Ameren (NYSE: AEE) Announces Second Quarter 2017 Results
ST. LOUIS, Aug. 4, 2017 /PRNewswire/ -- Ameren Corporation (NYSE: AEE) today announced second quarter 2017 net income attributable to common shareholders of $193 million, or $0.79 per share, compared to second quarter 2016 net income attributable to common shareholders of $147 million, or $0.61 per share.
The increase in year-over-year second quarter earnings reflected new Ameren Missouri electric service rates effective April 1, 2017 driven, in part, by increased infrastructure investments and removal of the negative effect of lower sales to the New Madrid smelter. The earnings improvement also resulted from the absence of a nuclear refueling and maintenance outage at the Callaway Energy Center, which reduced operations and maintenance expenses compared to the year-ago period when there was such an outage. In addition, the comparison benefited from a 2017 change in the timing of interim period revenue recognition at the Ameren Illinois Electric Distribution segment, reflecting the Illinois Future Energy Jobs Act, as well as increased infrastructure investments in the Ameren Transmission and Ameren Illinois Electric Distribution segments. These favorable factors were partially offset by lower 2017 Ameren Missouri electric retail sales, primarily driven by milder early summer temperatures.
"As a result of solid execution of our strategy, including continued disciplined cost management, we expect to deliver 2017 core earnings within a range of $2.70 to $2.90 per share, a 5-cent improvement over our prior guidance," said Warner L. Baxter, chairman, president and chief executive officer of Ameren Corporation. "Our team continues to allocate capital to jurisdictions with modern, constructive regulatory frameworks. This includes advancing key Illinois grid modernization projects that provide significant customer benefits, all while meeting our region's energy needs, especially during the hot summer months. We expect this execution to deliver superior value to our customers and shareholders."
Ameren recorded net income attributable to common shareholders for the six months ended June 30, 2017, of $295 million, or $1.21 per share, compared to net income attributable to common shareholders for the six months ended June 30, 2016, of $252 million, or $1.04 per share.
The increase in year-over-year six-month earnings reflected a 2017 change in the timing of interim period revenue recognition at the Ameren Illinois Electric Distribution segment, new Ameren Missouri electric service rates and the absence of a nuclear refueling and maintenance outage at the Callaway Energy Center compared to the year-ago period when there was such an outage. The earnings comparison also benefited from increased infrastructure investments in the Ameren Transmission and Ameren Illinois Electric Distribution segments. These favorable factors were partially offset by lower 2017 Ameren Missouri electric retail sales primarily driven by milder temperatures, lower tax benefits associated with share-based compensation and higher Ameren Missouri depreciation expense.
Earnings Guidance
Ameren continues to expect 2017 earnings guidance in accordance with generally accepted accounting principles (GAAP) in a range of $2.65 to $2.85 per diluted share, which now includes an expected third quarter non-cash estimated charge of 6 cents per diluted share, primarily at the parent company, for revaluation of deferred taxes resulting from an increase in the Illinois corporate income tax rate effective July 1, 2017. Excluding this expected charge, the company expects 2017 core (non-GAAP) earnings to be in a range of $2.70 to $2.90 per diluted share, a 5-cent-per-share improvement over the prior guidance range, reflecting solid execution of Ameren's strategy.
GAAP and core earnings guidance for 2017 assume normal temperatures for the last six months of this year and are subject to the effects of, among other things: 30-year U.S. Treasury bond yields; regulatory, judicial and legislative actions; energy center and energy distribution operations; energy, economic, capital and credit market conditions; severe weather; unusual or otherwise unexpected gains or losses; and other risks and uncertainties outlined, or referred to, in the Forward-looking Statements section of this press release.
Ameren Missouri Segment Results
Ameren Missouri second quarter 2017 earnings were $120 million, compared to second quarter 2016 earnings of $92 million. The increase in year-over-year earnings reflected new electric service rates and the absence of a nuclear refueling and maintenance outage at the Callaway Energy Center. The earnings comparison was unfavorably affected by lower 2017 electric retail sales, primarily driven by milder early summer temperatures.
Ameren Illinois Electric Distribution Segment Results
Ameren Illinois Electric Distribution second quarter 2017 earnings were $33 million, compared to second quarter 2016 earnings of $18 million. The improvement in year-over-year earnings included a $9 million increase due to a 2017 change in the timing of interim period revenue recognition reflecting the Illinois Future Energy Jobs Act, which decoupled revenues from sales volumes. This change increases first, second and fourth quarter revenue while decreasing third quarter revenue, compared to 2016, with no effect on full-year earnings. Earnings in 2017 also benefited from increased infrastructure investments, as well as a higher allowed return on equity due to a higher projected average 30-year U.S. Treasury bond yield in 2017 compared to 2016.
