Centerpoint Energy, Inc (holding Co) · NYSE:CNP
Centerpoint Energy, Inc (holding Co) — Q3 2017 Earnings Presentation
33 slides from Centerpoint Energy, Inc (holding Co)'s earnings presentation, Nov 3, 2017
Slide 1: 3rd Quarter 2017 Earnings Call
3rd Quarter 2017 Earnings Call November 3, 2017 Exhibit 99.2
Slide 2: Forward-looking statements
This presentation and the oral statements made in connection herewith contain statements concerning our expectations, beliefs, plans, objectives, goals, strategies, future operations, events, financial position, earnings, growth, costs, prospects, capital investments or performance or underlying ass
Slide 3: Agenda
Agenda Scott Prochazka – President and CEO Third Quarter Performance Hurricane Harvey Restoration Business Segment Highlights Full Year Outlook Midstream Investments Ownership Review Update Bill Rogers – Executive Vice President and CFO Hurricane Harvey Financial Impact Business Segment Performance
Slide 4: Third Quarter 2017 Performance
Third Quarter 2017 Performance (1) Refer to slide 29 for reconciliation to GAAP measures and slide 2 for information on non-GAAP measures (2) Excluding ZENS and CES mark-to-market adjustments (3) Primarily due to the annual true-up of transition charges correcting for over-collections that occurred
Slide 5: Hurricane Harvey Restoration
Hurricane Harvey Restoration Employees, Technology and T&D Investments Provided Resiliency Grid hardening initiatives since 2009 reduced storm impact Smart meters identified outages across the system CenterPoint’s intelligent grid expedited service restorations Outage notification service informed c
Slide 6: Electric Transmission and Distribution Highlights
Electric Transmission and Distribution Highlights TDU core operating income of $229 million in Q3 2017 compared to $234 million in Q3 2016 Added more than 46,000 metered customers year-over-year, representing 2% customer growth Brazos Valley Connection on target to be completed in Q1 2018 at a final
Slide 7: Electric Transmission and Distribution Capital Investment Outlook Update
Electric Transmission and Distribution Capital Investment Outlook Update 2017 – 2021 Capital Plan expected to increase Continued growth in both industrial and residential customer segments in the Houston metro area Proposed $250 million Freeport transmission project submitted to ERCOT in April 2017
Slide 8: Natural Gas Distribution Highlights
Natural Gas Distribution Highlights Natural Gas Distribution operating income of $19 million in Q3 2017 compared to $22 million in Q3 2016 Added 38,000 customers year-over-year, representing 1% customer growth FRP – Formula Rate Plan; APSC – Arkansas Public Service Commission Minnesota rate case fil
Slide 9: Energy Services Highlights and Outlook
Energy Services Highlights and Outlook Energy Services operating income of $5 million in Q3 2017 compared to $7 million in Q3 2016, excluding a mark-to-market gain of $2 million and loss of $2 million, respectively Business Outlook Atmos Energy Marketing acquisition has been accretive to earnings ye
Slide 10: Midstream Investments Highlights
Midstream Investments Highlights Strong Operational Performance Continues Intrastate Average Deliveries Natural Gas Gathered Volumes Natural Gas Processed Volumes TBtu/d TBtu/d TBtu/d 7.3% Increase 40 rigs are currently drilling wells to be connected to Enable’s gathering and processing systems1 Nat
Slide 11: 2017 Full Year Outlook
2017 Full Year Outlook 2017 Utility EPS growth anticipated to exceed 6% despite an extremely mild winter Enable Midstream Partners stated that it anticipates exceeding the midpoint of its earnings range for 2017(2) Anticipate achieving at or near the high end of 2017 EPS range (1) Refer to slide 31
Slide 12: Midstream Investments Ownership Review Update
Midstream Investments Ownership Review Update We are currently in late stage discussions regarding our investment in Enable; we will not comment on the status of those activities, nor can we represent that an agreement will be reached Should these discussions not result in an agreement, we will eval
Slide 13: Agenda
Scott Prochazka – President and CEO Third Quarter Performance Hurricane Harvey Restoration Business Segment Highlights Full Year Outlook Midstream Investments Ownership Review Update Bill Rogers – Executive Vice President and CFO Hurricane Harvey Financial Impact Business Segment Performance Utility
Slide 14: Hurricane Harvey - A Balance Sheet Event
Hurricane Harvey - A Balance Sheet Event Balance Sheet Impacts at September 30, 2017 (1) in millions Electric Gas Total Insurance Receivables for expected expense and property claims $22.6 $1.6 $24.2 Property, Plant and Equipment (2) $4.4 $0.1 $4.5 Regulatory Assets for EOP O&M (2) $73.3 $7.4 $80.7
Slide 15: Electric Transmission and Distribution Operating Income Drivers
Electric Transmission and Distribution Operating Income Drivers Q3 2016 v. Q3 2017 (1) Houston Electric’s customer count increased by 46,544 from 2,389,014 as of September 30, 2016 to 2,435,558 as of September 30, 2017 (2) Q3 2016 TDU core operating income represents total segment operating income o
Slide 16: Natural Gas Distribution Operating Income Drivers
Natural Gas Distribution Operating Income Drivers Q3 2016 v. Q3 2017 (1) Natural Gas Distribution’s customer count increased by 37,925 from 3,394,400 as of September 30, 2016 to 3,432,325 as of September 30, 2017 (2) Includes rate relief increases of $5 million, primarily from Texas jurisdictions of
