CenterPoint Energy Reports Third Quarter 2010 Earnings

Oct 28, 2010, 07:00 ET from CenterPoint Energy, Inc.

HOUSTON, Oct. 28 /PRNewswire-FirstCall/ -- CenterPoint Energy, Inc. (NYSE: CNP) today reported net income of $123 million, or $0.29 per diluted share, for the third quarter of 2010 compared to $114 million, or $0.31 per diluted share, for the same period of 2009.  Operating income for the third quarter of 2010 was $327 million compared to $287 million for the same period of 2009.

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"I am pleased with the overall results from our business units this quarter," said David M. McClanahan, president and chief executive officer of CenterPoint Energy.  "Our regulated electric and natural gas utilities performed well and we continue to see the benefits of the significant investments we have made in our field services and pipeline businesses."  

For the nine months ended September 30, 2010, net income was $318 million, or $0.78 per diluted share, compared to $267 million, or $0.74 per diluted share, for the same period of 2009.  Operating income for the nine months ended September 30, 2010, was $947 million compared to $825 million for the same period of 2009.

OPERATING INCOME BY SEGMENT

Electric Transmission & Distribution

The electric transmission & distribution segment reported operating income of $212 million for the third quarter of 2010, consisting of $178 million from the regulated electric transmission & distribution utility operations (TDU) and $34 million related to transition and system restoration bonds.  Operating income for the third quarter of 2009 was $218 million, consisting of $187 million from the TDU and $31 million related to transition bonds.  Operating income for the TDU increased from growth of nearly 21,000 metered customers since September 2009, but was more than offset by reduced revenues associated with the credit to customers' bills reflecting the benefit of deferred taxes associated with Hurricane Ike storm restoration costs, and increased operation and maintenance expenses.

Operating income for the nine months ended September 30, 2010, was $477 million, consisting of $371 million from the TDU and $106 million related to transition and system restoration bonds.  Operating income for the same period of 2009 was $450 million, consisting of $353 million from the TDU and $97 million related to transition bonds.

Natural Gas Distribution

The natural gas distribution segment reported an operating loss of $4 million for the third quarter of 2010 compared to an operating loss of $15 million for the same period of 2009.  Operating results benefited from rate increases and rate design changes, and higher system throughput, partially offset by higher operation and maintenance expenses.  Due to seasonal impacts, this segment typically reports a loss in the third quarter.  

Operating income for the nine months ended September 30, 2010, was $145 million compared to $105 million for the same period of 2009.

Interstate Pipelines

The interstate pipelines segment reported operating income of $68 million for the third quarter of 2010 compared to $64 million for the same period of 2009.  Operating income increased due to higher revenue from firm contracts associated with Phase IV of the Carthage to Perryville pipeline and for deliveries to gas-fired power generators, as well as lower operation and maintenance expenses, partially offset by reduced revenues from ancillary services.  

In addition to operating income, this segment recorded equity income of $8 million for the third quarter of 2010 primarily from its 50 percent interest in the Southeast Supply Header (SESH) compared to an equity loss of $5 million for the third quarter of 2009, which included a non-cash charge of $11 million to reflect SESH's discontinued use of regulatory accounting.

Operating income for the nine months ended September 30, 2010, was $207 million compared to $194 million for the same period of 2009.  In addition to operating income, this segment recorded equity income of $15 million for the nine months ended September 30, 2010, primarily from its 50 percent interest in SESH compared to $2 million for the nine months ended September 30, 2009, which included non-cash charges of $16 million to reflect SESH's discontinued use of regulatory accounting.  

Field Services

The field services segment reported operating income of $40 million for the third quarter of 2010 compared to $23 million for the same period of 2009.  Revenue growth from higher gathering volumes was partially offset by increased operation and maintenance expenses primarily related to facility expansions.

In addition to operating income, this business had equity income of $3 million in the third quarter of 2010 compared to $2 million in the third quarter of 2009 from its 50 percent interest in a gas processing plant.  

