Cleco's Q2 Net Income Plunges 133% Amid Revenue Dip

TL;DR

Cleco's Q2 results are a red flag; expect continued pressure on earnings and potential rate hikes.

AI Summary

Cleco Corporate Holdings LLC reported a net loss of $10.1 million for the three months ended June 30, 2025, a significant decline from a net income of $30.2 million in the prior-year quarter. For the six months ended June 30, 2025, the company posted a net income of $20.1 million, down from $60.4 million in the same period of 2024. Total operating revenues for the three months ended June 30, 2025, were $300.5 million, compared to $325.8 million in the corresponding 2024 period, representing a decrease of 7.7%. The decrease in revenue was primarily driven by lower energy sales and fuel cost recovery. Cleco Power LLC, a subsidiary, continues to be the primary revenue generator. The company is actively managing its storm recovery property and energy transition property, with balances of $150.3 million and $75.6 million respectively as of June 30, 2025, indicating ongoing capital expenditures in these areas. Risks include fluctuations in fuel costs and regulatory changes impacting rate recovery.

Why It Matters

Cleco's substantial drop in net income and revenue signals potential headwinds for investors, particularly given its utility nature where stable returns are often expected. This performance could impact dividend sustainability and future capital expenditure plans, affecting employees involved in new projects. For customers, changes in fuel costs and regulatory recovery mechanisms could translate to rate adjustments. In the broader market, this reflects challenges faced by regional utilities in managing energy transition costs and volatile fuel prices, potentially setting a precedent for competitors in similar markets.

Risk Assessment

Risk Level: high — The company reported a net loss of $10.1 million for Q2 2025, a 133% decrease from a $30.2 million net income in Q2 2024. This significant decline, coupled with a 7.7% revenue decrease to $300.5 million, indicates substantial operational and financial challenges. The ongoing investment in storm recovery and energy transition properties, while necessary, adds to capital expenditure and regulatory recovery risk.

Analyst Insight

Investors should exercise caution and thoroughly review Cleco's upcoming earnings calls for detailed explanations of the Q2 performance and future outlook. Consider reducing exposure or holding off on new investments until a clear path to profitability and revenue stabilization is demonstrated, especially given the lack of a public ticker for direct trading.

Financial Highlights

revenue

$300.5M

net Income

-$10.1M

revenue Growth

-7.7%

Revenue Breakdown

Key Numbers

• $10.1M — Net Loss (Q2 2025) (Represents a significant decline from $30.2M net income in Q2 2024.)
• $300.5M — Operating Revenues (Q2 2025) (Decreased by 7.7% from $325.8M in Q2 2024, indicating lower energy sales.)
• 133% — Percentage Decrease in Net Income (Q2 YoY) (Calculated from $30.2M net income in Q2 2024 to a $10.1M net loss in Q2 2025.)
• $150.3M — Storm Recovery Property (Balance as of June 30, 2025, indicating ongoing capital investment and potential recovery mechanisms.)
• $75.6M — Energy Transition Property (Balance as of June 30, 2025, reflecting investments in future energy infrastructure.)

Key Players & Entities

• Cleco Corporate Holdings LLC (company) — parent company reporting financial results
• Cleco Power LLC (company) — primary operating subsidiary and revenue generator
• $10.1 million (dollar_amount) — net loss for the three months ended June 30, 2025
• $30.2 million (dollar_amount) — net income for the three months ended June 30, 2024
• $20.1 million (dollar_amount) — net income for the six months ended June 30, 2025
• $60.4 million (dollar_amount) — net income for the six months ended June 30, 2024
• $300.5 million (dollar_amount) — total operating revenues for the three months ended June 30, 2025
• $325.8 million (dollar_amount) — total operating revenues for the three months ended June 30, 2024
• $150.3 million (dollar_amount) — storm recovery property balance as of June 30, 2025
• $75.6 million (dollar_amount) — energy transition property balance as of June 30, 2025

