10-QPeriod: Q2 FY2013

AMEREN CORP Quarterly Report for Q2 Ended Jun 30, 2013

Filed August 9, 2013For Securities:AEE

Summary

Ameren Corporation's (AEE) second-quarter and year-to-date results for 2013 show a significant decrease in net income attributable to Ameren Corporation compared to the same periods in 2012. This decline is primarily driven by the impact of the Callaway energy center's refueling and maintenance outage, the absence of a prior-year favorable purchased power expense adjustment, and a reduction in Ameren Missouri's revenues due to a favorable FAC prudence review charge. Additionally, cooler spring temperatures in the second quarter impacted electric demand. The company is progressing with its strategic shift to become a purely rate-regulated utility by divesting its Merchant Generation segment, with the transaction expected to close in the fourth quarter of 2013. This divestiture will allow Ameren to focus on its core regulated utility operations, enhancing its ability to invest in infrastructure and serve customers. Despite the decrease in net income, Ameren's rate-regulated businesses in Missouri and Illinois are working to improve regulatory frameworks and cost recovery mechanisms to align spending with economic conditions and regulatory outcomes.

Financial Highlights

46 data points
Beta

Revenue

$1.40B

Net Income

$95.00M

6.8% Net Margin

EPS (Diluted)

$0.39

Total Assets

$22.28B

Cash & Equivalents

$150.00M

Free Cash Flow

$89.00M

Financial Statements
Beta
Revenue$1.40B
Operating Expenses$1.14B
Operating Income$261.00M
Interest Expense$100.00M
Net Income$95.00M
EPS (Basic)$0.39
EPS (Diluted)$0.39
Shares Outstanding (Basic)242.60M

Key Highlights

  • 1Ameren reported a net income attributable to Ameren Corporation of $95 million ($0.39 per share) for the second quarter of 2013, a decrease from $211 million ($0.87 per share) in the second quarter of 2012.
  • 2Net income from continuing operations decreased to $105 million ($0.44 per share) in Q2 2013 from $161 million ($0.66 per share) in Q2 2012, primarily due to higher operating and maintenance costs, including a scheduled outage at the Callaway energy center.
  • 3The company anticipates completing the divestiture of its Merchant Generation segment (New AER) in the fourth quarter of 2013, which will transform Ameren into a purely rate-regulated utility.
  • 4Ameren Missouri's electric margins decreased significantly in the second quarter of 2013 compared to 2012, impacted by weather, a FAC prudence review charge, and reduced transmission services revenues.
  • 5Ameren Illinois' electric margins saw an increase in the second quarter of 2013 compared to 2012, driven by higher transmission revenues and regulatory adjustments under the IEIMA.
  • 6Cash from operating activities for continuing operations increased for Ameren Corporation in the first six months of 2013 compared to 2012, driven by changes in coal inventory levels and improved margins.
  • 7The company continues to plan significant capital expenditures, with Ameren planning to invest $2.2 billion in FERC-regulated electric transmission projects over the five-year period ending in 2017.

Frequently Asked Questions

The decrease in net income was primarily due to higher costs associated with the Callaway energy center's scheduled refueling and maintenance outage, the absence of a favorable purchased power expense adjustment that occurred in the prior year, and a reduction in Ameren Missouri's revenues resulting from a FAC prudence review charge. Cooler weather in the second quarter of 2013 also negatively impacted electric demand compared to the warmer weather in the prior year.

Ameren entered into a transaction agreement on March 14, 2013, to divest its Merchant Generation segment (New AER) to IPH. The closing of this transaction is expected in the fourth quarter of 2013, subject to regulatory approvals from FERC and the Illinois Pollution Control Board. Once completed, Ameren will operate solely as a rate-regulated utility.

Illinois enacted amendments to the IEIMA in May 2013, clarifying the calculation of revenue requirement reconciliations and interest adjustments. Additionally, the Natural Gas Consumer, Safety and Reliability Act, enacted in July 2013, provides opportunities for natural gas utilities to accelerate infrastructure modernization and recover costs through rate surcharges. Ameren Illinois is evaluating participation in this new framework.

Ameren plans to invest significantly in its regulated utility infrastructure. Specifically, Ameren plans to invest $2.2 billion in FERC-regulated electric transmission projects over the five-year period ending in 2017, including the Illinois Rivers project. Ameren Illinois also anticipates increased natural gas capital expenditures upon its participation in the new Illinois regulatory framework.