2009     2008   Change
                                                 -------- -------- --------
Electric Sales
  Residential                                         791      804   (1.6)%
  Commercial                                          596      599   (0.5)%
  Industrial                                          469      729  (35.7)%
  Other retail                                         34       33    3.0%
                                                 -------- --------
    Total retail                                    1,890    2,165  (12.7)%
  Sales for resale                                    144      103   39.8%
  Unbilled                                            325      203      60
                                                 -------- --------
Total retail and wholesale customer sales           2,359    2,471   (4.5)%


-- Realized losses and lower mark-to-market gains on energy hedging
   positions tied to a fixed-price wholesale contract reduced earnings by
   $0.03 per share compared to the second quarter of 2008.

-- Interest expense increased $0.04 per share compared to the second
   quarter of 2008.  Of that, $0.05 per share was primarily related to the
   issuances of senior notes, Gulf Opportunity Zone bonds and solid-waste
   disposal bonds.  These increases were partially offset by $0.01 per
   share of lower interest expense relating to medium-term notes and lower
   interest rates and borrowings under Cleco Power's credit facility.

-- Adjustments to record tax expense at the expected annual effective tax
   rate decreased earnings by $0.02 per share.

-- Other expenses were $0.01 per share higher compared to the same period
   last year primarily due to higher employee benefit costs, training
   expenses and administrative expenses, partially offset by lower other
   non-recoverable fuel expenses.

-- AFUDC, primarily associated with the Rodemacher Unit 3 project,
   contributed an additional $0.05 per share as compared to the second
   quarter of 2008.  The equity portion of AFUDC associated with the
   Rodemacher Unit 3 project was up $0.04 per share, while the debt portion
   of AFUDC contributed $0.01 per share more than in the second quarter of
   2008.

Cleco Midstream Resources' results for second quarter 2009 -- down $0.03 per share in the quarter-to-quarter comparison

Acadia was down $0.04 per share compared to the second quarter of 2008 primarily due to higher expenses from an unplanned outage at the facility during 2009. Also contributing to the loss at Acadia were higher interest charges primarily from additional estimated interest costs related to an IRS audit and higher legal fees. These decreases were partially offset by higher net revenue from Acadia's short-term tolling agreement with Cleco Power. Evangeline was up $0.01 per share for the second quarter of 2009 compared to the second quarter of 2008 primarily due to lower gas expenses and lower interest charges.

Other

Corporate earnings increased $0.03 per share in the quarter-to-quarter comparison primarily due to increases in the cash surrender values of corporate life insurance policies.

    Consolidated Diluted Earnings Per Share Allocated to Subsidiaries

                                                            Diluted EPS
                                                        ------------------
                                                         six months ended
                                                              June 30
                                                        ------------------
Subsidiary                                                2009      2008
                                                        --------  --------
Cleco Power LLC                                         $   0.75  $   1.00
Cleco Midstream Resources LLC                              (0.22)    (0.12)
Corporate and Other(1)                                      0.03     (0.02)
                                                        --------  --------
  Earnings applicable to common stock                   $   0.56  $   0.86

(1) Includes dividends on preferred stock

Results for six months ended June 30, 2009:

Major Reconciling Items for six months ended June 30, EPS 2009 vs. 2008:

$ 0.86           Six Months ended June 30, 2008

 (0.04)          Non-fuel revenue
 (0.07)          Energy hedging, net
 (0.14)          Interest expense
 (0.09)          Income tax adjustments
 (0.04)          Other expenses, net
  0.13           AFUDC (allowance for funds used during construction)
  ----
 (0.25)          Cleco Power results

 (0.10)          Cleco Midstream results

  0.05           Corporate results
  ----
$ 0.56           Six Months ended June 30, 2009 Diluted EPS

Cleco Power's six months ended June 30, 2009 earnings -- down $0.25 per
share year over year

-- Retail and wholesale sales decreased $0.04 per share compared to last
   year's results primarily from milder winter weather and lower industial
   electric sales.  Lower sales to industrial customers were largely the
   result of decreased production at one of Cleco Power's largest
   industrial customers and the start of a large industrial customer
   cogenerating its electricity requirements.  Heating degree days for the
   first half of 2009 were 9 percent below 2008 levels while cooling degree
   days were 2 percent above 2008 levels.

                                                 For the six months ended
(Million kWh)                                             June 30
                                                 --------------------------
                                                   2009     2008   Change
                                                 -------- -------- --------
Electric Sales
  Residential                                       1,607    1,644   (2.3)%
  Commercial                                        1,139    1,153   (1.2)%
  Industrial                                        1,056    1,416  (25.4)%
  Other retail                                         66       65    1.5 %
                                                 -------- --------
    Total retail                                    3,868    4,278   (9.6)%
  Sales for resale                                    233      173   34.7%
  Unbilled                                            192      147      30
                                                 -------- --------
Total retail and wholesale customer sales           4,293    4,598   (6.6)%

-- Mark-to-market and realized losses on energy hedging positions tied to a
   fixed-price wholesale contract increased $0.07 per share year over year.