Ameren Illinois Natural Gas Segment Results
Ameren Illinois Natural Gas second quarter 2017 earnings were $5 million, compared to second quarter 2016 earnings of $7 million.
Ameren Transmission Segment Results
Ameren Transmission second quarter 2017 earnings were $34 million, compared to second quarter 2016 earnings of $32 million. The year-over-year earnings improvement reflected increased infrastructure investments, partially offset by a lower allowed return on equity.
Analyst Conference Call
Ameren will conduct a conference call for financial analysts at 9 a.m. Central Time on Friday, Aug. 4, to discuss 2017 earnings, earnings guidance and other matters. Investors, the news media and the public may listen to a live broadcast of the call at Amereninvestors.com by clicking on "Webcast" under "Q2 2017 Earnings Conference Call," where an accompanying slide presentation will also be available. The conference call and presentation will be archived for one year in the "Investor News and Events" section of the website under "Events and Presentations."
About Ameren
St. Louis-based Ameren Corporation powers the quality of life for 2.4 million electric customers and more than 900,000 natural gas customers in a 64,000-square-mile area through its Ameren Missouri and Ameren Illinois rate-regulated utility subsidiaries. Ameren Illinois provides electric and natural gas transmission and distribution service while Ameren Missouri provides vertically integrated electric service, with generating capacity of over 10,200 megawatts, and natural gas distribution service. Ameren Transmission Company of Illinois develops regional electric transmission projects. For more information, visit Ameren.com, or follow us at @AmerenCorp, Facebook.com/AmerenCorp, or LinkedIn/company/Ameren.
Use of Non-GAAP Financial Measures
In this release, Ameren has presented core earnings per share guidance, which is a non-GAAP measure and may not be comparable to those of other companies. A reconciliation of non-GAAP information to GAAP information has been included in this release. Generally, core earnings (or losses) include earnings or losses attributable to common stockholders and exclude income or loss from significant discrete items that management does not consider representative of ongoing earnings, such as the expected third quarter 2017 non-cash estimated charge for the revaluation of deferred taxes resulting from an increase in the Illinois corporate income tax rate effective July 1, 2017. Ameren uses core earnings internally for financial planning and for analysis of performance. Ameren also uses core earnings as the primary performance measurement when communicating with analysts and investors regarding our earnings results and outlook, as the company believes that core earnings allow the company to more accurately compare its ongoing performance across periods. In providing consolidated core earnings guidance, there could be differences between core earnings and earnings prepared in accordance with GAAP as a result of our treatment of certain items, such as that described above. Ameren is unable to estimate the impact, if any, on future GAAP earnings of such future items.
Forward-looking Statements
Statements in this release not based on historical facts are considered "forward-looking" and, accordingly, involve risks and uncertainties that could cause actual results to differ materially from those discussed. Although such forward-looking statements have been made in good faith and are based on reasonable assumptions, there is no assurance that the expected results will be achieved. These statements include (without limitation) statements as to future expectations, beliefs, plans, strategies, objectives, events, conditions, and financial performance. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we are providing this cautionary statement to identify important factors that could cause actual results to differ materially from those anticipated. The following factors, in addition to those discussed under Risk Factors in Ameren's Annual Report on Form 10-K for the year ended December 31, 2016, and elsewhere in this release and in our other filings with the Securities and Exchange Commission, could cause actual results to differ materially from management expectations suggested in such forward-looking statements:
-- regulatory, judicial, or legislative actions, including any changes in
regulatory policies and ratemaking determinations, such as those that
may result from the complaint case filed in February 2015 with the
Federal Energy Regulatory Commission seeking a reduction in the allowed
base return on common equity under the Midcontinent Independent System
Operator tariff, Ameren Illinois' April 2017 annual electric
distribution formula rate update filing, and future regulatory,
judicial, or legislative actions that change regulatory recovery
mechanisms;
-- the effect of Ameren Illinois participating in a performance-based
formula ratemaking process under the Illinois Energy Infrastructure
Modernization Act (IEIMA), including the direct relationship between
Ameren Illinois' return on common equity and 30-year United States
Treasury bond yields, and the related financial commitments;
-- the effects of changes in federal, state, or local laws and other
governmental actions, including monetary, fiscal, and energy policies;