Operating income for the nine months ended September 30, 2010, was $94 million compared to $72 million for the same period of 2009.  Equity income from the jointly-owned gas processing plant was $8 million for the nine months ended September 30, 2010, compared to $6 million for the same period of 2009.

Competitive Natural Gas Sales and Services

The competitive natural gas sales and services segment reported operating income of $7 million for the third quarter of 2010 compared to an operating loss of $8 million for the same period of 2009.  Operating income for the third quarter of 2010 included gains of $19 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 $6 million for the same period of 2009.  The third quarter of 2010 also included a $6 million write-down of natural gas inventory to the lower of average cost or market.  

Operating income for the nine months ended September 30, 2010, was $16 million compared to no operating income for the same period of 2009.  Operating income for the nine months ended September 30, 2010, included gains of $14 million resulting from mark-to-market accounting compared to charges of $22 million for the same period of 2009.  Each of the nine months ended September 30, 2010 and 2009, also included $6 million in inventory write-downs.    

DIVIDEND DECLARATION

On October 21, 2010, CenterPoint Energy's board of directors declared a regular quarterly cash dividend of $0.195 per share of common stock payable on December 10, 2010, to shareholders of record as of the close of business on November 16, 2010.    

OUTLOOK REAFFIRMED FOR 2010

CenterPoint Energy reaffirmed its 2010 earnings guidance of $1.02 to $1.12 per diluted share.  This guidance takes into consideration performance to date, equity issuances and various economic and operational assumptions related to the business segments in which the company operates.  The company has made certain assumptions regarding the timing and cost of financing activities and the impact to earnings of various regulatory proceedings.  In providing this guidance, the company has not included the impact of any changes in accounting standards, any impact from significant acquisitions or divestitures, any impact to income from the change in value of Time Warner stocks and the related ZENS securities, the timing effects of mark-to-market or inventory accounting in the company's competitive natural gas sales and services business, or the outcome of the TDU's true-up appeal.  The company has also excluded increased taxes recorded in the first quarter of 2010 as a result of recent health care legislation.  For the impact of these factors on the company's earnings for the three months and nine months ended September 30, 2010, see the reconciliation below.

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 September 30, 2010.  A copy of that report is available on the company's Web site, www.CenterPointEnergy.com, 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, October 28, 2010, 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 at www.CenterPointEnergy.com.  A replay of the call can be accessed approximately two hours after the completion of the call and will be archived on the Web site 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 over $19 billion. With about 8,800 employees, CenterPoint Energy and its predecessor companies have been in business for more than 135 years.  For more information, visit the Web site at www.CenterPointEnergy.com.

This news release includes forward-looking statements.  Actual events and results may differ materially from those projected.   The statements in this news release regarding the company's earnings outlook for 2010 and future financial performance and results of operations, and other statements that are not historical facts are forward-looking statements.  Factors that could affect actual results include the timing and outcome of the appeal from the true-up proceedings, the timing and impact of future regulatory, legislative, and IRS decisions, effects of competition, weather variations, changes in CenterPoint Energy's or its subsidiaries' business plans, financial market conditions, the timing and extent of changes in natural gas and natural gas liquids prices, the impact of unplanned facility outages, and other factors discussed in CenterPoint Energy's and its subsidiaries' Forms 10-K for the fiscal year ended December 31, 2009, CenterPoint Energy's and its subsidiaries' Forms 10-Q for the periods ended March 31, 2010, and June 30, 2010, CenterPoint Energy's Form 10-Q for the period ended September 30, 2010, and other filings with the SEC.

