CenterPoint Energy, Inc. : CenterPoint Energy Reports First Quarter 2012 Earnings
05/03/2012| 08:20am US/Eastern
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HOUSTON, May 3, 2012 /PRNewswire/ -- CenterPoint Energy, Inc. (NYSE: CNP) today reported net income of $147 million, or $0.34 per diluted share, for the first quarter of 2012 compared to $148 million, or $0.35 per diluted share, for the same period of 2011. Operating income for the first quarter of 2012 was $338 million compared to $364 million for the same period of 2011.
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"Despite extremely mild winter weather and low natural gas prices, the company reported solid earnings for the quarter," said David M. McClanahan, president and chief executive officer of CenterPoint Energy. "The benefits of our diversified portfolio of electric and natural gas businesses were evident this quarter and the fundamentals of our business units remain strong. We continue to look for opportunities to invest in each of our businesses where we believe we can build value for our shareholders."
Electric Transmission & Distribution
The electric transmission & distribution segment reported operating income of $107 million for the first quarter of 2012, consisting of $70 million from the regulated electric transmission & distribution utility operations (TDU) and $37 million related to securitization bonds. Operating income for the first quarter of 2011 was $101 million, consisting of $68 million from the TDU and $33 million related to securitization bonds. Operating income for the TDU benefited from higher miscellaneous revenues, growth of more than 42,000 customers since March 2011, and higher returns associated primarily with the company's recovery of the true-up proceeds. These gains were partially offset by milder weather and impacts from new rates implemented in September 2011.
Natural Gas Distribution
The natural gas distribution segment reported operating income of $121 million for the first quarter of 2012 compared to $142 million for the same period of 2011. Operating income declined due to significantly warmer winter weather.
Interstate Pipelines
The interstate pipelines segment reported operating income of $60 million for the first quarter of 2012 compared to $76 million for the same period of 2011. The decline was due to lower revenues primarily as a result of an expired backhaul contract and lower off-system sales due primarily to compressed basis differentials. These declines were partially offset by higher revenues from previously restructured contracts with the company's natural gas distribution affiliates and increased ancillary services. Operation and maintenance expenses were higher primarily due to a favorable insurance settlement recognized in the first quarter of 2011.
In addition to operating income, this segment recorded equity income of $6 million for the first quarter of 2012 from its 50 percent interest in the Southeast Supply Header (SESH) compared to $4 million for the same period of 2011.
Field Services
The field services segment reported operating income of $47 million for the first quarter of 2012 compared to $36 million for the same period of 2011. The first quarter of 2012 benefited from higher gathering volumes in the Haynesville and Fayetteville shales partially offset by lower prices received from sales of retained gas.
In addition to operating income, this business had equity income of $3 million for the first quarter of 2012 from its 50 percent interest in a gathering and processing joint venture (Waskom) compared to $2 million for the same period of 2011.
Competitive Natural Gas Sales and Services
The competitive natural gas sales and services segment reported operating income of $1 million for the first quarter of 2012 compared to $10 million for the same period of 2011. The first quarter of 2012 included a $4 million write-down of natural gas inventory to the lower of average cost or market. The first quarter of 2012 also included charges of $1 million resulting from mark-to-market accounting for derivatives associated with certain forward natural gas purchases and sales used to lock in economic margins compared to charges of $2 million for the same period of 2011. In addition to these items, operating income was impacted by milder winter weather, compressed margins and higher operation and maintenance expenses.
Dividend Declaration
On April 26, 2012, CenterPoint Energy's board of directors declared a regular quarterly cash dividend of $0.2025 per share of common stock payable on June 8, 2012, to shareholders of record as of the close of business on May 16, 2012.
Outlook Reaffirmed for 2012
CenterPoint Energy reaffirmed its estimate for 2012 earnings on a guidance basis in the range of $1.08 to $1.20 per diluted share. Earnings guidance is being provided in the form of a range to reflect economic and operational variables associated with the company's various business segments and takes into consideration performance to date. Significant variables include the impact to earnings of commodity prices, volume throughput, weather, regulatory proceedings, effective tax rates and financing activities. In providing this guidance, the company does not include the impact of any changes in accounting standards, any impact from significant acquisitions or divestitures, any impact to earnings from the change in the value of Time Warner stocks and the related ZENS securities, or the timing effects of mark-to-market and inventory accounting in the company's competitive natural gas sales and services business.
