Mirant Q3 Profit Plummets

11/6/2009 10:10 AM ET

(RTTNews) - Friday, electric utility company Mirant Corp. (MIR: News ), reported a plunge in profit for the third quarter, in the the absence of hefty hedging gains from last year. However, on an adjusted basis, net income rose from last year and came in well ahead of Street estimates. The company also lowered its forecast for 2009 adjusted earnings before interest, taxes, depreciation and amortization, but raised its outlook for fiscal year 2010.

The Atlanta, Georgia-based company's net income from continuing operations for the third quarter plummeted to $55 million or $0.38 per share from $1.61 billion or $8.69 per share in the year ago quarter.

The results for the recent third quarter include unrealized losses, principally on hedges of $174 million or $1.19 per share, compared to unrealized gains on hedges of $1.395 billion or $7.54 per share in the prior year quarter.

Adjusted income from continuing operations for the quarter, however, increased to $238 million or $1.63 per share from $216 million or $1.17 per share in the same quarter last year.

On average, eight analysts polled by Thomson Reuters expected the company to earn $1.16 per share. Analysts' estimates typically exclude one-time charges and gains.

In the sequentially preceding second quarter, Mirant reported a net income of $163 million or $1.12 per share, compared with a net loss of $783 million or $3.90 per share in the year earlier quarter.

Adjusted Earnings before Interest, Taxes, Depreciation, and Amortization, or EBITDA, from continuing operations for the latest third quarter was $311 million, compared to $278 million a year earlier. The increase in adjusted EBITDA was due to higher realized value of hedges and higher realized results from proprietary trading activities, partially offset by lower energy gross margins from generation.

Mirant's net cash provided by operating activities of continuing operations for the quarter dropped to $290 million from $632 million in the same period last year, primarily as a result of significant cash collateral returned in the previous year quarter.

As at September 30, 2009, Mirant had cash and cash equivalents of $2.029 billion, of which $574 million was restricted at Mirant North America and its subsidiaries and not available for distribution to Mirant. The company anticipates Mirant North America would distribute nearly $116 million to its parent, Mirant Americas Generation, in November 2009. As at September 30, 2009, Mirant had total outstanding debt of $2.633 billion.