(1)In the fourth quarter of 2005, Cleco recognized $108.0 million from the reconsolidation of Perryville into Cleco's consolidated financial results following the sale of the subsidiary's generating plant and related claims and its emergence from bankruptcy. The reconsolidation of Perryville was applied retroactively. Consequently, Cleco has adjusted retroactively and recorded net income of $150.0 million for the third-quarter 2005 to include the $108.0 million of earnings from the Perryville reconsolidated results. This retroactive adjustment did not have an impact on Cleco's consolidated results for the year ended December 31, 2005. (See Cleco Corporation's Form 10-Q for the quarterly period ended September 30, 2006, for discussion of this adjustment.)
For the nine months ended Sept. 30, 2006, Cleco recorded $62.1 million of net income. Net income for the same period of 2005, excluding income from the 2005 Perryville reconsolidation was $71.1 million. Including the $108.0 million from the Perryville reconsolidated earnings, net income was $179.1 million for the first three quarters of 2005. Cleco recorded earnings of $1.18 per diluted share for the first three quarters of 2006. During the same period of 2005, excluding the Perryville reconsolidation, Cleco recorded earnings of $1.39 per share. Loss of the Calpine tolling payments and higher expenses at Evangeline, as well as mark-to-market losses on Cleco Power energy hedges, were the primary drivers of the decrease. With the Perryville reconsolidation included, earnings were $3.50 per diluted share for the same period of 2005. Cleco Power's third quarter 2006 kilowatt-hour sales were up 1.4 percent over third quarter 2005, and 2006 year-to-date sales were up 2.4 percent compared to the same 2005 period. "We remain on target to meet our financial expectations for the year," Michael Madison, president and CEO of Cleco Corp., said. "And while it is still very early in the game, we're also meeting our schedule in the construction of the new solid-fuel unit at our Rodemacher Power Station near Boyce."
Consolidated Diluted Earnings Per Share Allocated to Subsidiaries
Diluted EPS
----------------------------
Three Months Ended Sept. 30,
----------------------------
Subsidiary 2006 2005
------------ -----------
Cleco Power LLC $ 0.39 $ 0.53
Cleco Midstream Resources
LLC (excluding
Perryville for 2005) 0.07 0.26
Corporate and Other(2) 0.04 0.03
------------ -----------
Earnings excluding
Perryville $ 0.50 $ 0.82
Earnings from Perryville
reconsolidation -- 2.09
------------ -----------
Earnings applicable to
common stock $ 0.50 $ 2.91
============ ===========
Diluted EPS
----------------------------
Nine Months Ended Sept. 30,
----------------------------
Subsidiary 2006 2005
------------ -----------
Cleco Power LLC $ 1.00 $ 1.02
Cleco Midstream Resources
LLC (excluding
Perryville for 2005) 0.11 0.38
Corporate and Other(2) 0.07 (0.01)
------------ -----------
Earnings excluding
Perryville $ 1.18 $ 1.39
Proceeds from Perryville
transactions -- 2.11
------------ -----------
Earnings applicable to
common stock $ 1.18 $ 3.50
============ ===========
(2) Includes dividends on preferred stock
Results for Third Quarter 2006:
Major Reconciling Items for Third-Quarter EPS 2006 vs. 2005:
$2.91 2005 Third-Quarter Diluted EPS
(2.09) Less: Impact of reconsolidation of Perryville
-----
$0.82
0.10 Higher Cleco Power nonfuel revenue
(0.08) Energy hedging, net
(0.13) Higher Cleco Power nonfuel expenses
(0.03) Effect of higher number of outstanding shares
(0.19) Lower Cleco Midstream contribution
0.01 Lower corporate expense
-----
$0.50 2006 Third-Quarter Diluted EPS
Cleco Power LLC
Cleco Power's 2006 third-quarter earnings were $0.14 per share lower than
in the same quarter of 2005.
Overall, nonfuel revenue increased $0.10 per share in the
quarter-to-quarter comparison with 2005:
-- Higher kilowatt-hour sales contributed $0.02 per share to the increase.
Retail customer usage was higher, while sales to municipalities declined.
-- Third quarter 2006 retail and wholesale kilowatt-hour sales were up 1.4
percent, for the same period a year ago, largely due to the absence of
outages from hurricanes Katrina and Rita. Cooling degree-days were 4
percent higher than normal but 11 percent lower than in the third quarter
of 2005.