Filing of Form 10-Q for CenterPoint Energy, Inc.
Today, CenterPoint Energy, Inc. filed with the Securities and Exchange Commission (SEC) its Quarterly Report on Form 10-Q for the period ended March 31, 2012. A copy of that report is available on the company's website under the Investors section. Other filings the company makes with the SEC and other documents relating to its corporate governance can also be found on that site.
Webcast of Earnings Conference Call
CenterPoint Energy's management will host an earnings conference call on Thursday, May 3, 2012, at 10:30 a.m. Central time or 11:30 a.m. Eastern time. Interested parties may listen to a live audio broadcast of the conference call on the company's website under the Investors section. A replay of the call can be accessed approximately two hours after the completion of the call and will be archived on the website for at least one year.
CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution, competitive natural gas sales and services, interstate pipelines, and field services operations. The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma and Texas. Assets total more than $22 billion. With over 8,800 employees, CenterPoint Energy and its predecessor companies have been in business for more than 135 years. For more information, visit the company's website at CenterPointEnergy.com.
This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events and results may differ materially from those expressed or implied by these forward-looking statements. The statements in this news release regarding the company's earnings outlook for 2012 and future financial performance and results of operations, and any other statements that are not historical facts are forward-looking statements. Each forward-looking statement contained in this news release speaks only as of the date of this release. Factors that could affect actual results include (1) state and federal legislative and regulatory actions or developments affecting various aspects of CenterPoint Energy's businesses, including, among others, energy deregulation or re-regulation, pipeline integrity and safety, health care reform, financial reform and tax legislation; (2) state and federal legislative and regulatory actions or developments relating to the environment, including those related to global climate change; (3) timely and appropriate rate actions and increases, allowing recovery of costs and a reasonable return on investment; (4) the timing and outcome of any audits, disputes or other proceedings related to taxes; (5) problems with construction, implementation of necessary technology or other issues with respect to major capital projects that result in delays or in cost overruns that cannot be recouped in rates; (6) industrial, commercial and residential growth in CenterPoint Energy's service territories and changes in market demand, including the effects of energy efficiency measures and demographic patterns; (7) the timing and extent of changes in commodity prices, particularly natural gas and natural gas liquids, and the effects of geographic and seasonal commodity price differentials, including the effects of these circumstances on re-contracting available capacity on CenterPoint Energy's interstate pipelines; (8) the timing and extent of changes in the supply of natural gas, particularly supplies available for gathering by CenterPoint Energy's field services business and transporting by its interstate pipelines, including the impact of natural gas prices on the level of drilling and production in the regions served by CenterPoint Energy; (9) competition in CenterPoint Energy's mid-continent region footprint for access to natural gas supplies and to markets; (10) weather variations and other natural phenomena; (11) any direct or indirect effects on CenterPoint Energy's facilities, operations and financial condition resulting from terrorism, cyber attacks, data security breaches or other attempts to disrupt its businesses or the businesses of third parties, or other catastrophic events; (12) the impact of unplanned facility outages; (13) timely and appropriate regulatory actions allowing securitization or other recovery of costs associated with any future hurricanes or natural disasters; (14) changes in interest rates or rates of inflation; (15) commercial bank and financial market conditions, CenterPoint Energy's access to capital, the cost of such capital, and the results of our financing and refinancing efforts, including availability of funds in the debt capital markets; (16) actions by credit rating agencies; (17) effectiveness of CenterPoint Energy's risk management activities; (18) inability of various counterparties to meet their obligations; (19) non-payment for services due to financial distress of CenterPoint Energy's customers; (20) the ability of GenOn Energy, Inc. (formerly known as RRI Energy, Inc.) and its subsidiaries to satisfy their obligations to CenterPoint Energy and its subsidiaries; (21) the ability of retail electric providers, and particularly the two largest customers of the TDU, to satisfy their obligations to CenterPoint Energy and its subsidiaries; (22) the outcome of litigation brought by or against CenterPoint Energy; (23) CenterPoint Energy's ability to control costs; (24) the investment performance of pension and postretirement benefit plans; (25) potential business strategies, including restructurings, acquisitions or dispositions of assets or businesses; (26) acquisition and merger activities involving CenterPoint Energy or its competitors; and (27) other factors discussed in CenterPoint Energy's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, CenterPoint Energy's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, and other reports CenterPoint Energy or its subsidiaries may file from time to time with the Securities and Exchange Commission.
