Calpine Posts Weak Q2 Earnings - Analyst Blog

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Calpine Corporation ( CPN ) posted an adjusted loss of 7 cents per share for the second quarter of 2013 as against the Zacks Consensus Estimate as well as the year-ago figure of earnings of 8 cents and 3 cents per share, respectively. The decline in its adjusted results was due to lower commodity margins owing to the changes in the company's portfolio, milder weather and lower power generation.

On a GAAP basis, the utility posted a loss of $70 million, or 16 cents per share, for the quarter ended Jun 30, compared with a loss of $329 million, or 69 cents per share, a year earlier.

Operational Performance

Quarterly revenue at Calpine was $1,572 million, higher than the Zacks Consensus Estimate of $969.0 million by 62.2%. The reported figure was also ahead of the year-ago number of $879.0 million.

In the quarter under review, fuel and purchased energy expense was $1,000.0 million, up 62.9% year over year. Total operating expenses were $1,458.0 million, up 35.4% year over year.

In the reported quarter, commodity margin was $533.0 million, down 12.5% year over year. Adjusted earnings before interest tax, depreciation and amortization (EBITDA) were $343.0 million, down 14.9% year over year.

Quarterly Segment Performance

Commodity margin in the West Region was $198 million, down 12% year over year due to lower contribution from hedges, partially offset by higher revenue from a tolling contract and higher market spark spreads on higher generation volumes.

Commodity margin in the Texas Region was $133.0 million, down 8.3% year over year due to lower spark spreads from milder weather and an increase in wind generation and lower generation output resulting from a reversal of coal-to-gas switching due to higher natural gas prices.

Commodity margin in the North Region was $159.0 million, down 22% year over year driven by the sale of Riverside Energy Center in December last year and lower spark spreads and lower generation output resulting from a reversal of coal-to-gas switching due to higher natural gas prices.

Commodity margin in the Southeast Region was $43.0 million, down 30% year over year due to the sale of Broad River Energy Center last year and lower spark spreads and lower generation output resulting from milder weather and a reversal of coal-to-gas switching due to higher natural gas prices.

Financial Update

Cash and cash equivalents at the end of Jun 30, 2013 were $715.0 million versus $1,284.0 million at the end of Dec 31, 2012. Debt, net was $11,020 million, up from $10,750 million at the end of Dec 2012.

In Feb 2013, the company announced a share repurchase program worth $400 million, bringing the cumulative authorization value to $1 billion. Over the course of its $1.0 billion share repurchase program, Calpine has repurchased over 55 million shares of its outstanding common stock at an average price of $18.18 per share.

Guidance

For full year 2013, the company expects adjusted EBITDA in the range of $1,800.0 million to $1,875.0 million. It expects growth capital expenditures to be $250 million.

Zacks Rank

The company presently retains a short-term Zacks Rank #2 (Buy). Other stocks to consider are Companhia Paranaense de Energia ( ELP ), Integrys Energy Group, Inc. ( TEG ) and NV Energy, Inc. ( NVE ), all with a Zacks Rank #1 (Strong Buy).



CALPINE CORP (CPN): Free Stock Analysis Report

COPEL-ADR PR B (ELP): Free Stock Analysis Report

NV ENERGY INC (NVE): Free Stock Analysis Report

INTEGRYS ENERGY (TEG): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CPN , ELP , NVE , TEG

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