Ameren Q2 Earnings Beat on Higher Demand, Keeps View

Zacks

Ameren Corp. (AEE) posted a solid second quarter 2014 performance. Earnings from continuing operations of 62 cents per share beat the Zacks Consensus Estimate by 5 cents. Quarterly earnings were also substantially higher than the year-ago figure of 44 cents by 40.9%. The year-over-year upside came on the back of a solid Missouri division.

 

Total Revenue

Ameren’s total operating revenue in the reported quarter was up 1.1% year over year to $1,419 million. Reported revenue also surpassed the Zacks Consensus Estimate of $1,381 million by 2.8%.

The year-over-year improvement was due to better electric and natural gas revenues. Electric revenues edged up 0.6% while gas revenues were up 5.1%.

Highlights of the Release

Ameren’s total electricity sales in the reported quarter decreased 3.8% to 18,772 million kilowatt hours from 19,521 million kilowatt hours in the prior-year quarter. Gas volumes also decreased to 31,134 thousand decatherms from 33,332 thousand decatherms in the prior-year quarter.

Total operating expenses in the second quarter were $1,097 million, down 3.9% from the prior-year period.

Interest expenses were $89 million versus $100 million in the prior-year quarter.

Segmental Performance

Ameren Missouri Segment: Segmental earnings were $126 million in the second quarter, up from $84 million in the year-ago period due to warmer early summer temperatures in 2014 which boosted demand for electric volumes. Again, the absence of the 2013 Callaway Energy Center nuclear refueling outage expenses and a 2013 charge related to Missouri fuel adjustment clause (FAC) treatment of certain prior period wholesale sales made for some easier comparisons. The quarter also benefited from lower interest expense and disciplined cost management.

Ameren Illinois Segment: Segmental earnings stood at $28.0 million versus $31.0 million in the year-ago quarter.

Parent Company and Other: The segment narrowed its loss to $4 million from continuing operations in the quarter, from a loss of $10 million in the year-ago period.

Financial Condition

Ameren reported cash and cash equivalents of $46.0 million at quarter end, compared with $30.0 million at 2013 end.

Long-term debt (including current maturities) as of Jun 30, 2014 was $5,944 million versus $6,038 million as of Dec 31, 2013.

Cash generated from operating activities by Ameren in the first six months of 2014 was $654 million compared with $768 million in the year-ago period.

Capital expenditure in the first half of the year was $883 million versus $575 million a year ago.

Guidance

Ameren maintained its 2014 earnings guidance in the range of $2.30 to $2.50 per share.

Ameren expects positive returns from its infrastructure investments in FERC-regulated transmission projects. Also, Illinois energy delivery services will help its earnings to grow at a 7% to 10% compound annual rate through 2018 using 2013 as the base year.

Other Company Releases

Edison International (EIX) reported solid second quarter 2014 results with its adjusted earnings of $1.08 per share well ahead of the Zacks Consensus Estimate of 83 cents by 30.1%. Earnings for the quarter also increased 36.7% from the year-ago figure of 79 cents per share.

Entergy Corp. (ETR) posted second quarter 2014 operational earnings of $1.11 per share, higher than the year-ago number of $1.01 per share by 9.9%. However, earnings failed to surpass the Zacks Consensus Estimate of $1.14. Quarterly earnings increased on the back of strong performance from its Utility and Entergy Wholesale Commodities units.

American Electric Power Company Inc. (AEP) reported second quarter 2014 operating earnings of 80 cents per share, beating the Zacks Consensus Estimate of 75 cents by 6.7%. The quarterly figure also improved 9.6% from the year-ago adjusted profit of 73 cents per share. The upbeat performance was supported by investments in infrastructure and transmission as well as system improvement.

Zacks Rank

Ameren presently holds a Zacks Rank #2 (Buy).

With a market cap of $9.31 billion, this St. Louis-based company generates and distributes electricity and natural gas to residential, commercial, industrial and wholesale end markets in Missouri and Illinois.

With its recent exit from the merchant generation business – Ameren Energy Resources Company – Ameren is now more focused on its rate-regulated utilities. Now that the divesture is complete, we expect Ameren to witness modestly rising earnings at its core utilities, primarily in Illinois, over the long term. The utility is focused on the completion of several key infrastructure projects, and is also prudent about cost management.

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