CenterPoint Energy Reports Second Quarter 2008 Earnings
HOUSTON, Aug. 6, 2008 (PRIME NEWSWIRE) — CenterPoint Energy, Inc. (NYSE:CNP) today reported net income of $101 million, or $0.30 per diluted share, for the second quarter of 2008 compared to $70 million, or $0.20 per diluted share, for the same period of 2007.
“I am pleased with the overall performance of our company during the second quarter, particularly in a period of high energy prices,” said David M. McClanahan, president and chief executive officer of CenterPoint Energy. “We continue to see the benefit of our balanced electric and natural gas portfolio. Our utility operations turned in solid performances, and our pipelines and field services businesses continue to benefit from our previous investments and the continuing high levels of drilling activity in the mid-continent area driven by the strong demand for natural gas.”
For the six months ended June 30, 2008, net income was $224 million, or $0.66 per diluted share, compared to $200 million, or $0.58 per diluted share, for the same period of 2007.
OPERATING INCOME BY SEGMENT
Electric Transmission & Distribution
The electric transmission & distribution segment reported operating income of $164 million in the second quarter of 2008, consisting of $129 million from the regulated electric transmission & distribution utility operations (TDU) and $35 million related to transition bonds. Operating income for the second quarter of 2007 was $157 million, consisting of $118 million from the TDU, $10 million from the competition transition charge (CTC), and $29 million related to transition bonds. In February 2008, the company monetized the remaining allowed true-up balance resulting in the discontinuance of the CTC.
Operating income for the TDU for the second quarter of 2008 increased due to warmer weather, continued strong customer growth of nearly 52,000 metered customers since June 2007, higher revenues from ancillary services and a $9 million gain from a land sale, partially offset by higher transmission costs and other operating expenses. Operating income for the second quarter of 2007 included a $17 million favorable settlement related to the final fuel reconciliation of the formerly integrated electric utility.
Operating income for the six months ended June 30, 2008, was $255 million, consisting of $183 million from the TDU, $5 million from the CTC and $67 million related to transition bonds. Operating income for the same period of 2007 was $261 million, consisting of $180 million from the TDU, $21 million from the CTC, and $60 million related to transition bonds.
Natural Gas Distribution
The natural gas distribution segment reported operating income of $4 million for the second quarter of 2008 compared to $8 million for the same period of 2007. The decline was due to higher operating expenses primarily related to bad debts, customer-related costs and support services, partially offset by the benefit of new rates implemented in late 2007, lower employee-related costs and continued customer growth of nearly 34,000 metered customers since June 2007. Due to seasonal impacts, this segment typically reports minimal earnings in the second quarter.
Operating income for the six months ended June 30, 2008, was $125 million compared to $137 million for the same period of 2007.
Interstate Pipelines
The interstate pipelines segment reported operating income of $101 million for the second quarter of 2008 compared to $52 million for the same period of 2007. The increase was driven by increased ancillary services and the Carthage to Perryville pipeline, which went into commercial service in May 2007. In addition, operating income for the second quarter of 2008 included an $18 million gain from the sale of two storage development projects.
Operating income for the six months ended June 30, 2008, was $172 million compared to $96 million for the same period of 2007.
Field Services
The field services segment reported operating income of $32 million for the second quarter of 2008 compared to $27 million for the same period of 2007. Operating income increased from higher throughput, increased ancillary services and higher commodity prices.
In addition to operating income, this business had equity income of $4 million in the second quarter of 2008 compared to $2 million in the second quarter of 2007 from its 50 percent interest in a jointly-owned gas processing plant. These amounts are included in Other – net under the Other Income (Expense) caption.
Operating income for the six months ended June 30, 2008, was $77 million compared to $49 million for the same period of 2007. Equity income from the jointly-owned gas processing plant was $8 million for the six months ended June 30, 2008, compared to $4 million for the same period of 2007.