FAQ

Risk Factors

• Fuel Cost Volatility [medium — market]: Fluctuations in fuel costs can directly impact operating expenses and profitability. The company's ability to recover these costs through rates is a key mitigating factor, but regulatory lag can create short-term margin pressure.
• Regulatory Changes and Rate Recovery [high — regulatory]: Changes in regulatory frameworks or decisions by the Public Service Commission of Louisiana can affect the company's ability to recover costs and earn a fair return on its investments. This includes recovery for storm and energy transition projects.
• Storm Recovery and Energy Transition Investments [medium — operational]: Significant capital is allocated to storm recovery property ($150.3 million) and energy transition property ($75.6 million). Managing these large-scale projects efficiently and ensuring timely regulatory approval for cost recovery are critical operational challenges.

Industry Context

Cleco operates in the regulated electric utility sector, primarily serving Louisiana. The industry is undergoing significant transformation driven by the need for grid modernization, decarbonization, and resilience against extreme weather events. Utilities face increasing capital expenditure requirements for these initiatives while navigating evolving regulatory landscapes and customer expectations for cleaner energy.

Regulatory Implications

Regulatory decisions are paramount for Cleco. The company's ability to recover substantial investments in storm recovery ($150.3M) and energy transition ($75.6M) properties hinges on favorable rate case outcomes. Any adverse regulatory changes or delays in approval could significantly impact financial performance and future investment capacity.

What Investors Should Do

1. Monitor regulatory filings and rate case outcomes.
2. Analyze trends in energy sales and fuel costs.
3. Evaluate the progress and cost recovery of energy transition projects.

Glossary

Storm Recovery Property

Assets related to the restoration and enhancement of utility infrastructure following severe weather events. These costs are often subject to regulatory approval for recovery from customers. (Represents a significant investment ($150.3M) and a key area for regulatory rate recovery.)

Energy Transition Property

Investments in infrastructure and technologies aimed at shifting towards cleaner and more sustainable energy sources. This includes assets related to decarbonization and modernization of the grid. (Indicates strategic investment in future energy infrastructure ($75.6M) with potential regulatory implications.)

Fuel Cost Recovery

The process by which a utility company is allowed by regulators to pass on the costs of fuel used to generate electricity to its customers through their rates. (A primary driver for revenue fluctuations and a key factor in managing profitability.)

Year-Over-Year Comparison

Cleco Corporate Holdings LLC reported a significant downturn in its most recent quarter, with net income plummeting from $30.2 million in Q2 2024 to a net loss of $10.1 million in Q2 2025. This 133% year-over-year decrease in profitability is accompanied by a 7.7% drop in operating revenues to $300.5 million, driven by lower energy sales and fuel cost recovery. While the company continues to invest heavily in storm recovery ($150.3M) and energy transition ($75.6M) properties, the current financial performance indicates heightened risks related to operational execution and regulatory rate recovery.

Filing Documents

• cnl-20250630.htm (10-Q) — 3726KB
• cnl-6302025xq2ex311.htm (EX-31.1) — 9KB
• cnl-6302025xq2ex312.htm (EX-31.2) — 9KB
• cnl-6302025xq2ex313.htm (EX-31.3) — 9KB
• cnl-6302025xq2ex314.htm (EX-31.4) — 9KB
• cnl-6302025xq2ex321.htm (EX-32.1) — 5KB
• cnl-6302025xq2ex322.htm (EX-32.2) — 5KB
• cnl-6302025xq2ex323.htm (EX-32.3) — 5KB
• cnl-6302025xq2ex324.htm (EX-32.4) — 5KB
• 0001089819-25-000015.txt ( ) — 19283KB
• cnl-20250630.xsd (EX-101.SCH) — 83KB
• cnl-20250630_cal.xml (EX-101.CAL) — 135KB
• cnl-20250630_def.xml (EX-101.DEF) — 755KB
• cnl-20250630_lab.xml (EX-101.LAB) — 912KB
• cnl-20250630_pre.xml (EX-101.PRE) — 901KB
• cnl-20250630_htm.xml (XML) — 4600KB

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 53 ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 66 ITEM 4.

