CenterPoint Energy Reports Full-Year 2019 Earnings of $1.33 Per Diluted Share; $1.79 Earnings Per Diluted Share on a Guidance Basis, Excluding Certain Vectren Merger Impacts and Impairment Charges

  • Strong utility performance drives 2019 results well above upper end of EPS guidance basis range of $1.60 – $1.70
  • Sale of Energy Services and Infrastructure Services businesses
  • Announced 2020 Utility EPS guidance range of $1.10 – $1.20; 2020 Midstream Investments EPS expected range of $0.23 – $0.28

HOUSTON–(BUSINESS WIRE)–CenterPoint Energy, Inc. (NYSE: CNP) today reported income available to common shareholders of $674 million, or $1.33 per diluted share, for the full-year 2019, compared with $333 million, or $0.74 per diluted share for the full-year 2018. On a guidance basis, full-year 2019 earnings were $1.79 per diluted share, excluding certain impacts associated with the Vectren merger (the merger) and non-cash impairment charges recorded at Energy Services and Midstream Investments. Full-year 2019 earnings, on a guidance basis, included $0.12 of favorable weather and one-time tax benefits. Full-year 2018 earnings, on a guidance basis and excluding certain impacts associated with the merger, were $1.60 per diluted share.

Fourth quarter 2019 earnings were $0.25 per diluted share, compared to $0.18 per diluted share for the fourth quarter of 2018. On a guidance basis and excluding certain impacts associated with the merger and non-cash impairment charges, fourth quarter 2019 earnings were $0.45 per diluted share, compared to $0.36 per diluted share for the fourth quarter of 2018.

I am very pleased with our 2019 results, driven by strong utility performance, primarily as a result of customer growth and disciplined cost management, as well as favorable weather and tax related outcomes,” said John W. Somerhalder II, interim president and chief executive officer of CenterPoint Energy. “The recently announced agreements to sell our Energy Services and Infrastructure Services businesses will further sharpen the company’s focus on our core utility businesses, improving our business profile and earnings quality, while at the same time strengthening our balance sheet and enhancing our investment grade credit quality.”

Business Segments

Houston Electric – Transmission & Distribution

The Houston electric – transmission & distribution segment reported operating income of $624 million for the full-year 2019, consisting of $590 million from the regulated electric transmission and distribution utility operations (TDU) and $34 million related to securitization bonds. Operating income for the TDU for 2019 includes $10 million of merger-related expenses. Excluding merger-related expenses, 2019 TDU operating income was $600 million.

Operating income for 2018 was $623 million, consisting of $568 million from the TDU and $55 million related to securitization bonds. Excluding merger-related expenses, operating income for the TDU benefited primarily from rate relief, lower operation and maintenance expenses, customer growth and miscellaneous revenues, primarily related to right-of-way revenues. These benefits were partially offset by increased depreciation and amortization expense, lower usage, lower revenues related to the Tax Cuts and Jobs Act (TCJA) and lower equity return, primarily related to the annual true-up of transition charges.

Indiana Electric – Integrated

The Indiana electric – integrated segment reported operating income of $90 million for the full-year 2019. Operating income includes $21 million of merger-related expenses. These results are not comparable to 2018 as this segment was acquired in the merger in February 2019.

Natural Gas Distribution

The natural gas distribution segment reported operating income of $408 million for the full-year 2019. Operating income includes $55 million of merger-related expenses. Excluding merger-related expenses, 2019 natural gas distribution segment operating income was $463 million. Natural gas distribution segment operating income for the full-year 2018 was $266 million.

Excluding merger-related expenses, operating income increased $136 million due to the gas utilities acquired in the merger in February 2019. The remaining increase is primarily due to favorable weather and usage, driven by timing of a decoupling mechanism in Minnesota, rate relief, customer growth and lower operation and maintenance expenses. These increases were partially offset by increased depreciation and amortization expense.

Energy Services

The energy services segment reported operating income of $32 million for the full-year 2019, which included a mark-to-market gain of $39 million and a non-cash impairment charge of $48 million recorded for goodwill, compared with an operating loss of $47 million for 2018, which included a mark-to-market loss of $110 million. Excluding mark-to-market adjustments and the non-cash impairment charge, operating income was $41 million for the full-year 2019 compared to $63 million for 2018. Operating income, excluding mark-to-market adjustments and the non-cash impairment charge, decreased primarily as a result of a decrease in margin due to fewer opportunities to optimize natural gas supply costs in 2019 relative to 2018.