Competitive Natural Gas Sales and Services
The competitive natural gas sales and services segment reported an operating loss of $5 million for the second quarter of 2008 compared to a loss of $4 million for the same period of 2007. The second quarter of 2008 included charges of $10 million resulting from mark-to-market accounting for derivatives used to lock in economic margins of certain forward natural gas sales compared to mark-to-market charges of $6 million for the same period of 2007. The second quarter of 2007 also included a $5 million write-down of natural gas inventory to the lower of average cost or market.
Operating income for the six months ended June 30, 2008, was $1 million compared to $52 million for the same period of 2007. Approximately $13 million of the decline was due to reduced locational and seasonal price differentials. In addition, the six months ended June 30, 2008 included charges of $32 million resulting from mark-to-market accounting compared to charges of $14 million for the same period of 2007. The six months ended June 30, 2007 also included $6 million in inventory write-downs. Additionally, the six months ended June 30, 2008 included $6 million in gains on sales of gas from inventory compared to $30 million for the same period of 2007.
DIVIDEND DECLARATION
On July 24, 2008, CenterPoint Energy’s board of directors declared a regular quarterly cash dividend of $0.1825 per share of common stock payable on September 10, 2008, to shareholders of record as of the close of business on August 15, 2008.
OUTLOOK FOR 2008
CenterPoint Energy expects diluted earnings per share for 2008 to be in the upper half of its guidance range of $1.15 to $1.25. This guidance takes into consideration performance to date as well as various economic and operational assumptions related to the business segments in which the company operates. The company has made certain assumptions regarding the impact to earnings of various regulatory proceedings but cannot predict the ultimate outcome of any of those proceedings. In providing this guidance, the company has not projected the impact of any changes in accounting standards, any impact from acquisitions or divestitures, the timing effects of mark-to-market or inventory accounting in our competitive natural gas sales and services business or the outcome of the TDU’s true-up appeal.
FILING OF FORM 10-Q FOR CENTERPOINT ENERGY, INC.
Today, CenterPoint Energy, Inc. filed with the Securities and Exchange Commission (SEC) its Quarterly Report on Form 10-Q for the period ended June 30, 2008. A copy of that report is available on the company’s Web site, www.CenterPointEnergy.com, under the Investors section. Other filings the company makes at the SEC and other documents relating to its corporate governance can also be found on that site.
WEBCAST OF EARNINGS CONFERENCE CALL
CenterPoint Energy’s management will host an earnings conference call on Wednesday, August 6, 2008, at 10:30 a.m. Central time or 11:30 a.m. Eastern time. Interested parties may listen to a live audio broadcast of the conference call at www.CenterPointEnergy.com. A replay of the call can be accessed approximately two hours after the completion of the call and will be archived on the Web site for at least one year.
CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution, competitive natural gas sales and services, interstate pipelines and field services operations. The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. Assets total over $17 billion. With about 8,600 employees, CenterPoint Energy and its predecessor companies have been in business for more than 130 years. For more information, visit the Web site at www.CenterPointEnergy.com.
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This news release includes forward-looking statements. Actual events and results may differ materially from those projected. The statements in this news release regarding future financial performance and results of operations and other statements that are not historical facts are forward-looking statements. Factors that could affect actual results include the timing and outcome of appeals from the true-up proceedings, the timing and impact of future regulatory, legislative and IRS decisions, effects of competition, weather variations, changes in CenterPoint Energy’s or its subsidiaries’ business plans, financial market conditions, the timing and extent of changes in commodity prices, particularly natural gas, the impact of unplanned facility outages, and other factors discussed in CenterPoint Energy’s and its subsidiaries’ Form 10-Ks for the period ended December 31, 2007, CenterPoint Energy’s and its subsidiaries’ Form 10-Qs for the period ended March 31, 2008, CenterPoint Energy’s Form 10-Q for the period ended June 30, 2008, and other filings with the SEC.
