EX-99.1 2 exhibit991_073113erq2.htm EXHIBIT 99.1 exhibit99.1_073113erQ2


 
 
EXHIBIT 99.1

Cleco Corporation ends second quarter with operational earnings of $0.62 per diluted share
•
Receives state regulatory approval to join MISO
•
Affirms 2013 earnings guidance of $2.45 to $2.55 per diluted share

PINEVILLE, La., July 31, 2013 - Cleco Corporation (NYSE: CNL) posted 2013 second-quarter operational earnings of $37.4 million, or $0.62 per share, down from $39.4 million, or $0.64 per diluted share recorded in the second quarter of 2012. Operational earnings exclude amounts for underlying indemnifications and other nonoperational adjustments. Generally accepted accounting principles (GAAP) earnings for the second quarter of 2013 were $42.0 million, or $0.69 per diluted share, down from $46.7 million, or $0.77 per diluted share recorded in the second quarter of 2012.

“In the second quarter, we experienced slightly milder weather compared to last year but saw revenues increase through expected rate adjustments in our formula rate plan and through increased transmission revenues associated with our recently completed transmission rate case,” said Bruce Williamson, president and CEO of Cleco Corporation. “While we continued our management of controllable operating expenses, planned outages at our regulated generation facilities during the second quarter increased overall operating expenses and reduced operating earnings for the quarter.

“On a strategic front, we received approval from the Louisiana Public Service Commission to join the Midcontinent Independent System Operator, Inc. (MISO), which provides growth possibilities through wholesale contracts and transmission and generation expansion,” said Williamson. “In addition to MISO, we are progressing on our other key regulatory initiatives with filings made early in the second quarter regarding the transfer of Coughlin into Cleco Power and an extension to our formula rate plan.

“We are confident in our ability to manage costs and efficiently operate our utility; therefore, we are affirming our current earnings guidance range of $2.45 to $2.55 per diluted share for 2013,” said Williamson. “We are focused on growing our company through Cleco Power, which provides low-risk earnings growth for our shareholders. This guidance assumes normal weather for the remainder of the year, minimal earnings contribution from Midstream and excludes non-operational adjustments.”





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Cleco Corporation
Page 2 of 9

Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures
 
 
 
 
 
 
Diluted Earnings Per Share
 
For the three months
ended June 30
 
For the six months
ended June 30
Subsidiary
2013
 
2012
 
2013
 
2012
Cleco Power LLC
$
0.57

 
$
0.60

 
$
1.03

 
$
1.06

Cleco Midstream Resources LLC
0.03

 
(0.01
)
 
0.01

 
(0.06
)
Corporate and Other
0.02

 
0.05

 
0.02

 
0.07

Operational diluted earnings per share (Non-GAAP)
0.62

 
0.64

 
1.06

 
1.07

Adjustments1
0.07

 
0.13

 
0.08

 
0.20

Diluted earnings per share applicable to common stock
$
0.69

 
$
0.77

 
$
1.14

 
$
1.27


1 Refer to “Operational Earnings Adjustments” in this news release

Quarter-Over-Quarter Operational Diluted Earnings Per Share Reconciliation:

$
0.64

 
2012 second-quarter operational diluted earnings per share
 
 
 
0.05

 
Non-fuel revenue
(0.10
)
 
Other expenses, net
(0.01
)
 
AFUDC (allowance for funds used during construction)
0.03

 
Income taxes
$
(0.03
)
 
Cleco Power results
 
 
 
0.04

 
Cleco Midstream results
 
 
 
(0.03
)
 
Corporate and Other results
 
 
 
$
0.62

 
2013 second-quarter operational diluted earnings per share
 
 
 
0.07

 
Adjustments1
 
 
 
$
0.69

 
2013 second-quarter reported GAAP diluted earnings per share

1Refer to “Operational Earnings Adjustments” in this news release

Cleco Power

•
Higher non-fuel revenue increased earnings by $0.05 per share compared to the second quarter of 2012 primarily due to $0.04 per share from adjustments to Cleco Power's formula rate plan. Also contributing to this increase was $0.01 per share of higher transmission and other revenue.
•
Higher other expenses, net, decreased earnings by $0.10 per share compared to the second quarter of 2012 primarily due to $0.04 per share from higher generation expenses relating to outages, $0.04 per share from higher consulting expenses, higher property taxes, and higher other miscellaneous expenses, and $0.02 per share of higher depreciation expense.
•
Lower AFUDC decreased earnings by $0.01 per share compared to the second quarter of 2012 primarily due to the timing of capital expenditures relating to transmission projects.
•
Lower income taxes increased earnings by $0.03 per share compared to the second quarter of 2012 primarily due to the adjustment to record tax expense at the projected annual effective tax rate.







