Ameren Announces First Quarter 2020 Results and Affirms 2020 Earnings and Long-Term Earnings Growth Guidance

ST. LOUIS, May 11, 2020 /PRNewswire/ -- Ameren Corporation (NYSE: AEE) today announced first quarter 2020 net income attributable to common shareholders of $146 million, or $0.59 per diluted share, compared to first quarter 2019 net income attributable to common shareholders of $191 million, or $0.78 per diluted share.

First quarter 2020 results reflected earnings on increased infrastructure investments made across all business segments driven by solid execution of the company's strategy. Earnings were negatively impacted at Ameren Missouri by lower weather-driven retail sales and the absence of energy efficiency performance incentives. Earnings were also reduced at Ameren Missouri by higher other operations and maintenance expenses primarily driven by changes in the cash surrender value of company-owned life insurance, as well as by higher charitable donations resulting from the March 2020 electric rate review settlement. Finally, earnings decreased due to lower allowed returns on equity at Ameren Illinois Electric Distribution and Ameren Transmission.

"We are managing through an unprecedented time in our country's and company's history due to COVID-19. During this period, we have been relentlessly focused on the safety of our co-workers, customers and communities, as well as delivering safe, reliable and affordable electric and natural gas services. We recognize that being part of our country's critical infrastructure, our customers and communities are depending on us," said Warner L. Baxter, chairman, president and chief executive officer of Ameren Corporation. "While COVID-19 is presenting certain financial challenges, we have taken several actions expected to mitigate these issues. As a result, we remain on track to deliver within our 2020 earnings per share guidance range of $3.40 to $3.60."

Earnings Guidance

Today, Ameren affirmed its 2020 earnings guidance range of $3.40 to $3.60 per diluted share. Ameren also affirmed its 2020 through 2024 compound annual diluted earnings per share growth expectations of 6% to 8%, using the 2020 guidance range midpoint of $3.50 per share as the base. Ameren's expected multi-year earnings growth is expected to be driven by strong projected rate base growth of approximately 9% compounded annually from 2019 through 2024. Earnings guidance for 2020 and multi-year growth expectations assume normal temperatures for all periods after March 2020 and are subject to the effects of, among other things: the impacts of COVID-19; 30-year U.S. Treasury bond yields; regulatory, judicial and legislative actions; energy center and energy distribution operations; energy, economic and capital market conditions; severe storms; unusual or otherwise unexpected gains or losses; and other risks and uncertainties outlined, or referred to, in the Forward-looking Statements section of this press release.

Ameren Missouri Segment Results

Ameren Missouri first quarter 2020 loss was $(10) million, compared to first quarter 2019 earnings of $39 million. The year-over-year comparison reflected lower retail sales, primarily driven by milder-than-normal winter temperatures compared to colder-than-normal temperatures in the year-ago period, as well as the absence in 2020 of energy efficiency performance incentives compared to the year-ago period. In addition, the comparison was negatively impacted by higher other operations and maintenance expenses, primarily driven by changes in the cash surrender value of company-owned life insurance due to unfavorable market returns. Finally, increased charitable donations resulting from the March 2020 electric rate review settlement also reduced earnings.

Ameren Illinois Electric Distribution Segment Results

Ameren Illinois Electric Distribution first quarter 2020 earnings were $37 million, compared to first quarter 2019 earnings of $36 million. The year-over-year comparison reflected increased earnings on infrastructure investments offset by a lower allowed return on equity due to a lower projected average 30-year U.S. Treasury bond yield in 2020 compared to 2019.

Ameren Illinois Natural Gas Segment Results

Ameren Illinois Natural Gas first quarter 2020 earnings were $55 million, compared to first quarter 2019 earnings of $57 million. The year-over-year comparison reflected higher other operations and maintenance expenses driven by changes in the cash surrender value of company-owned life insurance due to unfavorable market returns, which was mostly offset by increased earnings on infrastructure investments.

Ameren Transmission Segment Results

Ameren Transmission first quarter 2020 earnings were $47 million, compared to first quarter 2019 earnings of $44 million. The year-over-year improvement reflected increased earnings on infrastructure investments, partially offset by a lower allowed return on equity.

Ameren Parent Results (includes items not reported in a business segment)

Ameren Parent results for the first quarter of 2020 reflected earnings of $17 million, compared to first quarter 2019 earnings of $15 million. The year-over-year comparison reflected timing of income tax expense, which is not expected to impact full-year results. This was offset by lower tax benefits associated with share-based compensation.