CenterPoint Energy, Inc. and Subsidiaries Statements of Consolidated Income (Millions of Dollars) (Unaudited) Quarter Ended Six Months June 30, Ended June 30, -------------- -------------- 2007 2008 2007 2008 ------ ------ ------ ------ Revenues: Electric Transmission & Distribution $ 465 $ 510 $ 871 $ 919 Natural Gas Distribution 576 726 2,143 2,426 Competitive Natural Gas Sales and Services 881 1,243 1,945 2,363 Interstate Pipelines 121 192 211 325 Field Services 42 62 81 120 Other Operations 3 2 5 5 Eliminations (55) (65) (117) (125) ------ ------ ------ ------ Total 2,033 2,670 5,139 6,033 ------ ------ ------ ------ Expenses: Natural gas 1,208 1,750 3,358 4,143 Operation and maintenance 330 342 682 707 Depreciation and amortization 160 188 305 346 Taxes other than income taxes 93 93 199 204 ------ ------ ------ ------ Total 1,791 2,373 4,544 5,400 ------ ------ ------ ------ Operating Income 242 297 595 633 ------ ------ ------ ------ Other Income (Expense): Gain (loss) on Time Warner investment 28 17 (16) (37) Gain (loss) on indexed debt securities (27) (17) 14 33 Interest and other finance charges (119) (113) (242) (228) Interest on transition bonds (32) (35) (63) (68) Other - net 6 14 12 27 ------ ------ ------ ------ Total (144) (134) (295) (273) ------ ------ ------ ------ Income Before Income Taxes 98 163 300 360 Income Tax Expense (28) (62) (100) (136) ------ ------ ------ ------ Net Income $ 70 $ 101 $ 200 $ 224 ====== ====== ====== ====== Reference is made to the Notes to the Consolidated Financial Statements contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc. CenterPoint Energy, Inc. and Subsidiaries Selected Data From Statements of Consolidated Income (Millions of Dollars, Except Share and Per Share Amounts) (Unaudited) Quarter Ended Six Months Ended June 30, June 30, ---------------- ---------------- 2007 2008 2007 2008 ------- ------- ------- ------- Basic Earnings Per Common Share: Net Income $ 0.22 $ 0.30 $ 0.62 $ 0.68 ======= ======= ======= ======= Diluted Earnings Per Common Share: Net Income $ 0.20 $ 0.30 $ 0.58 $ 0.66 ======= ======= ======= ======= Dividends Declared per Common Share $ 0.17 $0.1825 $ 0.34 $ 0.365 Weighted Average Common Shares Outstanding (000): - Basic 320,927 331,354 319,501 329,316 - Diluted 343,770 342,027 342,024 340,873 Operating Income (Loss) by Segment ---------------------------------- Electric Transmission & Distribution: Electric Transmission and Distribution Operations $ 118 $ 129 $ 180 $ 183 Competition Transition Charge 10 -- 21 5 ------- ------- ------- ------- Total Electric Transmission and Distribution Utility 128 129 201 188 Transition Bond Companies 29 35 60 67 ------- ------- ------- ------- Total Electric Transmission & Distribution 157 164 261 255 Natural Gas Distribution 8 4 137 125 Competitive Natural Gas Sales and Services (4) (5) 52 1 Interstate Pipelines 52 101 96 172 Field Services 27 32 49 77 Other Operations 2 1 -- 3 ------- ------- ------- ------- Total $ 242 $ 297 $ 595 $ 633 ======= ======= ======= ======= Reference is made to the Notes to the Consolidated Financial Statements contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc. CenterPoint Energy, Inc. and Subsidiaries Results of Operations by Segment (Millions of Dollars) (Unaudited) Electric Transmission & Distribution -------------------------------------------------------- Quarter Ended % Six Months Ended % June 30, Diff June 30, Diff -------------------- Fav/ -------------------- Fav/ 2007 2008 (Unfav) 2007 2008 (Unfav) --------- --------- ------ --------- --------- ------ Results of Operations: Revenues: Electric transmission and distribution utility $ 395 $ 419 6% $ 742 $ 765 3% Transition bond companies 70 91 30% 129 154 19% --------- --------- ------ --------- --------- ------ Total 465 510 10% 871 919 6% --------- --------- ------ --------- --------- ------ Expenses: Operation and maintenance 150 167 (11%) 304 335 (10%) Depreciation and amortization 61 71 (16%) 124 137 (10%) Taxes other than income taxes 56 52 7% 113 105 7% Transition bond companies 41 56 (37%) 69 87 (26%) --------- --------- ------ --------- --------- ------ Total 308 346 (12%) 610 664 (9%) --------- --------- ------ --------- --------- ------ Operating Income $ 157 $ 164 4% $ 261 $ 255 (2%) ========= ========= ====== ========= ========= ====== Operating Income: Electric transmission and distribution operations $ 118 $ 129 9% $ 180 $ 183 2% Competition transition charge 10 -- (100%) 21 5 (76%) Transition bond companies 29 35 21% 60 67 12% --------- --------- ------ --------- --------- ------ Total Segment Operating Income $ 157 $ 164 4% $ 261 $ 255 (2%) ========= ========= ====== ========= ========= ====== Electric Transmission Distribution Operating Data: Actual MWH Delivered Residential 6,020,714 6,774,069 13% 10,678,773 11,177,381 5% Total 19,175,278 20,359,540 6% 35,835,191 36,929,230 3% Weather (average for service area): Percentage of 10-year average: Cooling degree days 94% 111% 17% 96% 113% 17% Heating degree days 197% 73% (124)% 114% 95% (19%) Average number of metered customers: Residential 1,767,749 1,814,840 3% 1,760,006 1,808,056 3% Total 2,006,840 2,058,171 3% 1,998,291 2,050,316 3% Natural Gas Distribution -------------------------------------------------------- Quarter Ended % Six Months Ended % June 30, Diff June 30, Diff -------------------- Fav/ -------------------- Fav/ 2007 2008 (Unfav) 2007 2008 (Unfav) --------- --------- ------ --------- --------- ------ Results of Operations: Revenues $ 576 $ 726 26% $ 2,143 $ 2,426 13% --------- --------- ------ --------- --------- ------ Expenses: Natural gas 366 512 (40%) 1,578 1,845 (17%) Operation and maintenance 135 141 (4%) 282 297 (5%) Depreciation and amortization 38 39 (3%) 76 78 (3%) Taxes other than income taxes 29 30 (3%) 70 81 (16%) --------- --------- ------ --------- --------- ------ Total 568 722 (27%) 2,006 2,301 (15%) --------- --------- ------ --------- --------- ------ Operating Income $ 8 $ 4 (50%) $ 137 $ 125 (9%) ========= ========= ====== ========= ========= ====== Natural Gas Distribution Operating Data: Throughput data in BCF Residential 20 20 -- 106 104 (2%) Commercial and Industrial 44 47 7% 126 130 3% --------- --------- ------ --------- --------- ------ Total Throughput 64 67 5% 232 234 1% ========= ========= ====== ========= ========= ====== Weather (average for service area) Percentage of 10-year average: Heating degree days 95% 113% 18% 99% 107% 8% Average number of customers: Residential 2,925,120 2,956,291 1% 2,935,661 2,965,941 1% Commercial and Industrial 247,550 249,776 1% 246,564 250,382 2% --------- --------- ------ --------- --------- ------ Total 3,172,670 3,206,067 1% 3,182,225 3,216,323 1% ========= ========= ====== ========= ========= ====== Reference is made to the Notes to the Consolidated Financial Statements contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc. CenterPoint Energy, Inc. and Subsidiaries Results of Operations by Segment (Millions of Dollars) (Unaudited) Competitive Natural Gas Sales and Services ---------------------------------------------- Quarter Ended % Six Months % June 30, Diff Ended June 30, Diff -------------- Fav/ -------------- Fav/ 2007 2008 (Unfav) 2007 2008 (Unfav) ------ ------ ------- ------ ------ ------- Results of Operations: Revenues $ 881 $1,243 41% $1,945 $2,363 21% ------ ------ ------ ------ Expenses: Natural gas 877 1,237 (41%) 1,875 2,342 (25%) Operation and maintenance 7 10 (43%) 16 18 (13%) Depreciation and amortization 1 -- -- 1 1 -- Taxes other than income taxes -- 1 -- 1 1 -- ------ ------ ------ ------ Total 885 1,248 (41%) 1,893 2,362 (25%) ------ ------ ------ ------ Operating Income (Loss) $ (4) $ (5) (25%) $ 52 $ 1 (98%) ====== ====== ====== ====== Competitive Natural Gas Sales and Services Operating Data: Throughput data in BCF 120 129 8% 275 267 (3%) ====== ====== ====== ====== Average number of customers 7,077 9,186 30% 7,032 8,840 26% ====== ====== ====== ====== Interstate Pipelines ---------------------------------------------- Quarter Ended % Six Months % June 30, Diff Ended June 30, Diff -------------- Fav/ -------------- Fav/ 2007 2008 (Unfav) 2007 2008 (Unfav) ------ ------ ------- ------ ------ ------- Results of Operations: Revenues $ 121 $ 192 59% $ 211 $ 325 54% ------ ------ ------ ------ Expenses: Natural gas 24 58 (142%) 28 73 (161%) Operation and maintenance 29 16 45% 56 46 18% Depreciation and amortization 11 11 -- 21 23 (10%) Taxes other than income taxes 5 6 (20%) 10 11 (10%) ------ ------ ------ ------ Total 69 91 (32%) 115 153 (33%) ------ ------ ------ ------ Operating Income $ 52 $ 101 94% $ 96 $ 172 79% ====== ====== ====== ====== Pipelines Operating Data: Throughput data in BCF Transportation 274 361 32% 568 785 38% ====== ====== ====== ====== Reference is made to the Notes to the Consolidated Financial Statements contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc. CenterPoint Energy, Inc. and Subsidiaries Results of Operations by Segment (Millions of Dollars) (Unaudited) Field Services ---------------------------------------------- Quarter Ended % Six Months % June 30, Diff Ended June 30, Diff -------------- Fav/ -------------- Fav/ 2007 2008 (Unfav) 2007 2008 (Unfav) ------ ------ ------- ------ ------ ------- Results of Operations: Revenues $ 42 $ 62 48% $ 81 $ 120 48% ------ ------ ------ ------ Expenses: Natural gas (4) 8 (300%) (7) 6 (186%) Operation and maintenance 16 18 (13%) 32 29 9% Depreciation and amortization 3 3 -- 6 6 -- Taxes other than income taxes -- 1 -- 1 2 (100%) ------ ------ ------ ------ Total 15 30 (100%) 32 43 (34%) ------ ------ ------ ------ Operating Income $ 27 $ 32 19% $ 49 $ 77 57% ====== ====== ====== ====== Field Services Operating Data: Throughput data in BCF Gathering 100 104 4% 193 202 5% ====== ====== ====== ====== Other Operations ---------------------------------------------- Quarter Ended % Six Months % June 30, Diff Ended June 30, Diff -------------- Fav/ -------------- Fav/ 2007 2008 (Unfav) 2007 2008 (Unfav) ------ ------ ------- ------ ------ ------- Results of Operations: Revenues $ 3 $ 2 (33%) $ 5 $ 5 -- Expenses 1 1 -- 5 2 60% ------ ------ ------ ------ Operating Income (Loss) $ 2 $ 1 (50%) $ -- $ 3 -- ====== ====== ====== ====== Capital Expenditures by Segment (Millions of Dollars) (Unaudited) ------------------------------ Quarter Ended Six Months June 30, Ended June 30, -------------- -------------- 2007 2008 2007 2008 ------ ------ ------ ------ Capital Expenditures by Segment Electric Transmission & Distribution $ 111 $ 87 $ 221 $ 176 Natural Gas Distribution 44 56 77 94 