10-QPeriod: Q1 FY2012

CENTERPOINT ENERGY INC Quarterly Report for Q1 Ended Mar 31, 2012

Filed May 3, 2012For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) reported a slight decrease in net income for the first quarter of 2012 compared to the same period in 2011, with net income of $147 million ($0.34 per diluted share) versus $148 million ($0.35 per diluted share). This decrease was primarily driven by a $26 million reduction in operating income across its segments, notably within Natural Gas Distribution and Interstate Pipelines, partially offset by a decrease in income tax expense due to a favorable IRS settlement. The company experienced a significant increase in cash provided by financing activities, largely due to substantial long-term debt issuances, totaling $1.695 billion in transition bonds in January 2012. This strengthened the company's liquidity position, with cash and cash equivalents increasing significantly from $220 million at the end of 2011 to $1.096 billion at the end of Q1 2012. Capital expenditures remain a focus, with approximately $1.0 billion planned for the remainder of 2012, primarily for infrastructure improvements.

Financial Highlights

45 data points
Beta

Revenue

$2.08B

Net Income

$147.00M

7.1% Net Margin

EPS (Diluted)

$0.34

Total Assets

$22.35B

Cash & Equivalents

$1.10B

Free Cash Flow

$424.00M

Financial Statements
Beta
Revenue$2.08B
Operating Expenses$1.75B
Operating Income$338.00M
Net Income$147.00M
EPS (Basic)$0.34
EPS (Diluted)$0.34
Shares Outstanding (Basic)426.50M
Shares Outstanding (Diluted)428.49M

Key Highlights

  • 1Net income slightly declined to $147 million ($0.34 EPS) in Q1 2012 from $148 million ($0.35 EPS) in Q1 2011.
  • 2Consolidated revenues decreased to $2.084 billion in Q1 2012 from $2.587 billion in Q1 2011, mainly due to lower natural gas costs and reduced activity in the Competitive Natural Gas Sales and Services segment.
  • 3Operating income decreased by $26 million to $338 million in Q1 2012 compared to $364 million in Q1 2011, with notable declines in Natural Gas Distribution and Interstate Pipelines segments.
  • 4The company issued $1.695 billion in transition bonds in January 2012, significantly boosting cash and cash equivalents to $1.096 billion by the end of Q1 2012.
  • 5Capital expenditures for the first three months of 2012 were $264 million, with approximately $1.0 billion planned for the remainder of the year.
  • 6The effective income tax rate decreased from 37% in Q1 2011 to 33% in Q1 2012, primarily due to a $10 million reduction in uncertain tax liabilities from an IRS settlement.

Frequently Asked Questions

The decrease in net income was primarily due to a $26 million reduction in operating income across various segments, particularly in Natural Gas Distribution and Interstate Pipelines. This was partially offset by a $15 million decrease in income tax expense due to a favorable IRS settlement and a $14 million increase in gains on marketable securities.

CenterPoint Energy's liquidity has significantly improved. Cash and cash equivalents increased from $220 million at December 31, 2011, to $1.096 billion at March 31, 2012. This increase was driven by strong cash flows from financing activities, notably the issuance of $1.695 billion in transition bonds in January 2012.

The company plans to spend approximately $1.0 billion on capital expenditures for the remainder of 2012. These expenditures are primarily for investments in infrastructure for its electric transmission and distribution operations, as well as natural gas transmission, distribution, and gathering operations, focusing on reliability, safety, and system expansions.

The effective income tax rate decreased from 37% in the first quarter of 2011 to 33% in the first quarter of 2012. This reduction was mainly due to a $10 million reduction in the uncertain tax liability following a settlement with the IRS regarding federal income tax returns for tax years 2006 and 2007.