Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Q4 2018 Earnings Presentation
38 slides from Public Service Enterprise's earnings presentation, Feb 27, 2019
Slide 1: PSEG Earnings Conference Call 4th Quarter & Full Year 2018
Public Service Enterprise Group PSEG Earnings Conference Call 4th Quarter & Full Year 2018 February 27, 2019 EXHIBIT 99.1
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain of the matters discussed in this presentation about our and our subsidiaries’ future performance, including, without limitation, future revenues, earnings, strategies, prospects, consequences and all other statements that are not purely historical constitute “forwa
Slide 3: GAAP Disclaimer
GAAP Disclaimer PSEG presents Operating Earnings and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in addition to its Net Income reported in accordance with accounting principles generally accepted in the United States (GAAP). Operating Earnings and Adjusted EBITDA
Slide 4: 2018 Q4 and Full Year Review
PSEG 2018 Q4 and Full Year Review Ralph Izzo Chairman, President and Chief Executive Officer
Slide 5: 2018 Highlights
2018 Highlights 2018 Results Net Income per share of $0.39 in Q4 2018 vs. $1.88 in Q4 2017; Net Income per share of $2.83 in 2018 vs. $3.10 in 2017 Non-GAAP Operating Earnings* per share of $0.56 in Q4 2018 vs. $0.57 in Q4 2017; full-year, non-GAAP Operating Earnings* per share of $3.12 in 2018 vs.
Slide 6: Q4 Results Summary
PSEG Q4 Results Summary Quarter ended December 31 $ millions (except EPS) 2018 2017 Net Income $ 199 $ 956 Reconciling Items 85 (667) Operating Earnings (non-GAAP)* $ 284 $ 289 EPS from Net Income $ 0.39 $ 1.88 EPS from Operating Earnings (non-GAAP)* $ 0.56 $ 0.57 *See Slide A for Items excluded fro
Slide 7: Full Year Results
Full Year Results Twelve Months ended December 31 *See Slide A for Items excluded from Net Income to reconcile to Operating Earnings (non-GAAP). $ millions (except EPS) 2018 2017 Net Income $ 1,438 $ 1,574 Reconciling Items 144 (86) Operating Earnings (non-GAAP)* $ 1,582 $ 1,488 EPS from Net Income
Slide 8: Executing on Regulatory and Policy Initiatives
PSEG - Executing on Regulatory and Policy Initiatives Distribution Base Rate Case Settlement Approved Constructive outcome provides customers and PSE&G a framework for rate stability; new rates with annual base revenue impact of $212 million went into effect November 1, moderated by annual tax adjus
Slide 9: PSEG – Introducing 2019 Guidance
Ongoing investment in utility infrastructure drives increase in earnings Non-GAAP Operating Earnings* Contribution by Subsidiary 2018 Actual and 2019 Guidance *See Slides A, B and C for Items excluded from Net Income/(Loss) to reconcile to Operating Earnings (non-GAAP). **Based on the mid-point of 2
Slide 10: Indicative Annual Dividend – Increased $0.08 to $1.88 per share
PSEG Indicative Annual Dividend – Increased $0.08 to $1.88 per share $ Per Share Payout Ratio 54% 54% 57% 59% 58% 58%** Building on a 112-year history of returning cash to our shareholders PSEG Annual Dividend Rate 5 year rate of growth: 4.9% * *Indicative annual 2019 PSEG common dividend rate per s
Slide 11: 2018 Q4 Operating Company Review
PSEG 2018 Q4 Operating Company Review Dan Cregg EVP and Chief Financial Officer
Slide 12: PSEG Q4 EPS Summary
PSEG – Q4 Results by Subsidiary Net Income/(Loss) 2018 2017 Change PSE&G $ 0.47 $ 0.43 $ 0.04 PSEG Power $ (0.07) $ 1.20 $ (1.27) PSEG Enterprise/Other $ (0.01) $ 0.25 $ (0.26) Total PSEG $ 0.39 $ 1.88 $ (1.49) Non-GAAP Operating Earnings* 2018 2017 Change PSE&G $ 0.47 $ 0.41 $ 0.06 PSEG Power $ 0.1
Slide 13: PSEG EPS Reconciliation – Q4 2018 versus Q4 2017
