Mirant Reports $42 Million Loss on Restructuring Charges, Tight Margins (2024)

Despite the positive spin Mirant put on its quarterly earnings report, the numbers show it was a very tough quarter for the energy merchant and power producer. It reported a 9-cent/share ($42 million) net loss after special charges, compared to net income of 53 cents/share ($180 million) in the first quarter of last year. Mirant said its net income from continuing operations exceeded by 10% its prior guidance, but it still fell 35% to 33 cents per share from the 51 cents per share it earned in 1Q2001.

Mirant reported two non-recurring items for the quarter: a $167 million gain from the sale of European BEWAG operations and an after-tax restructuring charge of $344 million. The restructuring charge reflects the planned cancellation of turbines, elimination of positions and other previously announced actions. It anticipates $70 million in additional after-tax restructuring charges over the remaining quarters of the year.

"Mirant's integrated business model and diversified global portfolio continue to perform well despite tough market conditions," said CEO Marce Fuller. "With the encouraging signs of an economic recovery and the steps we have taken to strengthen the business, Mirant is well positioned to capture market upside."

While Mirant's marketed energy volumes soared, margins shrunk to razor thin. The company's North American business contributed $77 million to consolidated income from operations, or 18 cents/share, which was down sharply from $174 million, or 49 cents in 1Q2001. Power sales jumped 50% to 98.6 million MWh and gas sales rose 67% to 21.4 Bcf/d. "This increase in volumes was achieved while collateral requirements decreased by more than $200 million from a peak of more than $800 million," the company noted.

"Mirant continues to rank among the top three owners of competitive generation and the top 15 electricity producers in the U.S.," said Fuller. "During the quarter, we strengthened that position by bringing an additional 474 MW on-line in Florida, and continued with the construction and development of an additional 2,500 MW. Of this amount, 1,500 MW are scheduled to come on-line by August. By the end of 2002, Mirant expects to own or control more than 18,000 MW in the U.S."

Mirant's international operations showed improvement for the quarter, with income from operations of $104 million, or 25 cents/share, compared to $74 million, or 21 cents/share for the first quarter 2001. "Mirant's international contract and franchise-based businesses continue to contribute solid earnings and cash flow, proving that a balanced global portfolio provides stability for Mirant," said Fuller.

The company has executed a series of actions designed to get its financial house in order and increase its liquidity at a time of increased scrutiny from credit ratings agencies and investors and credit pressure from trading counterparties. The company said it has strengthened its liquidity position (available cash and credit lines) to $1.6 billion and forecasts year-end liquidity of $1.4 billion. It has reduced debt from $8.4 billion to $7.2 billion, and cut 2002 and 2003 capital budgets from a total of $5.9 billion to $2.9 billion. In addition, it has cut operating expenses by $75 million (2002) and $150 million (2003) and restructured and reduced its global workforce by 700 positions.

Mirant also has sold or announced the sale of $1.3 billion assets and plans to sell another $300 million this year. The assets sold include its stake in BEWAG, a German integrated utility, and generating plants in Indiana and Louisiana.

"Mirant continues to demonstrate its ability to adapt quickly to changing market conditions and deliver results while preserving its underlying value," said Fuller. "Our rapid, decisive actions have enabled us to pay down debt and improve cash flow, while growing power and gas volumes. These steps continue to solidify Mirant's position as a leading competitive energy company."

Mirant is maintaining its current guidance for income from operations of $1.60 to $1.70 per diluted share for the year with a forecast of 30 cents per diluted share for the second quarter 2002.

©Copyright 2002 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.

Despite the positive spin Mirant put on its quarterly earnings report, the numbers show it was a very tough quarter for the energy merchant and power producer. It reported a 9-cent/share ($42 million) net loss after special charges, compared to net income of 53 cents/share ($180 million) in the first quarter of last year. Mirant said its net income from continuing operations exceeded by 10% its prior guidance, but it still fell 35% to 33 cents per share from the 51 cents per share it earned in 1Q2001.

Mirant reported two non-recurring items for the quarter: a $167 million gain from the sale of European BEWAG operations and an after-tax restructuring charge of $344 million. The restructuring charge reflects the planned cancellation of turbines, elimination of positions and other previously announced actions. It anticipates $70 million in additional after-tax restructuring charges over the remaining quarters of the year.

"Mirant's integrated business model and diversified global portfolio continue to perform well despite tough market conditions," said CEO Marce Fuller. "With the encouraging signs of an economic recovery and the steps we have taken to strengthen the business, Mirant is well positioned to capture market upside."

While Mirant's marketed energy volumes soared, margins shrunk to razor thin. The company's North American business contributed $77 million to consolidated income from operations, or 18 cents/share, which was down sharply from $174 million, or 49 cents in 1Q2001. Power sales jumped 50% to 98.6 million MWh and gas sales rose 67% to 21.4 Bcf/d. "This increase in volumes was achieved while collateral requirements decreased by more than $200 million from a peak of more than $800 million," the company noted.

"Mirant continues to rank among the top three owners of competitive generation and the top 15 electricity producers in the U.S.," said Fuller. "During the quarter, we strengthened that position by bringing an additional 474 MW on-line in Florida, and continued with the construction and development of an additional 2,500 MW. Of this amount, 1,500 MW are scheduled to come on-line by August. By the end of 2002, Mirant expects to own or control more than 18,000 MW in the U.S."

Mirant's international operations showed improvement for the quarter, with income from operations of $104 million, or 25 cents/share, compared to $74 million, or 21 cents/share for the first quarter 2001. "Mirant's international contract and franchise-based businesses continue to contribute solid earnings and cash flow, proving that a balanced global portfolio provides stability for Mirant," said Fuller.

The company has executed a series of actions designed to get its financial house in order and increase its liquidity at a time of increased scrutiny from credit ratings agencies and investors and credit pressure from trading counterparties. The company said it has strengthened its liquidity position (available cash and credit lines) to $1.6 billion and forecasts year-end liquidity of $1.4 billion. It has reduced debt from $8.4 billion to $7.2 billion, and cut 2002 and 2003 capital budgets from a total of $5.9 billion to $2.9 billion. In addition, it has cut operating expenses by $75 million (2002) and $150 million (2003) and restructured and reduced its global workforce by 700 positions.

Mirant also has sold or announced the sale of $1.3 billion assets and plans to sell another $300 million this year. The assets sold include its stake in BEWAG, a German integrated utility, and generating plants in Indiana and Louisiana.

"Mirant continues to demonstrate its ability to adapt quickly to changing market conditions and deliver results while preserving its underlying value," said Fuller. "Our rapid, decisive actions have enabled us to pay down debt and improve cash flow, while growing power and gas volumes. These steps continue to solidify Mirant's position as a leading competitive energy company."

Mirant is maintaining its current guidance for income from operations of $1.60 to $1.70 per diluted share for the year with a forecast of 30 cents per diluted share for the second quarter 2002.

©Copyright 2002 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.

Mirant Reports $42 Million Loss on Restructuring Charges, Tight Margins (2024)
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