10-QPeriod: Q2 FY2012

AMEREN CORP Quarterly Report for Q2 Ended Jun 30, 2012

Filed August 8, 2012For Securities:AEE

Summary

Ameren Corporation (AEE) reported a net income of $211 million for the second quarter of 2012, a significant increase from $138 million in the same period last year. However, for the first six months of 2012, the company recorded a net loss of $192 million, a reversal from a net income of $209 million in the first half of 2011. This loss was primarily driven by a substantial $628 million non-cash asset impairment charge recognized in the Merchant Generation segment due to declining power prices and market conditions. The rate-regulated utility operations, Ameren Missouri and Ameren Illinois, showed improved performance, benefiting from rate increases, favorable regulatory orders, and reduced storm-related expenses. Despite the overall loss for the six-month period, the company continues to invest in infrastructure modernization and seeks constructive regulatory frameworks to support its investments and earnings.

Financial Highlights

46 data points
Beta

Revenue

$1.40B

Net Income

$211.00M

15.0% Net Margin

EPS (Diluted)

$0.87

Total Assets

$22.98B

Cash & Equivalents

$91.00M

Free Cash Flow

$138.00M

Financial Statements
Beta
Revenue$1.40B
Operating Expenses$1.06B
Operating Income$347.00M
Interest Expense$98.00M
Net Income$211.00M
EPS (Basic)$0.87
EPS (Diluted)$0.87
Shares Outstanding (Basic)242.60M

Key Highlights

  • 1Ameren Corporation reported a Q2 2012 net income of $211 million, up from $138 million in Q2 2011.
  • 2The company incurred a net loss of $192 million for the first six months of 2012, compared to a net income of $209 million in the same period of 2011.
  • 3A significant $628 million non-cash asset impairment charge was recorded in the Merchant Generation segment due to declining power prices, impacting the six-month results.
  • 4Rate-regulated utility operations in Missouri (Ameren Missouri) and Illinois (Ameren Illinois) showed improved earnings due to rate increases, favorable regulatory outcomes, and lower storm expenses.
  • 5The company continues its strategy of investing in electric transmission projects and modernizing its infrastructure, supported by regulatory frameworks.
  • 6Genco, a part of the Merchant Generation segment, faces potential restrictions on external borrowing and dividend payments due to covenant limitations, with projections indicating inability to meet these requirements by early 2013.
  • 7Ameren Missouri received a $31 million refund from Entergy related to a past power purchase agreement, which had a positive impact on earnings.

Frequently Asked Questions

The net loss for the first six months of 2012 was primarily driven by a $628 million non-cash asset impairment charge recognized in the Merchant Generation segment. This charge was a result of declining power prices and adverse market conditions, which led to the carrying value of the AERG's Duck Creek energy center exceeding its estimated fair value.

The rate-regulated utility operations, particularly Ameren Missouri and Ameren Illinois, showed improved performance. This was driven by rate increases implemented in Ameren Missouri's electric service and Ameren Illinois' natural gas service, favorable regulatory outcomes such as a refund from Entergy for Ameren Missouri, and reduced storm-related expenses across segments.

The Merchant Generation segment continues to face challenges due to historically low power prices and margins. The company is focused on reducing operating costs, managing environmental compliance efficiently, and hedging fuel costs. However, the segment faces potential impairments and covenant restrictions, with a near-term outlook dependent on a potential recovery in power prices.

Yes, the company is involved in several significant regulatory and legal matters. These include ongoing electric rate cases in Missouri and Illinois, a FERC order requiring Ameren Illinois to refund certain transmission customers, EPA enforcement actions related to Clean Air Act compliance at certain facilities, and litigation concerning the Taum Sauk pumped-storage hydroelectric incident. The company is also monitoring new environmental regulations that could require significant capital expenditures and affect operations.