Ameren Corporation (AEE)

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Ameren Corporation (AEE)

Q4 2009 Earnings Call Transcript

February 18, 2010 10:00 am ET

Executives

Douglas Fischer – Director, IR

Tom Voss – President and CEO

Martin Lyons – SVP and CFO

Charles Naslund – Chairman, President and CEO, Ameren Energy Resources; Chairman and President, AmerenEnergy Generating Company

Warner Baxter – President and CEO, AmerenUE

Analysts

Paul Patterson – Glenrock Associates

Reza Hatefi – Decade Capital Management

Carl Seligson – Utility Financial Experts

Yiktat Fung – Zimmer Lucas

Dan Jenkins – State of Wisconsin Investment Board

Billy Hagstrom – Catapult Capital

Michael Lapides – Goldman Sachs

Steve Gambuzza – Longbow Capital

Presentation

Operator

Greetings and welcome to the Ameren Corporation’s fourth quarter and year-end call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator instructions). As a reminder this conference is being recorded.

It is now my pleasure to introduce your host Mr. Douglas Fischer, Director of Investor Relations for Ameren Corporation. Thank you Mr. Fischer, you may begin.

Douglas Fischer

Thank you, and good morning. I'm Doug Fischer, Director of Investor Relations for Ameren Corporation. On the call with me today are our President and Chief Executive Officer, Tom Voss; and our Senior Vice President and Chief Financial Officer, Marty Lyons, as well as other members of the Ameren management team.

Before we begin, let me cover a few administrative details. This call will be available by telephone for one week to anyone who wishes to hear it by dialing a callback number. The announcement you received in our news release contain instructions on replaying the call by telephone. This call is also being broadcast live on the Internet and the webcast will be available for one year on our website www.ameren.com.

This call contains time sensitive data that is accurate only as of the date of today's live broadcast. Redistribution of this broadcast is prohibited. To assist in our call this morning, we have posted presentation slides on our website that we will refer to during this call. To access this presentation, please look in the investors' section of our website under webcast and presentations and follow the appropriate link.

Turning to slide two of our presentation, I need to let you know that comments made in this conference call may contain statements that are commonly referred to as forward-looking statements. Such statements include those about future expectations, beliefs, plans, strategies, objectives, events, conditions and financial performance.

We caution you that various factors could cause actual results to differ materially from those anticipated in the forward-looking statements. For additional information concerning these factors, we ask you to read the forward-looking statements section in the news release we issued today and the forward-looking statements and risk factors sections in our periodic filings with the SEC.

Tom will begin this call with an overview of 2009 earnings and 2010 earnings guidance followed by a business and regulatory update. Marty will follow with a more detailed discussion of our 2009 financial results, our 2010 earnings guidance and a financial update. We will then open the call up for questions. Here is Tom.

Tom Voss

Thanks, Doug. Good morning and thank you for joining us. Moving to slide three of the presentation posted on our website, I'm pleased to report that 2009 non-GAAP or core earnings were $2.79 per share in line with our expectation. Key drivers favorably affecting 2009 core earnings per share compared to 2008 results included new utility service rates in Illinois and Missouri, and lower operations and maintenance expenses.

These lower expenses were due in part to the absence in 2009 of the refueling outage at the Callaway nuclear plant, and proactive cost-cutting efforts across all of our businesses. These positive factors were more than offset by lower electricity and natural gas sales in our regulated utility businesses as a result of weak economic conditions in the Noranda outage and milder 2009 weather.

Merchant Generation margins were also hurt by higher fuel costs and less generation being in the money. Higher depreciation and interest expense and an increased average number of common shares outstanding further affected comparative results.

Turning to slide four today, we also announced 2010 GAAP and core earnings guidance of $2.20 to $2.60 per share. The expected decline in 2010 earnings from 2009 primarily reflects the lower projected Merchant Generation segment margins and earnings. While earnings of our regulated utilities are expected to improve, regulatory ladies and gentlemen is anticipated to result in earnings lower than those authorized by state commissions.

Marty will provide further details on our 2009 earnings and 2010 guidance in his remarks. But before I turn the call over to him, I would like to provide a business and regulatory update.

Looking now at slide five, electricity sale at our regulated utilities it is clear that the economy drove our sales down in 2009. While 2009 was indeed a difficult year, there are signs that the weak economy has hit bottom in our regions. In a positive sales development, the Noranda Aluminum smelter plant has continued to add to its load as the plant now starts returning to full capacity. You may recall that Noranda’s New Madrid, Missouri, smelter plant, AmerenUE’s largest customer sustained damage because of a power interruption on non-Ameren owned power lines during a severe ice storm in January 2009.

As a result, the smelter’s load was sharply reduced, but has been rising steadily as repairs have been made to their production lines with full production expected to be reached early in the second quarter of this year. In Illinois, our industrial sales are expected to benefit significantly from the expansion of an oil refinery and the resumption of higher levels of operations at several other facilities. While increased industrial sales in Illinois will not significantly contribute to margins, the health of local businesses is certainly a key to the prosperity of all of our customers.

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