Cleco Corporate Holdings LLC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 19, 2013

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8-K - 8-K - Cleco Corporate Holdings LLCclecocorp8k_021913.htm


 
 
EXHIBIT 99.1

Cleco Corporation reports full-year 2012 operational earnings of $2.46 per share.

•
Sustainable cost management efforts helped offset below normal 2012 weather
•
Demonstrated growth through long-term regulated wholesale contract with Dixie Electric Membership Corporation (DEMCO)
•
Additional wholesale load justified adding generating capacity at Cleco Power with Coughlin Power Station selected as low-cost option
•
2013 operational earnings guidance affirmed at $2.45 to $2.55 per diluted share

PINEVILLE, LA., Feb. 19, 2013 - Cleco Corporation (NYSE:CNL) posted 2012 earnings of $163.6 million, or $2.70 per diluted share, down $32.1 million from the $195.7 million recorded in 2011. Fourth-quarter earnings were $23.1 million or $0.38 per diluted share, down $7.5 million from the $30.6 million recorded in the fourth quarter of 2011. Operational earnings for 2012, which exclude the Acadia Units 1 and 2 indemnifications and other nonoperational gains, were $149.1 million, or $2.46 per diluted share, while operational earnings for 2011 were $152.9 million or $2.51 per diluted share, which excludes the gains on the Acadia Unit 2 transaction and other nonoperational gains.

“Our full-year operational earnings of $2.46 are at the top of our final 2012 guidance range of $2.40 to $2.46 per share. We achieved this despite less than favorable weather through our focus on low-cost and reliable operations of our regulated utility business,” said Bruce Williamson, president and CEO of Cleco Corporation. “During 2012, we focused the company on driving down many areas of our cost structure while maintaining operational reliability. In addition to our sustainable cost management program, we resolved a number of legacy tax issues in a positive fashion for our shareholders and customers.

“In addition to delivering solid earnings per share, we positioned the company for the future through a number of strategic initiatives. These include advancing our utility’s wholesale growth strategy with the signing of our largest ever long-term full-requirements wholesale power agreement with DEMCO. We continued the path to winding down our Cleco Midstream business with the announcement that Coughlin Power Station was the winning bidder in Cleco Power’s 2012 request for proposals for additional generation capacity,” said Williamson. “In 2012, we also completed our transmission project in south Louisiana and settled our Federal Energy Regulatory Commission (FERC) transmission rate case. In addition, we used our strong cash flow to self-fund system improvement projects and environmental upgrades to our plants to help keep our fleet out in front of our competitors as our industry faces stricter environmental mandates.

“As we head into 2013, we are focused on three main areas,” said Williamson.

•
“We will continue to deliver competitive, reliable energy to our customers by maintaining focus on our cost structure.

•
We will work closely with the Louisiana Public Service Commission on the transfer of Coughlin into Cleco Power and on several other regulatory issues that will provide certainty for our investors and customers.

•
We will seek additional long-term wholesale contracts modeled on the DEMCO contract, which includes capacity, energy and services and allows progressive municipalities and cooperatives to drive economic growth through stable electric rates.”


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Cleco Corporation
Page 2 of 10

Earnings Guidance:

Cleco is affirming its 2013 consolidated operational earnings in the range of $2.45 to $2.55 per diluted share. This estimate assumes normal weather for the year and an estimated consolidated tax rate of 32 percent. The guidance range excludes adjustments related to life insurance policies and expiring indemnifications. Please refer to “Operational Earnings Adjustments” in this news release for a description of these adjustments.

Financial Highlights:

Fourth Quarter 2012
•
Cleco reports fourth-quarter GAAP earnings applicable to common stock of $23.1 million, or $0.38 per diluted share, compared to $30.6 million, or $0.51 per diluted share for the fourth quarter of 2011.

Year-to-Date 2012
•
Cleco reports GAAP earnings applicable to common stock for 2012 of $163.6 million, or $2.70 per diluted share, compared to $195.7 million, or $3.22 per diluted share for 2011.


Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures
 
 
Diluted Earnings Per Share
 
For the three months ended Dec. 31
 
For the year ended Dec. 31
Subsidiary
2012
 
2011
 
2012
 
2011
Cleco Power LLC
$
0.41

 
$
0.39

 
$
2.42

 
$
2.34

Cleco Midstream Resources LLC
(0.05
)
 
0.06

 
(0.07
)
 
0.05

Corporate and Other1
—

 
—

 
0.11

 
0.12

Operational diluted earnings per share (Non-GAAP)
0.36

 
0.45

 
2.46

 
2.51

Adjustments2
0.02

 
0.06

 
0.24

 
0.71

Diluted earnings per share applicable to common stock
$
0.38

 
$
0.51

 
$
2.70

 
$
3.22


GAAP refers to United States generally accepted accounting principles.

1 Includes dividends and redemption costs on preferred stock
2 Refer to “Operational Earnings Adjustments” in this news release


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Cleco Corporation
Page 3 of 10

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

$
0.45

 
2011 fourth-quarter operational diluted earnings per share
 
 
 
0.05

 
Non-fuel revenue
0.02

 
Rate refund accrual
(0.04
)
 
Other expenses, net
0.03

 
Interest charges
0.02

 
AFUDC (allowance for funds used during construction)
(0.06
)
 
Income taxes
$
0.02

 
Cleco Power results
 
 
 
(0.11
)
 
Cleco Midstream results
 
 
 
—

 
Corporate and Other results
 
 
 
$
0.36

 
2012 fourth-quarter operational diluted earnings per share
 
 
 
0.02

 
Adjustments1
 
 
 
$
0.38

 
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 fourth quarter of 2011 primarily due to $0.06 per share of higher base revenue due to an annual base rate adjustment related to the formula rate plan, favorable weather, and higher commercial sales. This amount was partially offset by $0.01 per share of lower other net miscellaneous revenue.
•
Lower rate refund accrual increased earnings by $0.02 per share compared to the fourth quarter of 2011 primarily due to a change in estimated accruals.
•
Higher other expenses, net, decreased earnings by $0.04 per share compared to the fourth quarter of 2011 primarily due to $0.03 per share of higher depreciation and amortization expense and $0.01 per share of higher net other miscellaneous expenses.
•
Lower interest charges increased earnings by $0.03 per share compared to the fourth quarter of 2011 primarily due to $0.03 per share related to uncertain tax positions, $0.01 per share related to reacquired debt in October and December 2011, and $0.01 per share related to the retirement of pollution control bonds in January and May 2012. The issuance of private placement notes in December 2011 and May 2012 partially offset these amounts by $0.02 per share.
•
Higher AFUDC increased earnings by $0.02 per share compared to the fourth quarter of 2011 primarily due to higher AFUDC related to the advanced metering infrastructure project and miscellaneous transmission projects.
•
Higher income taxes decreased earnings by $0.06 per share compared to the fourth quarter of 2011 primarily due to $0.04 per share for the loss of state tax benefits related to tax credits and other state attributes and $0.02 per share related to the absence of the settlement of the 2001 through 2003 IRS audit.

Cleco Midstream Resources

•
Midstream’s results decreased earnings by $0.11 per share compared to the fourth quarter of 2011 primarily due to $0.12 per share related to the absence of the settlement of the 2001 through 2003 IRS audit, partially offset by $0.01 per share of lower other miscellaneous expenses.

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



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Cleco Corporation
Page 4 of 10

Corporate and Other

•
Higher interest charges decreased earnings by $0.01 per share compared to the fourth quarter of 2011 primarily due to higher amounts related to uncertain tax positions.
•
Lower income taxes increased earnings by $0.01 per share compared to the fourth quarter of 2011 as a result of $0.02 per share for the loss of state tax benefits related to tax credits and other state attributes, and $0.01 per share for tax returns filed, partially offset by $0.01 per share related to the absence of the settlement of the 2001 through 2003 IRS audit, and $0.01 per share for tax credits.