Competitive Natural Gas Sales and Services 2 1 4 2 Interstate Pipelines 60 42 214 70 Field Services 13 28 40 46 Other Operations 6 5 17 13 ------ ------ ------ ------ Total $ 236 $ 219 $ 573 $ 401 ====== ====== ====== ====== Interest Expense Detail (Millions of Dollars) (Unaudited) ------------------------------ Quarter Ended Six Months June 30, Ended June 30, -------------- -------------- 2007 2008 2007 2008 ------ ------ ------ ------ Interest Expense Detail Amortization of Deferred Financing Cost $ 12 $ 6 $ 31 $ 12 Capitalization of Interest Cost (7) (4) (15) (7) Transition Bond Interest Expense 32 35 63 68 Other Interest Expense 114 111 226 223 ------ ------ ------ ------ Total Interest Expense $ 151 $ 148 $ 305 $ 296 ====== ====== ====== ====== Reference is made to the Notes to the Consolidated Financial Statements contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc. CenterPoint Energy, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Millions of Dollars) (Unaudited) Dec. 31, June 30, 2007 2008 -------- -------- ASSETS Current Assets: Cash and cash equivalents $ 129 $ 150 Other current assets 2,659 2,448 -------- -------- Total current assets 2,788 2,598 -------- -------- Property, Plant and Equipment, net 9,740 9,908 -------- -------- Other Assets: Goodwill 1,696 1,696 Regulatory assets 2,993 2,847 Other non-current assets 655 1,027 -------- -------- Total other assets 5,344 5,570 -------- -------- Total Assets $ 17,872 $ 18,076 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term borrowings $ 232 $ 200 Current portion of transition bond long-term debt 159 186 Current portion of other long-term debt 1,156 123 Other current liabilities 2,244 2,304 -------- -------- Total current liabilities 3,791 2,813 -------- -------- Other Liabilities: Accumulated deferred income taxes, net and investment tax credit 2,266 2,255 Regulatory liabilities 828 806 Other non-current liabilities 813 883 -------- -------- Total other liabilities 3,907 3,944 -------- -------- Long-term Debt: Transition bond 2,101 2,485 Other 6,263 6,869 -------- -------- Total long-term debt 8,364 9,354 -------- -------- Shareholders' Equity 1,810 1,965 -------- -------- Total Liabilities and Shareholders' Equity $ 17,872 $ 18,076 ======== ======== Reference is made to the Notes to the Consolidated Financial Statements contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc. CenterPoint Energy, Inc. and Subsidiaries Condensed Statements of Consolidated Cash Flows (Millions of Dollars) (Unaudited) Six Months Ended June 30, ------------------ 2007 2008 -------- -------- Cash Flows from Operating Activities: Net income $ 200 $ 224 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 338 360 Deferred income taxes 12 12 Changes in net regulatory assets 31 14 Changes in other assets and liabilities (164) 256 Other, net 10 2 -------- -------- Net Cash Provided by Operating Activities 427 868 Net Cash Used in Investing Activities (709) (700) Net Cash Provided by (Used in) Financing Activities 267 (147) -------- -------- Net Increase (Decrease) in Cash and Cash Equivalents (15) 21 Cash and Cash Equivalents at Beginning of Period 127 129 -------- -------- Cash and Cash Equivalents at End of Period $ 112 $ 150 ======== ======== Reference is made to the Notes to the Consolidated Financial Statements contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc.
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CONTACT: CenterPoint Energy, Inc. Media: Leticia Lowe 713.207.7702 Investors: Marianne Paulsen 713.207.6500