Ameren (NYSE: AEE) Announces Third Quarter 2017 Results
The decrease in year-over-year third quarter earnings was largely due to a change in the timing of interim period revenue recognition at Ameren Illinois Electric Distribution that reduced results by
"As a result of continued solid execution of our strategy, including disciplined cost management, we remain on track to deliver strong earnings results this year," said
The decrease in year-over-year nine-month earnings reflected lower electric retail sales driven by milder temperatures and a change in the timing of interim period revenue recognition at Ameren Illinois Electric Distribution that reduced results by
As reflected in the table below, core earnings for the third quarter and first nine months of 2017 excluded a non-cash charge at the parent company for the revaluation of deferred taxes resulting from a
Three Months |
Nine Months |
|||||||||||||||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||||||||||||||
GAAP Earnings / Diluted EPS |
$ |
288 |
$ |
1.18 |
$ |
369 |
$ |
1.52 |
$ |
583 |
$ |
2.39 |
$ |
621 |
$ |
2.56 |
||||||||
Charge for revaluation of deferred taxes |
22 |
0.09 |
— |
— |
22 |
0.09 |
— |
— |
||||||||||||||||
Less: Federal income tax benefit |
(8) |
(0.03) |
— |
— |
(8) |
(0.03) |
— |
— |
||||||||||||||||
Charge, net of tax benefit |
14 |
0.06 |
— |
— |
14 |
0.06 |
— |
— |
||||||||||||||||
Core Earnings / Diluted EPS |
$ |
302 |
$ |
1.24 |
$ |
369 |
$ |
1.52 |
$ |
597 |
$ |
2.45 |
$ |
621 |
$ |
2.56 |
Earnings Guidance
GAAP and core earnings guidance for 2017 assume normal temperatures for the last three months of this year and are subject to the effects of, among other things: 30-year
Ameren Missouri Segment Results
Ameren Missouri third quarter 2017 earnings were
Ameren Illinois Electric Distribution Segment Results
Ameren Illinois Electric Distribution third quarter 2017 earnings were
Ameren Illinois Natural Gas Segment Results
Ameren Transmission Segment Results
Ameren Transmission third quarter 2017 earnings were
Other Results
Other results, which includes items not reported in a business segment, were a GAAP loss of
Analyst Conference Call
About
Use of Non-GAAP Financial Measures
In this release,
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
- 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 theFederal Energy Regulatory Commission seeking a reduction in the allowed base return on common equity under theMidcontinent 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, including the direct relationship betweenAmeren 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, or rates, such as the
July 2017 change inIllinois law that increased the state's corporate income tax rate, or changes to federal tax laws as a result of tax reform legislation currently being developed byCongress , 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' ability to achieve 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 and to recover these costs in a timely manner in our attempt to earn our allowed returns on equity;
- 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 onlyNuclear 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 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 as well as potential wind and solar generation 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, 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; 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.
