CenterPoint Lags Consensus - Analyst Blog

Energy delivery company CenterPoint Energy Inc. (CNP) posted earnings of 27 cents per share for the fourth quarter of 2009, three cents lower than the Zacks Consensus Estimate of 30 cents but higher than the year-ago quarterly earnings of 25 cents. However fiscal 2009 EPS came in at $1.01, lower than both the Zacks Consensus Estimate of $1.09 and the fiscal 2008 EPS of $1.30.

Operational Results

Total revenues in the reported quarter decreased 17.1% to $2.3 billion, compared to $2.8 billion in the year-ago quarter. The falling trend was reflected in fiscal 2009 results, where revenue fell to $8.3 billion compared to $11.3 billion in fiscal 2008.

Segmental Results

Electric Transmission & Distribution

The electric transmission & distribution segment reported operating income of $95 million for the fourth quarter of 2009, compared to $88 million in the year-ago quarter.

Operating income benefited from higher metered customers, rising net transmission revenues and income associated with the company's investment in an advanced metering system (AMS). These benefits were partially offset by reduced energy demand, and higher operation and maintenance expenses. In addition, the fourth quarter of 2008 reflected lower operating expenses as resources were devoted to recovery from Hurricane Ike.

Natural Gas Distribution

The natural gas distribution segment reported operating income of $99 million for the fourth quarter of 2009, compared to $96 million for the same period of 2008. Operating income increased from higher rates, other miscellaneous revenues and lower bad debt expense, partially offset by higher pension expense of $11 million.

Interstate Pipelines

The interstate pipelines segment reported an operating income of $62 million for the fourth quarter of 2009, compared to $66 million for the same period of 2008. The decline in operating income was primarily due to higher pension and other operating expenses. Higher revenue from new firm contracts was offset by lower revenue from off-system sales.

Field Services

The field services segment reported an operating income of $22 million for the fourth quarter of 2009, compared to $26 million for the same period of 2008. The decline in operating income was primarily the result of commodity prices that were higher in 2008 than in 2009, partially offset by growth in core gathering throughput.

Competitive Natural Gas Sales and Services

The competitive natural gas sales and services segment reported an operating income of $21 million for the fourth quarter of 2009, compared to $26 million for the same period of 2008. The decline in operating income was due to reduced locational and seasonal price differentials, partially offset by lower operation and maintenance expenses. In addition, operating income for the fourth quarter of 2009 included charges of $1 million resulting from mark-to-market accounting for derivatives associated with certain forward natural gas purchases and sales used to lock in economic margins.

Financial Condition

CenterPoint Energy reported cash and cash equivalents of $740 million at the end of fiscal 2009 from $167 million at fiscal-end 2008. The company reported $1.8 billion in cash from operating activities at fiscal-end 2009, compared to $851 million at fiscal-end 2008. Long-term debt increased to $9.1 billion at fiscal-end 2009 from $10.2 billion at fiscal-end 2008.

Outlook

CenterPoint Energy expects earnings for 2010 in the range of $1.02 – $1.12 per share. This is a tad lower than the Zacks Consensus Estimate of $1.16 per share. However, the aftershocks of fiscal 2009 results have yet to be incorporated in the Zacks Consensus Estimate.

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