Infrastructure Services

The infrastructure services segment reported operating income of $95 million for the full-year 2019. Operating income includes $32 million of merger-related expenses. These results are not comparable to 2018 as this segment was acquired in the merger in February 2019.

Midstream Investments

The midstream investments segment reported $229 million of equity income for the full-year 2019, which included the company’s share, $46 million, of the non-cash impairment charge Enable Midstream Partners, LP (Enable) recorded for goodwill. Equity income for 2018 was $307 million. For further detail, please refer to Enable’s investor materials provided during its 4th quarter earnings call on February 19, 2020.

Corporate and Other

The corporate and other segment reported an operating loss of $23 million for the full-year 2019, compared with an $11 million operating loss for 2018. Operating income in 2019 included $79 million of merger-related expenses. Operating income for 2018 included $46 million of merger-related expenses.

Earnings Outlook

To provide greater transparency on utility earnings, 2020 guidance will be presented in two components, a guidance basis Utility EPS range and a Midstream Investments EPS expected range.

  • 2020 guidance basis Utility EPS range of $1.10 – $1.20
  • 2020 – 2024 target of 5 – 7% compound annual guidance basis Utility EPS growth, using the 2020 range of $1.10 – $1.20 as the starting EPS
  • 2020 Midstream Investments EPS expected range is $0.23 – $0.28

Utility EPS Guidance Range

  • Utility EPS guidance range includes net income from Houston Electric, Indiana Electric and Natural Gas Distribution business segments, as well as after tax operating income from the Corporate and Other business segment.
  • The 2020 Utility EPS guidance range considers operations performance to date and assumptions for certain significant variables that may impact earnings, such as customer growth (approximately 2% for electric operations and 1% for natural gas distribution) and usage including normal weather, throughput, recovery of capital invested through rate cases and other rate filings, effective tax rates, financing activities and related interest rates, regulatory and judicial proceedings and anticipated cost savings as a result of the merger. The Utility EPS guidance range also assumes an allocation of corporate overhead based upon its relative earnings contribution. Corporate overhead consists of interest expense, preferred stock dividend requirements and other items directly attributable to the parent along with the associated income taxes.
  • Utility EPS guidance excludes:

    • Certain integration and transaction-related fees and expenses associated with the merger
    • Severance costs
    • Midstream Investments and allocation of associated corporate overhead
    • Results related to Infrastructure Services and Energy Services prior to the anticipated closing of the sale of those businesses, including anticipated costs and impairment resulting from the sale of Infrastructure Services and Energy Services
    • Earnings or losses from the change in value of ZENS and related securities
    • Changes in accounting standards

In providing this 2020 guidance, CenterPoint Energy uses a non-GAAP measure of adjusted diluted earnings per share that does not consider the items noted above and other potential impacts, including unusual items, which could have a material impact on GAAP reported results for the applicable guidance period. CenterPoint Energy is unable to present a quantitative reconciliation of forward looking adjusted diluted earnings per share because changes in the value of ZENS and related securities is not estimable as it is highly variable and difficult to predict due to various factors outside of management’s control.

Midstream Investments EPS Expected Range

The 2020 Midstream Investments EPS expected range is $0.23 – $0.28. In providing this EPS range for Midstream Investments, the company assumes a 53.7 percent limited partner ownership interest in Enable and includes the amortization of its basis differential in Enable and assumes an allocation of CenterPoint Energy corporate overhead based upon Midstream Investments relative earnings contribution. The Midstream Investments EPS expected range takes into account such factors as Enable’s most recent public outlook for 2020 dated Feb. 19, 2020, and effective tax rates. The company does not include other potential impacts such as any changes in accounting standards, impairments or Enable’s unusual items.

 

Quarter Ended

 

December 31, 2019

 

December 31, 2018

 

Dollars

in millions

 

Diluted

EPS(1)

 

Dollars

in millions

 

Diluted

EPS(1)

Consolidated income available to common shareholders and diluted EPS

$

128

 

 

$

0.25

 

 

$

90

 

 

$

0.18

 

Timing effects impacting CES (2):

 

 

 

 

 

 

 

Mark-to-market (gains) losses (net of taxes of $2 and $9) (3)

6

 

 

0.01

 

 

30

 

 

0.06

 

ZENS-related mark-to-market (gains) losses:

 

 

 

 

 

 

 

Marketable securities (net of taxes of $16 and $19) (3)(4)

(60

)

 

(0.12

)

 

69

 

 

0.13

 

Indexed debt securities (net of taxes of $16 and $18) (3)

60

 

 

0.12

 

 

(66

)

 

(0.13

)

Consolidated on a guidance basis

$

134

 

 

$

0.26

 

