SOURCE: Cleco Corp.

February 27, 2008 18:55 ET

Cleco Corp. Reports Full-Year 2007 Earnings

Issues Guidance for 2008

PINEVILLE, LA--(Marketwire - February 27, 2008) - Cleco Corp. (NYSE: CNL) today reported 2007 net income applicable to common stock of $151.3 million. Our 2007 net income includes a $72.2 million net gain from the Acadia partnership settlement with Calpine ($48.1 million) and the Calpine bankruptcy claim ($24.1 million).

Net income, excluding the $72.2 million from the Acadia transactions, was up $6.2 million compared to 2006; however, earnings for 2007 were diluted by the August 2006 sale of 6.9 million shares of common stock. Cleco Power's retail sales grew by two percent.

On an earnings per share (EPS) basis, Cleco recorded earnings of $2.54 per diluted share in 2007. Excluding the $1.22 per diluted share from the Acadia partnership settlement and Calpine bankruptcy claim, Cleco recorded earnings of $1.32 per diluted share, down $0.04 per share from the $1.36 per diluted share recorded in 2006.

For the fourth quarter of 2007, Cleco recorded net income of $11.9 million, up $1.1 million compared to the fourth quarter of 2006. Earnings for the fourth quarter of 2007 were $0.20 per diluted share, up $0.01 compared to $0.19 per diluted share recorded in the fourth quarter of 2006.

"We had a good fourth quarter and year. The Acadia partnership transactions positively increased our 2007 earnings; however, we had strong earnings without the Acadia-related income," Cleco President and CEO Michael Madison said. "In 2008, our focus will be on keeping our major solid-fuel generation project, Rodemacher 3, within budget to begin commercial operations no later than the fourth quarter of 2009. We also will be focused on filing our base rate case with the Louisiana Public Service Commission (LPSC), and securing the additional capacity needed to meet our utility customers' long-term power needs."

    Consolidated Diluted Earnings Per Share Allocated to Subsidiaries


                                                          Diluted EPS
                                                      --------------------
                                                       Three Months Ended
                                                            Dec. 31
                                                      --------------------
Subsidiary                                              2007       2006
                                                      ---------  ---------
Cleco Power                                           $    0.33  $    0.22
Cleco Midstream Resources                                 (0.09)     (0.14)
Corporate and Other(1)                                    (0.04)      0.11
                                                      ---------  ---------
   Earnings applicable to common stock                $    0.20  $    0.19
                                                      =========  =========

(1) Includes dividends on preferred stock


                                                          Diluted EPS
                                                      --------------------
                                                       Twelve Months Ended
                                                            Dec. 31
                                                      --------------------
Subsidiary                                              2007       2006
                                                      ---------  ---------
Cleco Power                                           $    1.42  $    1.21
Cleco Midstream Resources (excluding Acadia
 partnership settlement and Calpine bankruptcy claim)     (0.22)     (0.07)
Corporate and Other(1)                                     0.12       0.22
                                                      ---------  ---------
   Earnings excluding Acadia partnership settlement
    and Calpine bankruptcy claim                      $    1.32  $    1.36
Earnings from 2007 Acadia partnership settlement and
 Calpine bankruptcy claim                                  1.22         --
                                                      ---------  ---------
   Earnings applicable to common stock                $    2.54  $    1.36
                                                      =========  =========

(1) Includes dividends on preferred stock



Results for Fourth-Quarter 2007:

Major Reconciling Items for Fourth-Quarter EPS 2007 vs. 2006:


  $ 0.19               2006 Fourth-Quarter Diluted EPS

    0.15               Higher Cleco Power AFUDC
   (0.04)              Higher Cleco Power expenses
    0.05               Lower losses at Cleco Midstream
   (0.09)              Lower proceeds from corporate-owned life insurance
   (0.06)              Lower other corporate results
--------

  $ 0.20               2007 Fourth-Quarter Diluted EPS

Cleco Power

Cleco Power's 2007 fourth-quarter earnings were $0.11 per share higher than in the fourth quarter of 2006.

Overall, nonfuel revenue was even in the quarter-to-quarter comparison with 2006.

--  Fourth-quarter 2007 kilowatt-hour sales were approximately the same as
    a year ago for the same period.
    