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Cleco Corporation
Page 3 of 9

Cleco Midstream Resources

•
Midstream's results increased earnings by $0.04 per share compared to the second quarter of 2012 primarily due to $0.03 per share of higher tolling revenue and $0.02 per share of lower maintenance expenses at Evangeline. These amounts were partially offset by $0.01 per share of higher interest charges primarily related to uncertain tax positions.

For a discussion of other transactions affecting Cleco Midstream’s results, please refer to “Operational Earnings Adjustments - Acadia Units 1 and 2 Indemnifications” below.

Corporate and Other

•
Higher income taxes decreased earnings by $0.03 per share compared to the second quarter of 2012 primarily due to $0.03 per share for the adjustment to record tax expense at the consolidated projected annual effective tax rate and $0.01 per share for tax credits. These amounts were partially offset by $0.01 per share for permanent tax deductions.

Year-Over-Year Operational Diluted Earnings Per Share Reconciliation:
 
 
 
$
1.07

 
Six months ended June 30, 2012, operational diluted earnings per share
 
 
 
0.14

 
Non-fuel revenue
(0.02
)
 
Rate refund accrual
(0.13
)
 
Other expenses, net
(0.03
)
 
Interest charges
(0.01
)
 
AFUDC
0.02

 
Income taxes
$
(0.03
)
 
Cleco Power results
 
 
 
0.07

 
Cleco Midstream results
 
 
 
(0.05
)
 
Corporate and Other results
 
 
 
$
1.06

 
Six months ended June 30, 2013, operational diluted earnings per share
 
 
 
0.08

 
Adjustments1
 
 
 
$
1.14

 
Six months ended June 30, 2013, reported GAAP diluted earnings per share

1Refer to “Operational Earnings Adjustments” in this news release

Cleco Power

•
Higher non-fuel revenue increased earnings by $0.14 per share compared to the first six months of 2012 primarily due to $0.08 per share from adjustments to Cleco Power's formula rate plan, $0.05 per share from increased sales due primarily to weather, and $0.03 per share from higher transmission revenue. Partially offsetting these increases were $0.01 per share from lower mineral lease payments and $0.01 per share from other revenue.
•
Higher rate refund accrual decreased earnings by $0.02 per share compared to the first six months of 2012 primarily due to the absence of the reversals of the 2012 cycle accrual and fuel audit reserves.
•
Higher other expenses, net, decreased earnings by $0.13 per share compared to the first six months of 2012 primarily due to $0.05 per share of higher depreciation expense, $0.03 per share of higher generation maintenance expenses primarily related to outages, $0.03 per share of higher property taxes, $0.01 per share of higher consulting expenses, and $0.01 per share of higher other miscellaneous expenses.
•
Higher interest charges decreased earnings by $0.03 per share compared to the first six months of 2012 primarily due to $0.05 per share from the absence of a favorable adjustment related to a tax settlement in 2012, partially offset by $0.01 per share related to reacquired debt and $0.01 per share related to the retirement of pollution control bonds.

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Cleco Corporation
Page 4 of 9

•
Lower AFUDC decreased earnings by $0.01 per share compared to the first six months of 2012 primarily due to the timing of capital expenditures relating to transmission projects.
•
Lower income taxes increased earnings by $0.02 per share compared to the first six months of 2012 primarily due to $0.03 per share for the adjustment to record tax expense at the projected annual effective tax rate and $0.02 per share for settlements with taxing authorities, partially offset by $0.02 per share for permanent tax deductions and $0.01 per share for the flowthrough of tax benefits.

