SOURCE: Cleco Corp

Cleco Corp

February 26, 2009 16:30 ET

Cleco Corp. Reports Full-Year 2008 Earnings

Cleco Power Long-Term RFP Low Bidder Announced

PINEVILLE, LA--(Marketwire - February 26, 2009) - Cleco Corp. (NYSE: CNL) reported today 2008 net income applicable to common stock of $102.1 million, down $49.2 million from the $151.3 million recorded in 2007. Included in 2007 net income was a $72.2 million net gain from the Acadia partnership settlement with Calpine Corp. (Calpine) and the Calpine bankruptcy claim.

On an earnings per share basis, Cleco recorded earnings of $1.70 per diluted share in 2008, down $0.84 per share from the $2.54 per share recorded in 2007. Included in 2007 earnings was $1.22 per share from the Acadia partnership settlement and the Calpine bankruptcy claim.

For the fourth quarter of 2008, net income applicable to common stock was $13.5 million, or $0.22 per diluted share, up $0.02 per share from the $0.20 per share in 2007.

"Although Cleco faced many challenges in 2008, I am pleased to say that we did not waiver from our strategy and produced a solid year," said Michael Madison, president and CEO of Cleco Corp. "In 2008, we issued securitized storm recovery bonds to pay for our unrecovered restoration costs from hurricanes Katrina and Rita and to establish a $50 million restricted storm reserve fund. Having the storm reserve in place helped us to reach a consensus with the Louisiana Public Service Commission (LPSC) on the treatment of 2008 storm costs from hurricanes Gustav and Ike. We also completed the financing of Rodemacher Unit 3 in 2008. In 2009, we should see the benefits of our past efforts as we prepare for commercial operation of Rodemacher Unit 3, which also is the time we should begin to realize the results of our new base rate plan."

    Consolidated Diluted Earnings Per Share Allocated to Subsidiaries

                                                      Diluted EPS
                                              ----------------------------
                                              Three Months Ended Dec. 31,
                                              ----------------------------
Subsidiary                                        2008           2007
                                              -------------  -------------
Cleco Power LLC                               $        0.38  $        0.33
Cleco Midstream Resources LLC                         (0.12)         (0.09)
Corporate and Other(1)                                (0.04)         (0.04)
                                              -------------  -------------
   Earnings applicable to common stock        $        0.22  $        0.20

(1)Includes dividends on preferred stock

Results for Fourth Quarter 2008:

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

  $ 0.20     2007 Fourth-Quarter Diluted EPS

   (0.02)    Losses on energy hedging, net
   (0.04)    Higher Cleco Power expenses, net
    0.11     Higher Cleco Power AFUDC (allowance for funds used during
              construction)
   (0.03)    Lower Cleco Midstream results
  ------
  $ 0.22     2008 Fourth-Quarter Diluted EPS

Cleco Power's 2008 fourth-quarter earnings -- up $0.05 per share in the quarter-to-quarter comparison

-- Overall, nonfuel revenue was the same in the quarter-to-quarter
   comparison with 2007. Fourth quarter 2008 kilowatt-hour sales
   were the same as a year ago for the same period.

                                              For the three months ended
               (Million kWh)                            Dec. 31,
                                              ---------------------------
                                                2008      2007     Change
                                              --------- --------  -------
Electric Sales
   Residential                                      757      806    (6.08)%
   Commercial                                       576      609    (5.42)%
   Industrial                                       721      754    (4.38)%
   Other retail                                      33       33        -
                                              --------- --------
     Total retail                                 2,087    2,202    (5.22)%
   Sales for resale                                 114       89    28.09 %
   Unbilled                                           4      (86)  104.65 %
                                              --------- --------
Total retail and wholesale customer sales         2,205    2,205        -

-- Mark-to-market and realized losses on energy hedging positions tied to a
   fixed-price wholesale contract were $0.02 per share higher as compared
   to the same period of 2007.

-- Interest expense increased $0.14 per share compared to last year's
   results. Of that, $0.07 per share was primarily related to the 2008
   absence of a favorable 2007 settlement with the Internal Revenue Service
   (IRS) and $0.08 per share was due to the issuances of senior notes,
   senior secured storm recovery bonds, Gulf Opportunity Zone bonds, and
   solid-waste disposal bonds. Partially offsetting these amounts was $0.01
   per share related to the storm damage surcredit.

