Centerpoint Energy, Inc (holding Co) · NYSE:CNP
Centerpoint Energy, Inc (holding Co) — Q1 2020 Earnings Presentation
30 slides from Centerpoint Energy, Inc (holding Co)'s earnings presentation, May 7, 2020
Slide 1: 1st Quarter 2020 Earnings Call
1ST QUARTER 2020 EARNINGS CALL MAY 7, 2020
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT This presentation and the oral statements made in connection herewith contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical f
Slide 3: Additional Information: Use of Non-GAAP Financial Measures
ADDITIONAL INFORMATION Use of Non-GAAP Financial Measures In addition to presenting its financial results in accordance with generally accepted accounting principles (GAAP), including presentation of income (loss) available to common shareholders and diluted earnings (loss) per share, CenterPoint En
Slide 4: Thank You Employees
THANK YOU EMPLOYEES During these unprecedented times, we are proud of the tremendous efforts our employees are making every day to continue providing safe and reliable electricity and natural gas to our customers. We would like to extend a special thank you to our operations personnel who are on the
Slide 5: Key Takeaways
KEY TAKEAWAYS Strong First Quarter Utility guidance basis EPS of $0.50 , over 20% Q-o-Q increase (1) Mitigating COVID-19 Impact Constructive regulatory mechanisms Transformative Equity Capital Raise $1.4 billion of new equity capital to reduce debt and eliminate anticipated equity needs through 2022
Slide 6: Significant Equity Investment
SIGNIFICANT EQUITY INVESTMENT REMOVED ANTICIPATED EQUITY NEEDS THROUGH 2022 Significant $1.4 billion equity investment from highly credible investors with a record of value creation $1.4 billion equity investment comprised of: Transaction Led by Long-Term • $725 million mandatory convertible preferr
Slide 7: New Business Review and Evaluation Committee Formed by the Board
NEW BUSINESS REVIEW AND EVALUATION COMMITTEE FORMED BY THE BOARD Includes 2 new Board members and will complete a 5-month comprehensive review ✓ New Board Members: David Lesar (former CEO of Halliburton) and Barry Smitherman (former chairman of PUCT and Railroad Commission of Texas) will join the Bo
Slide 8: Q1 2020 COVID-19 Pandemic Update
Q1 2020 COVID-19 PANDEMIC UPDATE OPERATIONS • Safety and well-being of CenterPoint’s customers, employees, contractors and the communities we serve are top priorities – Committed to being “Always There” for our customers (1) by enacting temporary suspension of DNP – Implementation of Pandemic Prepar
Slide 9: First Quarter 2020 Earnings Summary
FIRST QUARTER 2020 EARNINGS SUMMARY First quarter 2020 loss of $2.44 per diluted Reiterate 2020 Utility Guidance share, which included non-cash impairment Basis EPS Range charges and losses on assets held for sale $1.10 - $1.20(1) totaling $3.12 per diluted share, compared and with earnings of $0.28
Slide 10: COVID-19 Pandemic Update: Expenses, Including Bad Debt
COVID-19 PANDEMIC UPDATE COVID-19 EXPENSES, INCLUDING BAD DEBT • Collaboration with various PUCs across COVID-19 expense deferral available in nearly 70% of jurisdictions CenterPoint’s regulated footprint to address recovery of COVID-19 Rate base by jurisdiction(1) expenses MS LA 1% • Nearly 70% of
Slide 11: COVID-19 Pandemic Update: Q2 Demand Sensitivities & FY Guidance Assumptions