-- Interest expense increased $0.14 per share compared to the first half of
   2008 primarily due to the issuances of senior notes, senior secured
   storm recovery bonds, Gulf Opportunity Zone bonds and solid-waste
   disposal bonds.

-- Adjustments to record tax expense at the expected annual effective tax
   rate decreased earnings by $0.09 per share.

-- Other expenses were $0.04 per share higher compared to the same period
   last year primarily due to higher general liability expense, higher
   employee benefit costs, training expenses and administrative expenses.

-- AFUDC, primarily associated with the Rodemacher Unit 3 project,
   contributed an additional $0.13 per share as compared to the first half
   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 $0.03 per share more than in the first half of 2008.

Cleco Midstream Resources' six months ended June 30, 2009 results -- down $0.10 per share year over year

Evangeline was down $0.05 per share for the first half of 2009 compared to the first half of 2008 primarily due to higher maintenance expenses largely related to a planned steam turbine major inspection outage during 2009. Acadia was down $0.04 per share for the first half of 2009 compared to the first half of 2008 primarily due to higher expenses from an unplanned outage at the facility during 2009. These decreases were partially offset by higher net revenue from Acadia's short-term tolling agreement with Cleco Power. Additional estimated interest costs related to an IRS audit reduced Midstream's results by $0.01 per share.

Other

Corporate earnings increased $0.05 per share in the year-to-year comparison primarily due to increases in the cash surrender values of corporate life insurance policies, lower interest charges resulting from the repayment of $100 million of senior notes in May 2008 and lower other net expenses.

Earnings Guidance

"We are reaffirming our 2009 earnings target in the range of $1.62 to $1.72 per share," Madison said. "Those targets assume normal weather for the remainder of the year and the continuation of our current rate plan through the in-service date of Rodemacher Unit 3. Additionally, the Cleco Power earnings target range accommodates in-service dates for Rodemacher Unit 3 from Sept. 30, 2009, through the end of 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."

Strategic update:

Cleco Power

"Construction of Rodemacher Unit 3 is more than 90 percent complete, and as reported last quarter, the prerequisites for actual startup are ongoing," Madison said.

"On July 27, 2009, we notified the Administrative Law Judge that Cleco Power, along with the Louisiana Public Service Commission staff, and the intervenors in the case had made significant progress toward a full resolution of all issues in the case," Madison said. "We are pleased that our proposed rate plan has a target return on equity of 10.7 percent with sharing occurring after 11.3 percent. This settlement brings us one step closer to delivering on our growth strategy and will now be presented to the commission for approval. We hope to implement our new rate plan when Rodemacher Unit 3 begins commercial operation in the fourth quarter of 2009."

"Cleco Power's acquisition of 50 percent of the Acadia plant is progressing. We've finished our due diligence and signed the agreements to transfer the asset," Madison said. "The next step is to file for regulatory approvals. The acquisition is expected to be complete during the first quarter of 2010. Beginning January 2010, the agreements provide that Acadia will continue to operate the plant and serve Cleco Power under a tolling agreement covering 50 percent of the plant until the transaction is closed."

Midstream

"In addition to working on the Acadia-Cleco Power transaction, our Midstream subsidiary continues to work on selling the remaining capacity at Acadia either through a power purchase agreement, tolling agreement or asset sale in order to attain the maximum value from the asset," Madison said.

Cleco management will discuss the company's second-quarter 2009 results during a conference call scheduled for 11 a.m. Eastern time (10 a.m. Central time) Thursday, Aug. 6, 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 Second-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 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:

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


For the three months ended June 30                      2009       2008
                                                     ---------- ----------
Operating revenue
   Electric operations                               $  195,651 $  259,581
   Other operations                                       8,712     12,758
   Affiliate revenue                                      2,863      2,448
                                                     ---------- ----------
      Operating revenue                                 207,226    274,787
Operating expenses
   Fuel used for electric generation                     50,326     22,887
   Power purchased for utility customers                 56,547    151,949
   Other operations                                      25,941     22,862
   Maintenance                                           14,766     14,589
   Depreciation                                          19,479     19,336
   Taxes other than income taxes                          8,300      9,455
                                                     ---------- ----------
      Total operating expenses                          175,359    241,078
                                                     ---------- ----------
Operating income                                         31,867     33,709
Interest income                                             271      1,258
Allowance for other funds used during construction       17,538     14,993
Equity loss from investees                               (3,125)    (2,365)
Other income                                              1,633         91
Other expense                                              (480)    (1,377)
Interest charges
   Interest charges, including amortization of debt
    expenses, premium and discount, net of
    capitalized interest                                 20,150     14,947
   Allowance for borrowed funds used during
    construction                                         (6,421)    (5,026)
                                                     ---------- ----------
      Total interest charges                             13,729      9,921
                                                     ---------- ----------
Income before income taxes                               33,975     36,388
Federal and state income tax expense                      6,949      6,999
                                                     ---------- ----------
Net income                                               27,026     29,389
Preferred dividends requirements, net of tax                 12         12
                                                     ---------- ----------
Net income applicable to common stock                $   27,014 $   29,377
                                                     ========== ==========

