Ameren Announces Second Quarter 2020 Results
ST. LOUIS, Aug. 6, 2020 /PRNewswire/ -- Ameren Corporation (NYSE: AEE) today announced second quarter 2020 net income attributable to common shareholders of $243 million, or $0.98 per diluted share, compared to second quarter 2019 net income attributable to common shareholders of $179 million, or $0.72 per diluted share.
Second quarter 2020 results reflected earnings on increased infrastructure investments made across all business segments driven by solid execution of the company's strategy. The earnings improvement also resulted from lower Ameren Missouri operations and maintenance expenses due to the absence of a refueling and maintenance outage at the Callaway Energy Center compared to the year-ago period when there was such an outage, as well as disciplined cost management. Earnings at Ameren Missouri were also positively impacted by new electric service rates effective April 1, 2020 driven, in part, by earnings on increased infrastructure investments. In addition, Ameren Missouri experienced higher earnings from electric retail sales due to near-normal temperatures in the second quarter of 2020 compared to milder-than-normal temperatures in the year-ago period. This benefit offset lower electric retail sales due to the impacts of COVID-19. Finally, earnings increased at Ameren Transmission resulting from the impact of the May 2020 Federal Energy Regulatory Commission (FERC) order addressing the Midcontinent Independent System Operator (MISO) allowed base return on equity. These favorable factors were partially offset by a lower allowed return on equity at Ameren Illinois Electric Distribution.
"We continue to effectively manage through an unprecedented time in our country's and company's history due to COVID-19. We remain relentlessly focused on the safety of our co-workers, customers and communities, as well as delivering safe, reliable and affordable electric and natural gas services," said Warner L. Baxter, chairman, president and chief executive officer of Ameren Corporation. "While COVID-19 has presented certain financial challenges, we are executing on all elements of our strategy, including significant investment in energy infrastructure and disciplined cost management in each of our business segments. As a result, we remain on track to deliver within our 2020 earnings per share guidance range of $3.40 to $3.60."
Ameren recorded net income attributable to common shareholders for the six months ended June 30, 2020, of $389 million, or $1.57 per diluted share, compared to net income attributable to common shareholders for the six months ended June 30, 2019, of $370 million, or $1.50 per diluted share.
The year-over-year six month earnings comparison benefited from increased infrastructure investments made across all business segments. Earnings increased at Ameren Missouri due to 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 and from new electric service rates effective April 1, 2020. Ameren Transmission earnings also benefited from the impact of the May 2020 FERC order addressing the MISO allowed base return on equity. These favorable factors were partially offset by lower Ameren Missouri electric retail sales, due in part to the impacts of COVID-19, and the absence of energy efficiency performance incentives. Ameren Illinois Electric Distribution earnings also decreased due to a lower allowed return on equity compared to the year-ago period. Finally, Ameren Missouri's operations and maintenance expenses were comparable as disciplined cost management offset changes in the cash surrender value of company-owned life insurance driven by unfavorable market returns.
Earnings Guidance
Today, Ameren reaffirmed its 2020 earnings guidance range of $3.40 to $3.60 per diluted share. Earnings guidance for 2020 assumes normal temperatures for the last six months of the year and is subject to the effects of, among other things: the impacts of COVID-19; 30-year U.S. Treasury bond yields; regulatory, judicial and legislative actions; energy center and energy distribution operations; energy, economic and capital market conditions; severe storms; 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 2020 earnings were $152 million, compared to second quarter 2019 earnings of $107 million. The year-over-year comparison reflected lower operations and maintenance expenses due to the absence of a nuclear refueling and maintenance outage at the Callaway Energy Center, as well as disciplined cost management and changes in the cash surrender value of company-owned life insurance driven by favorable market returns. Earnings also increased due to new electric service rates and the positive impact on electric sales from near-normal temperatures in the second quarter of 2020 compared to milder-than-normal temperatures in the year-ago period. These favorable factors more than offset lower electric retail sales due to the impacts of COVID-19.