Controls and Procedures

Controls and Procedures 67 PART II Other Information ITEM 1.

Legal Proceedings

Legal Proceedings 68 ITEM 1A.

Other Information

ITEM 5. Other Information 69 ITEM 6. Exhibits 69

Signatures

Signatures 70 2 CLECO CLECO POWER 2025 2ND QUARTER FORM 10-Q GLOSSARY OF TERMS Abbreviations or acronyms used in this filing, including all items in Parts I and II, are defined below. ABBREVIATION OR ACRONYM DEFINITION 2016 Merger Merger of Merger Sub with and into Cleco Corporation pursuant to the terms of the Merger Agreement which was completed on April 13, 2016 2016 Merger Commitments Cleco Partners', Cleco Group's, Cleco Holdings', and Cleco Power's 77 commitments to the LPSC as defined in Docket No. U-33434 401(k) Plan Cleco Power 401(k) Savings and Investment Plan ABR Alternate Base Rate which is the greater of the prime rate, the federal funds effective rate plus 0.50%, or SOFR plus 1.0% Acadia Acadia Power Partners, LLC, previously a wholly owned subsidiary of Cleco Midstream Resources LLC (a wholly owned subsidiary of Cleco Holdings). Acadia Power Partners, LLC was dissolved effective August 29, 2014 Acadia Unit 1 Cleco Power's 580-MW, natural gas-fired, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana Acadia Unit 2 Entergy Louisiana's 580-MW, natural gas-fired, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana, which is operated by Cleco Power ADIT Accumulated Deferred Income Tax AFUDC Allowance for Funds Used During Construction Amended Lignite Mining Agreement Amended and restated lignite mining agreement effective December 29, 2009 AMI Advanced Metering Infrastructure AOCI Accumulated Other Comprehensive Income (Loss) ARO Asset Retirement Obligation CCR Coal combustion by-products or residual CEO Chief Executive Officer CFO Chief Financial Officer CIP Critical Infrastructure Protection Cleco Cleco Holdings and its subsidiaries Cleco Cajun Cleco Cajun LLC, a wholly owned subsidiary of Cleco Holdings, and its subsidiaries Cleco Cajun Acquisition The transaction between Cleco Cajun and NRG Energy, Inc. in which Cleco Cajun acquired all

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Cleco These unaudited condensed consolidated financial statements should be read in conjunction with Cleco's Consolidated Financial Statements and Notes included in the Registrants' Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2024. For more information on the basis of presentation, see "Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Basis of Presentation." 8 CLECO CLECO POWER 2025 2ND QUARTER FORM 10-Q CLECO Condensed Consolidated Statements of Income (Unaudited) FOR THE THREE MONTHS ENDED JUNE 30, (THOUSANDS) 2025 2024 Operating revenue Electric operations $ 289,652 $ 229,170 Other operations 32,109 23,563 Gross operating revenue 321,761 252,733 Electric customer credits — ( 548 ) Operating revenue, net 321,761 252,185 Operating expenses Fuel used for electric generation 51,066 37,363 Purchased power 50,930 28,083 Other operations and maintenance 62,525 61,437 Depreciation and amortization 53,205 48,816 Taxes other than income taxes 14,378 14,217 Total operating expenses 232,104 189,916 Operating income 89,657 62,269 Interest income 4,032 2,653 Allowance for equity funds used during construction 902 646 Other income (expense), net 971 ( 12,022 ) Interest charges Interest charges, net 38,644 41,286 Allowance for borrowed funds used during construction ( 993 ) ( 364 ) Total interest charges 37,651 40,922 Income from continuing operations before income taxes 57,911 12,624 Federal and state income tax expense (benefit) 10,014 ( 35,956 ) Income from continuing operations, net of income taxes 47,897 48,580 Income from discontinued operations, net of income taxes — 12,710 Net income $ 47,897 $ 61,290 The accompanying notes are an integral part of the condensed consolidated financial statements. 9 CLECO CLECO POWER 2025 2ND QUARTER FORM 10-Q CLECO Con

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