10-QPeriod: Q1 FY2010

CENTERPOINT ENERGY INC Quarterly Report for Q1 Ended Mar 31, 2010

Filed May 5, 2010For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) reported a significant increase in net income for the first quarter of 2010, reaching $114 million, or $0.29 per diluted share, compared to $67 million, or $0.19 per diluted share, in the same period of 2009. This robust performance was driven by a $72 million increase in operating income across its various segments, particularly Electric Transmission & Distribution and Natural Gas Distribution. The company also benefited from a favorable shift in gains/losses on marketable and indexed debt securities and a reduction in interest expenses. Key financial highlights include strong revenue growth in both the Electric Transmission & Distribution and Natural Gas Distribution segments, supported by increased customer usage and infrastructure investments like the advanced metering system (AMS). Despite a notable increase in income tax expense, largely due to the Affordable Care Act's impact on retiree healthcare cost deductibility, the company's operational improvements led to substantial bottom-line growth. Management anticipates that current operating cash flows and credit facilities will be sufficient to meet near-term capital expenditure and debt service requirements.

Financial Highlights

44 data points
Beta

Revenue

$3.02B

Net Income

$114.00M

3.8% Net Margin

EPS (Diluted)

$0.29

Total Assets

$19.35B

Cash & Equivalents

$329.00M

Free Cash Flow

$435.00M

Financial Statements
Beta
Revenue$3.02B
Operating Expenses$2.67B
Operating Income$357.00M
Net Income$114.00M
EPS (Basic)$0.29
EPS (Diluted)$0.29
Shares Outstanding (Basic)392.86M
Shares Outstanding (Diluted)395.08M

Key Highlights

  • 1Net income surged to $114 million ($0.29/share) in Q1 2010 from $67 million ($0.19/share) in Q1 2009, representing a significant year-over-year improvement.
  • 2Operating income increased substantially by $72 million, driven by growth in Electric Transmission & Distribution and Natural Gas Distribution segments.
  • 3Revenues grew to $3.02 billion in Q1 2010 from $2.77 billion in Q1 2009, indicating strong top-line performance.
  • 4The company is accelerating its Advanced Metering System (AMS) and intelligent grid projects with the help of a $200 million U.S. Department of Energy grant.
  • 5Long-term agreements for natural gas gathering and treating services in Louisiana, involving significant capital expenditures and volume commitments, were secured with Encana and Shell.
  • 6Total assets decreased slightly from $19.77 billion at year-end 2009 to $19.35 billion at March 31, 2010, primarily due to a reduction in current assets.
  • 7Long-term debt decreased from $9.12 billion at year-end 2009 to $8.41 billion at March 31, 2010, reflecting active debt management.

Frequently Asked Questions

The primary driver was a substantial increase in operating income, totaling $72 million, stemming from improved performance in the Electric Transmission & Distribution and Natural Gas Distribution segments. This was complemented by a positive swing in investment gains/losses and reduced interest expenses.

Long-term debt decreased from $9.12 billion at December 31, 2009, to $8.41 billion at March 31, 2010. This reduction was achieved through various debt repayments and refinancing activities.

The Affordable Care Act led to a non-cash increase in income tax expense of $21 million in Q1 2010. This was due to the elimination of tax deductibility for a portion of retiree healthcare costs reimbursed by Medicare Part D subsidies, which required a reduction in deferred tax assets.

CenterPoint Energy is investing significantly in its Field Services segment through long-term natural gas gathering and treating agreements in Louisiana, with estimated capital costs up to $325 million for the initial phase and potential further expansions. Additionally, the company is accelerating its advanced metering and intelligent grid deployment in its electric transmission and distribution business, supported by a $200 million DOE grant.