-- Interest income decreased $0.01 per share resulting primarily from a
   lower balance of deferred lignite mining costs.

-- Adjustments/true-ups related to income taxes increased earnings by
   $0.06 per share.

-- Other expenses were $0.05 per share lower compared to the same period
   last year primarily due to lower property taxes and lower generation
   station maintenance work performed in 2008.

-- AFUDC, primarily associated with the Rodemacher Unit 3 project,
   contributed an additional $0.11 per share as compared to the fourth
   quarter of 2007. The equity portion of AFUDC associated with the
   Rodemacher Unit 3 project was up $0.12 per share. Partially offsetting
   this was $0.01 related to the debt portion of AFUDC due to adjustments
   made in 2007.

Cleco Midstream Resources' results for fourth quarter 2008 -- down $0.03 per share in the quarter-to-quarter comparison

Evangeline was down $0.05 per share for the fourth quarter of 2008 compared to the same period a year ago, primarily due to higher maintenance expenses largely related to a combustion turbine major inspection outage during 2008. Acadia had lower losses of $0.02 per share compared to the same period last year due to the absence of the effect from renegotiation of the turbine maintenance agreement in 2007.

    Consolidated Diluted Earnings Per Share Allocated to Subsidiaries

                                                      Diluted EPS
                                              ----------------------------
                                              Twelve Months Ended Dec. 31,
                                              ----------------------------
Subsidiary                                        2008           2007
                                              -------------  -------------
Cleco Power LLC                               $        1.89  $        1.42
Cleco Midstream Resources LLC (excluding 2007
 gains from the Calpine bankruptcy claim,
 net, and Acadia settlement, net of
 impairment on investment)                            (0.17)         (0.22)
Corporate and Other(1)                                (0.02)          0.12
                                              -------------  -------------
   Earnings excluding Acadia net gain         $        1.70  $        1.32
Gain from Calpine bankrupcty claim, net                   -           0.81
Gain from Acadia settlement, net of
 impairment on investment                                 -           0.41
                                              -------------  -------------
   Earnings applicable to common stock        $        1.70  $        2.54

(1)Includes dividends on preferred stock

Results for Twelve Months ended Dec. 31, 2008:

Major Reconciling Items for Twelve Months ended Dec. 31, EPS 2008 vs. 2007:

  $ 2.54     Twelve Months ended Dec. 31, 2007 Diluted EPS
   (0.81)    Absence of 2007 gain from Calpine bankruptcy claim (equity
              income)
   (0.62)    Absence of 2007 gain from Acadia settlement preferred
              distribution (equity income)
   (0.26)    Absence of 2007 gain from Acadia settlement guaranteed payment
              (other income)
    0.47     Absence of 2007 impairment of investment in Acadia (equity
  ------      income)
  $ 1.32

    0.06     Higher Cleco Power non-fuel revenue
   (0.02)    Losses on energy hedging, net
   (0.03)    Lower storm surcharge collections
   (0.12)    Higher Cleco Power expenses, net
   (0.02)    EPS dilution - conversion of ESOP (Employee Stock Ownership
              Plan) shares
    0.60     Higher Cleco Power AFUDC
    0.05     Lower Cleco Midstream losses (excluding gains from the Calpine
              bankruptcy claim, net, and Acadia settlement, net of
              impairment of investment)
   (0.14)    Lower corporate results
  ------
  $ 1.70     Twelve Months ended Dec. 31, 2008 Diluted EPS

Cleco Power's twelve months ended Dec. 31, 2008 earnings -- up $0.47 per share year over year

-- Revenue from wholesale customers added $0.03 per share compared to last
   year's results while other retail sales were down $0.01 per share
   compared to last year's results. Lower retail sales resulted primarily
   from a decrease in cooling-degree days and hurricane-related outages.
   Cooling-degree days for the period were slightly lower than 2007 levels
   by 2.5 percent while heating-degree days were slightly above 2007 levels
   by 1.8 percent.