-- the effects of changes in federal, state, or local tax laws,
regulations, interpretations, such as the increase in Illinois'
corporate income tax rate that became effective in July 2017, or rates
and any challenges to the tax positions we have taken;
-- the effects on demand for our services resulting from technological
advances, including advances in customer energy efficiency and private
generation sources, which generate electricity at the site of
consumption and are becoming more cost-competitive;
-- the effectiveness of Ameren Missouri's customer energy efficiency
programs and the related revenues and performance incentives earned
under its Missouri Energy Efficiency Investment Act plans;
-- Ameren Illinois' achievement of Future Energy Jobs Act electric energy
efficiency goals and the resulting impact on its allowed return on
program investments;
-- our ability to align overall spending, both operating and capital, with
frameworks established by our regulators in our attempt to earn our
allowed return on equity;
-- the timing of increasing capital expenditure and operating expense
requirements and our ability to recover these costs in a timely manner;
-- the cost and availability of fuel, such as ultra-low-sulfur coal,
natural gas, and enriched uranium used to produce electricity; the cost
and availability of purchased power, zero-emission credits, renewable
energy credits, and natural gas for distribution; and the level and
volatility of future market prices for such commodities, including our
ability to recover the costs for such commodities and our customers'
tolerance for the related rate increases;
-- disruptions in the delivery of fuel, failure of our fuel suppliers to
provide adequate quantities or quality of fuel, or lack of adequate
inventories of fuel, including nuclear fuel assemblies from Westinghouse
Electric Company, LLC, the Callaway Energy Center's only Nuclear
Regulatory Commission-licensed supplier of such assemblies, which is
currently in bankruptcy proceedings;
-- the effectiveness of our risk management strategies and our use of
financial and derivative instruments;
-- the ability to obtain sufficient insurance, including insurance for
Ameren Missouri's Callaway Energy Center, or in the absence of
insurance, the ability to recover uninsured losses from our customers;
-- business and economic conditions, including their impact on interest
rates, collection of our receivable balances, and demand for our
products;
-- disruptions of the capital markets, deterioration in our credit metrics,
or other events that may have an adverse effect on the cost or
availability of capital, including short-term credit and liquidity;
-- the actions of credit rating agencies and the effects of such actions;
-- the impact of adopting new accounting guidance and the application of
appropriate accounting rules and guidance;
-- the impact of weather conditions on Ameren Missouri and other natural
phenomena on us and our customers, including the impact of system
outages;
-- the construction, installation, performance, and cost recovery of
generation, transmission, and distribution assets;
-- the effects of breakdowns or failures of equipment in the operation of
natural gas transmission and distribution systems and storage
facilities, such as leaks, explosions, and mechanical problems, and
compliance with natural gas safety regulations;
-- the effects of our increasing investment in electric transmission
projects, our ability to obtain all of the necessary approvals to
complete the projects, and the uncertainty as to whether we will achieve
our expected returns in a timely manner;
-- operation of Ameren Missouri's Callaway Energy Center, including planned
and unplanned outages, and decommissioning costs;
-- the effects of strategic initiatives, including mergers, acquisitions
and divestitures;
-- the impact of current environmental regulations and new, more stringent,
or changing requirements, including those related to carbon dioxide,
other emissions and discharges, cooling water intake structures, coal
combustion residuals, and energy efficiency, that are enacted over time
and that could limit or terminate the operation of certain of Ameren
Missouri's energy centers, increase our costs or investment
requirements, result in an impairment of our assets, cause us to sell
our assets, reduce our customers' demand for electricity or natural gas,
or otherwise have a negative financial effect;
-- the impact of complying with renewable energy portfolio requirements in
Missouri;
-- labor disputes, work force reductions, future wage and employee benefits
costs, including changes in discount rates, mortality tables, and
returns on benefit plan assets;
-- the inability of our counterparties to meet their obligations with
respect to contracts, credit agreements, and financial instruments;
-- the cost and availability of transmission capacity for the energy
generated by Ameren Missouri's energy centers or required to satisfy
Ameren Missouri's energy sales;
-- legal and administrative proceedings;
-- the impact of cyber attacks, which could result in the loss of
operational control of energy centers and electric and natural gas
transmission and distribution systems and/or the loss of data, such as
customer data and account information; and
-- acts of sabotage, war, terrorism, or other intentionally disruptive
acts.