Cleco Midstream Resources

•
Midstream’s results increased earnings by $0.07 per share compared to the first six months of 2012 primarily due to higher tolling revenue due to the power purchase agreement with Cleco Power beginning May 2012 and the absence of availability penalties from 2012.

For a discussion of other transactions affecting Cleco Midstream's results, please refer to “Operational Earnings Adjustments - Acadia Units 1 and 2 Indemnifications” below.

Corporate and Other

•
Higher income taxes decreased earnings by $0.05 per share compared to the first six months of 2012 primarily due to $0.03 per share for the adjustment to record tax expense at the consolidated projected annual effective tax rate and $0.02 per share for tax credits.

Operational Earnings Adjustments:

Cleco’s management uses operational earnings per share, which is a non-GAAP measure, to evaluate the operations of Cleco and 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 diluted earnings as presented here may not be comparable to similarly titled measures used by other companies. The following table provides a reconciliation of operational diluted earnings per share to reported GAAP diluted earnings per share.

Reconciliation of Operational Diluted Earnings Per Share to Reported GAAP Diluted Earnings Per Share

 
Diluted Earnings Per Share
 
For the three months
ended June 30
 
For the six months
ended June 30
 
2013
 
2012
 
2013
 
2012
Operational diluted earnings per share
$
0.62

 
$
0.64

 
$
1.06

 
$
1.07

Life insurance policies
—

 
—

 
0.01

 
0.01

Tax levelization
—

 
0.01

 
—

 
—

Acadia Unit 1 indemnifications
—

 
—

 
—

 
0.07

Acadia Unit 2 indemnifications
0.07

 
0.12

 
0.07

 
0.12

Reported GAAP diluted earnings per share applicable to common stock
$
0.69

 
$
0.77

 
$
1.14

 
$
1.27


Reconciling adjustments from operational diluted earnings per share to GAAP diluted earnings per share are as follows:

Life Insurance Policies

Cleco has life insurance policies covering certain members of management. These policies have a cash surrender value component that is carried as an asset and adjusted due to market changes, premium payments, or policy redemptions. Cleco is unable to predict market changes and cash surrender value amounts of these policies, and management does not consider these adjustments to be a component of operational earnings.


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Cleco Corporation
Page 5 of 9



Tax Levelization

GAAP requires companies to apply an effective tax rate to interim periods that is consistent with the company’s estimated annual effective tax rate. As a result, on a quarterly basis, Cleco projects the annual effective tax rate and then adjusts the tax expense recorded in that quarter to reflect the projected annual effective tax rate. During the second quarter of 2012, Cleco recorded a $0.01 per share benefit from the levelization of its annual tax rate to bring the actual tax rate in line with the projected annual effective tax rate. The resulting adjustment for this item had no impact for the second quarter of 2013. The incremental adjustment for tax levelization is not related to the current quarter's operational earnings because it reflects the effect of the change in tax rates on operational earnings for the prior quarter.

Acadia Units 1 and 2 Indemnifications

Acadia Power Partners, LLC provided limited guarantees and indemnifications to Cleco Power and Entergy Louisiana when they acquired Acadia Units 1 and 2 in February 2010 and April 2011, respectively. Acadia Power Partners, LLC and Acadia Power Holdings will reduce the indemnification liabilities either through expiration of the contractual life or through changes in the probability of a claim arising. During the second quarters of 2013 and 2012, the contractual expiration of the underlying indemnifications increased earnings $0.07 and $0.12 per share, respectively. The resulting adjustment for this item for the six months ended June 30, 2013 and 2012, increased earnings by $0.07 and $0.19 per share, respectively.

Cleco management will discuss the company’s second-quarter 2013 results during a conference call scheduled for 7:30 a.m. Central time (8:30 a.m. Eastern time) Thursday, August 1, 2013. 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 website at www.cleco.com by selecting “Investor Relations” and then “Q2 2013 Cleco Corporation Earnings Conference Call.”

Please note: In addition to historical financial information, this news release contains forward-looking statements about future results and circumstances. 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 impact of the global economic environment, 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.

