Ameren Corporation (AEE)

AEE 
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Ameren Corporation (AEE)

Q3 2011 Earnings Call

November 4, 2011 10:00 AM ET

Executives

Douglas Fischer – Director, IR

Thomas Voss – Chairman and CEO

Martin Lyons – SVP and CFO

Scott Cisel – President and CEO, Ameren Illinois

Warner Baxter – President and CEO, AmerenUE

Analysts

Scott Senchak – Decade Capital

Michael Lapides – Goldman Sachs

Erica Piserchia – Wunderlich Securities

Paul Patterson – Glenrock Associates

David Paz – Bank of America Merrill Lynch

Julien Dumoulin-Smith – UBS

Greg Gordon – ISI Group

Ashar Khan – Visium

Presentation

Operator

Greetings, and welcome to the Ameren Corporation Third Quarter Earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentations. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, 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 Ameren’s 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 webcast – website at www.ameren.com. This call contains time-sensitive data that is accurate only as of the date of today’s live call. 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 section in our filings with the SEC.

Tom will begin this call with a brief overview of third quarter 2011 earnings and updated 2011 guidance, followed by discussion of recent business and regulatory developments. Marty will follow with more detailed discussions of third quarter 2011 financial results and guidance, as well as updates on regulatory and other 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 strong third quarter 2011 core earnings of $1.57 per share, compared to third quarter 2010 core earnings of $1.40 per share. The increase in three quarter 2011 core earnings compared to third quarter 2010 core earnings reflected Illinois and Missouri electric rate increases and lower non-fuel operations and maintenance expenses as a result of continued cost discipline. Improvement in earnings was also due to lower interest expense driven by debt reduction and also weather that was slightly warmer than that of the year ago quarter. These positive factors were partially offset by reduced margins in the merchant generation segment due to lower realized power prices and higher fuel and transportation related expenses.

While temperate in the third quarter of 2011 were not significantly different than those experienced in the third quarter of 2010, they were much warmer than normal. Before I move on to discussion of earnings guidance, I would like to comment on our operating performance during the third quarter of 2011. I’m proud to report that our energy centers performed exceptionally well during the summer months.

Equivalent availability at our base load energy centers was a strong 94% and the net capacity factor was a strong 84% in the third quarter of 2011. This performance included our Callaway nuclear energy center which operated continuously from its last refueling which ended in June of 2010 until the beginning of its current refueling in mid October 2011, a period of 489 days. This was the facility’s second longest breaker-to-breaker run since it began operating in 1984.

Turning to page 4, reflecting our strong third quarter earnings, today we’re raising our 2011 core earnings guidance range to $2.50 to $2.60 per share up from our prior range of $2.30 to $2.55 per share.

Martin will provide further details regarding our third quarter 2011 earnings and 2011 guidance later in this call.

Moving to page five, we now expect 2011 positive free cash flow to reach approximately $325 million, an increase of $100 billion from the estimate we provided on our second quarter conference call. We have been using our free cash flow to reduce outstanding borrowings. This has included not only the June 2011 maturity of $150 million of Ameren Illinois Company long-term debt but also a significant amount of short-term debt. In fact at September 30, 2011, cash and equivalents exceeded short-term debt and we expect this also be the case at year end. These reductions in debt contributed to a common equity ratio that stood at a solid 53.9% of total capitalization at the end of the third quarter.

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