For more information contact
Media:
Leticia Lowe
Phone 713.207.7702
Investors:
Marianne Paulsen
Phone 713.207.6500
CenterPoint Energy, Inc. and
Subsidiaries
Reconciliation of reported Net
Income and diluted EPS to the basis
used in providing 2012 annual
earnings guidance
Quarter Ended
March 31, 2012
--------------
Net
Income EPS
------- ---
(in
millions)
As reported
$147 $0.34
Timing effects impacting CES (1):
Mark-to-
market
(gains)
losses -
natural
gas
derivative
contracts 1 0.00
Natural gas
inventory
write-
downs 3 0.01
ZENS-related mark-to-market
(gains) losses:
Marketable
securities
(2) (30) (0.07)
Indexed
debt
securities 21 0.05
---
Per the basis used in providing
2012 annual earnings guidance
$142 $0.33
=====
(1) Competitive natural gas sales
and services
(2) Time Warner Inc., Time Warner
Cable Inc. and AOL Inc.
CenterPoint Energy, Inc. and Subsidiaries
Statements of Consolidated Income
(Millions of Dollars)
(Unaudited)
Quarter Ended
March 31,
---------
2011 2012
---- ----
Revenues:
Electric Transmission &
Distribution $489 $531
Natural Gas Distribution 1,212 854
Competitive Natural Gas Sales
and Services 706 525
Interstate Pipelines 147 127
Field Services 90 105
Other Operations 3 3
Eliminations (60) (61)
Total 2,587 2,084
----- -----
Expenses:
Natural gas 1,476 969
Operation and maintenance 439 455
Depreciation and amortization 201 224
Taxes other than income taxes 107 98
Total 2,223 1,746
----- -----
Operating Income 364 338
--- ---
Other Income (Expense) :
Gain on marketable securities 32 46
Loss on indexed debt securities (23) (33)
Interest and other finance
charges (116) (110)
Interest on transition and
system restoration bonds (33) (37)
Equity in earnings of
unconsolidated affiliates 6 9
Other - net 5 6
Total (129) (119)
---- ----
Income Before Income Taxes 235 219
Income Tax Expense 87 72
--- ---
Net Income $148 $147
==== ====
Reference is made to the Notes
to the Consolidated Financial
Statements contained in the
Quarterly Report on Form 10-Q
of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Selected Data From Statements of Consolidated Income
(Millions of Dollars, Except Share and Per Share Amounts)
(Unaudited)
Quarter Ended
March 31,
---------
2011 2012
---- ----
Basic Earnings
Per Common Share $0.35 $0.34
===== =====
Diluted Earnings
Per Common Share $0.35 $0.34
===== =====
Dividends
Declared per
Common Share $0.1975 $0.2025
Weighted Average
Common Shares
Outstanding
(000):
- Basic 425,018 426,499
- Diluted 427,415 428,492
Operating Income
(Loss) by
Segment
----------------
Electric
Transmission &
Distribution:
Electric
Transmission and
Distribution
Operations $68 $70
Transition and
System
Restoration Bond
Companies 33 37
Total Electric
Transmission &
Distribution 101 107
Natural Gas
Distribution 142 121
Competitive
Natural Gas
Sales and
Services 10 1
Interstate
Pipelines 76 60
Field Services 36 47
Other Operations (1) 2
Total $364 $338
==== ====
Reference is made to the Notes to the
Consolidated Financial Statements
contained in the Quarterly Report on
Form 10-Q of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
Electric Transmission & Distribution
------------------------------------
Quarter Ended
March 31, % Diff
---------
2011 2012 Fav/(Unfav)
---- ---- -----------
Results of Operations:
Revenues:
Electric transmission and
distribution utility $400 $415 4%
Transition and system
restoration bond companies 89 116 30%
--- ---
Total 489 531 9%
--- ---
Expenses:
Operation and maintenance 208 220 (6%)
Depreciation and amortization 71 73 (3%)
