Energy delivery company CenterPoint Energy Inc. (CNP) posted earnings of 20 cents per share for the second quarter of 2010, 2 cents lower than the Zacks Consensus Estimate but 4 cents higher than the year-ago quarterly earnings.
However, after adjusting for one-time items, earnings per share on a GAAP basis also came in at 20 cents. One time mark-to-market losses from marketable securities (4 cents) and losses from natural gas derivative contracts (1 cent) were reversed by gains from indexed debt securities (5 cents).
Operational Results
CenterPoint Energy’s total revenues for the reported quarter increased 7.1% to $1.8 billion, compared to $1.6 billion in the year-ago quarter. However, this fell behind the Zacks Consensus Estimate of approximately $2 billion. Operating income in the reported quarter was $263 million compared to $253 million for the same period of 2009. The company reported a net income of $81 million compared to $86 million in the year-ago quarter.
Segment Results
Electric Transmission & Distribution
The Electric Transmission & Distribution segment reported operating income of $158 million for the second quarter of 2010, consisting of $122 million from the regulated electric transmission & distribution utility operations (TDU) and $36 million related to transition and system restoration bonds. Operating income for the second quarter of 2009 was $162 million, consisting of $129 million from the TDU and $33 million related to transition bonds.
Natural Gas Distribution
The Natural Gas Distribution segment reported operating income of $10 million for the second quarter of 2010 compared to $2 million for the year-ago quarter. Operating income benefited from rate changes, higher non-volumetric revenues and lower operation and maintenance expenses, resulting primarily from reduced bad debt expenses. These benefits were partially offset by lower system throughput.
Interstate Pipelines
The Interstate Pipelines segment reported operating income of $67 million for the second quarter of 2010 compared to $61 million in the year-ago quarter. Operating income increased due to higher revenue from new firm contracts and lower operation and maintenance expenses. This was partially offset by reduced revenues from off-system sales and ancillary services.
Field Services
The Field Services segment reported operating income of $31 million for the second quarter of 2010 compared to $23 million in the year-ago quarter. Revenue growth from higher gathering volumes and higher commodity prices was partially offset by increased operation and maintenance expenses primarily related to facility expansions.
Competitive Natural Gas Sales and Services
The Competitive Natural Gas Sales and Services segment reported an operating loss of $6 million for the second quarter of 2010 compared to operating income of $6 million for the year-ago quarter. Operating income for the reported quarter included charges of $8 million resulting from mark-to-market accounting for derivatives for forward natural gas purchases and sales used to lock in economic margins compared with gains of $3 million for the year-ago quarter.
Financial Condition
CenterPoint Energy reported cash and cash equivalents of $583 million at the end of the reported period from $151 million at the end of the year-ago period. The company reported $818 million in cash from operating activities, compared to $1.1 billion at the end of the year-ago period. Long-term debt decreased to $8.4 billion from $9.1 billion at fiscal-end 2009.
Outlook
CenterPoint Energy reaffirmed its earnings guidance for fiscal 2010 in the range of $1.02–$1.12 per share.
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