Ameren Illinois Electric Distribution Segment Results
Ameren Illinois Electric Distribution second quarter 2020 earnings were $36 million, compared to second quarter 2019 earnings of $37 million. The year-over-year comparison reflected increased earnings on infrastructure investments that were more than offset by a lower allowed return on equity due to a lower projected average 30-year U.S. Treasury bond yield in 2020 compared to 2019.
Ameren Illinois Natural Gas Segment Results
Ameren Illinois Natural Gas second quarter 2020 earnings were $9 million, compared to second quarter 2019 earnings of $1 million. The year-over-year comparison reflected increased earnings on infrastructure investments and lower other operations and maintenance expenses.
Ameren Transmission Segment Results
Ameren Transmission second quarter 2020 earnings were $59 million, compared to second quarter 2019 earnings of $42 million. The year-over-year improvement reflected increased earnings on infrastructure investments and the impact of the May 2020 FERC order addressing the MISO allowed base return on equity.
Ameren Parent Results (includes items not reported in a business segment)
Ameren Parent results for the second quarter of 2020 reflected a loss of $13 million, compared to a second quarter 2019 loss of $8 million. The year-over-year comparison reflected increased interest expense primarily due to higher long-term debt.
Analyst Conference Call
Ameren will conduct a conference call for financial analysts at 9 a.m. Central Time on Friday, Aug. 7, to discuss 2020 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 2020 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 & 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 transmission and distribution service and natural gas distribution service. Ameren Missouri provides electric generation, transmission and distribution service, as well as natural gas distribution service. Ameren Transmission Company of Illinois develops, owns and operates rate-regulated regional electric transmission projects. For more information, visit Ameren.com, or follow us on Twitter at @AmerenCorp, Facebook.com/AmerenCorp, or LinkedIn/company/Ameren.
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, projections, 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, 2019, Form 10-Q for the quarter ended March 31, 2020, 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, and any changes in
regulatory policies and ratemaking determinations, that may change
regulatory recovery mechanisms, such as those that may result from a
potential rehearing of the May 2020 Federal Energy Regulatory Commission
(FERC) order determining the allowed base return on common equity (ROE)
under the Midcontinent Independent System Operator (MISO) tariff, the
Notice of Inquiry issued by the FERC in March 2019 regarding its allowed
base ROE policy, the Notice of Proposed Rulemaking issued by the FERC in
March 2020, the July 2020 appeal filed by Ameren Missouri, Ameren
Illinois, and ATXI challenging the FERC's rehearing denials in the
transmission formula rate revision cases, Ameren Illinois' May 2020
annual electric energy-efficiency formula rate update, Ameren Illinois'
April 2020 annual electric distribution formula rate update filing, and
Ameren Illinois' natural gas delivery service regulatory rate review
filed with the Illinois Commerce Commission (ICC) in February 2020;
-- the length and severity of the COVID-19 pandemic, and its impacts on our
business continuity plans and our results of operations, financial
position, and liquidity, including but not limited to changes in
customer demand resulting in changes to sales volumes, customers'
customers' payment for our services and their use of deferred payment
arrangements, future regulatory or legislative actions that could
require suspension of customer disconnections and/or late fees, among
other things, for an extended period of time, the health and welfare of
our workforce and that of our contractors, supplier disruptions, delays
in the completion of capital or other construction projects, which could
impact our planned capital expenditures and expected planned rate base
growth, Ameren Missouri's ability to recover any lost revenues or
incremental costs, our ability to meet customer energy-efficiency
