Calpine Turns to Profit, Sales Lag - Analyst Blog
February 14 2013 - 10:23AM
Zacks
Calpine Corporation (CPN) posted operating
earnings of 22 cents per share for the fourth quarter of 2012 as
against the Zacks Consensus Estimate as well as the year-ago figure
of a loss of 3 cents per share.
In full-year 2012, earnings were 42 cents per share in comparison
to a loss of 39 cents per share in the prior year and the Zacks
Consensus Estimate of a loss of 24 cents per share.
Operational Performance
Quarterly revenue at Calpine was $1,367 million, lower than the
Zacks Consensus Estimate by $999 million. The figure also fell
below the year-ago figure of $1,459 million. In 2012, the top-line
figure of $5,478 million was lower than the Zacks Consensus
Estimate of $6,641 million and the year-ago figure of $6,800
million.
In the quarter under review, fuel and purchased energy expense was
$878 million, down 0.34% year over year. Total operating expenses
were $1,301 million, up 2.3% year over year.
In the reported quarter, commodity margin was $515 million, down
6.9% year over year. Adjusted earnings before interest tax,
depreciation and amortization (EBITDA) were $315 million, down
16.9% year over year. In 2012, adjusted EBITDA was $1,749 million,
up 1.33% year over year.
Quarterly Segment Performance
Commodity margin in the West Region was $246
million, down 6.5% year over year due to lower contribution from
hedges and lower revenue due to the expiration of contracts,
partially offset by an increase in commodity margin on open
position driven by higher market spark spreads on higher generation
volumes.
Commodity margin in the Texas Region was $98
million, down from 12.5% year over year due to lower contribution
from hedges and weak market pricing conditions.
Commodity margin in the North Region was $138
million, up 9.5% year over year driven by higher regulatory
capacity revenues and to some extent by increased generation.
Commodity margin in the Southeast Region was $33
million, down 36.5% year over year due to expiration of a purchase
power agreement during the third quarter of 2012, which has since
been recontracted and lower contribution from hedges.
Financial Update
Cash and cash equivalents at the end of Dec 31, 2012 were $1,284
million versus $1,252 million at the end of Dec 31, 2011. Debt, net
was $10,635 million, up from $10,325 million at the end of Dec
2011.
In 2012, the company repurchased 35.6 million shares worth $600
million. In Feb 2013, the company also announced a share repurchase
program worth $400 million, bringing the cumulative authorization
value to $1 billion.
Guidance
For full year 2013, the company expects adjusted EBITDA in the
range of $1,760 million to $1,960 million. It expects growth
capital expenditures to be $250 million.
Our Take
Though Calpine Corporation missed the top line, it posted strong
bottom-line numbers. The company continued to make progress during
the year via sale and purchase of various projects. The company is
also well placed on the strength of its power plant operations,
unprecedented coal-to-gas switching and a steady share repurchase
program.
However, we prefer to remain on the sidelines due to price
fluctuations in the wholesale power and natural gas markets, lower
demand for electricity and a tepid economy. The company presently
retains a short-term Zacks Rank #3 (Hold).
Other Stocks to consider
Other stocks to consider are Ameren Corporation
(AEE) with a Zacks Rank #1 (Strong Buy), and ALLETE,
Inc. (ALE) and Avista Corp. (AVA) that
carry a Zacks Rank #2 (Buy).
AMEREN CORP (AEE): Free Stock Analysis Report
ALLETE INC (ALE): Free Stock Analysis Report
AVISTA CORP (AVA): Free Stock Analysis Report
CALPINE CORP (CPN): Free Stock Analysis Report
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