(Million kWh) For the three months ended Sept. 30,
-------------------------------------
2006 2005 Change
----------- ----------- ----------
Electric Sales
Residential 1,190 1,155 3.03%
Commercial 651 540 20.56%
Industrial 784 760 3.16%
Other retail 101 174 (41.95)%
----------- -----------
Total retail 2,726 2,629 3.69%
Sales for resale 159 203 (21.67)%
Unbilled (89) (74) 20.27%
----------- -----------
Total retail and wholesale
customer sales 2,796 2,758 1.38%
-- Another $0.08 per share of the increase was from the collection of a
storm surcharge, which started in May 2006 as a result of the Louisiana
Public Service Commission's approval of an interim storm recovery plan.
Cleco anticipates the LPSC will determine the final recovery amount in
early 2007.
Results of energy hedging, net were down compared to third quarter 2005:
-- The $0.08 per share decrease was the result of mark-to-market losses on
energy hedging positions tied to a fixed-price municipal contract as
compared to mark-to-market gains in the same period of 2005.
Nonfuel expenses were $0.13 per share higher than in the same quarter of
2005:
-- Nonrecoverable fuel expenses were even as compared to the same period of
2005, with $0.03 per share increase tied to the fixed-price contract with a
municipality mentioned above, offset by a $0.03 per share decrease due to
the reclassification of certain capacity charges to operations expense. The
contract began January 1, 2006.
-- Operations and maintenance expenses increased by $0.02 per share
compared to the same period of 2005. Of that amount $0.03 was primarily due
to higher generation and transmission costs, $0.03 due to a
reclassification of certain capacity charges to operations expense,
partially offset by $0.04 from the reclassification of certain storm
amortization costs from maintenance expense to depreciation expense.
-- Depreciation expense increased $0.11 per share largely due to a $0.06
per share increase in storm cost amortization, $0.04 per share increase due
to the reclassification of certain storm amortization costs from operations
and maintenance, as well as $0.01 per share of additional depreciation
expense from routine property, plant and equipment additions.
-- Net interest expense increased by $0.02 per share over the same period
of 2005 primarily as a result of a higher level of outstanding debt.
-- Income tax expense was up $0.01 per share compared to the same period of
2005.
-- Partially offsetting the increased expenses was $0.03 per share of
higher AFUDC (allowance for funds used during construction) associated with
the Rodemacher project.
Other factors included:
-- The issuance of 6.9 million shares of common stock in August 2006
resulted in a $0.03 share dilutive effect.
Cleco Midstream Resources LLC
Cleco Midstream's earnings were down $0.19 per share in the third quarter
of 2006 compared to the same period of 2005. The quarter-to-quarter
comparison excludes the $2.09 per share impact from the Perryville
reconsolidation.
Acadia's results were down $0.11 per share largely due to the loss of
tolling revenue, the write-off of irreparable turbine parts, and higher
interest expense. Partially offsetting those decreases was revenue from
energy sales through a third-party energy management contract.
Evangeline's contribution was down $0.08 per share from a year ago. The
major factors affecting the plant's results were lower variable revenue,
higher maintenance expense, and higher income tax expense due to an
adjustment of state income taxes as a result of an analysis of income taxes
payable following completion of an audit for tax years 1997 to 2000.
Other
Corporate and other expenses were $0.01 per share lower in the
quarter-to-quarter comparison. The primary reasons were higher interest
income offset by lower proceeds from corporate-owned life insurance
policies compared to the same period of 2005.
Results for Nine Months ended Sept. 30, 2006: Major Reconciling Items for Nine Months ended Sept. 30 EPS 2006 vs. 2005: $3.50 Nine Months ended Sept. 30, 2005, Diluted EPS (2.11) Less: Impact of reconsolidation of Perryville ----- $1.39 0.28 Higher Cleco Power nonfuel revenue (0.12) Energy hedging, net (0.16) Higher Cleco Power nonfuel expenses (0.02) Effect of higher number of outstanding shares (0.27) Lower Cleco Midstream contribution 0.08 Lower corporate expense ----- $1.18 Nine Months ended Sept. 30, 2006, Diluted EPSCleco Power LLC For the nine months ended Sept. 30, 2006, Cleco Power's earnings were $0.02 per share lower than in the same period of 2005. Nonfuel revenue increased $0.28 per share when compared to the first nine months of 2005.
-- Sales to retail customers were $0.08 per share higher, and sales to
municipal customers were $0.01 per share higher in the year-to-date
comparison. Kilowatt-hour sales were up 2.4 percent over the same period a
year ago, largely due to the absence of outages from hurricanes Katrina and
Rita. Cooling degree-days were 11 percent higher than normal but 3 percent
lower than in the same period of 2005.