Average shares of common stock outstanding
  Basic                                              60,175,528 59,998,227
  Diluted                                            60,451,665 60,168,947
Basic earnings per share
  From continuing operations                         $     0.45 $     0.49
  Net income applicable to common stock              $     0.45 $     0.49
Diluted earnings per share
  From continuing operations                         $     0.45 $     0.49
  Net income applicable to common stock              $     0.45 $     0.49
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                        2009       2008
                                                     ---------- ----------
Operating revenue
  Electric operations                                $  398,517 $  469,462
  Other operations                                       15,820     22,821
  Affiliate revenue                                       5,825      5,054
                                                     ---------- ----------
    Operating revenue                                   420,162    497,337
Operating expenses
  Fuel used for electric generation                     138,629     68,423
  Power purchased for utility customers                 102,265    241,743
  Other operations                                       50,892     45,138
  Maintenance                                            25,325     24,702
  Depreciation                                           38,613     38,686
  Taxes other than income taxes                          15,333     18,286
  Gain on sales of assets                                     -        (99)
                                                     ---------- ----------
    Total operating expenses                            371,057    436,879
                                                     ---------- ----------
Operating income                                         49,105     60,458
Interest income                                             682      2,875
Allowance for other funds used during construction       34,529     28,677
Equity loss from investees                              (14,876)    (6,939)
Other income                                              2,674        157
Other expense                                            (1,332)    (2,046)
Interest charges
  Interest charges, including amortization of debt
   expenses, premium and discount, net of
   capitalized interest                                  41,466     29,265
  Allowance for borrowed funds used during
   construction                                         (12,634)    (9,603)
                                                     ---------- ----------
    Total interest charges                               28,832     19,662
                                                     ---------- ----------
Income before income taxes                               41,950     63,520
Federal and state income tax expense                      8,275     12,060
                                                     ---------- ----------
Net income                                               33,675     51,460
Preferred dividends requirements, net of tax                 23         23
                                                     ---------- ----------
Net income applicable to common stock                $   33,652 $   51,437
                                                     ========== ==========

Average shares of common stock outstanding
  Basic                                              60,132,358 59,948,801
  Diluted                                            60,279,903 60,068,682
Basic earnings per share
  From continuing operations                         $     0.56 $     0.86
  Net income applicable to common stock              $     0.56 $     0.86
Diluted earnings per share
  From continuing operations                         $     0.56 $     0.86
  Net income applicable to common stock              $     0.56 $     0.86
Cash dividends paid per share of common stock        $    0.450 $    0.450




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


                                                  At June 30,  At Dec. 31,
                                                      2009         2008
                                                  -----------  -----------
Assets
Current Assets
   Cash and cash equivalents                      $    41,996  $    97,483
   Accounts receivable, net                            86,998       78,314
   Other current assets                               270,800      290,582
                                                  -----------  -----------
      Total Current Assets                            399,794      466,379
Property, plant and equipment, net                  2,161,603    2,045,286
Equity investment in investees                        248,485      249,144
Prepayments, deferred charges and other               607,889      580,395
                                                  -----------  -----------
   Total Assets                                   $ 3,417,771  $ 3,341,204
                                                  -----------  -----------
Liabilities
Current Liabilities
   Long-term debt due within one year             $    11,087  $    63,546
   Accounts payable                                    86,043      138,300
   Other current liabilities                          152,591      158,987
                                                  -----------  -----------
      Total Current Liabilities                       249,721      360,833
Deferred credits and other liabilities                859,742      812,687
Long-term debt, net                                 1,238,757    1,106,819
                                                  -----------  -----------
   Total Liabilities                                2,348,220    2,280,339
                                                  -----------  -----------
Shareholders’ Equity
   Preferred stock                                      1,029        1,029
   Common shareholders’ equity                      1,078,352    1,069,669
   Accumulated other comprehensive loss                (9,830)      (9,833)
                                                  -----------  -----------
Total Shareholders’ Equity                          1,069,551    1,060,865
                                                  -----------  -----------
   Total Liabilities and Shareholders’ Equity     $ 3,417,771  $ 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, Cleco Power's pending rate case and Cleco Power's 2007 long-term request for proposal (RFP). 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 pending rate case, the results of Cleco Power's 2007 long-term RFP, the implementation of the Acadiana Load Pocket project, 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

    Cleco Corporation
    2030 Donahue Ferry Road
    PO Box 5000
    Pineville, LA 71361-5000
    Tel 318.484.7400
    www.cleco.com