CenterPoint Energy Reports Fourth Quarter and Full Year 2008 Earnings
HOUSTON, Feb 25, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- CenterPoint Energy, Inc. (NYSE: CNP) today reported net income of $87 million, or $0.25 per diluted share, for the fourth quarter of 2008 compared to $108 million, or $0.32 per diluted share, for the same period of 2007.
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Net income for the year 2008 was $447 million, or $1.30 per diluted share, compared to $399 million, or $1.17 per diluted share, for 2007.
"I am pleased with the overall financial results that we are reporting today," said David M. McClanahan, president and chief executive officer of CenterPoint Energy. "Our interstate pipelines and field services businesses turned in record performances, and our electric and natural gas utilities reported solid results. Although we expect 2009 to be a more challenging year, we continue to benefit from the stability of our regulated utility operations and from the high levels of activity in a number of the producing areas served by our pipelines and field services businesses."
OPERATING INCOME BY SEGMENT
Electric Transmission & Distribution
The electric transmission & distribution segment reported operating income of $88 million for the fourth quarter of 2008, consisting of $55 million from the regulated electric transmission & distribution utility operations (TDU) and $33 million related to transition bonds. Operating income for the fourth quarter of 2007 was $104 million, consisting of $65 million from the TDU, $29 million related to transition bonds, and $10 million from the competition transition charge (CTC). In February 2008, the company monetized the remaining true-up balance resulting in the discontinuance of the CTC. Operating income for the TDU declined primarily due to higher transmission costs billed to the company from other transmission providers.
Operating income for the year 2008 was $545 million, consisting of $407 million from the TDU, $133 million related to transition bonds, and $5 million from the CTC. Operating income for 2007 was $561 million, consisting of $400 million from the TDU, $119 million related to transition bonds, and $42 million from the CTC. Operating income for the TDU increased as a result of customer growth of nearly 31,000 customers since December 2007, increased usage, in part due to favorable weather, proceeds from a land sale, and a refund of prior years' state franchise taxes. These positive impacts were partially offset by higher transmission costs and other operating expenses, and the impacts from Hurricane Ike. Operating income for 2007 included a $17 million favorable settlement related to the final fuel reconciliation of the formerly integrated electric utility. As a result of revisions to the Texas State Franchise Tax Law, the Texas margin tax, which was reported as operating expense prior to 2008, is now being reported as income tax and does not impact operating income.
Natural Gas Distribution
The natural gas distribution segment reported operating income of $96 million for the fourth quarter of 2008 compared to $89 million for the same period of 2007. Operating income benefited from continued customer growth of nearly 25,000 since December 2007 and lower employee-related expenses.
Operating income for the year 2008 was $215 million compared to $218 million for 2007. Operating income for 2008 declined primarily due to reduced usage and higher expenses, partially offset by rate increases and customer growth.
Interstate Pipelines
The interstate pipelines segment reported operating income of $66 million for the fourth quarter of 2008 compared to $71 million for the same period of 2007. Higher income from the Carthage to Perryville pipeline and increased transportation services was offset by reduced ancillary services and higher operation and maintenance expenses. Operating income for the fourth quarter of 2007 included favorable settlements of certain state tax issues and a write-off of project development costs.
Operating income for the year 2008 was $293 million compared to $237 million for 2007. Higher income from the Carthage to Perryville pipeline and increased transportation and ancillary services was partially offset by higher operation and maintenance expenses. Operating income for 2008 included an $18 million gain from the sale of two storage development projects and a $7 million write-down associated with pipeline assets removed from service. Operating income for 2007 included $8 million from the favorable settlement of certain state tax issues.
In addition to operating income, this business had equity income of $36 million for 2008 and $6 million for 2007, including $33 million for 2008 and $6 million for 2007 of pre-operating allowance for funds used during construction from its 50 percent interest in the Southeast Supply Header, a new pipeline that went into service in September 2008.
Field Services
The field services segment reported operating income of $26 million for the fourth quarter of 2008 compared to $24 million for the same period of 2007. Operating income increased primarily from higher throughput and increased ancillary services, partially offset by lower commodity prices and higher operation and maintenance expenses.