Slide 17: Utility Operations Adjusted Diluted EPS Drivers
Utility Operations Adjusted Diluted EPS Drivers Q3 2016 v. Q3 2017 (Guidance Basis) (1) Excludes equity return; please refer to slide 28 for more detail on core operating income (2) Lower equity return of $9 million, primarily related to the annual true-up of transition charges correcting for over-c
Slide 18: Consolidated Adjusted Diluted EPS Drivers
Consolidated Adjusted Diluted EPS Drivers Q3 2016 v. Q3 2017 (Guidance Basis) Midstream Investments $0.41 $0.38 Midstream Investments (1) See previous slide (2) Uses an ownership percentage of 55.4% for Q3 2016 and 54.1% for Q3 2017 (3) Midstream Investments components adjusted for the effective tax
Slide 19: Update on 2017 Investment and Financing
Update on 2017 Investment and Financing 2017 Investment and Financing Planned capital investment of approximately $1.5 billion Equity issuance not anticipated Current ratings and outlook 2017 Income Tax Q3 2017 effective tax rate: 37% Expected full year 2017 effective tax rate: 36% Moody’s S&P Fitch
Slide 20: Consolidated Adjusted Diluted EPS Drivers, Nine Months
Consolidated Adjusted Diluted EPS Drivers Nine Months Ended Sept 30, 2016 v. 2017 (Guidance Basis) $1.04 (1) Includes Utility Operations improvement of $0.04 in Q1 2017 v. Q1 2016, $0.06 in Q2 2017 v. Q2 2016 and ($0.03) in Q3 2017 v. Q3 2016 (2) Uses an ownership percentage of 55.4% for nine months
Slide 21: Agenda
Scott Prochazka – President and CEO Third Quarter Performance Hurricane Harvey Restoration Business Segment Highlights Full Year Outlook Midstream Investments Ownership Review Update Bill Rogers – Executive Vice President and CFO Hurricane Harvey Financial Impact Business Segment Performance Utility
Slide 22: Electric Transmission and Distribution Q3 2017 Regulatory Update
Electric Transmission and Distribution Q3 2017 Regulatory Update Mechanism Docket # Annual Increase (1) ($ in millions) Filing Date Effective Date Approval Date Additional Information AMS 47364 N/A Jun-17 TBD TBD Final reconciliation of AMS surcharge proposing a $28.7 million refund for AMS revenue
Slide 23: Natural Gas Distribution Q3 2017 Regulatory Update
Natural Gas Distribution Q3 2017 Regulatory Update Jurisdiction Mechanism Docket # Annual Increase (1) ($ in millions) Filing Date Effective Date Approval Date Additional Information South Texas and Beaumont/East Texas (RRC) GRIP 10618, 10619 7.6 Mar-17 Jul-17 Jun-17 Based on net change in invested
Slide 24: Natural Gas Distribution Q3 2017 Regulatory Update
Natural Gas Distribution Q3 2017 Regulatory Update Jurisdiction Mechanism Docket # Annual Increase (1) ($ in millions) Filing Date Effective Date Approval Date Additional Information Minnesota (MPUC) CIP (2) G008/M-17-339 13.8 May-17 Aug-17 Aug-17 Annual reconciliation filing for program year 2016 a
Slide 25: CenterPoint's Current Tax Position
CenterPoint’s Current Tax Position Effective Tax Rates CenterPoint’s 2016 Effective Tax Rate was 37% (projected rate of 36% plus the income tax expense recognized due to the Louisiana state tax law change) Cash Tax Rates CenterPoint’s 2016 federal cash tax rate was 5% All remaining federal NOL carry
Slide 26: CenterPoint's Deferred Tax Liability
CenterPoint’s Deferred Tax Liability CenterPoint has a net deferred tax liability of $5.3 billion as of Dec. 31, 2016, which would be reduced if a lower federal income tax rate is enacted December 31, 2016 ($ in millions) Utility Related (1) Non-Utility Related Total Deferred Tax Assets Benefits and
Slide 27: Potential Tax Reform Implications
Potential Tax Reform Implications Using a 2018 effective tax date and either of the following assumptions (and assuming the current business segments) (1) Lower corporate tax rate of 20%; 100% expensing of capital investments or Provisions for utilities outlined in H.R.1 Tax Cuts and Jobs Act Tax re
Slide 28: Reconciliation: Operating Income to Core Operating Income
Reconciliation: Operating Income to Core Operating Income on a Guidance (Non-GAAP) Basis
Slide 29: Reconciliation: Net Income and Diluted EPS to Adjusted
Reconciliation: Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS Used in Providing Annual Earnings Guidance
Slide 30: Reconciliation: Net Income and Diluted EPS to Adjusted
Reconciliation: Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS Used in Providing Annual Earnings Guidance
Slide 31: Reconciliation: Net Income and Diluted EPS to Adjusted
Reconciliation: Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS Used in Providing Annual Earnings Guidance
Slide 32: Consolidated Adjusted Funds From Operations (FFO)
CenterPoint Energy Consolidated Adjusted Funds From Operations (FFO) Year Ended December 31, 2016 Year Ended December 31, 2015 Year Ended December 31, 2014 ($ in millions) Net cash provided by operating activities $ 1,928 $ 1,865 $ 1,397 Less: Changes in other assets and liabilities Accounts receiva
Slide 33: Consolidated Ratio of Adjusted FFO/Total Debt
CenterPoint Energy Consolidated Ratio of Adjusted FFO/Total Debt Excluding Transition and System Restoration Bonds ($ in millions) December 31, 2016 December 31, 2015 December 31, 2014 Short-term Debt: Short-term borrowings $ 35 $ 40 $ 53 Current portion of transition and system restoration bonds* 4