Taxes other than income taxes 53 52 2%
Transition and system
restoration bond companies 56 79 (41%)
--- ---
Total 388 424 (9%)
--- ---
Operating Income $101 $107 6%
==== ====
Operating Income:
Electric transmission and
distribution operations $68 $70 3%
Transition and system
restoration bond companies 33 37 12%
--- ---
Total Segment Operating Income $101 $107 6%
==== ====
Electric Transmission &
Distribution
Operating Data:
Actual MWH Delivered
Residential 4,871,253 4,525,294 (7%)
Total 16,767,968 16,544,009 (1%)
Weather (average for service
area):
Percentage of 10-year average:
Cooling degree days 151% 237% 86%
Heating degree days 109% 56% (53%)
Number of metered customers -
end of period:
Residential 1,879,796 1,914,906 2%
Total 2,124,809 2,167,052 2%
Natural Gas Distribution
------------------------
Quarter Ended
March 31, % Diff
---------
2011 2012 Fav/(Unfav)
---- ---- -----------
Results of Operations:
Revenues $1,212 $854 (30%)
------ ----
Expenses:
Natural gas 818 493 40%
Operation and maintenance 168 163 3%
Depreciation and amortization 42 43 (2%)
Taxes other than income taxes 42 34 19%
Total 1,070 733 31%
Operating Income $142 $121 (15%)
==== ====
Natural Gas Distribution
Operating Data:
Throughput data in BCF
Residential 90 62 (31%)
Commercial and Industrial 88 74 (16%)
Total Throughput 178 136 (24%)
=== ===
Weather (average for service
area)
Percentage of 10-year average:
Heating degree days 108% 69% (39%)
Number of customers -end of
period:
Residential 3,029,079 3,042,617 -
Commercial and Industrial 246,987 246,852 -
Total 3,276,066 3,289,469 -
========= =========
Reference is made to the Notes
to the Consolidated Financial
Statements contained in the
Quarterly Report on Form 10-Q
of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
Competitive Natural Gas Sales and
Services
----------------------------------
Quarter Ended
March 31, % Diff
---------
2011 2012 Fav/(Unfav)
---- ---- -----------
Results of Operations:
Revenues $706 $525 (26%)
---- ----
Expenses:
Natural gas 685 511 25%
Operation and maintenance 10 12 (20%)
Depreciation and
amortization 1 1 -
Taxes other than income
taxes - - -
Total 696 524 25%
Operating Income $10 $1 (90%)
=== ===
Competitive Natural Gas
Sales and Services
Operating Data:
Throughput data in BCF 155 161 4%
=== ===
Number of customers -end
of period 11,942 14,495 21%
====== ======
Interstate Pipelines
--------------------
Quarter Ended
March 31, % Diff
---------
2011 2012 Fav/(Unfav)
---- ---- -----------
Results of Operations:
Revenues $147 $127 (14%)
---- ----
Expenses:
Natural gas 18 7 61%
Operation and maintenance 31 38 (23%)
Depreciation and
amortization 13 14 (8%)
Taxes other than income
taxes 9 8 11%
Total 71 67 6%
Operating Income $76 $60 (21%)
=== ===
Equity in Earnings of
Unconsolidated Affiliates $4 $6 50%
--- ---
Pipelines Operating Data:
Throughput data in BCF
Transportation 455 378 (17%)
=== ===
Reference is made to the Notes to the
Consolidated Financial Statements contained
in the Quarterly Report on Form 10-Q of
CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
Field Services
--------------
Quarter Ended
March 31, % Diff
---------
2011 2012 Fav/(Unfav)
---- ---- -----------
Results of Operations:
Revenues $90 $105 17%
--- ----
Expenses:
Natural gas 15 18 (20%)
Operation and maintenance 29 27 7%
Depreciation and amortization 9 11 (22%)
Taxes other than income taxes 1 2 (100%)
Total 54 58 (7%)
Operating Income $36 $47 31%
=== ===
Equity in Earnings of Unconsolidated
Affiliates $2 $3 50%
--- ---
Field Services Operating Data:
Throughput data in BCF
Gathering 183 237 30%
=== ===
Other Operations
----------------
Quarter Ended
March 31, % Diff
---------
2011 2012 Fav/(Unfav)
---- ---- -----------
Results of Operations:
Revenues $3 $3 -
Expenses 4 1 75%
Operating Income (Loss) $(1) $2 300%
=== ===
Capital Expenditures by Segment
(Millions of Dollars)
(Unaudited)
Quarter Ended
March 31,
---------
2011 2012
---- ----
Capital Expenditures by Segment
Electric Transmission & Distribution $106 $136
Natural Gas Distribution 51 66
Competitive Natural Gas Sales and
Services - 1
Interstate Pipelines 18 20
Field Services 69 13
Other Operations 9 6
Total $253 $242
==== ====
Interest Expense Detail
(Millions of Dollars)
(Unaudited)
Quarter Ended
March 31,
---------
2011 2012
---- ----
Interest Expense Detail
Amortization of Deferred Financing
Cost $7 $7
Capitalization of Interest Cost (2) (1)
Transition and System Restoration
Bond Interest Expense 33 37
Other Interest Expense 111 104
Total Interest Expense $149 $147
==== ====
Reference is made to the Notes
to the Consolidated Financial
Statements contained in the
Quarterly Report on Form 10-Q
of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Millions of Dollars)
(Unaudited)
December 31, March 31,
2011 2012
---- ----
ASSETS
Current Assets:
Cash and cash equivalents $220 $1,096
Other current assets 2,117 1,872
Total current assets 2,337 2,968
----- -----
Property, Plant and Equipment, net 12,402 12,512
------ ------
Other Assets:
Goodwill 1,696 1,696
Regulatory assets 4,619 4,524
Other non-current assets 649 651
Total other assets 6,964 6,871
Total Assets $21,703 $22,351
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings $62 $9
Current portion of transition and system
restoration bonds long-term debt 307 380
Current portion of indexed debt 131 133
Current portion of other long-term debt 46 496
Other current liabilities 2,047 1,717
Total current liabilities 2,593 2,735
----- -----
Other Liabilities:
Accumulated deferred income taxes, net 3,832 3,944
Regulatory liabilities 1,039 1,071
Other non-current liabilities 1,376 1,310
Total other liabilities 6,247 6,325
----- -----
Long-term Debt:
Transition and system restoration bonds 2,215 3,686
Other 6,426 5,319
Total long-term debt 8,641 9,005
----- -----
Shareholders' Equity 4,222 4,286
Total Liabilities and Shareholders' Equity $21,703 $22,351
======= =======
Reference is made to the Notes
to the Consolidated Financial
Statements contained in the
Quarterly Report on Form 10-Q
of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Condensed Statements of Consolidated Cash Flows
(Millions of Dollars)
(Unaudited)
Three Months Ended
March 31,
2011 2012
Cash Flows from Operating
Activities:
Net income $148 $147
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 208 232
Deferred income taxes 80 64
Changes in net regulatory
assets 17 42
Changes in other assets and
liabilities 173 (65)
Other, net 1 4
--- ---
Net Cash Provided by
Operating Activities 627 424
Net Cash Used in Investing
Activities (308) (292)
Net Cash Provided by (Used
in) Financing Activities (423) 744
---- ---
Net Increase (Decrease) in
Cash and Cash Equivalents (104) 876
Cash and Cash Equivalents at
Beginning of Period 199 220
--- ---
Cash and Cash Equivalents at
End of Period $95 $1,096
=== ======
Reference is made to the Notes
to the Consolidated Financial
Statements contained in the
Quarterly Report on Form 10-Q
of CenterPoint Energy, Inc.
SOURCE CenterPoint Energy, Inc.
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