Ameren's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Ameren Corporation (AEE)

Q2 2012 Earnings Call

August 2, 2012, 10:00 a.m. ET


Doug Fischer – Director of IR

Thomas Voss – Chairman, President, CEO

Martin Lyons – SVP, CFO


Steven Berg – Morgan Stanley

Paul Patterson – Glenrock Associates

Julian Dumoulin-Smith – UBS

John Hansen – Prestigious Advisors

Michael Lapides – Goldman Sachs

Andy Bishop – Morningstar

Kevin Fallon – SIR Capital

David Paz – Bank of America

(Brian Tadio – Future and Company)



Greetings and welcome to the Ameren Corporation Second Quarter 2012 Earnings Call. (Operator Instructions)

It is now my pleasure to introduce your host, Doug Fischer, Director of Investor Relations for Ameren Corporation. Thank you, Mr. Fischer, you may now begin.

Doug Fischer

Thank you and good morning. I am Doug Fischer, Director of Investor Relations for Ameren Corporation. On the call with me today are Tom Voss, our Chairman, President and Chief Executive Officer, Marty Lyons, our Senior Vice President and Chief Financial Officer and other members of the Ameren management team.

Before we begin, let me cover a few administrative details. This call is being broadcast live on the internet, and the webcast will be available for one year on our website at Further, this call contains time-sensitive data that is accurate only as of the date of today’s live broadcast. Redistribution of this broadcast is prohibited. To assist with our call this morning, we have posted a presentation on our website that will be referenced during this call. To access this presentation, please look in the investor section of our website under webcasts and presentations, and follow the appropriate link.

Turning to page two of the presentation, I need to inform you that comments made during this conference call may contain statements that are commonly referred to as forward-looking statements. Such statements include those about future expectations, beliefs, plans, strategies, objectives, events, conditions and financial performance. We caution you that various factors could cause actual results to differ materially from those anticipated and described in the forward-looking statement. For additional information concerning these factors, please read the forward-looking statement section in the news release we issued today, and the forward-looking statements and risk factor sections in our filings with the SEC.

Tom will begin this call with an overview of second quarter 2012 earnings and 2012 guidance, followed by a discussion of recent regulatory and business developments. Marty will follow with more detailed discussions of second quarter 2012 financial results, and regulatory and other financial matters. We will then open the call for questions. Here’s Tom, who will start on page three of the presentation.

Thomas Voss

Thanks, Doug. Good morning and thank you for joining us. I’m pleased to report that today we released second quarter 2012 core earnings of $.73 per share, compared to $.59 per share of core earnings in the second quarter of 2011. This improvement reflected increased earnings from our regulated utility operations, partially offset by decreased earnings from our merchant generation operations.

Key drivers of the higher regulated utility earnings were a favorable federal energy regulatory commission order related to a disputed Ameren Missouri power purchase agreement that expired in 2009, the absence in 2012 of a 2011 Ameren Missouri charge to earnings related to the fuel adjustment clause and 2011 Missouri electric and 2012 Illinois gas rate adjustments.

Other factors having a favorable effect on second quarter 2012 regulated utility earnings compared to second quarter 2011 regulated utility earnings included reduced storm-related costs and increased electric sales to native load customers resulting from warmer temperatures.

Merchant generation earnings were negatively impacted by lower prices for electricity. Marty will provide more details on our second quarter earnings in a few minutes.

Turning to page four, based on second quarter results, today we are raising our 2012 core earnings guidance range to $2.25 to $2.55 per share, from a prior range of $2.20 to $2.50 per share. Our core earnings guidance range for our merchant generation business segment remains $.05 to $.15 per share. The favorable earnings impact of warmer-than-normal second quarter temperatures, and the previously mentioned FERC order on the disputed power purchase agreement, have led us to raise core guidance for our regulated utility businesses by $.05 per share, at both the low and high ends of the range, to a new range of $2.20 to $2.40 per share. This guidance assumes normal temperatures for the second half of the year, and so far third quarter temperatures have been much warmer than normal, and I am very pleased to note that during the current extended period of very warm weather, which began with record temperatures in May, our utility systems have performed well, demonstrating the value of the significant reliability investments we have made in recent years.

Extreme weather puts strains not only on our system, but also on our customers we serve and our employees. We continue to provide a range of assistance to help low-income customers cope with the impacts of warm weather. These include promoting and contributing to programs that assist low-income customers with their bills, and annual donations of residential air conditioning units to local charities for distribution.

I also want to commend our employees, especially our generating center, substation mechanics and line workers, for their dedication and focus on safety. They work hard in the heat, so that our customers can stay cool.

Moving to page five, we have significant electric rate cases pending in both Missouri and Illinois, with decisions from utility regulators in these states expected later this year. While Marty will update you on other details of these proceedings, I want to touch on some policy issues. We continue to believe that modern, constructive regulatory frameworks, which provide timely cash flows and a reasonable opportunity to earn fair return on investments, are clearly in the best long-term interest of our customers and the states in which we operate. These frameworks support our ability to attract capital on terms which facilitate the timely investment needed to modernize our regulated utilities companies’ aging infrastructure and meet customers’ expectations for safe, reliable and clean energy. Constructive regulatory framework and the investment they facilitate, also help create good-paying jobs.

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