Year-Over-Year Operational Diluted Earnings Per Share Reconciliation:
$
2.51

 
Year ended Dec. 31, 2011, operational diluted earnings per share
 
 
 
(0.08
)
 
Non-fuel revenue
0.06

 
Rate refund accrual
(0.12
)
 
Other expenses, net
0.16

 
Interest charges
0.03

 
AFUDC (allowance for funds used during construction)
0.03

 
Income taxes
$
0.08

 
Cleco Power results
 
 
 
(0.12
)
 
Cleco Midstream results
 
 
 
(0.01
)
 
Corporate and Other results
 
 
 
$
2.46

 
Year ended Dec. 31, 2012, operational diluted earnings per share
 
 
 
0.24

 
Adjustments1
 
 
 
$
2.70

 
Reported GAAP diluted earnings per share

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

Cleco Power

•
Lower non-fuel revenue decreased earnings by $0.08 per share compared to 2011 primarily due to $0.09 per share relating to milder weather, $0.06 per share from lower mineral lease payments, and $0.05 per share from the absence of a gain on the sale of Cleco Power’s fuel oil inventory. These amounts were partially offset by $0.11 per share from an annual base rate adjustment related to the formula rate plan and $0.01 per share of higher other miscellaneous revenue.
•
Lower rate refund accrual increased earnings by $0.06 per share compared to 2011 primarily due to a change in estimated accruals.
•
Higher other expenses, net, decreased earnings by $0.12 per share compared to 2011 primarily due to $0.10 per share of higher depreciation and amortization expense, $0.07 per share of higher net non-recoverable wholesale power purchases and other capacity charges, and $0.02 per share of higher other taxes, primarily due to property taxes. These amounts were partially offset by $0.05 per share of lower other operations and maintenance expenses, and $0.02 per share of higher royalty income.
•
Lower interest charges increased earnings by $0.16 per share compared to 2011 primarily due to $0.12 per share related to uncertain tax positions, $0.08 per share related to reacquired debt in October and December 2011, and $0.03 per share related to the retirement of pollution control bonds in January and May 2012. Partially offsetting these amounts were $0.07 per share related to the issuance of private placement notes in December 2011 and May 2012.
•
Higher AFUDC increased earnings by $0.03 per share compared to 2011 primarily due to higher AFUDC accruals related to the advanced metering infrastructure project and miscellaneous transmission projects.

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Cleco Corporation
Page 5 of 10

•
Lower income taxes increased earnings by $0.03 per share compared to 2011 primarily due to $0.04 per share for tax returns filed, $0.03 per share for the settlement of legacy tax issues, and $0.03 per share for tax credits. These amounts were partially offset by $0.03 per share for the loss of state tax benefits related to tax credits and other state attributes, $0.02 per share related to the absence of the settlement of the 2001 through 2003 IRS audit, and $0.02 per share related to the absence in 2012 of the valuation allowance reversal in 2011.

Cleco Midstream Resources

•
Midstream’s results decreased earnings by $0.12 per share compared to 2011 primarily due to $0.12 from the absence of the settlement of the 2001 through 2003 IRS audit and $0.07 per share of higher operating and maintenance expenses. These amounts were partially offset by $0.07 per share of higher tolling revenue.

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

Corporate and Other

•
Higher income taxes decreased earnings by $0.01 per share compared to 2011 primarily due to $0.06 per share for tax returns filed and $0.01 per share related to the absence of the settlement of the 2001 through 2003 IRS audit. These amounts were partially offset by $0.06 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 per share 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 Dec. 31
 
For the year ended Dec. 31
 
2012
 
2011
 
2012
 
2011
Operational diluted earnings per share
$
0.36

 
$
0.45

 
$
2.46

 
$
2.51

Life insurance policies
—

 
0.06

 
0.02

 
0.06

Gain on Acadia Unit 2 transaction
—

 
—

 
—

 
0.63

Acadia Unit 1 indemnifications
—

 
—

 
0.08

 
0.02

Acadia Unit 2 indemnifications
0.02

 
—

 
0.14

 
—

Reported GAAP diluted earnings per share applicable to common stock
$
0.38

 
$
0.51

 
$
2.70

 
$
3.22



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 6 of 10

Gain from Acadia Unit 2 Transaction

On April 29, 2011, the disposition of Acadia Unit 2 and half of Acadia Power Station’s common facilities was completed resulting in the recognition of a gain of $0.63 per share for 2011. Because this is a one-time gain, management does not consider this adjustment to be a component of operational earnings.

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 fourth quarter of 2012, the contractual expiration of the underlying indemnifications increased earnings by $0.02 per share. The resulting adjustment for this item had no impact for the fourth quarter of 2011. During the year ended December 31, 2012 and 2011, the contractual expiration of the underlying indemnifications increased earnings $0.22 per share and $0.02 per share, respectively.