                                              For the twelve months ended
              (Million kWh)                             Dec. 31,
                                              ---------------------------
                                                2008      2007     Change
                                              --------- --------  -------
Electric Sales
   Residential                                    3,545    3,596    (1.42)%
   Commercial                                     2,450    2,478    (1.13)%
   Industrial                                     2,898    3,008    (3.66)%
   Other retail                                     134      135    (0.74)%
                                              --------- --------
     Total retail                                 9,027    9,217    (2.06)%
   Sales for resale                                 441      473    (6.77)%
   Unbilled                                          16      (19)  184.21 %
                                              --------- --------
Total retail and wholesale customer sales         9,484    9,671    (1.93)%


-- Transmission and miscellaneous revenue increased $0.04 per share year
   over year.

-- Mark-to-market and realized net losses on energy hedging positions tied
   to a fixed-price wholesale contract were $0.02 per share higher as
   compared to 2007.

-- Storm surcharge collections were down $0.03 per share due to the
   issuance of storm recovery bonds in March 2008.

-- Interest expense increased $0.25 per share year over year. The increase
   resulted from $0.14 per share due to solid-waste disposal bonds and
   senior notes issued in 2008, $0.08 per share on the storm recovery
   bonds, $0.07 per share related primarily to the carrying cost of the
   tax benefits of hurricanes Katrina and Rita storm damage costs and
   $0.07 per share primarily related to the 2008 absence of a favorable
   2007 settlement with the IRS.  These increases were partially offset by
   $0.06 per share related to the storm damage surcredit, $0.02 per share
   of lower interest related to the repayment of medium-term notes in 2007
   and $0.03 per share related to interest on retainage from Shaw and lower
   interest rates on Cleco Power's credit facility.

-- Interest income decreased $0.02 per share resulting primarily from a
   lower balance of deferred lignite mining costs.

-- Other expenses were $0.15 per share lower compared to last year. Lower
   employee benefit costs contributed $0.04 per share and lower
   distribution and generating maintenance work contributed $0.04 per
   share. Other taxes and depreciation expense collectively were $0.09
   per share lower. Partially offsetting this amount was $0.01 per share
   of higher expenses related to capacity contracts and $0.01 per share
   of other miscellaneous expenses.

-- The 2007 conversion of shares of ESOP preferred stock to shares of
   common stock resulted in a $0.02 per share dilution.

-- AFUDC, primarily associated with the Rodemacher Unit 3 project,
   contributed an additional $0.60 per share as compared to 2007. The
   equity portion of AFUDC associated with the Rodemacher Unit 3 project
   was up $0.53 per share, while the debt portion of AFUDC contributed
   $0.07 per share.

Cleco Midstream Resources' results for twelve months ended Dec. 31, 2008, excluding the 2007 gains from the Calpine bankruptcy claim, net and Acadia settlement, net of impairment on investment -- up $0.05 per share year over year

Excluding the 2007 gains from the Calpine bankruptcy claim and the Acadia settlement, net of impairment of investment of $1.22 per share, Acadia had lower losses of $0.10 per share largely due to $0.12 per share of lower interest paid to the holding company and $0.01 related to other miscellaneous items. These increases were partially offset by $0.03 per share related to the break-up fee paid to Acadia Power Holdings, LLC in 2007 related to the sale of Calpine's interest in Acadia. Evangeline was down $0.07 per share primarily due to higher maintenance expenses largely related to a combustion turbine major inspection outage during 2008, higher maintenance expenses under Evangeline's long-term maintenance contract, and higher other unplanned maintenance expenses as compared to 2007. Lower administrative and other miscellaneous expenses added $0.02 per share in the year-to-year comparison.

Other

Corporate earnings decreased $0.14 per share in the year-to-year comparison. Of that, $0.12 per share was due to lower affiliate interest income received from Acadia, $0.05 per share was related to decreases in cash surrender values of corporate life insurance policies, and $0.04 per share was related to lower interest income from temporary investments. Partially offsetting these decreases were $0.03 per share of lower interest expense primarily related to the repayment of $100 million of senior notes in May 2008 at maturity, $0.03 of lower taxes and other miscellaneous expenses, and $0.01 per share due to the absence of preferred dividends previously paid on shares of ESOP preferred stock converted to shares of common stock.

Strategic Update

"As we look toward the future, we are excited about the challenges and opportunities ahead. Cleco Power received both LPSC and Federal Energy Regulatory Commission (FERC) approval for its 2008 request for proposal for short-term capacity. Last quarter, we announced that Cleco Power selected the proposal submitted by Acadia Power Partners (APP), a joint venture between Cleco Midstream and Cajun Gas Energy, L.L.C. The contract is for 235 megawatts and is scheduled to take effect on March 1, 2009, and continue until Oct. 1, 2009," said Madison.

