Ameren Corporation (AEE)

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Ameren Corporation (AEE)

Q3 2010 Earnings Call Transcript

October 29, 2010 10:00 am ET

Executives

Douglas Fischer – IR

Tom Voss – Chairman, President and CEO

Marty Lyons – SVP and CFO

Analysts

Gregg Orrill – Barclays Capital

Julien Dumoulin-Smith – UBS

Jeff Coviello – Duquesne Capital

Dan Jenkins – State of Wisconsin Investment Board

Steven Gambuzza – Longbow Capital Partners

Greg Reiss – Catapult Capital Management

David Katz – Bank of America-Merrill Lynch

Michael Lapides – Goldman Sachs

Presentation

Operator

Greetings and welcome to the Ameren Corporation’s third quarter 2010 earnings conference 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, Douglas Fischer, Director of Investor Relations for Ameren Corporation. Thank you, Mr. Fischer. You may begin.

Douglas 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. The 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 pages 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 page two 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 and described in the forward-looking statements.

For additional information concerning these factors, please read the Forward-Looking Statement 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 third quarter results and our updated 2010 core earnings guidance, followed by a discussion of recent business developments. Marty will follow with a more detailed discussion of third quarter financial results, our 2010 guidance and regulatory and financial matters. We will then open the call for questions.

Here is Tom, who will start on page three of the presentation.

Tom Voss

Thanks, Doug. Good morning and thank you for joining us. I am pleased to report that third quarter 2010 core earnings were $1.40 per share, a $0.24 per share increase over third quarter 2009 core earnings.

These strong results driven by warm weather and a continued focus on cost control raised our expectations for full year 2010 core earnings. Our GAAP results for the third quarter of 2010 included after-tax non-cash charges of $522 million or $2.19 per share related to goodwill and other asset impairments associated with the Ameren’s Merchant Generation operations.

These charges did not impact the company’s liquidity position and have been excluded from core earnings. Key drivers of the increase in our third quarter core earnings included a 16% increase in kilowatt hour sales of electricity to native load utility customers compared to the third quarter of 2009.

Sales to residential customers rose 28%, and sales to commercial customers rose 11%, reflecting warmer weather as well as underlying growth. The improving economy also contributed to the 18% increase in kilowatt-hour sales to industrial customers.

A significant portion of this 18% increase was due to the return to full capacity in March 2010 of our Missouri utility’s largest electric customer, the Noranda Aluminum smelter plant. However, even after excluding Noranda’s contribution, industrial sales rose 10% at our regulated utilities. New utilities rates and lower financing expenses also contributed to the earnings improvement.

Our year-over-year results reflect continued disciplined cost management and strong operating performance across all of our business segments. I am pleased to report that our power plants performed well during the hot weather of the third quarter.

Our coal and nuclear units were available for service 90% of the time, equaling the solid availability achieved in the prior year quarter. The favorable impact of these factors on the third quarter earnings comparison was mitigated by an expected reduction in Merchant Generation segment margins. Lower realized power prices and higher fuel and related transportation costs contributed to this decrease.

Turning to page four, I am pleased to announce that for the second quarter in a row, we have our raised our 2010 core earnings guidance reflecting strong year-to-date core earnings. We now expect core earnings to be in the range of $2.60 to $2.80 per share, an increase from our prior guidance range of $2.50 to $2.80 per share.

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