COVID-19 PANDEMIC UPDATE Q2 DEMAND SENSITIVITIES & FY GUIDANCE ASSUMPTIONS (1) Early Q2 Estimated Impacts April 2020 Estimated Demand Impact • “Stay-at-home” practices estimated to yield modest negative Houston Indiana Natural Gas demand impacts associated with electric commercial and small Electric
Slide 12: Sale of Infrastructure Services & Energy Services for $1.25B
SALE OF INFRASTRUCTURE SERVICES & ENERGY SERVICES FOR $1.25B Transaction Details Strategic Rationale ✓ Infrastructure Services(1) ✓ Improves Business Risk Profile (3) ― Sale closed April 9, 2020 ✓ Strengthens Balance Sheet and ― Sales price $850 million; net-after tax Credit Quality(4) proceeds ~$67
Slide 13: Enable Update
ENABLE UPDATE • Market Update – Enable expects some amount of volume curtailment in the Anadarko and Williston Basins – Most producer drilling and completion activity for the balance of 2020 is expected to be focused in the Haynesville Shale • Enable Positioning – Recently announced actions expected
Slide 14: Achieving Our 5-7% Utility Growth Target
ACHIEVING OUR 5-7% UTILITY GROWTH TARGET Top Quartile Customer Growth Lower-risk T&D and Gas LDC and Low Customer Rates ◼ 96%(1) of rate base from lower-risk Gas ◼ Electric customer growth of 2.0% (2) and LDC and electric T&D utility asset bases gas of 1.2%(3), both above the national ◼ Premium util
Slide 15: First Quarter 2020 Highlights: Utility Operations
FIRST QUARTER 2020 HIGHLIGHTS UTILITY OPERATIONS Customer growth and capital Disciplined O&M management Optimize regulatory outcomes • Approximately $600 million • On target to achieve estimated • Rate relief filings increasing utility capital deployed across 2020 $40 million(2) incremental incremen
Slide 16: First Quarter 2020 Non-Cash Impairments
FIRST QUARTER 2020 NON-CASH IMPAIRMENTS (CONTINUING OPERATIONS) Impairment charges are non-cash AND do not impact: ✓ Liquidity ✓ Cash flow ✓ Compliance with debt covenants Midstream Investments Indiana Electric • $1,177 million after-tax non-cash impairment charge • $185 million non-cash impairment
Slide 17: Q1 2020 v Q1 2019 Guidance Basis EPS Drivers
Q1 2020 V Q1 2019 GUIDANCE BASIS (NON-GAAP) (1) EPS DRIVERS FOR CONTINUING OPERATIONS Utility Operations(2) $0.05 $0.01 $0.10 $0.07 Midstream Investments $0.01 $0.05 $0.00 Midstream Investments Primary Drivers Primary Drivers Primary Drivers Primary Drivers $0.02 O&M $0.01 Additional $0.06 Rat
Slide 18: Disciplined O&M Management
DISCIPLINED O&M MANAGEMENT Utility O&M Management(1) Key O&M Management Initiatives ($40) ➢ Approximately half of targeted 2020 O&M reductions anticipated to be derived from support functions $ in millions $1,500(2) ➢ Align work activities and organizational $1,460 approaches with our utility-focuse
Slide 19: Financing Outlook Update
FINANCING OUTLOOK UPDATE COMMITTED TO INVESTMENT-GRADE CREDIT • Execution of $1.4 billion equity transaction Consolidated Adjusted FFO/Debt o $725 million Mandatory Convertible Preferred Stock Target ~14 - 14.5% o $675 million Common Stock 13.6% (1) o Delevers balance sheet, strengthens investment-g
Slide 20: Reiterate 2020-2024 Utility Guidance
REITERATE 2020 – 2024 UTILITY GUIDANCE BASIS EPS OUTLOOK Robust regulated utility growth plan drives 5-7% utility growth 5 – 7% Utility EPS ➢ $13 billion 5-year capital investment plan CAGR through 2024 ➢ 7.5% rate base CAGR from 2019 – 2024 $1.10 – $1.20(1) ➢ Top quartile customer growth ➢ Electric
Slide 21: Appendix
e CenterPoint: Energy APPENDIX