Analyst Conference Call

Ameren will conduct a conference call for financial analysts at 9 a.m. Central Time on Tuesday, May 12 to discuss 2020 earnings, earnings guidance and other matters. Investors, the news media and the public may listen to a live broadcast of the call at AmerenInvestors.com by clicking on "Webcast" under "Q1 2020 Earnings Conference Call," where an accompanying slide presentation will also be available. The conference call and presentation will be archived for one year in the "Investor News & Events" section of the website under "Events and Presentations."

About Ameren

St. Louis-based Ameren Corporation powers the quality of life for 2.4 million electric customers and more than 900,000 natural gas customers in a 64,000-square-mile area through its Ameren Missouri and Ameren Illinois rate-regulated utility subsidiaries. Ameren Illinois provides electric transmission and distribution service and natural gas distribution service. Ameren Missouri provides electric generation, transmission and distribution service, as well as natural gas distribution service. Ameren Transmission Company of Illinois develops, owns and operates rate-regulated regional electric transmission projects. For more information, visit Ameren.com, or follow us on Twitter at @AmerenCorp, Facebook.com/AmerenCorp, or LinkedIn/company/Ameren.

Forward-looking Statements

Statements in this release not based on historical facts are considered "forward-looking" and, accordingly, involve risks and uncertainties that could cause actual results to differ materially from those discussed. Although such forward-looking statements have been made in good faith and are based on reasonable assumptions, there is no assurance that the expected results will be achieved. These statements include (without limitation) statements as to future expectations, beliefs, plans, strategies, objectives, events, conditions, and financial performance. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we are providing this cautionary statement to identify important factors that could cause actual results to differ materially from those anticipated. The following factors, in addition to those discussed under Risk Factors in Ameren's Annual Report on Form 10-K for the year ended December 31, 2019, Form 10-Q for the quarter ended March 31, 2020, and elsewhere in this release and in our other filings with the Securities and Exchange Commission, could cause actual results to differ materially from management expectations suggested in such forward-looking statements:

• regulatory, judicial, or legislative actions, and any changes in regulatory policies and ratemaking determinations, that may change regulatory recovery mechanisms, such as those that may result from a rehearing of the November 2019 Federal Energy Regulatory Commission (FERC) order determining the allowed base return on common equity (ROE) under the Midcontinent Independent System Operator (MISO) tariff, the Notices of Inquiry issued by the FERC in March 2019, the Notice of Proposed Rulemaking issued by the FERC in March 2020, Ameren Illinois' April 2020 annual electric distribution formula rate update filing, Ameren Illinois' natural gas delivery service regulatory rate review filed with the Illinois Commerce Commission (ICC) in February 2020, and the March 2020 ICC service disconnection moratorium proceeding;
• the length and severity of the COVID-19 pandemic, and its impacts on our business continuity plans and our results of operations, financial position, and liquidity, including but not limited to changes in customer demand resulting in changes to sales volumes, customers' ability to pay for our services, the health and welfare of our workforce and that of our contractors, supplier disruptions, delays in the completion of capital or other construction projects, which could impact our planned capital expenditures and expected planned rate base growth, our attempt to earn our allowed ROEs, the ability to meet customer energy-efficiency program goals and earn performance incentives related to those programs, increased data security risks as a result of the transition to remote working arrangements for a significant portion of our workforce, and our ability to access the capital markets on reasonable terms and when needed;
• the effect and continuation of Ameren Illinois' election to participate in performance-based formula ratemaking frameworks for its electric distribution service and its participation in electric energy-efficiency programs, including the direct relationship between Ameren Illinois' ROE and the 30-year United States Treasury bond yields;
• the effect on Ameren Missouri of any customer rate caps pursuant to Ameren Missouri's election to use the plant-in-service accounting (PISA), including an extension of use beyond 2023, if requested by Ameren Missouri and approved by the Missouri Public Service Commission;
• the effects of changes in federal, state, or local laws and other governmental actions, including monetary, fiscal, and energy policies;
• the effects of changes in federal, state, or local tax laws, regulations, interpretations, or rates, including as a result of amendments or technical corrections to the TCJA, and challenges to the tax positions we have taken, if any;
• the effects on demand for our services resulting from technological advances, including advances in customer energy efficiency, energy storage, and private generation sources, which generate electricity at the site of consumption and are becoming more cost-competitive;
• the effectiveness of Ameren Missouri's customer energy-efficiency programs and the related revenues and performance incentives earned under its Missouri Energy Efficiency Investment Act (MEEIA) programs;
• Ameren Illinois' ability to achieve the performance standards applicable to its electric distribution business and the FEJA electric customer energy-efficiency goals and the resulting impact on its allowed ROE;
• our ability to align overall spending, both operating and capital, with frameworks established by our regulators and to recover these costs in a timely manner in our attempt to earn our allowed ROEs;
• the cost and availability of fuel, such as low-sulfur coal, natural gas, and enriched uranium used to produce electricity; the cost and availability of purchased power, zero emission credits, renewable energy credits, and natural gas for distribution; and the level and volatility of future market prices for such commodities and credits, including our ability to recover the costs for such commodities and credits and our customers' tolerance for any related price increases;
• disruptions in the delivery of fuel, failure of our fuel suppliers to provide adequate quantities or quality of fuel, or lack of adequate inventories of fuel, including nuclear fuel assemblies from the one Nuclear Regulatory Commission-licensed supplier of Ameren Missouri's Callaway Energy Center's assemblies;
• the cost and availability of transmission capacity for the energy generated by Ameren Missouri's energy centers or required to satisfy Ameren Missouri's energy sales;
• the effectiveness of our risk management strategies and our use of financial and derivative instruments;
• the ability to obtain sufficient insurance, including insurance for Ameren Missouri's nuclear and coal-fired energy centers, or, in the absence of insurance, the ability to recover uninsured losses from our customers;
• the impact of cyberattacks on us or our suppliers, which could, among other things, result in the loss of operational control of energy centers and electric and natural gas transmission and distribution systems and/or the loss of data, such as customer, employee, financial, and operating system information;
• business and economic conditions, which have been affected by, and will be affected by the length and severity of, the COVID-19 pandemic, including the impact of such conditions on interest rates, collection of our receivable balances, and demand for our products;
• disruptions of the capital markets, deterioration in our credit metrics, or other events that may have an adverse effect on the cost or availability of capital, including short-term credit and liquidity;
• the actions of credit rating agencies and the effects of such actions, including any impacts on our credit ratings that may result from the economic conditions of the COVID-19 pandemic;
• the inability of our counterparties to meet their obligations with respect to contracts, credit agreements, and financial instruments;
• the impact of weather conditions and other natural phenomena on us and our customers, including the impact of system outages;
• the construction, installation, performance, and cost recovery of generation, transmission, and distribution assets;
• the effects of failures of electric generation, electric and natural gas transmission or distribution or natural gas storage facilities systems and equipment, which could result in unanticipated liabilities or unplanned outages;
• the operation of Ameren Missouri's Callaway Energy Center, including planned and unplanned outages, and decommissioning costs;
• Ameren Missouri's ability to recover the remaining investment, if any, and decommissioning costs associated with the retirement of an energy center, as well as the ability to earn a return on that remaining investment and those decommissioning costs;
• the impact of current environmental laws and new, more stringent, or changing requirements, including those related to the New Source Review, carbon dioxide and the implementation of the Affordable Clean Energy Rule, other emissions and discharges, cooling water intake structures, coal combustion residuals, and energy efficiency, that could limit or terminate the operation of certain of Ameren Missouri's energy centers, increase our operating costs or investment requirements, result in an impairment of our assets, cause us to sell our assets, reduce our customers' demand for electricity or natural gas, or otherwise have a negative financial effect;
• the impact of complying with renewable energy standards in Missouri and Illinois and with the zero emission standard in Illinois;
• Ameren Missouri's ability to acquire wind and other renewable energy generation facilities and recover its cost of investment and related return in a timely manner, which is affected by the ability to obtain all necessary project approvals; the ability of developers to meet contractual commitments and timely complete projects, which is dependent upon the availability of necessary materials and equipment, including those that are affected by the disruptions in the global supply chain caused by the COVID-19 pandemic, among other things; the availability of federal production and investment tax credits related to renewable energy and Ameren Missouri's ability to use such credits; the cost of wind and solar generation technologies; and Ameren Missouri's ability to obtain timely interconnection agreements with the MISO or other regional transmission organizations at an acceptable cost for each facility;
• labor disputes, work force reductions, changes in future wage and employee benefits costs, including those resulting from changes in discount rates, mortality tables, returns on benefit plan assets, and other assumptions;
• the impact of negative opinions of us or our utility services that our customers, investors, legislators, or regulators may have or develop, which could result from a variety of factors, including failures in system reliability, failure to implement our investment plans or to protect sensitive customer information, increases in rates, negative media coverage or concerns about environmental, social, and/or governance practices;
• the impact of adopting new accounting guidance;
• the effects of strategic initiatives, including mergers, acquisitions, and divestitures;
• legal and administrative proceedings; and
• acts of sabotage, war, terrorism, or other intentionally disruptive acts.

New factors emerge from time to time, and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statement. Given these uncertainties, undue reliance should not be placed on these forward-looking statements. Except to the extent required by the federal securities laws, we undertake no obligation to update or revise publicly any forward-looking statements to reflect new information or future events.

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