For the nine months ended
(Million kWh) Sept. 30
-----------------------------
2006 2005 Change
--------- --------- ---------
Electric Sales
Residential 2,760 2,696 2.37 %
Commercial 1,529 1,383 10.56 %
Industrial 2,201 2,146 2.56 %
Other retail 380 454 (16.30)%
--------- ---------
Total retail 6,870 6,679 2.86 %
Sales for resale 391 409 (4.40)%
Unbilled 53 56 (5.36)%
--------- ---------
Total retail and wholesale customer sales 7,314 7,144 2.38 %
-- Storm surcharge collections increased earnings $0.13 per share.
-- Miscellaneous revenue was $0.02 per share higher than in the same period
of 2005 primarily due to higher customer service fees and pole attachment
revenue.
-- The reversal of customer refund accruals for the years 2002 to 2006
added $0.07 per share to Cleco Power's results compared to a year ago. The
increase was partially offset by $0.03 per share from the absence of a 2005
fuel surcharge adjustment and other miscellaneous adjustments.
Results of energy hedging, net:
-- Mark-to-market losses on energy hedging positions tied to a fixed-price
contract with a municipality as compared to mark-to-market gains in the
same period 2005 resulted in a $0.12 per share decline in earnings.
Nonfuel expenses were up $0.16 per share compared to the first three
quarters of 2005:
-- Fuel and power purchases for a fixed-price municipal contract added
$0.08 per share to expenses, partially offset by a $0.03 per share
reduction in capacity costs compared to the same period of 2005.
-- Operations and maintenance expenses were down $0.04 per share in the
year-to-date comparison. Among the major factors behind the decrease were
$0.08 per share attributable to the transfer of previously expensed storm
costs to a regulatory asset, and $0.02 per share of lower employee benefit
costs. Partially offsetting the decreased expenses were $0.04 per share of
higher professional and miscellaneous fees, and $0.02 per share of higher
transmission and distribution maintenance costs.
-- Depreciation expense was up $0.13 per share compared to a year ago. Of
that amount, $0.10 per share was due to the amortization of deferred storm
costs, and $0.03 per share was from normal property, plant and equipment
additions.
-- Other expenses rose $0.07 per share compared to the first three quarters
of 2005. Contributing to that increase was $0.04 per share of higher net
interest expense, while $0.03 per share of the increase was due to the
absence of proceeds from the 2005 sale of distribution assets.
-- Miscellaneous expenses were $0.02 per share lower largely due to $0.04
per share of higher allowances for AFUDC, partially offset by $0.02 per
share of higher franchise and regulatory fees.
-- Income tax expense was down $0.03 per share compared to the first three
quarters of 2005, stemming from the positive resolution of federal and
state tax audits.
Other factors included:
-- Results were lowered $0.02 per share from the impact of the August 2006
common stock offering.
Cleco Midstream Resources LLC
Cleco Midstream's earnings were down $0.27 per share in the first nine
months of 2006 compared to the same period of 2005. The comparison excludes
the $2.11 per share impact from the Perryville reconsolidation.
Perryville's settlement of an insurance claim and transmission revenue in
2006 added $0.02 per share to results. Additionally, there was a $0.01 per
share decrease in Midstream administrative costs.
Earnings from the Acadia project were $0.18 per share lower than during the
first nine months of 2005 largely due to the loss of tolling revenue and a
write-off of irreparable parts, partly offset by merchant revenue, the
drawdown of the full $15 million letter of credit from Calpine, and
insurance claim settlements.
Evangeline's results were down $0.12 per share compared to the first three
quarters of 2005, primarily due to increased turbine expense caused by
higher plant run times, and an adjustment of state income taxes as a result
of an analysis of income taxes payable following completion of an audit for
tax years 1997 to 2000, and an adjustment related to 2003 state income
taxes.
Other
Corporate and other expenses dropped $0.08 per share compared to the first
three quarters of 2005. The main reason for the decrease was a reduction in
net interest expense stemming from the repayment of $100 million in senior
corporate notes in June 2005.
Strategic Update
"We continue to make progress in all areas of our solid-fuel unit project,"
Madison said. "We were pleased with the $157.7 million of net proceeds we
received from the sale of 6.9 million shares of common stock in August. In
addition, in early September, the state approved the issuance of up to $60
million of tax-exempt bonds we'll use to finance solid-waste disposal
facilities at the Rodemacher project. We anticipate the Rapides Finance
Authority issuing the bonds on our behalf in the fourth quarter of this
year."