                                                    For the three months
                 (Million kWh)                         ended Dec. 31
                                                 -------------------------
                                                   2007     2006   Change
                                                 -------  -------  ------
Electric Sales
   Residential                                       806      792     1.8 %
   Commercial                                        609      580     5.0 %
   Industrial                                        754      762    (1.0)%
   Other retail                                       33       32     3.1 %
                                                 -------  -------
      Total retail                                 2,202    2,166     1.7 %
   Sales for resale                                   89       89      --
   Unbilled                                          (86)     (46)  (87.0)%
                                                 -------  -------
Total retail and wholesale customer sales          2,205    2,209    (0.2)%

Cleco Power expenses were up $0.04 per share, but offset by $0.15 per share of AFUDC in the quarter-to-quarter comparison.

--  Distribution expenses related primarily to tree trimming were up $0.01
    per share, planned power plant outages increased maintenance costs by $0.01
    per share, and transmission expenses increased by $0.01 per share.
    
--  Damage claims and other miscellaneous items increased expenses by
    $0.03 per share.
    
--  Capacity payments were $0.01 per share higher primarily due to the
    March 2006 termination of a power purchase agreement with Calpine Energy
    Services.
    
--  Interest expense, net, decreased $0.03 per share primarily due to a
    reversal of accrued interest expense for uncertain tax positions, partially
    offset by higher interest associated with higher debt balances.
    
--  The equity portion of AFUDC (allowance for funds used during
    construction) associated with the Rodemacher 3 project was up $0.12 per
    share, while the debt portion of AFUDC contributed $0.03 per share more
    than in fourth quarter 2006.
    

Cleco Midstream

Cleco Midstream had $0.05 per share of lower losses in the fourth quarter of 2007 compared to the fourth quarter of 2006.

Acadia's earnings were up $0.02 per share mainly due to lower interest paid to the holding company, partially offset by higher turbine maintenance. Evangeline's earnings improved $0.03 per share primarily due to the absence of a 2006 depreciation adjustment.

Other

Corporate earnings decreased $0.15 per share in the quarter-to-quarter comparison. The decrease was due to lower proceeds from corporate-owned life insurance policies in the amount of $0.09 per share, $0.02 per share of lower interest income, $0.02 per share of higher income taxes, $0.02 per share of higher franchise taxes, and $0.01 per share of other miscellaneous expenses, partially offset by $0.01 per share due to the absence of penalties accrued in 2006 related to the Federal Energy Regulatory Commission investigation.

Results for 12 Months ended Dec. 31, 2007:

Major Reconciling Items for 12 Months ended Dec. 31 EPS 2007 vs. 2006:

$   1.36        12 Months ended Dec. 31, 2006, Diluted EPS

    0.53        Higher Cleco Power AFUDC
    0.12        Higher Cleco Power nonfuel revenue
   (0.06)       Absence of 2006 storm cost transfer to regulatory asset
   (0.04)       Amortization of deferred storm costs
   (0.06)       Cleco Power Dolet Hills planned power plant outage expenses
   (0.06)       Higher Cleco Power interest expense, net
   (0.12)       Higher other Cleco Power nonfuel expenses
   (0.10)       Effect of increased number of outstanding shares
   (0.15)       Lower Cleco Midstream contribution (excluding Acadia
                 settlement and claim)
   (0.08)       Lower proceeds from corporate-owned life insurance
   (0.02)       Lower other corporate results
--------
$   1.32        2007 EPS without Acadia partnership settlement and Calpine
                 bankruptcy claim
    1.22        Acadia partnership settlement and Calpine bankruptcy claim
--------
$   2.54        12 Months ended Dec. 31, 2007, Diluted EPS

Cleco Power

For 2007, Cleco Power's earnings were $1.42 per diluted share, up $0.21 per share from 2006 results.

Overall, nonfuel revenue increased $0.12 per share compared to 2006 results.

Kilowatt-hour sales were $0.04 per share higher. Cooling degree-days were up 2 percent in 2007 compared to 2006 and 13 percent above normal. Heating degree-days were up 10 percent in 2007 compared to 2006 levels, but 14 percent below normal.

                                           For the 12 months ended Dec. 31
                                           -------------------------------
             (Million kWh)
                                             2007       2006       Change
                                           ---------  ---------- --------
Electric Sales
   Residential                                 3,596       3,552      1.2 %
   Commercial                                  2,478       2,109     17.5 %
   Industrial                                  3,008       2,963      1.5 %
   Other retail*                                 135         412    (67.2)%
                                           ---------  ---------- --------
      Total retail                             9,217       9,036      2.0 %
   Sales for resale                              473         480     (1.5)%
   Unbilled                                      (19)          7   (371.4)%
                                           ---------  ---------- --------
Total retail and wholesale customer sales      9,671       9,523      1.5 %

*Effective August 2006, certain other retail customers were reclassified to
 commercial customers.