Cleco Corporation is a regional energy company headquartered in Pineville, La. Cleco owns a regulated electric utility company, Cleco Power LLC, which owns 9 generating units with a total nameplate capacity of 2,565 megawatts and serves approximately 283,000 customers in Louisiana through its retail business and 10 communities across Louisiana and Mississippi through wholesale power contracts. Cleco also owns a wholesale energy business, Cleco Midstream Resources LLC, which owns two generating units with a total nameplate capacity of 775 megawatts. For more information about Cleco, visit www.cleco.com.

Analyst Contact:
Tom Miller
(318) 484-7642
 
Media Contact:
Robbyn Cooper
(318) 484-7136


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Cleco Corporation
Page 6 of 9



 
For the three months ended June 30
(Unaudited)
(million kWh)
 
(thousands)
 
2013
 
2012
 
Change
 
2013
 
2012
 
Change
Electric Sales
 
 
 
 
 
 
 
 
 
 
 
Residential
801

 
848

 
(5.5
)%
 
$
64,815

 
$
66,150

 
(2.0
)%
Commercial
632

 
667

 
(5.2
)%
 
44,679

 
44,317

 
0.8
 %
Industrial
575

 
578

 
(0.5
)%
 
22,061

 
21,132

 
4.4
 %
Other retail
33

 
33

 
—
 %
 
2,494

 
2,407

 
3.6
 %
Surcharge
—

 
—

 
—
 %
 
2,054

 
2,036

 
0.9
 %
Other
—

 
—

 
—
 %
 
(1,566
)
 
(1,566
)
 
—
 %
Total retail
2,041

 
2,126

 
(4.0
)%
 
134,537

 
134,476

 
—
 %
Sales for resale
498

 
466

 
6.9
 %
 
13,299

 
11,710

 
13.6
 %
Unbilled
215

 
168

 
28.0
 %
 
12,195

 
10,006

 
21.9
 %
Total retail and wholesale
customer sales
2,754

 
2,760

 
(0.2
)%
 
$
160,031

 
$
156,192

 
2.5
 %

 
 
 
 
 
 
 
 
 
 
 
 
 
For the six months ended June 30
(Unaudited)
(million kWh)
 
(thousands)
 
2013

 
2012

 
Change
 
2013

 
2012

 
Change
Electric Sales
 
 
 
 
 
 
 
 
 
 
 
Residential
1,642

 
1,632

 
0.6
 %
 
$
126,515

 
$
122,540

 
3.2
 %
Commercial
1,214

 
1,237

 
(1.9
)%
 
88,728

 
86,064

 
3.1
 %
Industrial
1,130

 
1,128

 
0.2
 %
 
43,186

 
41,224

 
4.8
 %
Other retail
65

 
65

 
—
 %
 
5,061

 
4,767

 
6.2
 %
Surcharge
—

 
—

 
—
 %
 
4,291

 
4,851

 
(11.5
)%
Other
—

 
—

 
—
 %
 
(3,131
)
 
(3,120
)
 
(0.4
)%
Total retail
4,051

 
4,062

 
(0.3
)%
 
264,650

 
256,326

 
3.2
 %
Sales for resale
939

 
856

 
9.7
 %
 
25,577

 
23,495

 
8.9
 %
Unbilled
152

 
80

 
90.0
 %
 
8,007

 
5,703

 
40.4
 %
Total retail and wholesale
customer sales
5,142

 
4,998

 
2.9
 %
 
$
298,234

 
$
285,524

 
4.5
 %


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Cleco Corporation
Page 7 of 9

CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the three months ended June 30
2013
 
2012
Operating revenue
 
 
 
Electric operations
$
252,765

 
$
228,293

Other operations
11,531

 
12,111

Gross operating revenue
264,296

 
240,404

Electric customer credits
(402
)
 
(281
)
Operating revenue, net
263,894

 
240,123

Operating expenses
 
 
 
Fuel used for electric generation
72,611

 
54,999

Power purchased for utility customers
13,940

 
16,068

Other operations
31,442

 
28,688

Maintenance
26,310

 
24,184

Depreciation
34,740

 
32,250

Taxes other than income taxes
10,285

 
9,713

Gain on sale of assets
(188
)
 
