By Jason Fordney
Calpine reported Wednesday that it earned $225 million in the third quarter ($0.63/share), down 24% from $295 million ($0.83/share) a year earlier.
The decrease was primarily due to “an unfavorable variance in mark-to-market gain/loss, net, and increases in plant operating expense and depreciation and amortization expense,” Calpine said. The decline was partially offset by a higher commodity margin, which the company said was driven by hedge revenues from retail operations and higher regulated capacity revenue.
The company, which has agreed to go private in a $5.6 billion deal with Energy Capital Partners and an investors group, lost $47 million in the first nine months of this year, compared with a profit of $68 million in the same period a year ago. Company officials issued the earnings with no previous public notice and no conference call to take questions from analysts. (See Calpine Going Private in $5.6B Deal.)
In a news release announcing the results, CEO Thad Hill said the merger is on track to be completed in the first quarter of 2018. He focused on the company’s response to natural disasters in California and Texas.
“Since our last earnings call, we endured Hurricane Harvey in Texas and the wildfires in Northern California safely and without any material damage to our facilities,” Hill said. “I am particularly proud of team members on the front lines who kept our plants and operations going in the face of adversity.”
Operating revenues were $2.6 billion for the quarter, compared with about $2.4 billion in the same quarter last year. Operating revenues in the first nine months of 2017 were nearly $7 billion, compared with about $5.1 billion in the same period last year.
The company said cash from operating activities rose 21% to $807 million over the first three quarters, “primarily due to a decrease in working capital employed resulting from the period-over-period change in net margining requirements associated with our commodity hedging activity, partially offset by a decrease in income from operations, adjusted for non-cash items.”