 

$

123

 

 

$

0.24

 

Impacts associated with the Vectren merger:

 

 

 

 

 

 

 

Impacts associated with the Vectren merger (net of taxes of $1 and $2) (3)

17

 

 

0.03

 

 

37

 

 

0.07

 

Impact of increased share count on EPS

 

 

 

 

 

 

0.05

 

Total merger impacts

17

 

 

0.03

 

 

37

 

 

0.12

 

Loss on CenterPoint’s share of Enable’s impairment of its goodwill (net of taxes of $11) (3)

35

 

 

0.07

 

 

 

 

 

Loss on impairment of Energy Services goodwill (net of taxes of $3) (3)

45

 

 

0.09

 

 

 

 

 

Consolidated on a guidance basis, excluding impacts associated with the Vectren merger and losses on impairment of Energy Services and Midstream Investments

$

231

 

 

$

0.45

 

 

$

160

 

 

$

0.36

 

(1)

Quarterly diluted EPS on both a GAAP and guidance basis are based on the weighted average number of shares of common stock outstanding during the quarter, and the sum of the quarters may not equal year-to-date diluted EPS

(2)

Energy Services segment

(3)

Taxes are computed based on the impact removing such item would have on tax expense

(4)

Comprised of common stock of AT&T Inc. and Charter Communications, Inc.

 

Twelve Months Ended

 

December 31, 2019

 

December 31, 2018

 

Dollars

in millions

 

Diluted

EPS (1)

 

Dollars

in millions

 

Diluted

EPS (1)

Consolidated income available to common shareholders and diluted EPS

$

674

 

 

$

1.33

 

 

$

333

 

 

$

0.74

 

Timing effects impacting CES (2):

 

 

 

 

 

 

 

Mark-to-market (gains) losses (net of taxes of $9 and $26) (3)

(30

)

 

(0.07

)

 

84

 

 

0.18

 

ZENS-related mark-to-market (gains) losses:

 

 

 

 

 

 

 

Marketable securities (net of taxes of $59 and $5) (3)(4)

(223

)

 

(0.44

)

 

17

 

 

0.04

 

Indexed debt securities (net of taxes of $61 and $49) (3)(5)

231

 

 

0.46

 

 

183

 

 

0.40

 

Consolidated on a guidance basis

$

652

 

 

$

1.28

 

 

$

617

 

 

$

1.36

 

Impacts associated with the Vectren merger:

 

 

 

 

 

 

 

Impacts associated with the Vectren merger (net of taxes of $40 and $12) (3)

163

 

 

0.33

 

 

81

 

 

0.18

 

Impact of increased share count on EPS

 

 

0.02

 

 

 

 

0.06

 

Total merger impacts

163

 

 

0.35

 

 

81

 

 

0.24

 

Loss on CenterPoint’s share of Enable’s impairment of its goodwill (net of taxes of $11) (3)

35

 

 

0.07

 

 

 

 

 

Loss on impairment of Energy Services goodwill (net of taxes of $3) (3)

45

 

 

0.09

 

 

 

 

 

Consolidated on a guidance basis, excluding impacts associated with the Vectren merger and losses on impairment of Energy Services and Midstream Investments

$

895

 

 

$

1.79

 

 

$

698

 

 

$

1.60

 

(1)

Quarterly diluted EPS on both a GAAP and guidance basis are based on the weighted average number of shares of common stock outstanding during the quarter, and the sum of the quarters may not equal year-to-date diluted EPS

(2)

Energy Services segment

(3)

Taxes are computed based on the impact removing such item would have on tax expense

(4)

As of and after June 14, 2018, comprised of common stock of AT&T Inc. and Charter Communications, Inc. Prior to June 14, 2018, comprised of common stock of Time Warner Inc. and Charter Communications, Inc. Results prior to January 31, 2018 also included common stock of Time Inc.

(5)

2018 results include amount associated with the acquisition of Time Warner Inc. by AT&T Inc. as well as the Meredith tender offer for Time Inc. common stock

Filing of Form 10-K for CenterPoint Energy, Inc.

Today, CenterPoint Energy, Inc. filed with the Securities and Exchange Commission (SEC) its Annual Report on Form 10-K for the fiscal year ended December 31, 2019. A copy of that report is available on the company’s website, under the Investors section. Investors and others should note that we may announce material information using SEC filings, press releases, public conference calls, webcasts, and the Investor Relations page of our website. In the future, we will continue to use these channels to distribute material information about the company and to communicate important information about the company, key personnel, corporate initiatives, regulatory updates and other matters. Information that we post on our website could be deemed material; therefore we encourage investors, the media, our customers, business partners and others interested in our company to review the information we post on our website.