Slide 22: Utility Demand Sensitivities
UTILITY DEMAND SENSITIVITIES Estimated Margins by Customer Class Houston Electric Indiana Electric Natural Gas Distribution 10% 11% 25% 44% 18% 30% 60% 71% 31% Residential Commercial Industrial Residential Commercial Industrial Residential C&I Transportation Estimated Annual Sensitivity to +/- 2% Ch
Slide 23: Electric Operations Q1 2020 Regulatory Update
ELECTRIC OPERATIONS Q1 2020 REGULATORY UPDATE Annual Increase Filing Effective Approval Mechanism (Decrease) (1) Additional Information Date Date Date (in millions) CenterPoint Energy and Houston Electric (PUCT) For full disclosure on Houston Electric rate case, refer to "Regulatory Matters" in Item
Slide 24: Natural Gas Distribution Q1 2020 Regulatory Update
NATURAL GAS DISTRIBUTION Q1 2020 REGULATORY UPDATE Annual Increase Filing Effective Approval Mechanism (Decrease) (1) Additional Information Date Date Date (in millions) CenterPoint Energy and CERC - Beaumont/East Texas (Railroad Commission) Unanimous settlement agreement filed with the Railroad Com
Slide 25: Natural Gas Distribution Q1 2020 Regulatory Update
NATURAL GAS DISTRIBUTION Q1 2020 REGULATORY UPDATE Annual Increase Filing Effective Approval Mechanism (Decrease) (1) Additional Information Date Date Date (in millions) CenterPoint Energy - Indiana South - Gas (IURC) Requested an increase of $13 million to rate base, which reflects a $1 million ann
Slide 26: 2020 EPS Guidance Basis Considerations
2020 EPS GUIDANCE BASIS CONSIDERATIONS Translating Enable Guidance to CenterPoint’s Portion (in millions, except percentages) Guidance basis EPS before allocation of Corporate & Other Enable Net Income Attributable $195 - $235(2) to Common Units Midstream Utility Operations Corporate & Other Investm
Slide 27: Reconciliation: Income (Loss) and Diluted EPS to Adjusted Income and EPS (Q1 2020)
RECONCILIATION: INCOME (LOSS) AND DILUTED EARNINGS (LOSS) PER SHARE TO ADJUSTED INCOME AND ADJUSTED DILUTED EPS USED IN PROVIDING ANNUAL EARNINGS GUIDANCE Quarter Ended March 31, 2020 (1) (2) Midstream Corporate and CES & CIS Utility Operations Investments Other (6) (Disc. Operations) Consolidated D
Slide 28: Reconciliation: Income (Loss) and Diluted EPS to Adjusted Income and EPS (Q1 2019)
RECONCILIATION: INCOME (LOSS) AND DILUTED EARNINGS (LOSS) PER SHARE TO ADJUSTED INCOME AND ADJUSTED DILUTED EPS USED IN PROVIDING ANNUAL EARNINGS GUIDANCE Quarter Ended March 31, 2019 Midstream Corporate and CES (1) & CIS (2) Utility Operations Investments Other (6) (Disc. Operations) Consolidated D
Slide 29: Consolidated Adjusted Cash From Operations Pre-Working Capital
CENTERPOINT ENERGY CONSOLIDATED ADJUSTED CASH FROM OPERATIONS PRE-WORKING CAPITAL Year Ended December 31, 2019 ($ in millions) Net cash provided by operating activities 1,638 Less: Changes in other assets and liabilities Accounts receivable and unbilled revenues, net (226) Inventory 52 Taxes receiva
Slide 30: Ratio of Adjusted Cash From Operations Pre-Working Capital/Adjusted Total Debt
CENTERPOINT ENERGY CONSOLIDATED RATIO OF ADJUSTED CASH FROM OPERATIONS PRE-WORKING CAPITAL/ADJUSTED TOTAL DEBT Year Ended December 31, 2019 ($ in millions) Short-term Debt: Short-term borrowings - Current portion of transition and system restoration bonds 231 Indexed debt (ZENS)** 19 Current portion
CenterPoint Energy, Inc (Holding Co) — Q1 2020 Earnings Presentation on 6ix