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 annual earnings guidance

Quarter Ended

Nine Months Ended

September 30, 2010

September 30, 2010

Net Income

EPS

Net Income

EPS

(in millions)

(in millions)

As reported

$           123

$        0.29

$         318

$        0.78

Timing effects impacting CES(1):

Mark-to-market (gains) losses - natural gas derivative contracts

(12)

(0.03)

(9)

(0.02)

Natural gas inventory write-downs

4

0.01

4

0.01

ZENS-related mark-to-market (gains) losses:

Marketable securities(2)

(12)

(0.03)

(23)

(0.06)

Indexed debt securities

3

0.01

-

-

Tax impact of federal health care legislation

-

-

21

0.05

Per the basis used in providing annual earnings guidance

$           106

$        0.25

$         311

$        0.76

(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

Nine Months Ended

September 30,

September 30,

2009

2010

2009

2010

Revenues:

Electric Transmission & Distribution

$                    608

$                    655

$                 1,541

$                 1,699

Natural Gas Distribution

402

398

2,341

2,400

Competitive Natural Gas Sales and Services

399

647

1,596

2,059

Interstate Pipelines

153

170

461

456

Field Services

63

94

176

242

Other Operations

3

3

9

9

Eliminations

(52)

(59)

(142)

(178)

Total

1,576

1,908

5,982

6,687

Expenses:

Natural gas

582

808

3,081

3,521

Operation and maintenance

415

444

1,226

1,268

Depreciation and amortization

208

243

562

660

Taxes other than income taxes

84

86

288

291

Total

1,289

1,581

5,157

5,740

Operating Income

287

327

825

947

Other Income (Expense) :

Gain on marketable securities

47

19

68

35

Loss on indexed debt securities

(30)

(5)

(54)

-

Interest and other finance charges

(126)

(121)

(384)

(364)

Interest on transition and system restoration bonds

(32)

(34)

(98)

(106)

Equity in earnings (losses) of unconsolidated affiliates

(3)

10

8

22

Other - net

9

3

31

7

Total

(135)

(128)

(429)

(406)

Income Before Income Taxes

152

199

396

541

Income Tax Expense

(38)

(76)

(129)

(223)

Net Income

$                    114

$                    123

$                    267

$                    318

                                                                  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

Nine Months Ended

September 30,

September 30,

2009

2010

2009

2010

Basic Earnings Per Common Share

$                          0.31

$                          0.29

$                          0.75

$                          0.79

Diluted Earnings Per Common Share

$                          0.31

$                          0.29

$                          0.74

$                          0.78

Dividends Declared per Common Share

$                        0.190

$                        0.195

$                          0.57

$                        0.585

    Weighted Average Common Shares Outstanding (000):

- Basic

369,512

422,178

356,570

404,957

- Diluted

371,742

424,968

358,745

407,728

Operating Income (Loss) by Segment

Electric Transmission & Distribution:

Electric Transmission and Distribution Operations

$                           187

$                           178

$                           353

$                           371

Transition and System Restoration Bond Companies

31

34

97

106

Total Electric Transmission & Distribution

218

212

450

477

Natural Gas Distribution

(15)

(4)

105

145

Competitive Natural Gas Sales and Services

(8)

7

-

16

Interstate Pipelines

64

68

194

207

Field Services

23

40

72

94

Other Operations

5

4

4

8

Total

$                           287

$                           327

$                           825

$                           947

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

Nine Months Ended

September 30,

% Diff

September 30,

% Diff

2009

2010

Fav/(Unfav)

2009

2010

Fav/(Unfav)

Results of Operations:

Revenues:

Electric transmission and distribution utility

$                       503

$                    520

3%

$                 1,281

$                 1,355

6%

Transition and system restoration bond companies

105

135

29%

260

344

32%

Total

608

655

8%

1,541

1,699

10%

Expenses:

Operation and maintenance

194

215

(11%)

563

609

(8%)

Depreciation and amortization

70

75

(7%)

207

219

(6%)

Taxes other than income taxes

52

52

-

158

156

1%

Transition and system restoration bond companies

74

101

(36%)

163

238

(46%)

Total

390

443

(14%)

1,091

1,222

(12%)

Operating Income

$                       218

$                    212

(3%)

$                    450

$                    477

6%

Operating Income:

Electric transmission and distribution operations

$                       187

$                    178

(5%)

$                    353

$                    371

5%

Transition and system restoration bond companies

31

34

10%

97

106

9%

Total Segment Operating Income

$                       218

$                    212

(3%)

$                    450

$                    477

6%

Electric Transmission & Distribution

Operating Data:

Actual MWH Delivered

Residential

9,242,635

9,262,154

-

20,040,598

21,499,427

7%

Total

22,963,434

23,342,324

2%

57,946,697

59,952,416

3%

Weather (average for service area):

Percentage of 10-year average:

Cooling degree days

107%

109%

108%

104%

Heating degree days

0%

0%

89%

160%

Number of metered customers - end of period:

Residential

1,849,158

1,868,421

1%

1,849,158

1,868,421

1%

Total

2,094,847

2,115,595

1%

2,094,847

2,115,595

1%

Natural Gas Distribution

Quarter Ended

Nine Months Ended

September 30,

% Diff

September 30,

% Diff

2009

2010

Fav/(Unfav)

2009

2010

Fav/(Unfav)

Results of Operations:

Revenues

$                       402

$                    398

(1%)

$                 2,341

$                 2,400

3%

Expenses:

Natural gas

198

180

9%

1,538

1,563

(2%)

Operation and maintenance

157

160

(2%)

478

471

1%

Depreciation and amortization

40

40

-

121

124

(2%)

Taxes other than income taxes

22

22

-

99

97

2%

Total

417

402

4%

2,236

2,255

(1%)

Operating Income (Loss)

$                        (15)

$                      (4)

73%

$                    105

$                    145

38%

Natural Gas Distribution Operating Data:

Throughput data in BCF

Residential

13

13

-

111

125

13%

Commercial and Industrial

41

46

12%

164

182

11%

Total Throughput

54

59

9%

275

307

12%

Weather (average for service area)

Percentage of 10-year average:

Heating degree days

58%

97%

102%

110%

Number of customers - end of period:

Residential

2,954,095

2,969,452

1%

2,954,095

2,969,452

1%

Commercial and Industrial

241,036

242,032

-

241,036

242,032

-

Total

3,195,131

3,211,484

1%

3,195,131

3,211,484

1%

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

Nine Months Ended

September 30,

% Diff

September 30,

% Diff

2009

2010

Fav/(Unfav)

2009

2010

Fav/(Unfav)

Results of Operations:

Revenues

$                  399

$                  647

62%

$               1,596

$       2,059

29%

Expenses:

Natural gas

396

629

(59%)

1,562

2,009

(29%)

Operation and maintenance

10

10

-

30

29

3%

Depreciation and amortization

1

1

-

3

3

-

Taxes other than income taxes

-

-

-

1

2

(100%)

Total

407

640

(57%)

1,596

2,043

(28%)

Operating Income (Loss)

$                    (8)

$                      7

188%

$                    -

$            16

-

Competitive Natural Gas Sales and Services Operating Data:

Throughput data in BCF

115

135

17%

370

404

9%

Number of customers - end of period

10,934

11,883

9%

10,934

11,883

9%

Interstate Pipelines

Quarter Ended

Nine Months Ended

September 30,

% Diff

September 30,

% Diff

2009

2010

Fav/(Unfav)

2009

2010

Fav/(Unfav)

Results of Operations:

Revenues

$                  153

$                  170

11%

$                  461

$          456

(1%)

Expenses:

Natural gas

                      22

                      38

(73%)

                      85

              72

15%

Operation and maintenance

                      47

                      42

11%

                    123

            112

9%

Depreciation and amortization

                      12

                      13

(8%)

                      36

              39

(8%)

Taxes other than income taxes

                        8

                        9

(13%)

                      23

              26

(13%)

Total

                      89

                    102

(15%)

                    267

            249

7%

Operating Income

$                    64

$                    68

6%

$                  194

$          207

7%

Pipelines Operating Data:

Throughput data in BCF

Transportation

                    378

                    422

12%

                 1,235

         1,260

2%

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

Nine Months Ended

September 30,

% Diff

September 30,

% Diff

2009

2010

Fav/(Unfav)

2009

2010

Fav/(Unfav)

Results of Operations:

Revenues

$                    63

$                    94

49%

$                  176

$          242

38%

Expenses:

Natural gas

18

19

(6%)

36

53

(47%)

Operation and maintenance

17

29

(71%)

54

75

(39%)