--  The collection of a storm cost recovery surcharge, which began in May
    2006, increased revenue $0.08 per share.
    
--  Mark-to-market gains in 2007 on energy hedging positions tied to a
    fixed-price wholesale contract compared to mark-to-market losses in 2006
    resulted in a $0.06 per share increase in earnings.
    
--  The absence of the 2006 reversal of previously accrued customer
    refunds resulted in a $0.05 per share decrease in results.
    
--  Lower transmission services revenue, partially offset by higher
    distribution joint-use and other miscellaneous revenue, netted a $0.01 per
    share decrease in results compared to 2006 results.
    

Cleco Power expenses were up $0.34 per share, but offset by $0.53 per share of AFUDC in the year over year comparison.

--  Higher capacity payments of $0.03 per share primarily related to the
    March termination of the 2006 power purchase agreement with Calpine.
    
--  A $0.06 per share increase was due to the transfer of storm costs from
    expense to a regulatory asset in 2006.
    
--  Production maintenance expenses were $0.06 per share higher primarily
    due to a major planned maintenance outage at the Dolet Hills Power Station.
    Transmission costs increased $0.02 per share primarily related to a new
    service agreement, and distribution expenses, primarily related to right-of-
    way clearing, increased $0.03 per share. Increased customer and other
    miscellaneous expenses, partially offset by the transfer of the unamortized
    regulatory asset balance for prior storm costs (Hurricane Lili and Tropical
    Storm Isidore) from maintenance expense to the reserve for storm
    restoration costs, were a net $0.03 per share higher compared to 2006
    results.
    
--  Amortization of deferred storm costs increased expenses by $0.04 per
    share, and depreciation expense from routine property, plant, and equipment
    additions increased expenses by $0.01 per share.
    
--  Interest expense, net, was up $0.06 per share primarily due to higher
    short-term debt levels and lower income from temporary investments.
    
--  Higher AFUDC, primarily related to Rodemacher 3 construction, provided
    an increase in earnings of $0.53 per share.  The equity portion of AFUDC
    totaled $0.42 of the increase.
    

Finally, Cleco Power's 2007 earnings were reduced by approximately $0.10 per share due to the sale of 6.9 million shares of common stock in August 2006.

Cleco Midstream

Cleco Midstream's earnings were up $1.07 per share compared to the 2006 results.

Excluding the $1.22 per share gain from the Calpine bankruptcy claim and the Acadia partnership settlement, net of impairment of investment, Cleco Midstream's earnings were down $0.15 per share in 2007 compared to 2006.

Contributing to the decline were $0.18 per share of lower results from Acadia due to the absence of the $0.15 per share benefit from the drawdown on a letter of credit in 2006 and $0.03 per share primarily due to lower merchant revenue, higher maintenance expenses, and the absence of proceeds from two insurance claim settlements.

Evangeline's results were up $0.03 per share from 2006 primarily due to the absence of a maintenance depreciation adjustment and 2006 tax true-ups from prior years partially offset by higher interest on tax positions and a net increase in replacement power during a spring outage.

During the second quarter of 2007, Cleco Midstream recorded net income of $48.1 million, or $0.81 per share, from the approval and sale of unsecured bankruptcy claims against Calpine. Upon the August 2007 closing of Cajun Gas Energy's (Cajun) purchase of Calpine's 50 percent ownership in the Acadia project, Cleco Midstream recorded $0.88 per share related to the value of the preferred and guaranteed distribution structures within the Acadia partnership. Subsequently, Cleco Midstream reduced the carrying value of its 50 percent ownership in the Acadia project to the amount paid by Cajun for the other 50 percent interest, resulting in a $0.47 per share impairment. The resulting net gain from the settlement of Acadia claims and partnership value totaled $1.22 per share.

Other

Corporate earnings decreased $0.10 per share in the year-to-year comparison. Factors contributing to the decrease include $0.08 per share of lower proceeds from corporate-owned life insurance policies, higher corporate franchise tax, lower 2006 insurance proceeds, and the absence of a 2006 tax settlement, partially offset by higher interest income, net, and the conversion of shares of ESOP preferred stock to shares of common stock.