$ / share PSEG EPS Reconciliation – Q4 2018 versus Q4 2017 Capacity 0.04 Re-contracting (0.09) Volume 0.03 Gas Operations (0.02) O&M 0.01 Depreciation (0.02) Interest Expense (0.03) Taxes & Other (0.01) Transmission 0.04 Gas Margin 0.06 Electric Margin 0.02 Distribution O&M (0.05) Pension & OPEB** 0
Slide 14: PSEG Full Year EPS Summary
PSEG – Year-to-Date Results by Subsidiary Net Income 2018 2017 Change PSE&G $ 2.10 $ 1.92 $ 0.18 PSEG Power $ 0.72 $ 0.94 $ (0.22) PSEG Enterprise/Other $ 0.01 $ 0.24 $ (0.23) Total PSEG $ 2.83 $ 3.10 $ (0.27) Non-GAAP Operating Earnings* 2018 2017 Change PSE&G $ 2.10 $ 1.90 $ 0.20 PSEG Power $ 0.99
Slide 15: PSEG EPS Reconciliation – YTD 2018 versus YTD 2017
$ / share PSEG EPS Reconciliation – YTD 2018 versus YTD 2017 Capacity 0.13 Re-contracting (0.33) Volume 0.08 Gas Operations (0.01) O&M (0.03) Depreciation (0.02) Interest Expense (0.04) Taxes and Other 0.21 Transmission 0.12 Gas Margin 0.11 Electric Margin 0.05 Weather 0.04 Distribution O&M (0.09) P
Slide 16: PSE&G 2018 Q4 Review
PSE&G 2018 Q4 Review
Slide 17: PSE&G EPS Reconciliation – Q4 2018 versus Q4 2017
$ / share PSE&G EPS Reconciliation – Q4 2018versus Q4 2017 Transmission 0.04 Gas Margin 0.06 Electric Margin 0.02 Distribution O&M (0.05) Pension & OPEB** 0.02 Depreciation, Interest Expense, Taxes & Other (0.03) *See Slide B for Items excluded from Net Income to reconcile to Operating Earnings (non
Slide 18: PSE&G – Q4 & Full Year Weather Summary
PSE&G – Q4 & Full Year Weather Summary Q4 2018 vs. Q4 2017 vs. Q4 normal Monthly Heating Degree Days (HDD) Q4 2018 Winter weather, as defined by heating degree days, was ~7% colder than Q4 2017 and ~8% colder than normal Heating Degree Days Winter Weather Summary (HDD) FY 2018 vs. FY 2017 vs. FY nor
Slide 19: Energy Strong Program Filing
PSE&G filed its ES II infrastructure program in June 2018 which seeks to invest $2.5 billion, over a five-year period to further strengthen the utility’s electric and gas systems to better withstand storms, increase reliability and significantly enhance resiliency Electric: Provide flood mitigation
Slide 20: Partnership for a Clean Energy Future
Partnership for a Clean Energy Future PSE&G has proposed a ~$3.6 Billion investment program to provide cost-effective and innovative solutions supporting NJ’s clean energy goals Energy Efficiency: Residential and C&I programs to lower energy bills and combat climate change Savings support 2% electri
Slide 21: PSE&G's $11B - $16B investment program
PSE&G’s $11B - $16B investment program focused on reliability, grid modernization and clean energy CEF PSE&G Capital Spending 2019E – 2023E $ Millions Hashed portion of the chart represents ES II and CEF filings. E = Estimate. ES II
Slide 22: PSE&G Year-End Rate Base 2018 – 2023E
7% - 9% - $ Millions Investment program provides opportunity for approximately 7% - 9% compound annual rate base growth Hashed portion of the chart represents ES II and CEF filings. E = Estimate. PSE&G Year-End Rate Base 2018 – 2023E CEF ES II
Slide 23: PSE&G – Q4 Highlights
PSE&G – Q4 Highlights PSE&G settled its distribution base rate case, implementing a $212 million annual base revenue increase, 9.6% ROE and 54% equity ratio, offset by annual flow back of certain excess deferred tax benefits of $225 million; placed into effect November 1 2019 FERC transmission formu
Slide 24: Power 2018 Q4 Review
PSEG Power 2018 Q4 Review
Slide 25: Power EPS Reconciliation – Q4 2018 versus Q4 2017
PSEG Power EPS Reconciliation – Q4 2018 versus Q4 2017 Q4 2017 Net Income Q4 2017 Operating Earnings (non-GAAP)* Q4 2018 Net Loss Q4 2018 Operating Earnings (non-GAAP)* Capacity 0.04 Re-contracting (0.09) Volume 0.03 Gas Operations (0.02) O&M 0.01 Depreciation (0.02) Interest Expense (0.03) Taxes &
Slide 26: PSEG Power – Q4 Generation Measures