Cleco management will discuss the company’s fourth-quarter 2012 results during a conference call scheduled for 7:30 a.m. Central time (8:30 a.m. Eastern time) Wednesday, February 20, 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 “Q4 2012 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. 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 7 of 10


 
For the three months ended Dec. 31
(Unaudited)
(million kWh)
 
(thousands)
 
2012
 
2011
 
Change
 
2012
 
2011
 
Change
Electric Sales
 
 
 
 
 
 
 
 
 
 
 
Residential
790

 
772

 
2.3
%
 
$
61,884

 
$
58,404

 
6.0
 %
Commercial
634

 
613

 
3.4
%
 
44,884

 
42,652

 
5.2
 %
Industrial
601

 
596

 
0.8
%
 
22,457

 
21,642

 
3.8
 %
Other retail
32

 
32

 
—
%
 
2,472

 
2,331

 
6.0
 %
Surcharge
—

 
—

 
—

 
2,333

 
3,161

 
(26.2
)%
Other
—

 
—

 
—

 
(1,565
)
 
(1,552
)
 
(0.8
)%
Total retail
2,057

 
2,013

 
2.2
%
 
132,465

 
126,638

 
4.6
 %
Sales for resale
461

 
393

 
17.3
%
 
11,813

 
11,200

 
5.5
 %
Unbilled
(54
)
 
(49
)
 
10.2
%
 
(3,501
)
 
(2,980
)
 
(17.5
)%
Total retail and wholesale
customer sales
2,464

 
2,357

 
4.5
%
 
$
140,777

 
$
134,858

 
4.4
 %

 
For the year ended Dec. 31
(Unaudited)
(million kWh)
 
(thousands)
 
2012
 
2011
 
Change
 
2012
 
2011
 
Change
Electric Sales
 
 
 
 
 
 
 
 
 
 
 
Residential
3,624

 
3,877

 
(6.5
)%
 
$
281,378

 
$
294,076

 
(4.3
)%
Commercial
2,655

 
2,650

 
0.2
 %
 
181,093

 
179,786

 
0.7
 %
Industrial
2,311

 
2,366

 
(2.3
)%
 
85,675

 
85,965

 
(0.3
)%
Other retail
133

 
134

 
(0.7
)%
 
9,908

 
9,815

 
0.9
 %
Surcharge
—

 
—

 
—

 
9,133

 
10,695

 
(14.6
)%
Other
—

 
—

 
—

 
(6,252
)
 
(6,426
)
 
2.7
 %
Total retail
8,723

 
9,027

 
(3.4
)%
 
560,935

 
573,911

 
(2.3
)%
Sales for resale
1,934

 
1,888

 
2.4
 %
 
47,767

 
45,633

 
4.7
 %
Unbilled
(43
)
 
(139
)
 
69.1
 %
 
(2,125
)
 
(14,520
)
 
85.4
 %
Total retail and wholesale
customer sales
10,614

 
10,776

 
(1.5
)%
 
$
606,577

 
$
605,024

 
0.3
 %


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Cleco Corporation
Page 8 of 10

CLECO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the three months ended Dec. 31
2012
 
2011
Operating revenue
 
 
 
Electric operations
$
223,393

 
$
228,472

Tolling operations
—

 
2,868

Other operations
11,693

 
11,187

Gross operating revenue
235,086

 
242,527

Electric customer credits
(1,655
)
 
(3,406
)
Operating revenue, net
233,431

 
239,121

Operating expenses
 
 
 
Fuel used for electric generation
72,789

 
85,245

Power purchased for utility customers
9,065

 
9,872

Other operations
33,996

 
33,569

Maintenance
25,010

 
22,411

Depreciation
33,380

 
30,829

Taxes other than income taxes
9,317

 
7,587

Loss on sales of assets
108

 
959

Total operating expenses
183,665

 
190,472

Operating income
49,766

 
48,649

Interest income
183

 
97

Allowance for other funds used during construction
2,414

 
1,190

Equity loss from investees, before tax
(1
)
 
—

Other income
4,894

 
5,584

Other expense
(1,976
)
 
(2,785
)
Interest charges
 
 
 
