10-QPeriod: Q1 FY2012

AMEREN CORP Quarterly Report for Q1 Ended Mar 31, 2012

Filed May 10, 2012For Securities:AEE

Summary

Ameren Corporation (AEE) reported a significant net loss of $403 million for the first quarter of 2012, a sharp contrast to the $71 million net income in the same period of 2011. This loss was primarily driven by a substantial $628 million non-cash asset impairment charge related to the Duck Creek energy center within the Merchant Generation segment, stemming from a steep decline in power prices. The company also experienced reduced earnings due to milder weather impacting energy demand and lower power prices affecting generation volumes and margins in its merchant operations. Despite the net loss, Ameren's rate-regulated utilities, Ameren Missouri and Ameren Illinois, are focused on improving their regulatory frameworks and recovering investments. Ameren Illinois is implementing a performance-based formula ratemaking process, while Ameren Missouri has filed for an electric rate increase and is exploring energy efficiency programs and potential small modular reactor development. The company's overall financial health and liquidity are supported by its regulated utility operations, though the merchant generation segment faces ongoing challenges due to volatile market conditions.

Financial Highlights

46 data points
Beta

Revenue

$1.41B

Net Income

-$403.00M

-28.5% Net Margin

EPS (Diluted)

$-1.66

Total Assets

$22.90B

Cash & Equivalents

$207.00M

Free Cash Flow

$138.00M

Financial Statements
Beta
Revenue$1.41B
Operating Expenses$1.25B
Operating Income$159.00M
Interest Expense$98.00M
Net Income-$403.00M
EPS (Basic)$-1.66
EPS (Diluted)$-1.66
Shares Outstanding (Basic)242.60M

Key Highlights

  • 1Ameren reported a net loss of $403 million in Q1 2012, compared to a net income of $71 million in Q1 2011, largely due to a $628 million asset impairment charge in the Merchant Generation segment.
  • 2Operating revenues decreased to $1.658 billion from $1.904 billion in the prior year's quarter, reflecting lower electric and gas sales, and reduced merchant generation volumes.
  • 3Ameren Missouri's electric margins decreased by $17 million, primarily due to milder weather impacting demand and lower wholesale sales, partially offset by higher electric base rates.
  • 4Ameren Illinois' electric margins increased by $10 million, driven by regulatory adjustments under the IEIMA and partially offset by milder weather.
  • 5The Merchant Generation segment's electric margins decreased by $36 million due to lower power prices and reduced generation volumes.
  • 6Capital expenditures increased by $51 million year-over-year, primarily for boiler and turbine projects and maintenance.
  • 7The company's liquidity remains adequate, with $1.96 billion in available credit capacity at the end of Q1 2012, though Genco's ability to borrow externally may be constrained by its interest coverage ratio.

Frequently Asked Questions

The primary driver of the $403 million net loss in Q1 2012 was a non-cash asset impairment charge of $628 million related to the Duck Creek energy center in the Merchant Generation segment. This impairment was triggered by a sharp decline in power prices. Additionally, milder weather reduced energy demand, and lower market prices negatively impacted merchant generation volumes and margins.

Ameren Missouri and Ameren Illinois are focused on improving their regulatory frameworks to support investments and recover costs. Ameren Illinois is implementing a performance-based formula ratemaking process under the IEIMA, aiming for more predictable cost recovery. Ameren Missouri has filed for an electric rate increase and is pursuing energy efficiency programs and exploring small modular reactor development, seeking timely cash flows and fair returns on investment.

The Merchant Generation segment is facing challenges due to historically low power prices and volatile market conditions, leading to reduced generation volumes and margins. The company is focused on cost management and seeking to hedge its generation and fuel costs to reduce cash flow volatility. The segment also incurred a significant asset impairment. Future performance is dependent on a potential recovery in power prices and the successful implementation of environmental compliance strategies.

Ameren's liquidity is primarily supported by cash flows from its rate-regulated utility operations and available credit facilities. The company has $1.96 billion in available credit capacity. Ameren plans to finance its significant capital expenditures through a blend of equity and debt to maintain a stable capital structure. Genco, a subsidiary in the merchant segment, faces potential borrowing constraints due to its indenture covenants, but can utilize intercompany borrowings from Ameren's money pool.