) reported stable second quarter 2012 results. During the quarter,
pro forma earnings per share were 73 cents, beating the Zacks
Consensus Estimate of 60 cents. Pro forma earnings were also higher
than the year-ago figure of 59 cents.
The increase in year-over-year results reflect increased
earnings from regulated utility operations partially offset by
decreased earnings from merchant generation operations.
During the quarter, GAAP earnings per share were 87 cents compared
with earnings per share of 57 cents in the year-ago period.
The significant variation of 14 cents per share between GAAP and
pro forma earnings was due to the reduction of tax benefit of 18
cents and a 4 cents loss on net unrealized mark-to-market activity.
In the reported quarter, net revenues declined 6.8% to $1.7 billion
in-line versus the Zacks Consensus Estimate. Revenue from Electric
sales was down 6.3% year over year to $1.5 billion, while revenue
from Gas declined 12% year over year to $147 million.
Ameren Missouri: During the quarter, the segment reported GAAP and
pro forma earnings of $143 million, compared to $90 million in the
year-ago period. The increase in earnings reflected a favorable
Federal Energy Regulatory Commission (FERC) order related to a
disputed power purchase agreement; the absence of a charge related
to the fuel adjustment clause; and new electric rates.
Other factors having a favorable effect on second quarter 2012
earnings included an increase in kilowatthour sales to native load
customers due to warmer temperatures, and reduced storm-related
costs. The positive effects of the above factors were partially
offset by increased depreciation and amortization expense.
Ameren Illinois: During the quarter, the segment reported GAAP
earnings of $32 million, compared to earnings of $37 million in the
year-ago period. Pro forma earnings were $33 million, compared to
year-ago earnings of $37 million. The decrease in pro forma
earnings in the second quarter of 2012 reflected increased
reliability spending, excluding storm-related costs, and higher
The negative effects of the above factors were partially offset
by new natural gas delivery rates effective in January 2012, an
increase in kilowatt-hour sales due to warmer temperatures, and
lower financing costs. The GAAP earnings comparison was affected by
the factors mentioned above and by a $1 million loss from net
unrealized mark-to-market activity in the second quarter of 2012.
Merchant Generation: The segment digested GAAP losses of $5
million, compared to second quarter 2011 GAAP earnings of $15
million. Pro forma losses for the second quarter of 2012 were $2
million, compared to year-ago earnings of $20 million. The variance
in pro forma performance reflected lower market prices for
This negative factor was partially offset by reduced plant
maintenance costs and depreciation expenses. The GAAP earnings
comparison was affected by the factors mentioned above and by a
second quarter 2012 non-cash income tax benefit.
At the end of June 30, 2012, Ameren reported cash and cash
equivalents of $117 million compared with $378 million in the
year-ago period. As of June 30, 2012, long-term debt, net remained
flat at $6.7 billion versus year-end 2011.
During the first half of 2012, net cash provided by operating
activities was $805 million compared with $899 million at the end
of the year-ago period. Capital expenditure in the first half of
2012 was $565 million, up from $507 million the comparable year-ago
Ameren raised its pro forma earnings guidance range for full-year
2012 to a range of $2.25 - $2.55 per share, compared to the prior
range of $2.20 - $2.50 per share. GAAP earnings are now expected to
be in the range of $0.70 - $1.00 per share, compared to the prior
range of $0.65 - $0.95 per share.
Ameren's stable and regulated electric power operations in the
Midwest generate a relatively stable and growing earnings stream.
We expect future growth to be driven by improved plant operations,
focus on cost management, rate relief and installation of emissions
reduction equipment (scrubbers) at its generation plants.
However, the company is negatively impacted by the impairment
charges related to Ameren Energy Resources Generating Company's
Duck Creek Energy Center.
Also, its predominantly coal-based generation assets and pending
regulatory cases are a matter of concern. The company presently
retains a short-term Zacks #3 Rank (Hold) that corresponds with our
long-term Neutral recommendation on the stock. This is in-line with
St. Louis-based Ameren Corporation is a holding company which
engages in the generation and distribution of electricity and
natural gas and serves residential, commercial, industrial and
wholesale end-markets in Missouri and Illinois.
With a generating capacity of 15,900 megawatts, the company,
through its subsidiaries, serves 2.4 million electric customers and
more than 0.9 million natural gas customers in a 64,000-square-mile
AMEREN CORP (AEE): Free Stock Analysis Report
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