Ameren Corporation (AEE)

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Ameren Corporation (AEE)

Q2 2011 Earnings Call

August 4, 2011 10:00 AM ET


Douglas Fischer – Director, IR

Thomas Voss – Chairman, President and CEO

Martin Lyons – SVP, Principal Accounting Officer, and CFO

Warner Baxter – President and CEO, Ameren Services and CFO, Ameren Corp.


Julien Dumoulin-Smith – UBS

David Paz – Banc of America Merill Lynch

Erica Piserchia – Wunderlich Securities

Paul Patterson – Glenrock Associates

Robert Howard – Prospector Partners

Michael Lapides – Goldman Sachs



Greetings, and welcome to the Ameren Corporation Second Quarter Earnings. At this time, all participants are in a listen-only mode. A brief 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 IR for Ameren Corporation. Thank you, Mr. Fischer. You may now 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 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.

The call is also being broadcast live on the Internet, and the webcast will be available for one year on our website at 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 a presentation on our website to which we will refer during this call. To access this presentation, please look in the Investors section of our website 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 filings with the SEC.

Tom will begin this call with a brief overview of second quarter 2011 earnings and updated 2011 guidance, followed by a discussion of recent regulatory and other business developments. Marty will follow with more detailed discussions of second quarter 2011 financial results and guidance, as well as regulatory and financial matters. We will then open the call for questions.

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

Thomas Voss

Thanks, Doug. Good morning, and thank you for joining us. Today we announced second quarter 2011 core earnings of $0.59 per share, compared to second quarter 2010 core earnings of $0.73 per share. These results were on track with our expectations.

The decline in second quarter 2011 earnings, compared to second quarter 2010 earnings reflected a 4% decrease in kilowatt hour sales to regulated utility native load customers. The lower sales were due in part to milder temperatures through June.

Second quarter 2011 earnings also included a charge to earnings resulting from an April 2011 Missouri Public Service Commission order associated with our fuel adjustment clause or FAC.

You will remember from our first quarter call that a PSC order required the net margins associated with certain long-term, partial requirement sales included in the FAC calculation and, therefore, be credited to customers.

Other factors reducing second quarter 2011 earnings included increased storm-related expenses, higher property taxes as well as our higher effective income tax rate. Factors that favorably contributed second quarter 2011 earnings compared to second quarter 2010, included rate increases, the absence of a nuclear refueling and maintenance outage at our Callaway energy center and lower interest expense.

Turning to page four. We were challenged by an unusually large number of storms in the first half of this year but in every instance, in Illinois and in Missouri our employees responded aggressively and effectively to quickly and safely restore service and meet our customer’s expectations. Our management team also took action during the quarter to align client spending with business conditions.

Further while we estimate that about half of the second quarter 2011 decline in electric sales to native load customers compared to the second quarter of 2010 was due to milder weather, economic conditions and customer’s conservation efforts have also impacted sales.

As a result of our first half sales trends we have lowered our weather normalized sales growth expectations for the remainder of the year. To offset these reduced sales expectations we have reduced our spending plans.

In addition we are taking actions to better align our overall spending with rate orders and related regulatory policies. As a result today we’re able to essentially reaffirm our 2011 core earnings guidance with a narrow range of $2.30 to $2.55 per share. This narrowed guidance incorporates the impacts of our recently concluded Missouri rate case.

And I would note that this guide also assumes normal weather conditions for the second half of 2011. So far we are on track for a very hot summer. We also remain on track to generate positive free cash flow this year. Marty will provide more details on our earnings and cash flow guidance in a moment.

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