"Cleco Power has chosen the acquisition of 50 percent of the Acadia Power Station owned by APP, or one of its two 580-megawatt units, as the lowest bid in its 2007 long-term request for proposal for capacity beginning in 2010. Cleco Power will own and operate one unit and operate the other 580-megawatt unit on behalf of APP. Prior to closing the transaction, valued at approximately $300 million, Cleco Power must complete its due diligence, finalize and execute definitive agreements, and receive approvals from the LPSC and the FERC. We plan to complete the transaction by the end of 2009 in a process that remains under the supervision of an independent monitor appointed by the LPSC.

"Recently, Cleco Power, along with two of its neighboring utilities, received approval from the LPSC and the Southwest Power Pool on an agreement to upgrade our interconnected transmission system in our southern region. The upgrades will increase capacity, reduce transmission constraints, and improve the electric service provided by Cleco Power and the other two utilities in the Acadiana Load Pocket area, which is south of Highway 190 between the Atchafalaya Basin and Jennings. Construction of the project is expected to cost $200 million. Of that amount, Cleco's portion will be approximately $150 million. Construction is expected to begin in late 2009 with the final phase completed in late 2012," said Madison.

"With the court's reinstatement of the Clean Air Interstate Rule, the possible passing of climate change legislation, and the likely institution of a renewable portfolio standard, we are closely monitoring our environmental regulatory situation. While time will bring clarity, we are moving now to better position Cleco Power to face these potential environmental requirements. We have determined that our new Rodemacher Unit 3 can use biomass to generate electricity, and we have installed new pollution control systems at our existing solid-fuel units. We will continue to explore opportunities that make sense for Cleco's shareholders and customers."

2009 Earnings Guidance

"Cleco Power's current LPSC rate case is a historic one and its results will significantly shape the company's financial future," said Madison. "As a result, we will wait to give guidance until the LPSC staff files its testimony on the utility's proposed rate plan. We anticipate that filing will take place in April and we expect to provide 2009 guidance shortly thereafter."

Cleco management will discuss the company's annual and fourth-quarter 2008 results during a conference call scheduled for 11 a.m. EST (10 a.m. CST) Friday, Feb. 27, 2009. 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 Fourth-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 276,000 customers across Louisiana. Cleco also operates a wholesale energy business with approximately 1,350 megawatts of name plate generating capacity. For more information about Cleco, visit www.cleco.com.

Financial tables follow:

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

For the three months ended Dec. 31,                    2008        2007
                                                    ----------  ----------

Operating revenue
  Electric operations                               $  229,573  $  222,401
  Other operations                                       6,942       8,807
  Affiliate revenue                                      2,670       2,466
                                                    ----------  ----------
    Operating revenue                                  239,185     233,674
Operating expenses
  Fuel used for electric generation                     73,566      69,283
  Power purchased for utility customers                 79,016      76,859
  Other operations                                      29,068      27,989
  Maintenance                                           11,632      14,112
  Depreciation                                          19,906      20,077
  Taxes other than income taxes                          7,151      11,689
  (Gain) loss on sales of assets                           (11)         15
                                                    ----------  ----------
    Total operating expenses                           220,328     220,024
                                                    ----------  ----------
Operating income                                        18,857      13,650
Interest income                                            872       3,724
Allowance for other funds used during construction      18,490      11,240
Equity (loss) income from investees                     (8,265)     (4,460)
Other income                                               168         890
Other expense                                           (3,648)     (1,869)
Interest charges
  Interest charges, including amortization of debt
   expenses, premium and discount, net of
   capitalized interest                                 22,158       9,325
  Allowance for borrowed funds used during
   construction                                         (5,117)     (5,643)
                                                    ----------  ----------
    Total interest charges                              17,041       3,682
                                                    ----------  ----------
Income before income taxes                               9,433      19,493
Federal and state income tax (benefit) expense          (4,116)      7,585
                                                    ----------  ----------
Net income                                              13,549      11,908
Preferred dividends requirements, net of tax                12          12
                                                    ----------  ----------
Net income applicable to common stock               $   13,537  $   11,896
                                                    ==========  ==========