Webcast of Earnings Conference Call

CenterPoint Energy’s management will host an earnings conference call on Thursday, February 27, 2020, at 10:00 a.m. Central time/11:00 a.m. Eastern time. Interested parties may listen to a live audio broadcast of the conference call on the company’s website under the Investors section. A replay of the call can be accessed approximately two hours after the completion of the call and will be archived on the website for at least one year.

Headquartered in Houston, Texas, CenterPoint Energy, Inc. is an energy delivery company with regulated utility businesses in eight states and a competitive energy businesses footprint in nearly 40 states. Through its electric transmission & distribution, power generation and natural gas distribution businesses, the company serves more than 7 million metered customers in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio, Oklahoma and Texas. CenterPoint Energy’s competitive energy businesses include natural gas marketing and energy-related services; energy efficiency, sustainability and infrastructure modernization solutions; and construction and repair services for pipeline systems, primarily natural gas. The company also owns 53.7 percent of the common units representing limited partner interests in Enable Midstream Partners, LP, a publicly traded master limited partnership that owns, operates and develops strategically located natural gas and crude oil infrastructure assets. With approximately 14,000 employees and approximately $35 billion in assets, CenterPoint Energy and its predecessor companies have been in business for more than 150 years. For more information, visit CenterPointEnergy.com.

This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon assumptions of management which are believed to be reasonable at the time made and are subject to significant risks and uncertainties. Actual events and results may differ materially from those expressed or implied by these forward-looking statements. Any statements in this news release regarding future earnings, and future financial performance and results of operations, including, but not limited to earnings guidance, targeted dividend growth rate and any other statements that are not historical facts are forward-looking statements. Each forward-looking statement contained in this news release speaks only as of the date of this release.