In addition to operating income, this business had equity income of $3 million in each of the fourth quarters of 2008 and 2007 from its 50 percent interest in a gas processing plant.
Operating income for the year 2008 was $147 million compared to $99 million for 2007. Operating income increased primarily from higher throughput, increased ancillary services and higher commodity prices, partially offset by higher operation and maintenance expenses. Operating income for 2008 also included $17 million associated with the sale of non-strategic assets and the settlement of a contractual dispute, and a gain of $7 million associated with system imbalances.
Equity income from the jointly-owned gas processing plant was $15 million for 2008 compared to $10 million for 2007.
Competitive Natural Gas Sales and Services
The competitive natural gas sales and services segment reported operating income of $26 million for the fourth quarter of 2008 compared to $19 million for the same period of 2007. Operating income increased due to more favorable locational and seasonal price differentials, which were partially offset by higher operating expenses. Operating income for the fourth quarter of 2008 included a $6 million write-down of natural gas inventory to the lower of average cost or market. Operating income for the fourth quarter of 2007 included gains of $2 million resulting from mark-to-market accounting for derivatives used to lock in economic margins of certain forward natural gas sales.
Operating income for the year 2008 was $62 million compared to $75 million for 2007. Operating income declined due to lower gains on sales of gas from inventory and higher operating expenses, partially offset by more favorable locational and seasonal price differentials. Operating income for 2008 included inventory write-downs of $30 million compared to inventory write-downs of $11 million for 2007. Operating income for 2008 included gains of $13 million resulting from mark-to-market accounting compared to mark-to-market charges of $10 million for 2007.
DIVIDEND DECLARATION
On January 22, 2009, CenterPoint Energy's board of directors declared a regular quarterly cash dividend of $0.19 per share of common stock payable on March 10, 2009, to shareholders of record as of the close of business on February 16, 2009. This represents more than a four percent increase over the $0.1825 per common share quarterly dividends paid by the company in 2008.
OUTLOOK FOR 2009
CenterPoint Energy expects diluted earnings per share for 2009 to be in the range of $1.05 to $1.15. This guidance takes into consideration an estimated increase in non-cash pension expense of $0.16 per diluted share. Additionally, the guidance takes into consideration various economic and operational assumptions related to the business segments in which the company operates. The company has made certain assumptions regarding the timing and cost of certain financing activities and the impact to earnings of various regulatory proceedings, including recovery of costs associated with Hurricane Ike. The company 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-K FOR CENTERPOINT ENERGY, INC.
Today, CenterPoint Energy, Inc. filed with the Securities and Exchange Commission (SEC) its Annual Report on Form 10-K for the fiscal year ended December 31, 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, February 25, 2009, 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 $19 billion. With about 8,800 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.
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 Form 10-K for the period ended December 31, 2008, and other filings with the SEC.
CenterPoint Energy, Inc. and Subsidiaries
Statements of Consolidated Income
(Millions of Dollars)
(Unaudited)
Quarter Ended Year Ended
December 31, December 31,