Depreciation and amortization

4

6

(50%)

11

17

(55%)

Taxes other than income taxes

1

-

-

3

3

-

Total

40

54

(35%)

104

148

(42%)

Operating Income

$                    23

$                    40

74%

$                    72

$            94

31%

Field Services Operating Data:

Throughput data in BCF

Gathering

106

180

70%

312

464

49%

Other Operations

Quarter Ended

Nine Months Ended

September 30,

% Diff

September 30,

% Diff

2009

2010

Fav/(Unfav)

2009

2010

Fav/(Unfav)

Results of Operations:

Revenues

$                      3

$                      3

-

$                      9

$              9

-

Expenses

(2)

(1)

(50%)

5

1

80%

Operating Income

$                      5

$                      4

(20%)

$                      4

$              8

100%

Capital Expenditures by Segment

(Millions of Dollars)

(Unaudited)

Quarter Ended

Nine Months Ended

September 30,

September 30,

2009

2010

2009

2010

Capital Expenditures by Segment

Electric Transmission & Distribution

$                    99

$                  121

$                  288

$          317

Hurricane Ike

8

-

26

-

Total Electric Transmission & Distribution

107

121

314

317

Natural Gas Distribution

44

54

121

128

Competitive Natural Gas Sales and Services

1

1

2

2

Interstate Pipelines

44

31

118

71

Field Services

113

131

217

472

Other Operations

9

8

18

15

Total

$                  318

$                  346

$                  790

$       1,005

(Millions of Dollars)

(Unaudited)

Quarter Ended

Nine Months Ended

September 30,

September 30,

2009

2010

2009

2010

Interest Expense Detail

Amortization of Deferred Financing Cost

$                      9

$                      6

$                    27

$            18

Capitalization of Interest Cost

(1)

(2)

(4)

(5)

Transition and System Restoration Bond Interest Expense

32

34

98

106

Other Interest Expense

118

117

361

351

Total Interest Expense

$                  158

$                  155

$                  482

$          470

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,

September 30,

2009

2010

                                       ASSETS

Current Assets:

 Cash and cash equivalents

$                     740

$                          99

 Other current assets

2,164

2,044

     Total current assets

2,904

2,143

Property, Plant and Equipment, net

10,788

11,420

Other Assets:

 Goodwill

1,696

1,696

 Regulatory assets

3,677

3,444

 Other non-current assets

708

696

     Total other assets

6,081

5,836

       Total Assets

$                19,773

$                   19,399

                        LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

 Short-term borrowings

$                       55

$                          73

 Current portion of transition and system restoration bonds long-term debt

241

283

 Current portion of indexed debt

121

125

 Current portion of other long-term debt

541

570

 Other current liabilities

2,080

1,830

     Total current liabilities

3,038

2,881

Other Liabilities:

 Accumulated deferred income taxes, net and investment tax credit

2,792

2,850

 Regulatory liabilities

921

978

 Other non-current liabilities

1,264

1,294

     Total other liabilities

4,977

5,122

Long-term Debt:

 Transition and system restoration bonds

2,805

2,522

 Other

6,314

5,745

     Total long-term debt

9,119

8,267

Shareholders' Equity

2,639

3,129

     Total Liabilities and Shareholders' Equity

$                19,773

$                   19,399

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)

Nine Months Ended September 30,

2009

2010

Cash Flows from Operating Activities:

 Net income

$                      267

$                      318

 Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

591

681

Deferred income taxes

250

112

Write-down of natural gas inventory

6

6

Changes in net regulatory assets

19

23

Changes in other assets and liabilities

296

(170)

Other, net

8

13

Net Cash Provided by Operating Activities

1,437

983

Net Cash Used in Investing Activities

(582)

(1,014)

Net Cash Used in Financing Activities

(961)

(610)

Net Decrease in Cash and Cash Equivalents

(106)

(641)

Cash and Cash Equivalents at Beginning of Period

167

740

Cash and Cash Equivalents at End of Period

$                        61

$                        99

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.



RELATED LINKS

http://www.centerpointenergy.com