Houston, TX – May 5, 2010 - CenterPoint Energy, Inc. (NYSE: CNP) today reported net income of $114 million, or $0.29 per diluted share, for the first quarter of 2010 compared to $67 million, or $0.19 per diluted share, for the same period of 2009. Net income for the first quarter of 2010 reflected an increase in federal income tax expense of $21 million, or $0.05 per diluted share, as a result of the recent federal health care legislation that eliminated the future tax deductibility of certain retiree health care costs. Operating income for the first quarter of 2010 was $357 million compared to $285 million for the same period of 2009.
“I am pleased with the overall performance of our company during the first quarter of this year,” said David M. McClanahan, president and chief executive officer of CenterPoint Energy. “Our electric and natural gas utilities reported strong results driven in part from a colder than normal winter, as well as control of operating expenses. Our interstate pipelines and field services businesses also performed well due primarily to increased revenues from investments in the midcontinent area. We continue to believe that our balanced portfolio of electric and natural gas businesses position us well as the economy recovers and the energy markets rebound.”
OPERATING INCOME BY SEGMENT
Electric Transmission & Distribution
The electric transmission & distribution segment reported operating income of $107 million for the first quarter of 2010, consisting of $71 million from the regulated electric transmission & distribution utility operations (TDU) and $36 million related to transition and system restoration bonds. Operating income for the first quarter of 2009 was $70 million, consisting of $37 million from the TDU and $33 million related to transition bonds. Operating income for the TDU benefited from increased energy usage partially due to colder winter weather, the addition of nearly 22,000 metered customers since March 2009 and higher net transmission revenues. Operation and maintenance expenses in 2010 were essentially unchanged from the previous year.
Natural Gas Distribution
The natural gas distribution segment reported operating income of $139 million for the first quarter of 2010 compared to $118 million for the same period of 2009. Operating income benefited from higher system throughput primarily due to colder winter weather in this segment’s southern service territories, higher non-volumetric revenues and lower bad debt expense.
The interstate pipelines segment reported operating income of $72 million for the first quarter of 2010 compared to $69 million for the same period of 2009. Operating income increased due to higher revenue from firm contracts primarily associated with the Carthage to Perryville pipeline, partially offset by lower revenue from off-system sales.
In addition to operating income, this segment recorded equity income of $3 million for the first quarter of 2010 primarily from its 50 percent interest in the Southeast Supply Header (SESH) compared to an equity loss of $2 million for the first quarter of 2009, which included a non-cash charge of $5 million to reflect SESH’s discontinued use of regulatory accounting.
The field services segment reported operating income of $23 million for the first quarter of 2010 compared to $26 million for the same period of 2009. Revenue growth from higher gathering volumes, as well as higher liquids prices in this segment’s processing business, were more than offset by the impact of lower natural gas prices and higher operating expenses primarily related to facility expansions.
In addition to operating income, this segment recorded equity income of $2 million in each of the first quarters of 2010 and 2009 from its 50 percent interest in a gas processing plant.
Competitive Natural Gas Sales and Services
The competitive natural gas sales and services segment reported operating income of $15 million for the first quarter of 2010 compared to $2 million for the same period of 2009. Operating income for the first quarter of 2010 included gains of $3 million resulting from mark-to-market accounting for derivatives associated with certain forward natural gas purchases and sales used to lock in economic margins compared to charges of $19 million for the same period of 2009. The first quarter of 2009 included a $6 million write-down of natural gas inventory to the lower of average cost or market. Operating income for 2010 was also impacted by reduced locational and seasonal price differentials.
On April 22, 2010, CenterPoint Energy’s board of directors declared a regular quarterly cash dividend of $0.195 per share of common stock payable on June 10, 2010, to shareholders of record as of the close of business on May 14, 2010.
OUTLOOK REAFFIRMED FOR 2010
CenterPoint Energy reaffirmed its 2010 earnings guidance of $1.02 to $1.12 per diluted share. 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 timing and cost of financing activities and the impact to earnings of various regulatory proceedings. In providing this guidance, the company has not included the impact of any changes in accounting standards, increased taxes resulting from recent health care legislation, any impact from acquisitions or divestitures, the timing effects of mark-tomarket or inventory accounting in the company’s competitive natural gas sales and services business, or the outcome of the TDU’s true-up appeal. The company has also excluded any impact to income from the change in value of Time Warner stocks and the related ZENS securities. For the impact of these factors on first quarter 2010 earnings, see the attached reconciliation.
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 March 31, 2010. 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 with 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, May 5, 2010, 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 $19 billion. With about 8,800 employees, CenterPoint Energy and its predecessor companies have been in business for more than 135 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 natural gas and natural gas liquids prices, the impact of unplanned facility outages, and other factors discussed in CenterPoint Energy’s and its subsidiaries’ Forms 10-K for the fiscal year ended December 31, 2009, CenterPoint Energy’s Form 10-Q for the period ended March 31, 2010, and other filings with the SEC.