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Houston, TX – August 6, 2008 - CenterPoint Energy, Inc. (NYSE: CNP) today reported net income of $101 million, or $0.30 per diluted share, for the second quarter of 2008 compared to $70 million, or $0.20 per diluted share, for the same period of 2007.
“I am pleased with the overall performance of our company during the second quarter, particularly in a period of high energy prices,” said David M. McClanahan, president and chief executive officer of CenterPoint Energy. “We continue to see the benefit of our balanced electric and natural gas portfolio. Our utility operations turned in solid performances, and our pipelines and field services businesses continue to benefit from our previous investments and the continuing high levels of drilling activity in the mid-continent area driven by the strong demand for natural gas.”
For the six months ended June 30, 2008, net income was $224 million, or $0.66 per diluted share, compared to $200 million, or $0.58 per diluted share, for the same period of 2007.
OPERATING INCOME BY SEGMENT
Electric Transmission & Distribution
The electric transmission & distribution segment reported operating income of $164 million in the second quarter of 2008, consisting of $129 million from the regulated electric transmission & distribution utility operations (TDU) and $35 million related to transition bonds. Operating income for the second quarter of 2007 was $157 million, consisting of $118 million from the TDU, $10 million from the competition transition charge (CTC), and $29 million related to transition bonds. In February 2008, the company monetized the remaining allowed true-up balance resulting in the discontinuance of the CTC.
Operating income for the TDU for the second quarter of 2008 increased due to warmer weather, continued strong customer growth of nearly 52,000 metered customers since June 2007, higher revenues from ancillary services and a $9 million gain from a land sale, partially offset by higher transmission costs and other operating expenses. Operating income for the second quarter of 2007 included a $17 million favorable settlement related to the final fuel reconciliation of the formerly integrated electric utility.
Operating income for the six months ended June 30, 2008, was $255 million, consisting of $183 million from the TDU, $5 million from the CTC and $67 million related to transition bonds. Operating income for the same period of 2007 was $261 million, consisting of $180 million from the TDU, $21 million from the CTC, and $60 million related to transition bonds.
Natural Gas Distribution
The natural gas distribution segment reported operating income of $4 million for the second quarter of 2008 compared to $8 million for the same period of 2007. The decline was due to higher operating expenses primarily related to bad debts, customer-related costs and support services, partially offset by the benefit of new rates implemented in late 2007, lower employee-related costs and continued customer growth of nearly 34,000 metered customers since June 2007. Due to seasonal impacts, this segment typically reports minimal earnings in the second quarter.
Operating income for the six months ended June 30, 2008, was $125 million compared to $137 million for the same period of 2007.
Interstate Pipelines
The interstate pipelines segment reported operating income of $101 million for the second quarter of 2008 compared to $52 million for the same period of 2007. The increase was driven by increased ancillary services and the Carthage to Perryville pipeline, which went into commercial service in May 2007. In addition, operating income for the second quarter of 2008 included an $18 million gain from the sale of two storage development projects.
Operating income for the six months ended June 30, 2008, was $172 million compared to $96 million for the same period of 2007.
Field Services
The field services segment reported operating income of $32 million for the second quarter of 2008 compared to $27 million for the same period of 2007. Operating income increased from higher throughput, increased ancillary services and higher commodity prices.
In addition to operating income, this business had equity income of $4 million in the second quarter of 2008 compared to $2 million in the second quarter of 2007 from its 50 percent interest in a jointly-owned gas processing plant. These amounts are included in Other – net under the Other Income (Expense) caption.
Operating income for the six months ended June 30, 2008, was $77 million compared to $49 million for the same period of 2007. Equity income from the jointly-owned gas processing plant was $8 million for the six months ended June 30, 2008, compared to $4 million for the same period of 2007.
Competitive Natural Gas Sales and Services
The competitive natural gas sales and services segment reported an operating loss of $5 million for the second quarter of 2008 compared to a loss of $4 million for the same period of 2007. The second quarter of 2008 included charges of $10 million resulting from mark-to-market accounting for derivatives used to lock in economic margins of certain forward natural gas sales compared to mark-to-market charges of $6 million for the same period of 2007. The second quarter of 2007 also included a $5 million write-down of natural gas inventory to the lower of average cost or market.
Operating income for the six months ended June 30, 2008, was $1 million compared to $52 million for the same period of 2007. Approximately $13 million of the decline was due to reduced locational and seasonal price differentials. In addition, the six months ended June 30, 2008 included charges of $32 million resulting from mark-to-market accounting compared to charges of $14 million for the same period of 2007. The six months ended June 30, 2007 also included $6 million in inventory write-downs. Additionally, the six months ended June 30, 2008 included $6 million in gains on sales of gas from inventory compared to $30 million for the same period of 2007.
DIVIDEND DECLARATION
On July 24, 2008, CenterPoint Energy’s board of directors declared a regular quarterly cash dividend of $0.1825 per share of common stock payable on September 10, 2008, to shareholders of record as of the close of business on August 15, 2008.
OUTLOOK FOR 2008
CenterPoint Energy expects diluted earnings per share for 2008 to be in the upper half of its guidance range of $1.15 to $1.25. This guidance takes into consideration performance to date as well as various economic and operational assumptions related to the business segments in which the company operates. The company has made certain assumptions regarding the impact to earnings of various regulatory proceedings but cannot predict the ultimate outcome of any of those proceedings. In providing this guidance, the company has not projected the impact of any changes in accounting standards, any impact from acquisitions or divestitures, the timing effects of mark-to-market or inventory accounting in our competitive natural gas sales and services business or the outcome of the TDU’s true-up appeal.
FILING OF FORM 10-Q FOR CENTERPOINT ENERGY, INC.
Today, CenterPoint Energy, Inc. filed with the Securities and Exchange Commission (SEC) its Quarterly Report on Form 10-Q for the period ended June 30, 2008. A copy of that report is available on the company’s Web site, www.CenterPointEnergy.com, under the Investors section. Other filings the company makes at the SEC and other documents relating to its corporate governance can also be found on that site.
WEBCAST OF EARNINGS CONFERENCE CALL
CenterPoint Energy’s management will host an earnings conference call on Wednesday, August 6, 2008, at 10:30 a.m. Central time or 11:30 a.m. Eastern time. Interested parties may listen to a live audio broadcast of the conference call at www.CenterPointEnergy.com. A replay of the call can be accessed approximately two hours after the completion of the call and will be archived on the Web site for at least one year.
CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution, competitive natural gas sales and services, interstate pipelines and field services operations. The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. Assets total over $17 billion. With about 8,600 employees, CenterPoint Energy and its predecessor companies have been in business for more than 130 years. For more information, visit the Web site at www.CenterPointEnergy.com.
This news release includes forward-looking statements. Actual events and results may differ materially from those projected. The statements in this news release regarding future financial performance and results of operations and other statements that are not historical facts are forward-looking statements. Factors that could affect actual results include the timing and outcome of appeals from the true-up proceedings, the timing and impact of future regulatory, legislative and IRS decisions, effects of competition, weather variations, changes in CenterPoint Energy’s or its subsidiaries’ business plans, financial market conditions, the timing and extent of changes in commodity prices, particularly natural gas, the impact of unplanned facility outages, and other factors discussed in CenterPoint Energy’s and its subsidiaries’ Form 10-Ks for the period ended December 31, 2007, CenterPoint Energy’s and its subsidiaries’ Form 10-Qs for the period ended March 31, 2008, CenterPoint Energy’s Form 10-Q for the period ended June 30, 2008, and other filings with the SEC.