Quarter ended December 31 2017 2018 Combined Cycle 39.6% 50.6% Coal** PA 71.3% 79.9% CT 12.2% 9.2% Nuclear 89.9% 86.9% PSEG Power – Q4 Generation Measures Total Nuclear Total Coal** Natural Gas * Excludes solar and Kalaeloa. ** Includes figures for Pumped Storage. PSEG Power – Generation (GWh)* 11,9
Slide 27: PSEG Power – YTD Generation Measures
Twelve Months ended December 31 2017 2018 Combined Cycle 46.9% 52.0% Coal** PA 77.5% 80.1% CT 6.0% 9.9% Nuclear 93.9% 91.4% PSEG Power – YTD Generation Measures Total Nuclear Total Coal** Natural Gas * Excludes solar and Kalaeloa. ** Includes figures for Pumped Storage. PSEG Power – Generation (GWh)
Slide 28: Power – Gross Margin Performance
PSEG Power – Gross Margin Performance Higher generation from new units Keys and Sewaren 7 and increased weather driven demand Capacity revenues step up June 2018 through May 2019 Lower average price on energy hedges Regional Performance Region Q4 Gross Margin ($M) Q4 2018 Performance PJM $399 Re-con
Slide 29: NJ Basic Generation Service (BGS) 2019 Auction Results
Increase in Full Requirements Component Due to: Growing Renewable Energy/Transmission Costs Partially Offset by Decline in Capacity Prices NJ Basic Generation Service (BGS) 2019 Auction Results The BGS auction is a critical component of Power’s annual hedging strategy, accounting for ~ 9 TWh Note: B
Slide 30: Hedging Update
Hedging Update – Reflects recent BGS auction results Contracted Energy* * Hedge percentages and prices as of February 6, 2019 and reflect revenues of full requirement load deals based on contract price including renewable energy credits, ancillary and transmission components but excluding capacity.
Slide 31: Power – Q4 Highlights
PSEG Power – Q4 Highlights Q4 output up 19% on higher CCGT production with two new units coming on line and higher demand; full-year 2018 generation of 56 TWh up 9% over 2017 Nuclear fleet’s average capacity factor was ~87% in Q4; full-year 2018 capacity factor was ~91% CCGT fleet capacity factor wa
Slide 32: PSEG
PSEG
Slide 33: 2019 Guidance - By Subsidiary
PSEG 2019 Guidance - By Subsidiary $ millions (except EPS) 2019E 2018 PSE&G $1,200 - $1,230 $1,067 PSEG Power $395 - $460 $502 PSEG Enterprise/Other $5 - $10 $13 Operating Earnings (non-GAAP)* $1,600 - $1,700 $1,582 Operating EPS (non-GAAP)* $3.15 - $3.35 $3.12 Segment Operating Earnings Guidance an
Slide 34: Financial Highlights
PSEG Financial Highlights Initiating 2019 non-GAAP Operating Earnings guidance of $3.15 - $3.35 per share Business mix for 2019 guidance reflects nearly 75% of Operating Earnings coming from our regulated utility PSE&G PSEG’s 5-year capital spending forecast of $12 - $17 billion, primarily directed
Slide 35: Liquidity as of December 31, 2018
PSEG Liquidity as of December 31, 2018
Slide 36: Reconciliation of Non-GAAP Operating Earnings
Reconciliation of Non-GAAP Operating Earnings Please see Slide 2 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure and how it differs from Net Income. A Effective January 1, 2018, unrealized gains (losses) on equity securities are recorded in Net Income instead o
Slide 37: Reconciliation of Non-GAAP Operating Earnings
Reconciliation of Non-GAAP Operating Earnings Please see Slide 2 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure and how it differs from Net Income/(Loss). B Income tax effect calculated at a combined leveraged lease effective tax rate.
Slide 38: Reconciliation of Non-GAAP Operating Earnings and Non-GAAP Adjusted EBITDA
Reconciliation of Non-GAAP Operating Earnings and Non-GAAP Adjusted EBITDA Please see Slide 2 for an explanation of PSEG’s use of Operating Earnings and Adjusted EBITDA as non-GAAP financial measures and how they differ from Net Income/(Loss). C Effective January 1, 2018, unrealized gains (losses) o
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