program goals and earn performance incentives related to those programs,
increased data security risks as a result of the transition to remote
working arrangements for a significant portion of our workforce, and our
ability to access the capital markets on reasonable terms and when
needed;
-- the effect and duration of Ameren Illinois' election to participate in
performance-based formula ratemaking frameworks for its electric
distribution service and its participation in electric energy-efficiency
programs, including the direct relationship between Ameren Illinois' ROE
and the 30-year United States Treasury bond yields;
-- the effect on Ameren Missouri of any customer rate caps pursuant to
Ameren Missouri's election to use the plant-in-service accounting
(PISA), including an extension of use beyond 2023, if requested by
Ameren Missouri and approved by the Missouri Public Service Commission;
-- 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, or rates, including as a result of
amendments or technical corrections to the TCJA, and challenges to the
tax positions we have taken, if any;
-- the effects on demand for our services resulting from technological
advances, including advances in customer energy efficiency, electric
vehicles, electrification of various industries, energy storage, 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 (MEEIA) programs;
-- Ameren Illinois' ability to achieve the performance standards applicable
to its electric distribution business and the FEJA electric customer
energy-efficiency goals and the resulting impact on its allowed ROE;
-- our ability to align overall spending, both operating and capital, with
frameworks established by our regulators and to recover these costs in a
timely manner in our attempt to earn our allowed ROEs;
-- the cost and availability of fuel, such as 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 and credits, including our
ability to recover the costs for such commodities and credits and our
customers' tolerance for any related price 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 the one
Nuclear Regulatory Commission-licensed supplier of Ameren Missouri's
Callaway Energy Center's assemblies;
-- 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;
-- 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 nuclear and coal-fired energy centers, or, in the
absence of insurance, the ability to recover uninsured losses from our
customers;
-- the impact of cyberattacks on us or our suppliers, which could, among
other things, 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, employee, financial,
and operating system information;
-- business and economic conditions, which have been affected by, and will
be affected by the length and severity of, the COVID-19 pandemic,
including the impact of such conditions on interest rates;
-- 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,
including any impacts on our credit ratings that may result from the
economic conditions of the COVID-19 pandemic;
-- the inability of our counterparties to meet their obligations with
respect to contracts, credit agreements, and financial instruments;
-- the impact of weather conditions 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 failures of electric generation, electric and natural gas
transmission or distribution or natural gas storage facilities systems
and equipment, which could result in unanticipated liabilities or
unplanned outages;
-- the operation of Ameren Missouri's Callaway Energy Center, including
planned and unplanned outages, and decommissioning costs;
-- Ameren Missouri's ability to recover the remaining investment, if any,
and decommissioning costs associated with the retirement of an energy
center, as well as the ability to earn a return on that remaining
investment and those decommissioning costs;
-- the impact of current environmental laws and new, more stringent, or
changing requirements, including those related to the New Source Review,
carbon dioxide and the implementation of the Affordable Clean Energy
Rule, other emissions and discharges, cooling water intake structures,
coal combustion residuals, and energy efficiency, that could limit or
terminate the operation of certain of Ameren Missouri's energy centers,
increase our operating 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 standards in Missouri and
