Ameren Corporation (AEE)

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Ameren Corporation (AEE)

Q2 2010 Earnings Call Transcript

August 5, 2010 10:00 am ET

Executives

Doug Fischer – Director, IR

Tom Voss – Chairman, President and CEO

Marty Lyons – SVP and CFO

Maureen Borkowski – President & CEO, Ameren Transmission Company

Analysts

Julien Dumoulin-Smith – UBS

Neil Kalton – Wells Fargo Securities

Gregg Orrill – Barclays Capital

Presentation

Operator

Greetings and welcome to the Ameren Corporation’s second quarter earnings call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded.

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

Doug Fischer

Thank you and good morning. I am Doug Fischer, Director of Investor Relations for Ameren Corporation. On the call with me today are our Chairman, President, and Chief Executive Officer, Tom Voss; our Senior Vice President and Chief Financial Officer, Marty Lyons; and 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 playback number. The announcement you received in our news release include instructions for 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 Web site at 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 with our call this morning, we have posted presentation slides on our Web site to which we will refer during this call. To access this presentation, please look in the Investors section of our Web site under ‘Webcasts and Presentations’ and follow the appropriate link.

Turning to slide number two of the presentation, I need to inform you that comments made on this 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 and described in the forward-looking statements.

For additional information concerning these factors, we ask you to read the Forward-Looking Statement section in the news release we issued today and the Forward-Looking Statements and Risk Factors section in our periodic filings with the SEC.

Tom will begin this call with an overview of second quarter earnings and our increased 2010 earnings guidance, followed by a discussion of recent business developments. Marty will follow with a more detailed discussion of our second quarter financial results, our 2010 earnings guidance and regulatory and financial matters. We will then open the call for questions.

Here is Tom, who will start on slide number 3 of the presentation.

Tom Voss

Thanks, Doug. Good morning and thank you for joining us. Second quarter 2010 non-GAAP or core earnings were $0.73 per share compared to the second quarter 2009 core earnings of $0.75 per share. These results exceeded our expectations and reflect strong electricity sales and disciplined management of our cost.

Key positive earning drivers included a 9% increase in sales electricity to native load utility customers in the second quarter of 2010 compared to the second quarter of 2009. The higher sales partly reflected a recovering economy. This was evident in the 26% increase in kilowatt-hour sales to industrial customers.

A significant portion of this 26% increase was due to the return to full capacity in March 2010 of the Noranda aluminum smelter plant, our Missouri utility’s largest customer. Even after excluding Noranda’s contribution, industrial sales rose 17% at our regulated utilities driven by strong growth in Illinois.

Sales to residential customers rose 4% and sales to commercial customers rose 1%. These increases were driven in large part by early summer weather that was both warmer than that experienced in the second quarter of 2009 and warmer than normal.

In addition to strong sales, our year-over-year results benefited from disciplined cost management across all of our business segments. These cost containment efforts more than offset additional expenses from this spring’s refueling and maintenance outage at the Callaway nuclear plant. You’ll recall that the Callaway plant did not have a refueling outage in 2009.

The impact of these positive factors on the second quarter earnings comparison was offset by the expected reduction in margins at our Merchant Generation segment. That reduction was a result of lower realized power prices and higher fuel and related transportation costs.

Turning to slide number 4, I am very pleased to report that we have raised our 2010 GAAP and core earnings guidance to reflect strong year-to-date earnings and continued expected disciplined cost management. We now expect GAAP and core earnings to be in the range of $2.50 per share to $2.80 per share, an increase from our prior guidance range of $2.20 per share to $2.60 per share. Marty will provide further details on our second-quarter earnings and our 2010 guidance.

However, before moving on, I would like to emphasize that our year-to-date performance and ability to raise our 2010 guidance reflects our management team’s commitment to improving earned returns in our regulated businesses.

Further, we continue to aggressively manage the cost of our Merchant Generation business, so that it remains well positioned to weather current low power prices and benefit from an expected power price recovery. We will not lose focus on these objectives. At the same time, we will not lose focus on operating safely and reliably.

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