Ameren Corporation (AEE)

AEE 
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Ameren (AEE)

Q4 2012 Earnings Call

February 20, 2013 10:00 am ET

Executives

Douglas Fischer

Thomas R. Voss - Chairman, Chief Executive Officer and President

Martin J. Lyons - Chief Financial Officer and Executive Vice President

Analysts

Stephen Byrd - Morgan Stanley, Research Division

Paul Patterson - Glenrock Associates LLC

Ashar Khan

Julien Dumoulin-Smith - UBS Investment Bank, Research Division

Michael J. Lapides - Goldman Sachs Group Inc., Research Division

Scott Senchak

Joseph DeSapri - Morningstar Inc., Research Division

Dan Jenkins

Terran Miller

Phillip Pennell

Presentation

Operator

Greetings, and welcome to the Ameren Corporation's Fourth Quarter 2012 Earnings Conference. [Operator Instructions] As a reminder, this conference

is| being recorded. It is now my pleasure to introduce your host, Doug Fischer, Director of IR for Ameren Corporation. Thank you, Mr. Fischer. You may begin.

Douglas Fischer

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

Before we begin, let me cover a few administrative details. This call is being broadcast live on the Internet, and the webcast will be available for 1 year on our website at ameren.com. Further, this call contains time-sensitive data that is accurate only as of the date of today's live broadcast, and redistribution of this broadcast is prohibited. To assist with our call this morning, we have posted a presentation on our website that will be referenced by our speakers. To access this presentation, please look in the Investors Section of our website under Webcast and Presentations and follow the appropriate link.

Turning to Page 2 of the presentation, I need to inform you that comments made during 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. For additional information concerning these factors, please read the Forward-looking Statements section in the news release we issued today and the Forward-looking Statements and Risk Factors section in our filings with the SEC.

Tom will begin this call with an overview of 2012 results and 2013 guidance, followed by a discussion of recent regulatory and business developments. Marty will follow with more detailed discussions of 2012 financial results, 2013 guidance and regulatory and other financial matters. We will then open the call for questions.

Before I turn the call over to Tom, I would like to mention that we are now using the term "adjusted" to designate our non-GAAP earnings rather than our former term of "core." Let me be clear that we have not modified our approach as to how we calculate and present non-GAAP earnings. Only the designation has changed.

With that housekeeping out of the way, here's Tom, who will start on Page 3 of the presentation.

Thomas R. Voss

Thanks, Doug. Good morning, and thank you for joining us. Today, we announced 2012 adjusted earnings of $2.42 per share, in line with both our narrowed November 2012 and our initial year-ago guidance ranges. This is a decline from 2011 adjusted earnings of $2.56 per share, reflecting lower earnings from our merchant generation business.

2012 adjusted earnings from our rate-regulated utilities were $2.29 per share, equal to the level achieved in 2011, reflecting on the positive side of a full year of the 2011 Missouri electric rate increase and the absence of a Callaway refueling outage in 2012. These positive factors were offset by reduced Illinois electric delivery earnings, reflecting a lower allowed return on equity resulting from low treasury bond yields and required non-recoverable program donations related to 2012 implementation of formula ratemaking. The regulated utility earnings comparison was also impacted by the negative effect of warmer 2012 winter weather on electric and gas sales volumes.

Merchant generation adjusted 2012 earnings were $0.17 per share, a decline of $0.13 per share compared to 2011, primarily due to lower power prices and higher fuel costs. On December 20 of last year, we announced that we intend to exit our merchant generation business. As a result of this decision, we stated that Ameren expected to take a fourth quarter 2012 charge against earnings to reduce the carrying value of our merchant generation business's energy centers.

The 2012 GAAP loss of $4.01 per share, which we announced today, included both this fourth quarter charge and a first quarter charge related to the merchant generation business. Together, these non-cash impairment charges totaled $6.42 per share. Marty will provide more details on our earnings in a few minutes.

Moving to Page 4, I would like to highlight some key 2012 accomplishments. I am pleased to report that we posted our best safety performance in company history as measured by work -- lost workday away accidents. Further, our utilities recorded their best electric distribution system reliability performance in our history. In addition, Ameren Missouri's Callaway Nuclear Energy Center performed exceptionally well in 2012, running continuously since its November 2011 refueling.

We also had several notable regulatory accomplishments last year. We obtained FERC approval for constructive rate treatment of Ameren Transmission Company of Illinois' Spoon River and Mark Twain projects, greenfield regional projects expected to enter service in 2018 and forward-looking ratemaking for Ameren Illinois' electric transmission business. Ameren Missouri received a needed electric rate increase in December of last year, with new rates that became effective in January of 2013, and our merchant generation business won unanimous approval from the Illinois Pollution Control Board for a variance to the Illinois Multi-Pollutant Standard, allowing all of its currently operating energy centers to continue operating through 2019 without derates or shutdowns due to state sulfur dioxide limitations.

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