Strategic Update

"We have spent approximately $630 million, including $30 million of AFUDC, on the Rodemacher 3 project since construction began in May 2006, and we are pleased to report that this billion-dollar generating unit is taking shape. We are scheduled to begin commercial operations no later than the fourth quarter of 2009," Madison said.

"Another important project we're working on is our general base rate case. Cleco Power plans to file its rate case with the LPSC by the end of the second quarter this year," Madison said.

Madison stated, "We also are currently evaluating bids received from Cleco Power's long-term Request for Proposal. Cleco Power requested proposals to supply its customers with up to 600 megawatts of intermediate and/or peaking capacity based on our integrated resources planning process, which showed we'll need more capacity even after Rodemacher 3 comes on line. Cleco Power plans to develop a short list of bidders in mid-April and make the final selections in August 2008."

2008 Earnings Guidance:

"We are targeting consolidated 2008 earnings in the range of $1.60 to $1.70 per share," Madison said. "Our 2008 earnings estimate includes Cleco Power results of $1.60 to $1.70 per share, a Midstream loss of $0.10 per share, and corporate results of $0.10 per share.

"Cleco Power's earnings estimate assumes normal weather, 2008 capital expenditures of about $265 million, including AFUDC on the Rodemacher project, and the continuation of our current rate plan. The 2008 target includes approximately $1.05 per share of AFUDC equity income, an approximate $0.50 per share increase from 2007," Madison said. "Midstream's earnings estimate assumes continued performance by Evangeline's tolling counterparty and is based on assumptions about Acadia's plant operations and market conditions."

Cleco management will discuss the company's annual and fourth-quarter 2007 results during a conference call scheduled for 11 a.m. EST (10 a.m. CST) Thursday, Feb. 28, 2008. The call will be broadcast live on the Internet. Replays 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 Fourth-Quarter 2007 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 capacity. For more information about Cleco, visit www.cleco.com.


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


For the three months ended Dec. 31,                      2007       2006
                                                      ---------  ---------

Operating revenue
   Electric operations                                $ 222,401  $ 222,628
   Other operations                                       8,807      8,065
   Affiliate revenue                                      2,466      1,199
                                                      ---------  ---------
      Gross operating revenue                           233,674    231,892
         Electric customer credits                           --        310
                                                      ---------  ---------
      Operating revenue, net                            233,674    232,202
Operating expenses
   Fuel used for electric generation                     69,283     78,470
   Power purchased for utility customers                 76,859     68,285
   Other operations                                      27,989     22,600
   Maintenance                                           14,112     11,078
   Depreciation                                          20,077     19,865
   Taxes other than income taxes                         11,689      9,515
   Gain on sales of assets                                   15         --
                                                      ---------  ---------
      Total operating expenses                          220,024    209,813
                                                      ---------  ---------
Operating income                                         13,650     22,389
Interest income                                           3,724      3,235
Allowance for other funds used during construction       11,240      3,548
Equity income from investees                             (4,460)    (6,351)
Other income                                                890      6,483
Other expense                                            (1,869)    (2,910)
Interest charges
   Interest charges, including amortization of debt
    expenses, premium and discount, net of capitalized
    interest                                              9,325     13,443
   Allowance for borrowed funds used during
    construction                                         (5,643)    (1,311)
                                                      ---------  ---------
      Total interest charges                              3,682     12,132
                                                      ---------  ---------

Income from continuing operations before income taxes    19,493     14,262
Federal and state income tax expense                      7,585      3,126
                                                      ---------  ---------

Income from continuing operations                        11,908     11,136
Discontinued operations
   Income from discontinued operations, net of tax           --         75
                                                      ---------  ---------
Net income                                               11,908     11,211
Preferred dividends requirements, net                        12        425
                                                      ---------  ---------

Net income applicable to common stock                 $  11,896  $  10,786
                                                      =========  =========



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


For the three months ended Dec. 31,                      2007       2006
                                                      ---------- ----------

Average shares of common stock outstanding
   Basic                                              59,638,675 57,202,384
   Diluted                                            59,973,467 59,460,959

Basic earnings per share
   From continuing operations                         $     0.20 $     0.19
   Net income applicable to common stock              $     0.20 $     0.19

Diluted earnings per share
   From continuing operations                         $     0.20 $     0.19
   Net income applicable to common stock              $     0.20 $     0.19