New factors emerge from time to time, and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statement. Given these uncertainties, undue reliance should not be placed on these forward-looking statements. Except to the extent required by the federal securities laws, we undertake no obligation to update or revise publicly any forward-looking statements to reflect new information or future events.
AMEREN CORPORATION (AEE)
CONSOLIDATED STATEMENT OF INCOME
(Unaudited, in millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Operating Revenues:
Electric $1,383 $1,274 $2,589 $2,376
Natural gas 155 153 463 485
--- --- --- ---
Total operating revenues 1,538 1,427 3,052 2,861
----- ----- ----- -----
Operating Expenses:
Fuel 189 166 395 369
Purchased power 149 135 329 273
Natural gas purchased for resale 41 41 171 193
Other operations and maintenance 422 435 827 835
Depreciation and amortization 222 210 443 417
Taxes other than income taxes 117 115 235 229
--- --- --- ---
Total operating expenses 1,140 1,102 2,400 2,316
----- ----- ----- -----
Operating Income 398 325 652 545
Other Income and Expenses:
Miscellaneous income 14 16 29 36
Miscellaneous expense 5 6 14 13
--- --- --- ---
Total other income 9 10 15 23
Interest Charges 99 95 198 190
--- --- --- ---
Income Before Income Taxes 308 240 469 378
Income Taxes 114 92 171 123
--- --- --- ---
Net Income 194 148 298 255
Less: Net Income Attributable to
Noncontrolling Interests 1 1 3 3
--- --- --- ---
Net Income Attributable to Ameren
Common Shareholders $193 $147 $295 $252
--------------------------------- ---- ---- ---- ----
Earnings per Common Share - Basic
and Diluted $0.79 $0.61 $1.21 $1.04
Average Common Shares Outstanding
- Basic 242.6 242.6 242.6 242.6
AMEREN CORPORATION (AEE)
CONSOLIDATED BALANCE SHEET
(Unaudited, in millions)
June 30, December 31,
2017 2016
---- ----
ASSETS
Current Assets:
Cash and cash equivalents $10 $9
Accounts receivable -trade (less
allowance for doubtful accounts) 446 437
Unbilled revenue 334 295
Miscellaneous accounts receivable 77 63
Inventories 512 527
Current regulatory assets 95 149
Other current assets 97 113
--- ---
Total current assets 1,571 1,593
----- -----
Property, Plant, and Equipment, Net 20,589 20,113
Investments and Other Assets:
Nuclear decommissioning trust fund 651 607
Goodwill 411 411
Regulatory assets 1,506 1,437
Other assets 526 538
--- ---
Total investments and other assets 3,094 2,993
---------------------------------- ----- -----
TOTAL ASSETS $25,254 $24,699
------------ ------- -------
LIABILITIES AND EQUITY
Current Liabilities:
Current maturities of long-term debt $578 $681
Short-term debt 892 558
Accounts and wages payable 522 805
Taxes accrued 122 46
Interest accrued 104 93
Customer deposits 108 107
Current regulatory liabilities 141 110
Other current liabilities 298 274
--- ---
Total current liabilities 2,765 2,674
----- -----
Long-term Debt, Net 6,821 6,595
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes,
net 4,444 4,264
Accumulated deferred investment tax
credits 52 55
Regulatory liabilities 2,003 1,985
Asset retirement obligations 634 635
Pension and other postretirement
benefits 758 769
Other deferred credits and
liabilities 477 477
--- ---
Total deferred credits and other
liabilities 8,368 8,185
----- -----
Ameren Corporation Shareholders' Equity:
Common stock 2 2
Other paid-in capital, principally
premium on common stock 5,528 5,556
Retained earnings 1,649 1,568
Accumulated other comprehensive loss (21) (23)
--- ---
Total Ameren Corporation
shareholders' equity 7,158 7,103
Noncontrolling Interests 142 142
--- ---
Total equity 7,300 7,245
------------ ----- -----
TOTAL LIABILITIES AND EQUITY $25,254 $24,699
---------------------------- ------- -------
AMEREN CORPORATION (AEE)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, in millions)
Six Months Ended June 30,
2017 2016
---- ----
Cash Flows From Operating Activities:
Net income $298 $255
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 433 419
Amortization of nuclear fuel 48 38
Amortization of debt issuance costs and
premium/discounts 11 11
Deferred income taxes and investment tax
credits, net 175 134