|
|||||||||||||||
CONSOLIDATED STATEMENT OF INCOME |
|||||||||||||||
(Unaudited, in millions, except per share amounts) |
|||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
2017 |
2016 |
2017 |
2016 |
||||||||||||
Operating Revenues: |
|||||||||||||||
Electric |
$ |
1,594 |
$ |
1,725 |
$ |
4,183 |
$ |
4,101 |
|||||||
Natural gas |
129 |
134 |
592 |
619 |
|||||||||||
Total operating revenues |
1,723 |
1,859 |
4,775 |
4,720 |
|||||||||||
Operating Expenses: |
|||||||||||||||
Fuel |
199 |
205 |
594 |
574 |
|||||||||||
Purchased power |
162 |
178 |
491 |
451 |
|||||||||||
Natural gas purchased for resale |
25 |
34 |
196 |
227 |
|||||||||||
Other operations and maintenance |
402 |
411 |
1,229 |
1,246 |
|||||||||||
Depreciation and amortization |
225 |
211 |
668 |
628 |
|||||||||||
Taxes other than income taxes |
129 |
129 |
364 |
358 |
|||||||||||
Total operating expenses |
1,142 |
1,168 |
3,542 |
3,484 |
|||||||||||
Operating Income |
581 |
691 |
1,233 |
1,236 |
|||||||||||
Other Income and Expenses: |
|||||||||||||||
Miscellaneous income |
13 |
18 |
42 |
54 |
|||||||||||
Miscellaneous expense |
2 |
8 |
16 |
21 |
|||||||||||
Total other income |
11 |
10 |
26 |
33 |
|||||||||||
Interest Charges |
97 |
97 |
295 |
287 |
|||||||||||
Income Before Income Taxes |
495 |
604 |
964 |
982 |
|||||||||||
Income Taxes |
205 |
233 |
376 |
356 |
|||||||||||
Net Income |
290 |
371 |
588 |
626 |
|||||||||||
Less: Net Income Attributable to Noncontrolling Interests |
2 |
2 |
5 |
5 |
|||||||||||
Net Income Attributable to Ameren Common Shareholders |
$ |
288 |
$ |
369 |
$ |
583 |
$ |
621 |
|||||||
Earnings per Common Share – Basic |
$ |
1.19 |
$ |
1.52 |
$ |
2.40 |
$ |
2.56 |
|||||||
Earnings per Common Share – Diluted |
$ |
1.18 |
$ |
1.52 |
$ |
2.39 |
$ |
2.56 |
|||||||
Average Common Shares Outstanding – Basic |
242.6 |
242.6 |
242.6 |
242.6 |
|||||||||||
Average Common Shares Outstanding – Diluted |
244.7 |
242.9 |
244.0 |
243.0 |
|
|||||||
CONSOLIDATED BALANCE SHEET |
|||||||
(Unaudited, in millions) |
|||||||
|
|
||||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash and cash equivalents |
$ |
9 |
$ |
9 |
|||
Accounts receivable - trade (less allowance for doubtful accounts) |
507 |
437 |
|||||
Unbilled revenue |
262 |
295 |
|||||
Miscellaneous accounts receivable |
85 |
63 |
|||||
Inventories |
547 |
527 |
|||||
Current regulatory assets |
75 |
149 |
|||||
Other current assets |
96 |
113 |
|||||
Total current assets |
1,581 |
1,593 |
|||||
Property, Plant, and Equipment, Net |
20,906 |
20,113 |
|||||
Investments and Other Assets: |
|||||||
Nuclear decommissioning trust fund |
672 |
607 |
|||||
|
411 |
411 |
|||||
Regulatory assets |
1,509 |
1,437 |
|||||
Other assets |
538 |
538 |
|||||
Total investments and other assets |
3,130 |
2,993 |
|||||
TOTAL ASSETS |
$ |
25,617 |
$ |
24,699 |
|||
LIABILITIES AND EQUITY |
|||||||
Current Liabilities: |
|||||||
Current maturities of long-term debt |
$ |
777 |
$ |
681 |
|||
Short-term debt |
446 |
558 |
|||||
Accounts and wages payable |
548 |
805 |
|||||
Taxes accrued |
159 |
46 |
|||||
Interest accrued |
106 |
93 |
|||||
Customer deposits |
108 |
107 |
|||||
Current regulatory liabilities |
119 |
110 |