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

Average shares of common stock outstanding
  Basic                                             60,039,943  59,638,675
  Diluted                                           60,320,230  59,973,467
Basic earnings per share
  From continuing operations                        $     0.22  $     0.20
  Net income applicable to common stock             $     0.22  $     0.20
Diluted earnings per share
  From continuing operations                        $     0.22  $     0.20
  Net income applicable to common stock             $     0.22  $     0.20
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,                      2008         2007
                                                  -----------  -----------

Operating revenue
  Electric operations                             $ 1,032,970  $   988,193
  Other operations                                     36,768       35,285
  Affiliate revenue                                    10,460        7,138
                                                  -----------  -----------
    Operating revenue                               1,080,198    1,030,616
Operating expenses
  Fuel used for electric generation                   235,706      273,954
  Power purchased for utility customers               471,261      385,247
  Other operations                                     99,028      102,479
  Maintenance                                          47,089       49,498
  Depreciation                                         77,876       79,904
  Taxes other than income taxes                        34,471       41,975
  (Gain) loss on sale of assets                          (110)          15
                                                  -----------  -----------
    Total operating expenses                          965,321      933,072
                                                  -----------  -----------
Operating income                                      114,877       97,544
Interest income                                         5,417       11,754
Allowance for other funds used during
 construction                                          64,953       32,955
Equity (loss) income from investees                    (5,542)      93,148
Other income                                            1,263       29,531
Other expense                                          (7,970)      (4,405)
Interest charges
  Interest charges, including amortization of
   debt expenses, premium and discount, net of
   capitalized interest                                72,042       51,111
  Allowance for borrowed funds used during
   construction                                       (19,642)     (13,145)
                                                  -----------  -----------
    Total interest charges                             52,400       37,966
                                                  -----------  -----------
Income before income taxes                            120,598      222,561
Federal and state income tax expense                   18,457       70,772
                                                  -----------  -----------
Net income                                            102,141      151,789
Preferred dividends requirements, net of tax               46          458
                                                  -----------  -----------
Net income applicable to common stock             $   102,095  $   151,331
                                                  ===========  ===========

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

Average shares of common stock outstanding
  Basic                                            59,990,229   58,976,052
  Diluted                                          60,214,640   59,717,528
Basic earnings per share
  From continuing operations                      $      1.70  $      2.55
  Net income applicable to common stock           $      1.70  $      2.55
Diluted earnings per share
  From continuing operations                      $      1.70  $      2.54
  Net income applicable to common stock           $      1.70  $      2.54
Cash dividends paid per share of common stock     $     0.900  $     0.900






                           CLECO CORPORATION
                      CONSOLIDATED BALANCE SHEETS
                             (Thousands)
                                                       At           At
                                                    Dec. 31,     Dec. 31,
                                                      2008         2007
                                                  -----------  -----------
Assets
Current Assets
  Cash and cash equivalents                       $    97,483  $   129,013
  Accounts receivable, net                             78,314       87,983
  Other current assets                                290,582      188,520
                                                  -----------  -----------
    Total Current Assets                              466,379      405,516
Property, plant and equipment, net                  2,045,286    1,725,880
Equity investment in investees                        249,144      258,101
Prepayments, deferred charges and other               580,395      317,126
                                                  -----------  -----------
    Total Assets                                  $ 3,341,204  $ 2,706,623
                                                  -----------  -----------
Liabilities
Current Liabilities
  Long-term debt due within one year              $    63,546  $   100,000
  Accounts payable                                    138,300      129,946
  Other current liabilities                           158,987      127,521
                                                  -----------  -----------
    Total Current Liabilities                         360,833      357,467
Deferred credits and other liabilities                812,687      568,684
Long-term debt, net                                 1,106,819      769,103
                                                  -----------  -----------
  Total Liabilities                                 2,280,339    1,695,254
                                                  -----------  -----------
Shareholders' Equity
  Preferred stock                                       1,029        1,029
  Common shareholders' equity                       1,069,669    1,018,731
  Accumulated other comprehensive loss                 (9,833)      (8,391)
                                                  -----------  -----------
Total Shareholders' Equity                          1,060,865    1,011,369
                                                  -----------  -----------
  Total Liabilities and Shareholders' Equity      $ 3,341,204  $ 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 the results of Cleco Power's 2007 long-term 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 south Louisiana joint transmission 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. 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

    Media Contact:
    Cleco Corporation:
    Robbyn Cooper
    (318) 484-7136

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