Risks Related to CenterPoint Energy

Important factors that could cause actual results to differ materially from those indicated by the provided forward-looking information include risks and uncertainties relating to: (1) the performance of Enable Midstream Partners, LP (Enable), the amount of cash distributions CenterPoint Energy receives from Enable, Enable’s ability to redeem the Enable Series A Preferred Units in certain circumstances and the value of CenterPoint Energy’s interest in Enable, and factors that may have a material impact on such performance, cash distributions and value, including factors such as: (A) competitive conditions in the midstream industry, and actions taken by Enable’s customers and competitors, including the extent and timing of the entry of additional competition in the markets served by Enable; (B) the timing and extent of changes in the supply of natural gas and associated commodity prices, particularly prices of natural gas and natural gas liquids (NGLs), the competitive effects of the available pipeline capacity in the regions served by Enable, and the effects of geographic and seasonal commodity price differentials, including the effects of these circumstances on re-contracting available capacity on Enable’s interstate pipelines; (C) the demand for crude oil, natural gas, NGLs and transportation and storage services; (D) environmental and other governmental regulations, including the availability of drilling permits and the regulation of hydraulic fracturing; (E) recording of goodwill, long-lived asset or other than temporary impairment charges by or related to Enable; (F) the timing of payments from Enable’s customers under existing contracts, including minimum volume commitment payments; (G) changes in tax status; and (H) access to debt and equity capital; (2) CenterPoint Energy’s expected benefits of the merger with Vectren Corporation (Vectren) and integration, including the outcome of shareholder litigation filed against Vectren that could reduce anticipated benefits of the merger, as well as the ability to successfully integrate the Vectren businesses and to realize anticipated benefits and commercial opportunities; (3) industrial, commercial and residential growth in CenterPoint Energy’s service territories and changes in market demand, including the demand for CenterPoint Energy’s non-utility products and services and effects of energy efficiency measures and demographic patterns; (4) the outcome of the pending Houston Electric rate case; (5) timely and appropriate rate actions that allow recovery of costs and a reasonable return on investment; (6) future economic conditions in regional and national markets and their effect on sales, prices and costs; (7) weather variations and other natural phenomena, including the impact of severe weather events on operations and capital; (8) state and federal legislative and regulatory actions or developments affecting various aspects of CenterPoint Energy’s and Enable’s businesses, including, among others, energy deregulation or re-regulation, pipeline integrity and safety and changes in regulation and legislation pertaining to trade, health care, finance and actions regarding the rates charged by our regulated businesses; (9) tax legislation, including the effects of the comprehensive tax reform legislation informally referred to as the Tax Cuts and Jobs Act (which includes any potential changes to interest deductibility) and uncertainties involving state commissions’ and local municipalities’ regulatory requirements and determinations regarding the treatment of excess deferred income taxes and CenterPoint Energy’s rates; (10) CenterPoint Energy’s ability to mitigate weather impacts through normalization or rate mechanisms, and the effectiveness of such mechanisms; (11) the timing and extent of changes in commodity prices, particularly natural gas and coal, and the effects of geographic and seasonal commodity price differentials; (12) the ability of CenterPoint Energy’s and CERC’s non-utility business operating in the Energy Services reportable segment to effectively optimize opportunities related to natural gas price volatility and storage activities, including weather-related impacts; (13) actions by credit rating agencies, including any potential downgrades to credit ratings; (14) changes in interest rates and their impact on CenterPoint Energy’s costs of borrowing and the valuation of its pension benefit obligation; (15) problems with regulatory approval, legislative actions, construction, implementation of necessary technology or other issues with respect to major capital projects that result in delays or cancellations or in cost overruns that cannot be recouped in rates; (16) the availability and prices of raw materials and services and changes in labor for current and future construction projects; (17) local, state and federal legislative and regulatory actions or developments relating to the environment, including, among other things those related to global climate change, air emissions, carbon, waste water discharges and the handling and disposal of coal combustion residuals (CCR) that could impact the continued operation, and/or cost recovery of generation plant costs and related assets; (18) the impact of unplanned facility outages or other closures; (19) any direct or indirect effects on CenterPoint Energy’s or Enable’s facilities, operations and financial condition resulting from terrorism, cyber-attacks, data security breaches or other attempts to disrupt CenterPoint Energy’s businesses or the businesses of third parties, or other catastrophic events such as fires, ice, earthquakes, explosions, leaks, floods, droughts, hurricanes, tornadoes, pandemic health events or other occurrences; (20) CenterPoint Energy’s ability to invest planned capital and the timely recovery of CenterPoint Energy’s existing and future investments, including those related to the Indiana Electric’s anticipated Integrated Resource Plan; (21) CenterPoint Energy’s ability to successfully construct and operate electric generating facilities, including complying with applicable environmental standards and the implementation of a well-balanced energy and resource mix, as appropriate; (22) CenterPoint Energy’s ability to control operation and maintenance costs; (23) the sufficiency of CenterPoint Energy’s insurance coverage, including availability, cost, coverage and terms and ability to recover claims; (24) the investment performance of CenterPoint Energy’s pension and postretirement benefit plans; (25) commercial bank and financial market conditions, CenterPoint Energy’s access to capital, the cost of such capital, and the results of CenterPoint Energy’s financing and refinancing efforts, including availability of funds in the debt capital markets; (26) changes in rates of inflation; (27) inability of various counterparties to meet their obligations to CenterPoint Energy; (28) non-payment for CenterPoint Energy’s services due to financial distress of its customers; (29) the extent and effectiveness of CenterPoint Energy’s and Enable’s risk management and hedging activities, including but not limited to, financial and weather hedges and commodity risk management activities; (30) timely and appropriate regulatory actions, which include actions allowing securitization, for any future hurricanes or natural disasters or other recovery of costs, including costs associated with Hurricane Harvey; (31) CenterPoint Energy’s or Enable’s potential business strategies and strategic initiatives, including restructurings, joint ventures and acquisitions or dispositions of assets or businesses, including the proposed sales of Infrastructure Services and CES, which CenterPoint Energy and Enable cannot assure will be completed or will have the anticipated benefits to CenterPoint Energy or Enable; (32) the recording of impairment charges, including any impairment associated with Infrastructure Services and CES; (33) the performance of projects undertaken by CenterPoint Energy’s non-utility businesses and the success of efforts to realize value from, invest in and develop new opportunities and other factors affecting those non-utility businesses, including, but not limited to, the level of success in bidding contracts, fluctuations in volume and mix of contracted work, mix of projects received under blanket contracts, failure to properly estimate cost to construct projects or unanticipated cost increases in completion of the contracted work, changes in energy prices that affect demand for construction services and projects and cancellation and/or reductions in the scope of projects by customers and obligations related to warranties and guarantees; (34) acquisition and merger activities involving CenterPoint Energy or its competitors, including the ability to successfully complete merger, acquisition and divestiture plans; (35) CenterPoint Energy’s or Enable’s ability to recruit, effectively transition and retain management and key employees and maintain good labor relations; (36) the outcome of litigation; (37) the ability of retail electric providers (REPs), including REP affiliates of NRG Energy, Inc.

Contacts

For more information contact

Media:
Alicia Dixon
Phone 713.825.9107

Investors:
David Mordy
Phone 713.207.6500

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