|||||
Other current liabilities |
318 |
274 |
|||||
Total current liabilities |
2,581 |
2,674 |
|||||
Long-term Debt, Net |
6,922 |
6,595 |
|||||
Deferred Credits and Other Liabilities: |
|||||||
Accumulated deferred income taxes, net |
4,721 |
4,264 |
|||||
Accumulated deferred investment tax credits |
50 |
55 |
|||||
Regulatory liabilities |
2,045 |
1,985 |
|||||
Asset retirement obligations |
631 |
635 |
|||||
Pension and other postretirement benefits |
711 |
769 |
|||||
Other deferred credits and liabilities |
469 |
477 |
|||||
Total deferred credits and other liabilities |
8,627 |
8,185 |
|||||
Ameren Corporation Shareholders' Equity: |
|||||||
Common stock |
2 |
2 |
|||||
Other paid-in capital, principally premium on common stock |
5,534 |
5,556 |
|||||
Retained earnings |
1,830 |
1,568 |
|||||
Accumulated other comprehensive loss |
(21) |
(23) |
|||||
|
7,345 |
7,103 |
|||||
Noncontrolling Interests |
142 |
142 |
|||||
Total equity |
7,487 |
7,245 |
|||||
TOTAL LIABILITIES AND EQUITY |
$ |
25,617 |
$ |
24,699 |
|
|||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS |
|||||||
(Unaudited, in millions) |
|||||||
Nine Months Ended |
|||||||
2017 |
2016 |
||||||
Cash Flows From Operating Activities: |
|||||||
Net income |
$ |
588 |
$ |
626 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation and amortization |
653 |
625 |
|||||
Amortization of nuclear fuel |
71 |
63 |
|||||
Amortization of debt issuance costs and premium/discounts |
16 |
17 |
|||||
Deferred income taxes and investment tax credits, net |
366 |
364 |
|||||
Allowance for equity funds used during construction |
(16) |
(20) |
|||||
Share-based compensation costs |
12 |
17 |
|||||
Other |
(7) |
(9) |
|||||
Changes in assets and liabilities |
(40) |
(124) |
|||||
Net cash provided by operating activities |
1,643 |
1,559 |
|||||
Cash Flows From Investing Activities: |
|||||||
Capital expenditures |
(1,523) |
(1,496) |
|||||
Nuclear fuel expenditures |
(52) |
(41) |
|||||
Purchases of securities – nuclear decommissioning trust fund |
(248) |
(310) |
|||||
Sales and maturities of securities – nuclear decommissioning trust fund |
235 |
297 |
|||||
Other |
3 |
(1) |
|||||
Net cash used in investing activities |
(1,585) |
(1,551) |
|||||
Cash Flows From Financing Activities: |
|||||||
Dividends on common stock |
(320) |
(309) |
|||||
Dividends paid to noncontrolling interest holders |
(5) |
(5) |
|||||
Short-term debt, net |
(112) |
307 |
|||||
Maturities of long-term debt |
(425) |
(389) |
|||||
Issuances of long-term debt |
849 |
149 |
|||||
Share-based payments |
(39) |
(32) |
|||||
Debt issuance costs |
(5) |
(1) |
|||||
Other |
(1) |
(2) |
|||||
Net cash used in financing activities |
(58) |
(282) |
|||||
Net change in cash and cash equivalents |
— |
(274) |
|||||
Cash and cash equivalents at beginning of year |
9 |
292 |
|||||
Cash and cash equivalents at end of period |
$ |
9 |
$ |
18 |
|
|||||||||||||||
OPERATING STATISTICS |
|||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
|
|
||||||||||||||
2017 |
2016 |
2017 |
2016 |
||||||||||||
Electric Sales - kilowatthours (in millions): |
|||||||||||||||
Ameren Missouri |
|||||||||||||||
Residential |
3,667 |
3,867 |