Storm Cost Recovery
"Our application for Community Development Block Grants to recover some of
our storm recovery costs is still pending. We recognize the chance of
receiving funding from that source is slim, but we will continue urging the
need to ease the financial burden on our customers," Madison said.
"At the same time, we are continuing to pursue securitization of our storm
costs. We are working closely with LPSC staff on a draft financing order.
Assuming everything goes as planned, we could be issuing bonds by next
summer," Madison said. "On a related topic, Cleco Power's request for a $50
million storm reserve is currently before the LPSC as part of the storm
recovery docket. We have asked for permission to create a restricted funded
reserve, which we hope to fund with securitized debt. We anticipate the
LPSC will take up the issue in the first quarter of 2007."
RFP Proposals
"Barring some unforeseen event, we expect the LPSC to vote in the coming
weeks on Cleco Power's request for approval of two new one-year power
purchase agreements for 2007," Madison said. "The power purchase agreements
for up to 250 megawatts were the result of a 2006 RFP by Cleco Power to
replace expiring contracts."
Earnings Guidance
"We are maintaining our earnings guidance of $1.25 to $1.35 per share for
2006," Madison said. The target range assumes normal weather patterns,
continuation of our rate stabilization plan, and the continued performance
of the Evangeline tolling agreement. The earnings guidance also includes
management's assumptions about Acadia's ability to sell power and capacity
into the merchant power market. In addition, the target range assumes
approximately $200 million of expenditures for the Rodemacher project this
year.
Cleco management will discuss the company's 2006 third-quarter results
during a conference call scheduled for 11 a.m. ET (10 a.m. CT) Friday, Nov.
10, 2006. The call will be broadcast live on the Internet, and 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
"3rd Quarter 2006 Earnings Conference Call."
Cleco's businesses referred to in this news release are:
Cleco Power LLC Cleco Midstream Resources LLC Perryville Energy Partners, L.L.C.; Perryville Energy Holdings LLC Acadia Power Holdings LLC Other (Cleco Corporation; Cleco Support Group LLC, Cleco Innovations LLC.)Cleco Corp. is a regional energy services company headquartered in Pineville, La. It operates a regulated electric utility company that serves 267,000 customers across Louisiana. Cleco also operates a wholesale energy business that has approximately 1,350 megawatts of generating capacity. For more information about Cleco, visit www.cleco.com.
CLECO CORPORATION
Condensed Consolidated Statements of Income (Unaudited)
FOR THE THREE MONTHS
ENDED SEPTEMBER 30,
------------------------
(THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) 2006 2005
----------- -----------
Operating revenue
Electric operations $ 284,490 $ 267,958
Other operations 7,644 14,240
Affiliate revenue 1,969 1,758
----------- -----------
Gross operating revenue 294,103 283,956
Electric customer credits - (300)
----------- -----------
Operating revenue, net 294,103 283,656
----------- -----------
Operating expenses
Fuel used for electric generation 80,627 54,665
Power purchased for utility customers 106,940 124,261
Other operations 25,670 23,647
Maintenance 8,850 9,723
Depreciation 23,750 15,182
Taxes other than income taxes 11,066 10,938
----------- -----------
Total operating expenses 256,903 238,416
----------- -----------
Operating income 37,200 45,240
Interest income 2,782 1,136
Allowance for other funds used during
construction 2,190 325
Equity income from investees 15,197 200,986
Other income 702 2,626
Other expense (463) (861)
Interest charges
Interest charges, including amortization of
debt expenses, premium and discount, net of
capitalized interest 11,094 9,535
Allowance for borrowed funds used during
construction (816) (108)
----------- -----------
Total interest charges 10,278 9,427
----------- -----------
Income from continuing operations before income
taxes 47,330 240,025
Federal and state income tax expense 19,350 89,569
----------- -----------
Income from continuing operations 27,980 150,456
Discontinued operations
Income (loss) from discontinued operations, net
of tax 36 (25)
----------- -----------
Net income 28,016 150,431
Preferred dividends requirements, net 424 451
----------- -----------
Net income applicable to common stock $ 27,592 $ 149,980
=========== ===========
Average shares of common stock outstanding
Basic 53,630,494 49,548,835
Diluted 55,938,995 51,714,320
Basic earnings per share
From continuing operations $ 0.50 $ 2.92
Net income applicable to common stock $ 0.50 $ 2.92
