Ameren Corporation (NYSE:AEE) today announced third quarter 2016 net income attributable to common shareholders of $369 million, or $1.52 per diluted share, compared to third quarter 2015 net income attributable to common shareholders of $343 million, or $1.41 per diluted share.
The year-over-year third quarter earnings increase reflected higher 2016 electric sales to residential and commercial customers, driven by warmer summer temperatures. Earnings in 2016 also benefited from increased electric transmission and electric and natural gas distribution infrastructure investments made by Ameren Transmission Company of Illinois (ATXI) and Ameren Illinois under modern, constructive regulatory frameworks. These positive factors were partially offset by lower electric sales to the New Madrid, Missouri aluminum smelter. The smelter, which was historically Ameren Missouri’s largest customer and was formerly owned by Noranda Aluminum, Inc., suspended operations in early 2016. Third quarter 2016 results also reflected increased Ameren Missouri depreciation expense.
“We are on track to deliver strong earnings results for 2016,” said Warner L. Baxter, chairman, president and chief executive officer of Ameren Corporation. “Our team continued to successfully execute all elements of our strategy, including allocating capital to jurisdictions with modern, constructive regulatory frameworks and managing costs in a disciplined manner. That performance drove strong third quarter earnings, which also benefited from warmer-than-normal summer temperatures. As a result, I am pleased to report that we have raised our 2016 guidance to a range of $2.65 to $2.75 per share, up from our prior range of $2.45 to $2.65 per share.”
Ameren recorded net income attributable to common shareholders in accordance with Generally Accepted Accounting Principles (GAAP) for the nine months ended Sept. 30, 2016, of $621 million, or $2.56 per diluted share, compared to GAAP net income attributable to common shareholders of $601 million, or $2.47 per diluted share, for the same period in 2015. Excluding certain items discussed below, Ameren recorded core earnings of $592 million, or $2.44 per diluted share, for the nine months ended Sept. 30, 2015.
GAAP earnings for the first nine months of 2015 included results from discontinued operations and a loss provision for discontinuing the pursuit of a construction and operating license (COL) for a second nuclear unit at Ameren Missouri’s Callaway Energy Center, but these two items were excluded from core earnings. The year-over-year nine-month earnings comparisons reflected increased 2016 electric transmission and electric and natural gas distribution infrastructure investments made by ATXI and Ameren Illinois. The earnings comparisons also benefited from increased Illinois natural gas distribution service rates, higher summer 2016 electric sales to residential and commercial customers driven by warmer temperatures, as well as first quarter 2016 tax benefits associated with share-based compensation. These factors were partially offset by lower electric sales to the New Madrid smelter, the 2016 nuclear refueling and maintenance outage expenses at the Callaway Energy Center, and unfavorable net impacts of the 2015 Missouri energy efficiency plan.
As reflected in the table below, the following items were excluded from core earnings for the nine months ended Sept. 30, 2015:
| • | Results from discontinued operations, which increased 2015 GAAP net income for the nine-month period by $52 million, primarily due to recognition of a tax benefit related to the resolution of an uncertain tax position. |
| • | A provision for discontinuing pursuit of a COL for a second nuclear unit at Ameren Missouri’s Callaway Energy Center, which decreased 2015 net income from continuing operations for the nine-month period by $43 million. |
Earnings Guidance
Ameren now expects its 2016 earnings to be in a range of $2.65 to $2.75 per diluted share, an increase from its prior range of $2.45 to $2.65 per diluted share. This updated guidance reflects strong year-to-date results and continues to include an estimated 15 cents per share reduction related to the expected temporary net effect of significantly lower electric sales to the New Madrid smelter.
Earnings guidance for 2016 assumes normal temperatures for the last three months of this year and is subject to the effects of, among other things: 30-year U.S. Treasury bond yields; regulatory, judicial and legislative actions;
energy center and energy distribution operations; energy, economic, capital and credit market conditions; severe storms; unusual or otherwise unexpected gains or losses; and other risks and uncertainties outlined, or referred to, in the Forward-looking Statements section of this press release.
Ameren Missouri Segment Results
Ameren Missouri segment third quarter 2016 earnings were $241 million, compared to third quarter 2015 earnings of $239 million. The year-over-year earnings improvement reflected higher 2016 electric sales to residential and commercial customers, driven by warmer summer temperatures. This positive factor was partially offset by lower electric sales to the New Madrid smelter and higher depreciation expense.
Ameren Illinois Segment Results
Ameren Illinois segment third quarter 2016 earnings were $119 million, compared to third quarter 2015 earnings of $98 million. The year-over-year earnings improvement reflected increased investments in electric transmission and distribution infrastructure, as well as increased electric sales, driven by warmer summer temperatures.
Other Results from Continuing Operations, including ATXI and Parent
Other earnings, including those of ATXI and the parent company, for the third quarter of 2016 were $9 million, compared to third quarter 2015 earnings of $6 million. The higher earnings reflected an increase in ATXI earnings to $17 million from $9 million, primarily as a result of increased investments in electric transmission infrastructure, partially offset by increased parent company interest charges resulting from the November 2015 issuance of $700 million of senior notes that replaced lower-cost, short-term debt.
Analyst Conference Call
Ameren will conduct a conference call for financial analysts at 9 a.m. Central Time on Friday, Nov. 4, to discuss third quarter 2016 earnings, earnings guidance, and regulatory and other matters. Investors, the news media and the public may listen to a live Internet broadcast of the call at Ameren.com by clicking on “Q3 2016 Ameren Corporation Earnings Conference Call,” followed by the appropriate audio link. An accompanying slide presentation will be available on Ameren’s website. The conference call and this presentation will be accessible in the “Investors” section of the website under “Webcasts & Presentations.” The conference call will be available for replay on Ameren’s website for one year. In addition, a telephone replay will be available beginning at approximately noon Central Time from Nov. 4 through Nov. 11 by dialing U.S. and Canada 877.660.6853 or international 201.612.7415, and entering ID number 13648680.
About Ameren
St. Louis-based Ameren Corporation powers the quality of life for 2.4 million electric customers and more than 900,000 natural gas customers in a 64,000-square-mile area through its Ameren Missouri and Ameren Illinois rate-regulated utility subsidiaries. Ameren Illinois provides electric distribution and transmission service, as well as natural gas distribution service, while Ameren Missouri provides vertically integrated electric service, with generating capacity of over 10,200 megawatts, and natural gas distribution service. Ameren Transmission Company of Illinois develops regional electric transmission projects. Follow the company on Twitter @AmerenCorp. For more information, visit Ameren.com.
