CenterPoint Energy Reports First Quarter 2012 Earnings

May 03, 2012, 08:15 ET from CenterPoint Energy, Inc.

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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