Diluted earnings per share
From continuing operations $ 0.50 $ 2.91
Net income applicable to common stock $ 0.50 $ 2.91
Cash dividends paid per share of common stock $ 0.225 $ 0.225
----------- -----------
CLECO CORPORATION
Condensed Consolidated Statements of Income (Unaudited)
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
------------------------
(THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) 2006 2005
----------- -----------
Operating revenue
Electric operations $ 736,765 $ 614,670
Other operations 22,167 29,493
Affiliate revenue 5,157 6,488
----------- -----------
Gross operating revenue 764,089 650,651
Electric customer credits 4,382 (771)
----------- -----------
Operating revenue, net 768,471 649,880
----------- -----------
Operating expenses
Fuel used for electric generation 186,980 117,139
Power purchased for utility customers 306,426 265,441
Other operations 66,776 68,974
Maintenance 29,003 32,848
Depreciation 55,108 45,059
Taxes other than income taxes 31,655 30,646
Gain on sales of assets (71) (2,207)
----------- -----------
Total operating expenses 675,877 557,900
----------- -----------
Operating income 92,594 91,980
Interest income 7,217 2,987
Allowance for other funds used during
construction 4,231 2,104
Equity income from investees 30,802 221,859
Other income 929 3,445
Other expense (1,177) (1,652)
Interest charges
Interest charges, including amortization of
debt expenses, premium and discount, net of
capitalized interest 33,673 32,584
Allowance for borrowed funds used during
construction (1,535) (702)
----------- -----------
Total interest charges 32,138 31,882
----------- -----------
Income from continuing operations before income
taxes 102,458 288,841
Federal and state income tax expense 38,923 108,112
----------- -----------
Income from continuing operations 63,535 180,729
Discontinued operations
Loss from discontinued operations, net of tax (154) (230)
----------- -----------
Net income 63,381 180,499
Preferred dividends requirements, net 1,310 1,374
----------- -----------
Net income applicable to common stock $ 62,071 $ 179,125
=========== ===========
Average shares of common stock outstanding
Basic 51,408,708 49,443,912
Diluted 53,621,679 51,625,000
Basic earnings per share
From continuing operations $ 1.19 $ 3.50
Net income applicable to common stock $ 1.19 $ 3.50
Diluted earnings per share
From continuing operations $ 1.18 $ 3.50
Net income applicable to common stock $ 1.18 $ 3.50
Cash dividends paid per share of common stock $ 0.675 $ 0.675
----------- -----------
CLECO CORPORATION
Condensed Consolidated Balance Sheets (Unaudited)
AT SEPTEMBER AT DECEMBER
30, 31,
(Thousands) 2006 2005
----------- -----------
Assets
Current assets
Cash and cash equivalents $ 196,022 $ 219,153
Accounts receivable, net 91,267 89,750
Other current assets 245,377 125,565
----------- -----------
Total current assets 532,666 434,468
Property, plant and equipment, net 1,234,911 1,188,703
Equity investment in investees 327,309 317,762
Prepayments, deferred charges and other 310,208 208,555
----------- -----------
Total assets $ 2,405,094 $ 2,149,488
=========== ===========
Liabilities
Current liabilities
Short-term debt $ 20,000 $ -
Long-term debt due within one year 25,000 40,000
Accounts payable 125,684 147,899
Other current liabilities 197,904 106,205
----------- -----------
Total current liabilities 368,588 294,104
Deferred credits and other liabilities 550,970 539,478
Long-term debt, net 584,428 609,643
----------- -----------
Total liabilities 1,503,986 1,443,225
Shareholders’ equity
Preferred stock 20,263 20,034
Common shareholders’ equity 885,032 690,359
Accumulated other comprehensive loss (4,187) (4,130)
----------- -----------
Total shareholders’ equity 901,108 706,263
----------- -----------
Total liabilities and shareholders’ equity $ 2,405,094 $ 2,149,488
=========== ===========
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 counterparties, the performance of the tolling agreements by such
counterparties, the resolution of claims arising from the Calpine
bankruptcy, construction and operational startup of the new unit at
Rodemacher Power Station, and the other risks and uncertainties more fully
described in the company's latest Annual Report on Form 10-K and Quarterly
Report on Form 10-Q. Actual results may differ materially from those
indicated in such forward-looking statements.
Contact Information: Investor Contacts: Cleco Corporation: Keith Crump (318) 484-7719 Ryan Gunter (318) 484-7724 Shareholder Services: Rodney Hamilton (318) 484-7593 Analyst Inquiries: Dresner Companies Kristine Walczak (312) 780-7205 Media Contact: Cleco Corporation: Michael Burns (318) 484-7663