Allowance for equity funds used during
construction (10) (13)
Share-based compensation costs 8 12
Other (5) (7)
Changes in assets and liabilities (95) (86)
--- ---
Net cash provided by operating activities 863 763
----------------------------------------- --- ---
Cash Flows From Investing Activities:
Capital expenditures (998) (1,000)
Nuclear fuel expenditures (50) (24)
Purchases of securities - nuclear
decommissioning trust fund (213) (201)
Sales and maturities of securities - nuclear
decommissioning trust fund 204 192
Other (2) (2)
--- ---
Net cash used in investing activities (1,059) (1,035)
------------------------------------- ------ ------
Cash Flows From Financing Activities:
Dividends on common stock (214) (206)
Dividends paid to noncontrolling interest
holders (3) (3)
Short-term debt, net 334 477
Maturities of long-term debt (425) (389)
Issuances of long-term debt 549 149
Share-based payments (39) (32)
Capital issuance costs (4) (1)
Other (1) (2)
--- ---
Net cash provided by (used in) financing
activities 197 (7)
Net change in cash and cash equivalents 1 (279)
Cash and cash equivalents at beginning of year 9 292
--- ---
Cash and cash equivalents at end of period $10 $13
------------------------------------------ --- ---
AMEREN CORPORATION (AEE)
OPERATING STATISTICS
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Electric Sales -kilowatthours (in
millions):
Ameren Missouri
Residential 2,760 2,899 5,969 6,376
Commercial 3,556 3,610 6,888 7,079
Industrial 1,144 1,142 2,171 2,444
Off-system and other 3,495 1,400 6,716 3,326
----- ----- ----- -----
Ameren Missouri total 10,955 9,051 21,744 19,225
------ ----- ------ ------
Ameren Illinois Electric
Distribution
Residential 2,416 2,540 5,133 5,444
Commercial 2,934 3,001 5,851 5,836
Industrial 2,792 2,876 5,528 5,707
Street Lighting/Public Authority 125 119 257 263
--- --- --- ---
Ameren Illinois Electric
Distribution total 8,267 8,536 16,769 17,250
----- ----- ------ ------
Eliminate affiliate sales (97) (79) (265) (277)
--- --- ---- ----
Ameren Total 19,125 17,508 38,248 36,198
------------ ------ ------ ------ ------
Electric Revenues (in millions):
Ameren Missouri
Residential $362 $356 $650 $654
Commercial 334 326 563 566
Industrial 84 82 141 150
Off-system and other 133 80 305 168
--- --- --- ---
Ameren Missouri total $913 $844 $1,659 $1,538
---- ---- ------ ------
Ameren Illinois Electric
Distribution
Residential
Delivery service $145 $134 $282 $251
Power supply and other cost recovery 63 72 145 159
Commercial
Delivery service 82 70 162 131
Power supply and other cost recovery 45 49 98 100
Industrial
Delivery service 15 13 32 26
Power supply and other cost recovery 12 10 23 18
Street Lighting/Public Authority
Delivery service 9 5 15 13
Power supply and other cost recovery 3 2 6 6
Other 14 3 10 6
--- --- ---
Ameren Illinois Electric
Distribution total $388 $358 $773 $710
---- ---- ---- ----
Ameren Transmission
Ameren Illinois Transmission(a) $65 $63 $125 $114
ATXI 40 29 82 61
--- --- --- ---
Ameren Transmission total $105 $92 $207 $175
---- --- ---- ----
Other and intersegment eliminations (23) (20) (50) (47)
--- --- --- ---
Ameren Total $1,383 $1,274 $2,589 $2,376
------------ ------ ------ ------ ------
(a) Includes $12 million, $10
million, $18 million and $21
million, respectively, of
electric operating revenues
from transmission services
provided to the Ameren Illinois
Electric Distribution segment.
AMEREN CORPORATION (AEE)
OPERATING STATISTICS
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ----
Gas Sales - dekatherms (in millions):
Ameren Missouri 3 3 9 10
Ameren Illinois Natural
Gas 29 30 87 92
--- --- --- ---
Ameren Total 32 33 96 102
------------ --- --- --- ---
Gas Revenues (in millions):
Ameren Missouri $22 $23 $66 $70
Ameren Illinois Natural
Gas 134 131 398 416
Eliminate affiliate
revenues (1) (1) (1) (1)
--- --- --- ---
Ameren Total $155 $153 $463 $485
------------ ---- ---- ---- ----
June 30, December 31,
2017 2016
---- ----
Common Stock:
Shares outstanding (in millions) 242.6 242.6
Book value per share $29.51 $29.28
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SOURCE Ameren Corporation
