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Calpine Reports Second Quarter 2012 Results, Tightens 2012 Guidance Range By Raising Lower End

Stocks in this article: CPN

Calpine Corporation (NYSE: CPN):

Summary of Second Quarter 2012 Financial Results (in millions):

    Three Months Ended June 30,     Six Months Ended June 30,
2012     2011     % Change 2012     2011     % Change
Operating Revenues 1 $ 879 $ 1,633 (46.2 )% $ 2,115 $ 3,132 (32.5 )%
Commodity Margin $ 609 $ 607 0.3 % $ 1,126 $ 1,096 2.7 %
Adjusted EBITDA $ 403 $ 406 (0.7 )% $ 728 $ 709 2.7 %
Adjusted Recurring Free Cash Flow $ 87 $ 41 112.2 % $ 60 $ 20 200.0 %
Per Share



$ 0.08 137.5 %



$ 0.04 225.0 %
Net Loss 2 $ (329 ) $ (70 ) $ (338 ) $ (367 )
Net Income (Loss), As Adjusted 3 $ 14 $ (55 ) $ (51 ) $ (165 )

Tightening 2012 Full Year Guidance:

    Prior Guidance

(as of April 2012)

    Current Guidance
(in millions)
Adjusted EBITDA

$1,675 - 1,800

$1,700 - 1,800

Adjusted Recurring Free Cash Flow

$470 - 595

$500 - 600

Recent Achievements:

  • Operations:— Generated 27 million MWh 4 of electricity in the second quarter of 2012, a record for the period and a 37% increase compared to the second quarter of 2011— Held year-to-date plant operating expense 5 essentially flat, despite a 44% increase in generation— Delivered lowest year-to-date fleetwide forced outage factor on record: 2.0%— Produced highest year-to-date fleetwide starting reliability on record: 98%— Achieved best year-to-date safety performance on record
  • Commercial:— Cleared approximately 4,200 MW of PJM capacity in 2015/2016 auction— Signed approximately 900 MW of long-term capacity and energy contracts— Achieved constructive near-term resolution for Sutter Energy Center, providing a capacity contract for balance of 2012 while engaging broader market reform discussion in California
  • Capital Structure:— Repurchased approximately $284 million of our common stock during the second quarter, bringing our cumulative repurchases to $409 million of the $600 million authorized under our program

Calpine Corporation (NYSE: CPN) today reported second quarter 2012 Adjusted EBITDA of $403 million, compared to $406 million in the prior year period, and Adjusted Recurring Free Cash Flow of $87 million, compared to $41 million in the prior year period. Net Loss 2 for the second quarter was $329 million, or $0.69 per diluted share, compared to $70 million, or $0.14 per diluted share, in the prior year period. Net Income, As Adjusted 3, for the second quarter of 2012 was $14 million compared to Net Loss, As Adjusted 3, of $55 million in the prior year period.

The key driver of the increase in Net Loss 2 was non-cash, unrealized mark-to-market losses on forward commodity hedges, which also contributed to a year-over-year decline in revenue. The unrealized losses were largely associated with a temporary spike in near-term forward power prices in Texas during the last week of the quarter, which has since subsided, thus substantially mitigating the impact. Meanwhile, these unrealized losses do not account for the potential increase in the economic value of the underlying physical generation, for which offsetting realized gains are expected primarily during the third quarter. Regardless, unrealized mark-to-market gains and losses have always been excluded from Adjusted EBITDA and Net Income (Loss), as Adjusted 3, in order to provide a clearer view of realized results, which better represent the operating performance of our company.

Year-to-date 2012 Adjusted EBITDA was $728 million, compared to $709 million in the prior year period, and Adjusted Recurring Free Cash Flow was $60 million, compared to $20 million in the prior year period. Net Loss 2 for the first half of 2012 was $338 million, or $0.71 per diluted share, compared to $367 million, or $0.75 per diluted share, in the prior year period. Net Loss, As Adjusted 3, for the first half of 2012 was $51 million compared to $165 million in the prior year period.

“Calpine continues to capitalize on the secular shift toward greater utilization of combined-cycle gas turbines in the power generation industry,” said Jack Fusco, Calpine’s President and Chief Executive Officer. “Our versatile fleet generated 56 million MWhs during the first half of 2012, 44% more than last year, as natural gas-fired generation continued to take market share from coal. This increased productivity, coupled with our focus on operational excellence, drove a 30% reduction in our plant operating expenses per MWh for the first half of 2012 and yielded the best year-to-date forced outage factor and starting reliability on record. Similarly, our plant personnel achieved the best year-to-date safety performance on record.

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