Illinois and with the zero emission standard in Illinois;
-- Ameren Missouri's ability to acquire wind and other renewable energy
generation facilities and recover its cost of investment and related
return in a timely manner, which is affected by the ability to obtain
all necessary project approvals; the ability of developers to meet
contractual commitments and timely complete projects, which is dependent
upon the availability of necessary materials and equipment, including
those that are affected by the disruptions in the global supply chain
caused by the COVID-19 pandemic, among other things; the availability of
federal production and investment tax credits related to renewable
energy and Ameren Missouri's ability to use such credits; the cost of
wind and solar generation technologies; and Ameren Missouri's ability to
obtain timely interconnection agreements with the MISO or other regional
transmission organizations at an acceptable cost for each facility;
-- labor disputes, work force reductions, changes in future wage and
employee benefits costs, including those resulting from changes in
discount rates, mortality tables, returns on benefit plan assets, and
other assumptions;
-- the impact of negative opinions of us or our utility services that our
customers, investors, legislators, or regulators may have or develop,
which could result from a variety of factors, including failures in
system reliability, failure to implement our investment plans or to
protect sensitive customer information, increases in rates, negative
media coverage or concerns about environmental, social, and/or
governance practices;
-- the impact of adopting new accounting guidance;
-- the effects of strategic initiatives, including mergers, acquisitions,
and divestitures;
-- legal and administrative proceedings; 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,
2020 2019 2020 2019
Operating Revenues:
Electric $
1,237 $
1,218 $
2,357 $
2,400
Natural gas 161 161 481 535
Total operating revenues 1,398 1,379 2,838 2,935
Operating Expenses:
Fuel 119 102 259 262
Purchased power 109 136 243 292
Natural gas purchased for resale 42 44 149 205
Other operations and maintenance 384 450 822 867
Depreciation and amortization 271 249 526 497
Taxes other than income taxes 119 118 244 244
Total operating expenses 1,044 1,099 2,243 2,367
Operating Income 354 280 595 568
Other Income, Net 48 36 69 65
Interest Charges 108 97 201 194
Income Before Income Taxes 294 219 463 439
Income Taxes 50 39 71 66
Net Income 244 180 392 373
Less: Net Income Attributable to
Noncontrolling Interests 1 1 3 3
Net Income Attributable to Ameren
Common Shareholders $
243 $
179 $
389 $
370
Earnings per Common Share - Basic $
0.99 $
0.73 $
1.58 $
1.51
Earnings per Common Share -
Diluted $
0.98 $
0.72 $
1.57 $
1.50
Weighted-average Common Shares
Outstanding - Basic 246.9 245.6 246.7 245.3
Weighted-average Common Shares
Outstanding - Diluted 247.9 247.2 248.0 246.8
---
AMEREN CORPORATION (AEE)
CONSOLIDATED BALANCE SHEET
(Unaudited, in millions)
June 30, December 31,
2020 2019
ASSETS
Current Assets:
Cash and cash equivalents $
8 $
16
Accounts receivable -trade (less
allowance for doubtful accounts) 486 393
Unbilled revenue 323 278
Miscellaneous accounts receivable 76 63
Inventories 514 494
Current regulatory assets 82 69
Other current assets 131 118
Total current assets 1,620 1,431
Property, Plant, and Equipment, Net 25,081 24,376
Investments and Other Assets:
Nuclear decommissioning trust fund 854 847
Goodwill 411 411
Regulatory assets 1,133 992
Other assets 917 876
Total investments and other assets 3,315 3,126
TOTAL ASSETS $
30,016 $
28,933
LIABILITIES AND EQUITY
Current Liabilities:
Current maturities of long-term debt $
357 $
442
Short-term debt 120 440
Accounts and wages payable 616 874
Taxes accrued 142 37
Interest accrued 118 94
Customer deposits 126 111
Current regulatory liabilities 147 164
Other current liabilities 374 343
Total current liabilities 2,000 2,505
Long-term Debt, Net 10,171 8,915
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes and
investment tax credits, net 3,034 2,919
Regulatory liabilities 4,933 4,887
Asset retirement obligations 639 638
Pension and other postretirement
benefits 414 401
Other deferred credits and liabilities 456 467
Total deferred credits and other