------------ ------------
2007 2008 2007 2008
---- ---- ---- ----
Revenues:
Electric Transmission &
Distribution $438 $445 $1,837 $1,916
Natural Gas Distribution 1,158 1,250 3,759 4,226
Competitive Natural Gas Sales and
Services 864 896 3,579 4,528
Interstate Pipelines 152 182 500 650
Field Services 50 61 175 252
Other Operations 2 3 10 11
Eliminations (62) (63) (237) (261)
--- --- ---- ----
Total 2,602 2,774 9,623 11,322
----- ----- ----- ------
Expenses:
Natural gas 1,646 1,791 5,995 7,466
Operation and maintenance 409 424 1,440 1,502
Depreciation and amortization 156 168 631 708
Taxes other than income taxes 88 88 372 373
-- -- --- ---
Total 2,299 2,471 8,438 10,049
----- ----- ----- ------
Operating Income 303 303 1,185 1,273
--- --- ----- -----
Other Income (Expense) :
Loss on Time Warner investment (40) (66) (114) (139)
Gain on indexed debt securities 41 62 111 128
Interest and other finance charges (135) (122) (503) (466)
Interest on transition bonds (30) (34) (123) (136)
Distribution from AOL Time Warner
litigation settlement - - 32 -
Additional distribution to ZENS
holders - - (27) -
Equity in earnings of
unconsolidated affiliates 6 5 16 51
Other - net 4 4 17 14
- - -- --
Total (154) (151) (591) (548)
---- ---- ---- ----
Income Before Income Taxes 149 152 594 725
Income Tax Expense (41) (65) (195) (278)
--- --- ---- ----
Net Income $108 $87 $399 $447
==== === ==== ====
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K 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 Year
Ended Ended
December 31, December 31,
------------- -------------
2007 2008 2007 2008
---- ---- ---- ----
Basic Earnings Per Common Share $0.34 $0.25 $1.25 $1.33
===== ===== ===== =====
Diluted Earnings Per Common Share $0.32 $0.25 $1.17 $1.30
===== ===== ===== =====
Dividends Declared per
Common Share $0.17 $0.1825 $0.68 $0.73
Weighted Average Common
Shares Outstanding (000):
- Basic 321,695 344,536 320,480 336,387
- Diluted 342,841 346,839 342,507 343,555
Operating Income (Loss) by Segment
----------------------------------
Electric Transmission &
Distribution:
Electric Transmission and
Distribution Operations $65 $55 $400 $407
Competition Transition Charge 10 - 42 5
-- - -- -
Total Electric Transmission and
Distribution Utility 75 55 442 412
Transition Bond Companies 29 33 119 133
-- -- --- ---
Total Electric Transmission &
Distribution 104 88 561 545
Natural Gas Distribution 89 96 218 215
Competitive Natural Gas Sales and
Services 19 26 75 62
Interstate Pipelines 71 66 237 293
Field Services 24 26 99 147
Other Operations (4) 1 (5) 11
-- - -- --
Total $303 $303 $1,185 $1,273
==== ==== ====== ======
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
Electric Transmission & Distribution
------------------------------------
Quarter Ended Year Ended
December 31, December 31,
-------------- % Diff ----------- % Diff
Fav/ Fav/
2007 2008 (Unfav) 2007 2008 (Unfav)
---- ---- ------- ---- ---- -------
Results of
Operations:
Revenues:
Electric
transmission
and
distribution
utility $373 $373 - $1,560 $1,593 2%
Transition bond
companies 65 72 11% 277 323 17%
-- -- --- ---
Total 438 445 2% 1,837 1,916 4%
--- --- ----- -----
Expenses:
Operation and
maintenance 185 201 (9%) 652 703 (8%)
Depreciation and
amortization 61 69 (13%) 243 277 (14%)
Taxes other than
income taxes 52 48 8% 223 201 10%
Transition bond
companies 36 39 (8%) 158 190 (20%)
-- -- --- ---
Total 334 357 (7%) 1,276 1,371 (7%)
--- --- ----- -----
Operating Income $104 $88 (15%) $561 $545 (3%)
==== === ==== ====
Operating Income:
Electric
transmission
and
distribution
operations $65 $55 (15%) $400 $407 2%
Competition
transition charge 10 - - 42 5 (88%)
Transition bond
companies 29 33 14% 119 133 12%
-- -- --- ---
Total Segment
Operating
Income $104 $88 (15%) $561 $545 (3%)
==== === ==== ====
Electric
Transmission
& Distribution
Operating
Data:
Actual MWH