Cash dividends paid per share of common stock         $    0.225 $    0.225



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


For the 12 months ended Dec. 31,                        2007       2006
                                                      ---------  ---------
Operating revenue
   Electric operations                                $ 988,193  $ 959,393
   Other operations                                      35,285     30,233
   Affiliate revenue                                      7,138      6,356
                                                      ---------  ---------
      Gross operating revenue                         1,030,616    995,982
         Electric customer credits                           --      4,693
                                                      ---------  ---------
      Operating revenue, net                          1,030,616  1,000,675
Operating expenses
   Fuel used for electric generation                    273,954    265,450
   Power purchased for utility customers                385,247    374,712
   Other operations                                     102,479     90,661
   Maintenance                                           49,498     40,082
   Depreciation                                          79,904     74,975
   Taxes other than income taxes                         41,975     39,888
   Loss (gain) on sales of assets                            15        (69)
                                                      ---------  ---------
      Total operating expenses                          933,072    885,699
                                                      ---------  ---------
Operating income                                         97,544    114,976
Interest income                                          11,754     10,452
Allowance for other funds used during construction       32,955      7,779
Equity income from investees                             93,148     24,452
Other income                                             29,531      7,412
Other expense                                            (4,405)    (4,081)
Interest charges
   Interest charges, including amortization of debt
    expenses, premium and discount, net of
    capitalized interest                                 51,111     47,116
   Allowance for borrowed funds used during
    construction                                        (13,145)    (2,845)
                                                      ---------  ---------
      Total interest charges                             37,966     44,271
                                                      ---------  ---------
Income from continuing operations before income taxes   222,561    116,719
Federal and state income tax expense                     70,772     42,049
                                                      ---------  ---------
Income from continuing operations                       151,789     74,670
Discontinued operations
   Loss from discontinued operations, net of tax             --        (79)
                                                      ---------  ---------
Net income                                              151,789     74,591
Preferred dividends requirements, net                       458      1,735
                                                      ---------  ---------
Net income applicable to common stock                 $ 151,331  $  72,856
                                                      =========  =========



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


For the 12 months ended Dec. 31,                         2007       2006
                                                      ---------- ----------

Average shares of common stock outstanding
   Basic                                              58,976,052 52,751,021
   Diluted                                            59,717,528 55,028,211

Basic earnings per share
   From continuing operations                         $     2.55 $     1.36
   Net income applicable to common stock              $     2.55 $     1.36

Diluted earnings per share
   From continuing operations                         $     2.54 $     1.36
   Net income applicable to common stock              $     2.54 $     1.36

Cash dividends paid per share of common stock         $    0.900 $    0.900



                            CLECO CORPORATION
                        CONSOLIDATED BALANCE SHEETS
                                (Thousands)


                                                  At Dec. 31,  At Dec. 31,
                                                      2007         2006
                                                  -----------  -----------
Assets
Current Assets
   Cash and cash equivalents                      $   129,013  $   192,471
   Accounts receivable, net                            87,983       79,048
   Other current assets                               191,681      265,789
                                                  -----------  -----------
      Total Current Assets                            408,677      537,308
Property, plant and equipment, net                  1,725,880    1,304,887
Equity investment in investees                        258,101      307,136
Prepayments, deferred charges and other               318,077      311,773
                                                  -----------  -----------
   Total Assets                                   $ 2,710,735  $ 2,461,104
                                                  -----------  -----------

Liabilities
Current Liabilities
   Long-term debt due within one year             $   100,000  $    50,000
   Accounts payable                                   129,946      151,653
   Other current liabilities                          131,633      186,858
                                                  -----------  -----------
      Total Current Liabilities                       361,579      388,511
Deferred credits and other liabilities                568,684      557,031
Long-term debt, net                                   769,103      619,341
                                                  -----------  -----------
   Total Liabilities                                1,699,366    1,564,883
                                                  -----------  -----------
Shareholders' Equity
   Preferred stock                                      1,029       20,092
   Common shareholders' equity                      1,018,731      885,439
   Accumulated other comprehensive loss                (8,391)      (9,310)
                                                  -----------  -----------
Total Shareholders' Equity                          1,011,369      896,221
                                                  -----------  -----------
   Total Liabilities and Shareholders' Equity     $ 2,710,735  $ 2,461,104
                                                  -----------  -----------

Please note: In addition to historical financial information, this news release contains forward-looking statements about future results and circumstances, including, without limitation, 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 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. 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 Companies:
    Kristine Walczak
    (312) 780-7205

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