liabilities 9,476 9,312
Ameren Corporation Shareholders' Equity:
Common stock 2 2
Other paid-in capital, principally
premium on common stock 5,716 5,694
Retained earnings 2,525 2,380
Accumulated other comprehensive loss (16) (17)
Total Ameren Corporation shareholders'
equity 8,227 8,059
Noncontrolling Interests 142 142
Total equity 8,369 8,201
TOTAL LIABILITIES AND EQUITY $
30,016 $
28,933
---
AMEREN CORPORATION (AEE)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, in millions)
Six Months Ended June 30,
2020 2019
Cash Flows From Operating Activities:
Net income $
392 $
373
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 532 494
Amortization of nuclear fuel 45 33
Amortization of debt issuance costs and premium/
discounts 11 9
Deferred income taxes and investment tax credits,
net 68 54
Allowance for equity funds used during
construction (13) (13)
Stock-based compensation costs 11 10
Other 5 (5)
Changes in assets and liabilities (357) (76)
Net cash provided by operating activities 694 879
Cash Flows From Investing Activities:
Capital expenditures (1,228) (1,125)
Nuclear fuel expenditures (56) (25)
Purchases of securities - nuclear decommissioning
trust fund (153) (96)
Sales and maturities of securities - nuclear
decommissioning trust fund 121 95
Purchase of bonds (97)
Proceeds from sale of remarketed bonds 97
Other 1 (3)
Net cash used in investing activities (1,315) (1,154)
Cash Flows From Financing Activities:
Dividends on common stock (244) (233)
Dividends paid to noncontrolling interest holders (3) (3)
Short-term debt, net (320) 401
Maturities of long-term debt (85) (329)
Issuances of long-term debt 1,263 450
Issuances of common stock 27 37
Employee payroll taxes related to stock-based
compensation (20) (29)
Debt issuance costs (10) (4)
Net cash provided by financing activities 608 290
Net change in cash, cash equivalents, and
restricted cash (13) 15
Cash, cash equivalents, and restricted cash at
beginning of year 176 107
Cash, cash equivalents, and restricted cash at end
of period $
163 $
122
---
AMEREN CORPORATION (AEE)
OPERATING STATISTICS
Three Months Ended Six Months Ended
June 30,
June 30,
2020 2019 2020 2019
Electric Sales -kilowatthours (in millions):
Ameren Missouri
Residential 2,994 2,688 6,542 6,526
Commercial 3,020 3,426 6,372 6,975
Industrial 981 1,080 1,972 2,092
Street lighting and public authority 19 21 44 49
Ameren Missouri retail load subtotal 7,014 7,215 14,930 15,642
Off-system 2,172 719 4,441 2,555
Ameren Missouri total 9,186 7,934 19,371 18,197
Ameren Illinois Electric Distribution
Residential 2,622 2,381 5,508 5,514
Commercial 2,563 2,919 5,419 5,876
Industrial 2,598 3,021 5,292 5,765
Street lighting and public authority 109 116 229 253
Ameren Illinois Electric Distribution
total 7,892 8,437 16,448 17,408
Eliminate affiliate sales (111) (32) (181) (49)
Ameren Total 16,967 16,339 35,638 35,556
Electric Revenues (in millions):
Ameren Missouri
Residential $
359 $
333 $
656 $
645
Commercial 264 310 485 549
Industrial 67 77 120 132
Other, including street lighting and
public authority 36 29 48 70
Ameren Missouri retail load subtotal $
726 $
749 $
1,309 $
1,396
Off-system 45 24 93 81
Ameren Missouri total $
771 $
773 $
1,402 $
1,477
Ameren Illinois Electric Distribution
Residential $
210 $
199 $
430 $
416
Commercial 112 124 238 247
Industrial 30 33 65 67
Other, including street lighting and
public authority - 3 9 16
Ameren Illinois Electric Distribution
total $
352 $
359 $
742 $
746
Ameren Transmission
Ameren Illinois Transmission(a) $
86 $
66 $
161 $
136
ATXI 50 43 98 87
Ameren Transmission total $
136 $
109 $
259 $
223
Other and intersegment eliminations(a) (22) (23) (46) (46)
Ameren Total $
1,237 $
1,218 $
2,357 $
2,400
---
(a) Includes $12 million, $14
million, $24 million, and $29
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,
2020 2019 2020 2019
Gas Sales -dekatherms (in millions):
Ameren Missouri 4 3 12 12
Ameren Illinois Natural Gas 31 30 95 103
Ameren Total 35 33 107 115
Gas Revenues (in millions):
Ameren Missouri $
21 $
25 $
70 $
79
Ameren Illinois Natural Gas 140 136 411 456
Ameren Total $
161 $
161 $
481 $
535
---
June 30, December 31,
2020 2019
Common Stock:
Shares outstanding (in millions) 247.1 246.2
Book value per share $
33.29 $
32.73
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SOURCE Ameren Corporation