Delivered
Residential 4,939,054 4,635,129 (6%) 23,999,085 24,258,254 1%
Total 17,729,923 16,316,691 (8%) 76,290,615 74,839,972 (2%)
Weather
(average
for service
area):
Percentage of 10-
year average:
Cooling
degree days 140% 88% (52%) 104% 102% (2%)
Heating
degree days 76% 88% 12% 98% 92% (6%)
Number of
metered
customers
-end
of period:
Residential 1,793,600 1,821,267 2% 1,793,600 1,821,267 2%
Total 2,034,074 2,064,854 2% 2,034,074 2,064,854 2%
Natural Gas Distribution
---------------------------------------------
Quarter Ended Year Ended
December 31, December 31,
-------------- % Diff ----------- % Diff
Fav/ Fav/
2007 2008 (Unfav) 2007 2008 (Unfav)
---- ---- ------- ---- ---- ------- Results of
Operations:
Revenues $1,158 $1,250 8% $3,759 $4,226 12%
Expenses:
Natural gas 838 928 (11%) 2,683 3,124 (16%)
Operation and
maintenance 158 153 3% 579 589 (2%)
Depreciation
and
amortization 41 39 5% 155 157 (1%)
Taxes other
than income
taxes 32 34 (6%) 124 141 (14%)
Total 1,069 1,154 (8%) 3,541 4,011 (13%)
Operating
Income $89 $96 8% $218 $215 (1%)
Natural Gas
Distribution
Operating
Data:
Throughput
data in BCF
Residential 53 58 9% 172 175 2%
Commercial and
Industrial 65 65 - 232 236 2%
Total
Throughput 118 123 4% 404 411 2%
Weather
(average for
service area)
Percentage of
10-year
average:
Heating degree
days 93% 102% 9% 96% 104% 8%
Number of
customers -
end of
period:
Residential 2,961,110 2,987,222 1% 2,961,110 2,987,222 1%
Commercial
and
Industrial 249,877 248,476 (1%) 249,877 248,476 (1%)
Total 3,210,987 3,235,698 1% 3,210,987 3,235,698 1%
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K 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 Year Ended
December 31, December 31,
----------- % Diff ------------- % Diff
Fav/ Fav/
2007 2008 (Unfav) 2007 2008 (Unfav)
---- ---- ------- ---- ---- -------
Results of Operations:
Revenues $864 $896 4% $3,579 $4,528 27%
---- ---- ------ ------
Expenses:
Natural gas 836 856 (2%) 3,467 4,423 (28%)
Operation and
maintenance 8 13 (63%) 31 39 (26%)
Depreciation and
amortization 1 1 - 5 3 40%
Taxes other than
income taxes - - - 1 1 -
- - - -
Total 845 870 (3%) 3,504 4,466 (27%)
--- --- ----- -----
Operating Income $19 $26 37% $75 $62 (17%)
=== === === ===
Competitive Natural Gas
Sales and Services
Operating Data:
Throughput data in BCF 130 136 5% 522 528 1%
=== === === ===
Number of customers
- end of period 7,139 9,771 37% 7,139 9,771 37%
===== ===== ===== =====
Interstate Pipelines
------------------------------------
Quarter Ended Year Ended
December 31, December 31,
----------- % Diff ------------- % Diff
Fav/ Fav/
2007 2008 (Unfav) 2007 2008 (Unfav)
---- ---- ------- ---- ---- -------
Results of Operations:
Revenues $152 $182 20% $500 $650 30%
---- ---- ---- ----
Expenses:
Natural gas 28 58 (107%) 83 155 (87%)
Operation and
maintenance 40 40 - 125 133 (6%)
Depreciation and
amortization 12 12 - 44 46 (5%)
Taxes other than
income taxes 1 6 (500%) 11 23 (109%)
- - -- --
Total 81 116 (43%) 263 357 (36%)
-- --- --- ---
Operating Income $71 $66 (7%) $237 $293 24%
=== === ==== ====
Pipelines Operating Data:
Throughput data in BCF
Transportation 336 393 17% 1,216 1,538 26%
=== === ===== =====
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
Field Services
----------------------------------
Quarter Ended Year Ended
December 31, December 31,
--------- % Diff ------------ % Diff
Fav/ Fav/
2007 2008 (Unfav) 2007 2008 (Unfav)
---- ---- ------- ---- ---- -------
Results of Operations:
Revenues $50 $61 22% $175 $252 44%
--- --- ---- ----
Expenses:
Natural gas 5 10 (100%) (4) 21 (625%)
Operation and
maintenance 17 21 (24%) 66 69 (5%)
Depreciation and
amortization 3 3 - 11 12 (9%)
Taxes other than income
taxes 1 1 - 3 3 -
- - - -
Total 26 35 (35%) 76 105 (38%)
-- -- -- ---
Operating Income $24 $26 8% $99 $147 48%
=== === === ====
Field Services Operating Data:
Throughput data
in BCF
Gathering 102 110 8% 398 421 6%
=== === === ===
Other Operations
------------------------------
Quarter Ended Year Ended
December 31, December 31,
---------- % Diff ---------- % Diff
2007 2008 Fav/(Unfav) 2007 2008 Fav/(Unfav)
---- ---- ----------- ---- ---- -----------
Results of Operations:
Revenues $2 $3 50% $10 $11 10%
Expenses 6 2 67% 15 - -
- - -- -
Operating Income (Loss) $(4) $1 125% $(5) $11 320%
=== == === ===
Capital Expenditures by Segment
(Millions of Dollars)
(Unaudited)
-----------------------
Quarter Ended Year Ended
December 31, December 31,
------------- ------------
2007 2008 2007 2008
---- ---- ---- ----
Capital Expenditures by Segment
Electric Transmission & Distribution $97 $80 $401 $336
Hurricane Ike - 4 - 145
- - - ---
Total Electric Transmission &
Distribution 97 84 401 481
Natural Gas Distribution 56 63 191 214
Competitive Natural Gas Sales and
Services 2 5 7 8
Interstate Pipelines 55 59 308 189
Field Services 19 45 74 122
Other Operations 8 21 30 39
- -- -- --
Total $237 $277 $1,011 $1,053
==== ==== ====== ======
Interest Expense Detail
(Millions of Dollars)
(Unaudited)
-----------------------
Quarter Ended Year Ended
December 31, December 31,
------------- ------------
2007 2008 2007 2008
---- ---- ---- ----
Interest Expense Detail
Amortization of Deferred Financing Cost $20 $7 $62 $25
Capitalization of Interest Cost (3) (2) (21) (12)
Transition Bond Interest Expense 30 34 123 136
Other Interest Expense 118 117 462 453
--- --- --- ---
Total Interest Expense $165 $156 $626 $602
==== ==== ==== ====
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Millions of Dollars)
(Unaudited)
December 31, December 31,
2007 2008
---- ----
ASSETS
Current Assets:
Cash and cash equivalents $129 $167
Other current assets 2,659 2,868
----- -----
Total current assets 2,788 3,035
----- -----
Property, Plant and Equipment, net 9,740 10,296
----- ------
Other Assets:
Goodwill 1,696 1,696
Regulatory assets 2,993 3,684
Other non-current assets 655 965
--- ---
Total other assets 5,344 6,345
----- -----
Total Assets $17,872 $19,676
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings $232 $153
Current portion of transition bond
long-term debt 159 208
Current portion of other long-term debt 1,156 125
Other current liabilities 2,244 2,362
----- -----
Total current liabilities 3,791 2,848
----- -----
Other Liabilities:
Accumulated deferred income taxes, net and
investment tax credit 2,266 2,633
Regulatory liabilities 828 821
Other non-current liabilities 813 1,156
--- -----
Total other liabilities 3,907 4,610
----- -----
Long-term Debt:
Transition bond 2,101 2,381
Other 6,263 7,800
----- -----
Total long-term debt 8,364 10,181
----- ------
Shareholders' Equity 1,810 2,037
----- -----
Total Liabilities and
Shareholders' Equity $17,872 $19,676
======= =======
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Condensed Statements of Consolidated Cash Flows
(Millions of Dollars)
(Unaudited)
Year Ended
December 31,
-------------
2007 2008
---- ----
Cash Flows from Operating Activities:
Net income $399 $447
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 696 736
Deferred income taxes - 487
Write-down of natural gas inventory 11 30
Changes in net regulatory assets 81 (366)
Changes in other assets and liabilities (425) (450)
Other, net 12 (33)
-- ---
Net Cash Provided by Operating Activities 774 851
Net Cash Used in Investing Activities (1,300) (1,368)
Net Cash Provided by Financing Activities 528 555
--- ---
Net Increase in Cash and Cash Equivalents 2 38
Cash and Cash Equivalents at Beginning of Period 127 129
---- ----
Cash and Cash Equivalents at End of Period $129 $167
==== ====
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
SOURCE CenterPoint Energy, Inc.
http://www.centerpointenergy.com
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