Interest charges, including amortization of debt expense, premium, and discount, net
21,777

 
(6,923
)
Allowance for borrowed funds used during construction
(826
)
 
(430
)
Total interest charges
20,951

 
(7,353
)
Income before income taxes
34,329

 
60,088

Federal and state income tax expense
11,217

 
29,445

Net income applicable to common stock
$
23,112

 
$
30,643

 
 
 
 
Average number of basic common shares outstanding
60,353,185

 
60,282,040

Average number of diluted common shares outstanding
60,625,139

 
60,557,515

Basic earnings per share
 
 
 
Net income applicable to common stock
$
0.38

 
$
0.51

Diluted earnings per share
 
 
 
Net income applicable to common stock
$
0.38

 
$
0.51

Cash dividends paid per share of common stock
$
0.3375

 
$
0.3125

 


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Cleco Corporation
Page 9 of 10

CLECO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(Unaudited)
For the year ended Dec. 31
2012
 
2011
Operating revenue
 
 
 
Electric operations
$
944,169

 
$
1,051,956

Tolling operations
—

 
19,004

Other operations
50,158

 
52,962

Affiliate revenue
—

 
202

Gross operating revenue
994,327

 
1,124,124

Electric customer credits
(630
)
 
(6,811
)
Operating revenue, net
993,697

 
1,117,313

Operating expenses
 
 
 
Fuel used for electric generation
280,553

 
383,254

Power purchased for utility customers
53,134

 
70,462

Other operations
120,898

 
123,849

Maintenance
86,488

 
82,076

Depreciation
132,407

 
122,578

Taxes other than income taxes
38,515

 
36,356

Loss on sales of assets
51

 
491

Total operating expenses
712,046

 
819,066

Operating income
281,651

 
298,247

Interest income
346

 
891

Allowance for other funds used during construction
6,711

 
4,947

Equity income from investees, before tax
—

 
62,050

Other income
29,117

 
8,914

Other expense
(4,694
)
 
(5,646
)
Interest charges
 
 
 
Interest charges, including amortization of debt expense, premium, and discount, net
86,448

 
72,445

Allowance for borrowed funds used during construction
(2,292
)
 
(1,787
)
Total interest charges
84,156

 
70,658

Income before income taxes
228,975

 
298,745

Federal and state income tax expense
65,327

 
102,897

Net income
163,648

 
195,848

Preferred dividends requirements
—

 
26

Preferred stock redemption costs
—

 
112

Net income applicable to common stock
$
163,648

 
$
195,710

 
 
 
 
Average number of basic common shares outstanding
60,370,588

 
60,488,740

Average number of diluted common shares outstanding
60,628,129

 
60,833,564

Basic earnings per share
 
 
 
Net income applicable to common stock
$
2.71

 
$
3.24

Diluted earnings per share
 
 
 
Net income applicable to common stock
$
2.70

 
$
3.22

Cash dividends paid per share of common stock
$
1.30

 
$
1.1225



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Cleco Corporation
Page 10 of 10


CLECO CORPORATION
CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)
 
At Dec. 31, 2012
 
At Dec. 31, 2011
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
31,020

 
$
93,576

Accounts receivable, net
77,034

 
79,864

Other current assets
339,284

 
283,345

Total current assets
447,338

 
456,785

Property, plant and equipment, net
3,009,461

 
2,893,899

Equity investment in investees
14,540

 
14,540

Prepayments, deferred charges and other
676,010

 
684,978

Total assets
$
4,147,349

 
$
4,050,202

Liabilities
 
 
 
Current liabilities
 
 
 
Long-term debt due within one year
$
91,140

 
$
26,099

Accounts payable
102,695

 
127,467

Other current liabilities
100,795

 
167,436

Total current liabilities
294,630

 
321,002

Deferred credits
1,096,248

 
972,287

Long-term debt, net
1,257,258

 
1,337,056

Total liabilities
2,648,136

 
2,630,345

Shareholders’ equity
 
 
 
Common shareholders’ equity
1,531,583

 
1,447,996

Accumulated other comprehensive loss
(32,370
)
 
(28,139
)
Total shareholders’ equity
1,499,213

 
1,419,857

Total liabilities and shareholders’ equity
$
4,147,349

 
$
4,050,202




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