(22
)
Total operating expenses
189,140

 
165,880

Operating income
74,754

 
74,243

Interest income
257

 
(3
)
Allowance for other funds used during construction
413

 
1,399

Other income
8,165

 
13,014

Other expense
(1,247
)
 
(831
)
Interest charges
 
 
 
Interest charges, including amortization of debt expense and premium, net
21,017

 
21,094

Allowance for borrowed funds used during construction
(129
)
 
(478
)
Total interest charges
20,888

 
20,616

Income before income taxes
61,454

 
67,206

Federal and state income tax expense
19,422

 
20,520

Net income applicable to common stock
$
42,032

 
$
46,686

 
 
 
 
Average number of basic common shares outstanding
60,445,617

 
60,421,028

Average number of diluted common shares outstanding
60,713,374

 
60,660,702

Basic earnings per share
 
 
 
Net income applicable to common stock
$
0.70

 
$
0.77

Diluted earnings per share
 
 
 
Net income applicable to common stock
$
0.69

 
$
0.77

Cash dividends paid per share of common stock
$
0.3625

 
$
0.3125

 


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Cleco Corporation
Page 8 of 9

 
 
 
 
CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the six months ended June 30
2013
 
2012
Operating revenue
 
 
 
Electric operations
$
482,191

 
$
437,883

Other operations
23,074

 
23,056

Gross operating revenue
505,265

 
460,939

Electric customer credits
(424
)
 
1,955

Operating revenue, net
504,841

 
462,894

Operating expenses
 
 
 
Fuel used for electric generation
157,976

 
128,063

Power purchased for utility customers
18,796

 
24,705

Other operations
58,363

 
56,385

Maintenance
43,944

 
41,419

Depreciation
68,773

 
64,097

Taxes other than income taxes
22,919

 
19,743

Loss (gain) on sale of assets
846

 
(55
)
Total operating expenses
371,617

 
334,357

Operating income
133,224

 
128,537

Interest income
457

 
31

Allowance for other funds used during construction
1,577

 
2,416

Equity income from investees, before tax
—

 
1

Other income
10,438

 
22,389

Other expense
(1,683
)
 
(1,486
)
Interest charges
 
 
 
Interest charges, including amortization of debt expense and premium, net
42,848

 
42,062

Allowance for borrowed funds used during construction
(504
)
 
(822
)
Total interest charges
42,344

 
41,240

Income before income taxes
101,669

 
110,648

Federal and state income tax expense
32,503

 
33,930

Net income applicable to common stock
$
69,166

 
$
76,718

 
 
 
 
Average number of basic common shares outstanding
60,419,588

 
60,387,388

Average number of diluted common shares outstanding
60,670,112

 
60,625,377

Basic earnings per share
 
 
 
Net income applicable to common stock
$
1.15

 
$
1.27

Diluted earnings per share
 
 
 
Net income applicable to common stock
$
1.14

 
$
1.27

Cash dividends paid per share of common stock
$
0.70

 
$
0.625

 



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Cleco Corporation
Page 9 of 9

CLECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)
 
At June 30, 2013
 
At Dec. 31, 2012
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
7,567

 
$
31,020

Accounts receivable, net
89,425

 
77,034

Other current assets
288,943

 
339,284

Total current assets
385,935

 
447,338

Property, plant and equipment, net
3,042,221

 
3,009,461

Equity investment in investees
14,541

 
14,540

Prepayments, deferred charges and other
673,439

 
676,010

Total assets
$
4,116,136

 
$
4,147,349

Liabilities
 
 
 
Current liabilities
 
 
 
Short-term debt
$
3,000

 
$
—

Long-term debt due within one year
16,658

 
91,140

Accounts payable
93,981

 
102,695

Other current liabilities
120,177

 
100,795

Total current liabilities
233,816

 
294,630

Deferred credits
1,027,221

 
1,096,248

Long-term debt, net
1,323,765

 
1,257,258

Total liabilities
2,584,802

 
2,648,136

Shareholders’ equity
 
 
 
Common shareholders’ equity
1,561,209

 
1,531,583

Accumulated other comprehensive loss
(29,875
)
 
(32,370
)
Total shareholders’ equity
1,531,334

 
1,499,213

Total liabilities and shareholders’ equity
$
4,116,136

 
$
4,147,349




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