9,589 |
10,243 |
|||||||||||
Commercial |
4,065 |
4,190 |
10,953 |
11,269 |
|||||||||||
Industrial |
1,197 |
1,239 |
3,368 |
3,683 |
|||||||||||
Off-system and other |
2,491 |
1,823 |
9,207 |
5,149 |
|||||||||||
Ameren Missouri total |
11,420 |
11,119 |
33,117 |
30,344 |
|||||||||||
Ameren Illinois Electric Distribution |
|||||||||||||||
Residential |
3,172 |
3,457 |
8,305 |
8,901 |
|||||||||||
Commercial |
3,420 |
3,624 |
9,271 |
9,460 |
|||||||||||
Industrial |
2,983 |
3,188 |
8,511 |
8,895 |
|||||||||||
|
131 |
127 |
388 |
390 |
|||||||||||
Ameren Illinois Electric Distribution total |
9,706 |
10,396 |
26,475 |
27,646 |
|||||||||||
Eliminate affiliate sales |
(117) |
(117) |
(382) |
(394) |
|||||||||||
Ameren Total |
21,009 |
21,398 |
59,210 |
57,596 |
|||||||||||
Electric Revenues (in millions): |
|||||||||||||||
Ameren Missouri |
|||||||||||||||
Residential |
$ |
491 |
$ |
499 |
$ |
1,134 |
$ |
1,153 |
|||||||
Commercial |
408 |
416 |
971 |
982 |
|||||||||||
Industrial |
101 |
101 |
242 |
251 |
|||||||||||
Off-system and other |
98 |
128 |
410 |
296 |
|||||||||||
Ameren Missouri total |
$ |
1,098 |
$ |
1,144 |
$ |
2,757 |
$ |
2,682 |
|||||||
Ameren Illinois Electric Distribution |
|||||||||||||||
Residential |
|||||||||||||||
Delivery service |
$ |
143 |
$ |
204 |
$ |
425 |
$ |
455 |
|||||||
Power supply and other cost recovery |
81 |
94 |
226 |
253 |
|||||||||||
Commercial |
|||||||||||||||
Delivery service |
84 |
110 |
246 |
241 |
|||||||||||
Power supply and other cost recovery |
49 |
59 |
147 |
159 |
|||||||||||
Industrial |
|||||||||||||||
Delivery service |
10 |
14 |
42 |
40 |
|||||||||||
Power supply and other cost recovery |
15 |
11 |
38 |
29 |
|||||||||||
|
|||||||||||||||
Delivery service |
6 |
9 |
21 |
22 |
|||||||||||
Power supply and other cost recovery |
2 |
2 |
8 |
8 |
|||||||||||
Other |
15 |
— |
25 |
6 |
|||||||||||
Ameren Illinois Electric Distribution total |
$ |
405 |
$ |
503 |
$ |
1,178 |
$ |
1,213 |
|||||||
Ameren Transmission |
|||||||||||||||
Ameren Illinois Transmission(a) |
$ |
72 |
$ |
73 |
$ |
197 |
$ |
187 |
|||||||
ATXI |
47 |
35 |
129 |
96 |
|||||||||||
Ameren Transmission total |
$ |
119 |
$ |
108 |
$ |
326 |
$ |
283 |
|||||||
Other and intersegment eliminations |
(28) |
(30) |
(78) |
(77) |
|||||||||||
Ameren Total |
$ |
1,594 |
$ |
1,725 |
$ |
4,183 |
$ |
4,101 |
(a) |
Includes |
|
|||||||||||||||
OPERATING STATISTICS |
|||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
|
|
||||||||||||||
2017 |
2016 |
2017 |
2016 |
||||||||||||
Gas Sales - dekatherms (in millions): |
|||||||||||||||
Ameren Missouri |
3 |
3 |
12 |
13 |
|||||||||||
|
26 |
26 |
113 |
118 |
|||||||||||
Ameren Total |
29 |
29 |
125 |
131 |
|||||||||||
Gas Revenues (in millions): |
|||||||||||||||
Ameren Missouri |
$ |
17 |
$ |
20 |
$ |
83 |
$ |
90 |
|||||||
|
112 |
114 |
510 |
530 |
|||||||||||
Eliminate affiliate revenues |
— |
— |
(1) |
(1) |
|||||||||||
Ameren Total |
$ |
129 |
$ |
134 |
$ |
592 |
$ |
619 |
|||||||
|
|
||||||||||||||
Common Stock: |
|||||||||||||||
Shares outstanding (in millions) |
242.6 |
242.6 |
|||||||||||||
Book value per share |
$ |
30.28 |
$ |
29.28 |
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