UPDATE: Dynegy Swings To 3Q Loss, But Beats Market Expectations
(Updates with details from conference call, recent share price, adds
background)
By Mark Peters
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Dynegy Inc. (DYN) swung to a loss in the third quarter
Thursday, but beat market expectations and raised earnings guidance for the
year, sending shares higher.
Dynegy raised and tightened its outlook for adjusted, non-GAAP earnings for
2009 to $730 million to $760 million from $680 million to $740 million, while
reaffirming its 2010 guidance. Shares of Dynegy climbed in recent trading 9.6%
to $2.05.
Dynegy and other independent power producers, which rely on wholesale
electricity sales at market rates, have been hurt by dropping commodities
prices. Power prices in many markets track natural-gas prices, which fell to
multi-year lows during the quarter before rebounding slightly in recent weeks.
Dynegy is selling power plants and cutting back development to cope with the
economic downturn.
Dynegy executives said during the quarter the company benefited from owning
both natural gas-fired plants and coal-fired plants, as the higher usage of gas
plants helped offset volume declines at coal plants. The company's plants were
hit by lower demand because of cooler summer weather. In the Midwest, increased
use of wind generation during off-peak hours cut into sales as well. Overall
volumes, however, were only slightly down, and earnings benefited from the early
exit of a multi-year power contract.
"While Dynegy’s third quarter financial results continued to be impacted
by the overall weakness in U.S. energy prices, we again demonstrated the
benefits of having a diverse, well-operated fleet of power generation assets,"
said Bruce Williamson, Dynegy's chairman and chief executive.
The company reported a third-quarter loss of $212 million, or 25 cents a
share, compared with a year-earlier profit of $605 million, or 72 cents. The
latest results included charges of $128 million related to asset impairments
from the pending sale of plants to LS Power Associates L.P. and mark-to-market
losses. The previous year's quarter included mark-to-market gains of $889
million.
The company posted earnings before interest, taxes, depreciation and
amortization, known as Ebitda, of $388 million compared to $269 million a year
ago. Revenue fell 62% to $673 million. Analysts polled by Thomson Reuters had
expected Ebitda of $250.1 million and sales of $878 million.
Dynegy widened its 2009 GAAP loss forecast to $1.1 billion to $1.2 billion
from $955 million to $975 million as it also said it expects red ink of $175
million to $250 million next year.
The company said it plans to close the sale of nine U.S. power plants to one-
time development partner LS Power in the fourth quarter. Dynegy will receive an
estimated $1.03 billion and 245 million Class B common shares in the deal. The
company said it plans use an estimated $800 million in cash from the deal to
retire near-term debt obligations.
-By Mark Peters, Dow Jones Newswires; 212-416-2457; mark.peters@dowjones.com;
(Nathan Becker in New York contributed to this article.)
(END) Dow Jones Newswires
11-05-091139ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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