Public Service Enterprise Group Incorporated · NYSE:PEG

Public Service Enterprise — Q4 2015 Earnings Presentation

35 slides from Public Service Enterprise's earnings presentation, Feb 19, 2016

  1. Slide 1: PSEG Earnings Conference Call 4th Quarter & Year-end 2015

    Public Service Enterprise Group PSEG Earnings Conference Call 4th Quarter & Year-end 2015 February 19, 2016

  2. Slide 2: Forward-Looking Statements

    Forward-Looking Statements Certain of the matters discussed in this report 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 “forward-loo

  3. 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

  4. Slide 4: 2015 Q4 and Full Year Review

    PSEG 2015 Q4 and Full Year Review Ralph Izzo Chairman, President and Chief Executive Officer

  5. Slide 5: Q4 Earnings Summary – Strong Operating Results

    Q4 Earnings Summary – Strong Operating Results Quarter ended December 31 $ millions (except EPS) 2015 2014 Operating Earnings $ 255 $ 247 Reconciling Items, Net of Tax 54 229 Net Income $ 309 $ 476 EPS from Operating Earnings* $ 0.50 $ 0.49 * See Slide A for Items excluded from Net Income to reconci

  6. Slide 6: Full-year Earnings Summary – 5.4% Increase in Operating Earnings

    Full-year Earnings Summary – 5.4% Increase in Operating Earnings Twelve Months ended December 31 $ millions (except EPS) 2015 2014 Operating Earnings $ 1,476 $ 1,400 Reconciling Items, Net of Tax 203 118 Net Income $ 1,679 $ 1,518 EPS from Operating Earnings* $ 2.91 $ 2.76 5 * See Slide A for Items

  7. Slide 7: 2015 – A Year of Successful Deployment of Capital and Strong Operating Performance

    PSEG 2015 – A Year of Successful Deployment of Capital and Strong Operating Performance  Strong 2015 financial performance – at upper half of guidance  Operating earnings of $2.91 per share, up 5.4%, the 3rd consecutive year of growth  PSE&G achieved 9% growth in earnings, at the upper end of gui

  8. Slide 8: Annual Dividend – Increased 5.1% to $1.64 per share

    PSEG Annual Dividend – Increased 5.1% to $1.64 per share Continuing an improved rate of growth in the dividend, building on a 109-year history of returning cash to the shareholder PSEG Annual Dividend Rate $1.75 10-year rate of growth: 3.7% + 5.1% $1.64* $1.56 $1.48 $ Per Share $1.50 $1.44 $1.42 $1.

  9. Slide 9: 2016 Earnings Guidance

    PSEG 2016 Earnings Guidance Growth in regulated operations offsetting commodity market weakness in 2016 $2.91 $2.80 - $3.00E $2.76 2014 2015 2016 Operating Earnings Guidance * See Slide A for Items excluded from Net Income to reconcile to Operating Earnings. E = Estimate. 8

  10. Slide 10: 2015 Q4 Operating Company Review

    PSEG 2015 Q4 Operating Company Review Dan Cregg EVP and Chief Financial Officer

  11. Slide 11: Q4 Operating Earnings by Subsidiary

    Q4 Operating Earnings by Subsidiary Quarter ended December 31 Operating Earnings Earnings per Share $ millions (except EPS) 2015 2014 2015 2014 PSE&G $ 156 $ 160 $ 0.31 $ 0.32 PSEG Power 95 91 0.19 0.18 PSEG Enterprise/Other 4 (4) - (0.01) Operating Earnings* $ 255 $ 247 $ 0.50 $ 0.49 10 * See Slide

  12. Slide 12: EPS Reconciliation – Q4 2015 versus Q4 2014

    PSEG EPS Reconciliation – Q4 2015 versus Q4 2014 0.60 $0.49 (0.01) 0.01 0.01 $0.50 0.50 Transmission & Capacity (0.04) Taxes 0.40 Distribution 0.03 and Re-Contracting, Other $ / share Electric Weather, Volume Market Pricing 0.30 and Demand (0.01) and Lower Gas Sales 0.02 O&M, Taxes and 0.20 Other (0

  13. Slide 13: Strong Full-year Operating Earnings Achieved – Up 5.4%

    Strong Full-year Operating Earnings Achieved – Up 5.4% Twelve Months ended December 31 Operating Earnings Earnings per Share $ millions (except EPS) 2015 2014 2015 2014 PSE&G $ 787 $ 725 $ 1.55 $ 1.43 PSEG Power 653 642 1.29 1.27 PSEG Enterprise/Other 36 33 0.07 0.06 Operating Earnings* $ 1,476 $ 1,

  14. Slide 14: EPS Reconciliation – Full-year 2015 versus Full-year 2014

    PSEG EPS Reconciliation – Full-year 2015 versus Full-year 2014 3.00 0.12 0.02 0.01 $2.91 $2.76 2.50 Re-Contracting PSEG Transmission 0.13 Long Island and Market Gas Volume Pricing 0.27 2.00 & Demand 0.03 $ / share Capacity (0.24) 1.50 Electric Weather, Volume & Volume 0.02 Demand 0.04 O&M (0.05) 1.0

  15. Slide 15: PSE&G 2015 Q4 Review

    PSE&G 2015 Q4 Review

  16. Slide 16: PSE&G – Q4 Earnings Summary

    PSE&G – Q4 Earnings Summary $ millions (except EPS) Q4 2015 Q4 2014 Variance Operating Revenues $ 1,402 $ 1,531 $ (129) Operating Expenses Energy Costs 546 631 (85) Operation & Maintenance 389 368 21 Depreciation & Amortization 180 224 (44) Total Operating Expenses 1,115 1,223 (108) Operating Earnin

  17. Slide 17: PSE&G EPS Reconciliation – Q4 2015 versus Q4 2014

    PSE&G EPS Reconciliation – Q4 2015 versus Q4 2014 0.40 $0.32 0.02 (0.03) $0.31 0.30 $ / share Transmission & Distribution O&M, Taxes 0.20 Margin 0.03 & Other Electric Weather, 0.10 Volume & Demand (0.01) 0.00 Q4 2014 Q4 2015 Operating Operating Earnings Earnings 16 Prior quarter results for reconcil

  18. Slide 18: PSE&G – Q4 Operating Highlights

    PSE&G – Q4 Operating Highlights Operations  Q4 weather dominated by warmest December on record; average December temperature of 47.8°F resulted in heating degree days that were 31% below Q4 2014 and normal  Low natural gas prices continue to benefit weather normalized gas sales, up 2.1% for Q4 and

  19. Slide 19: Power 2015 Q4 Review

    PSEG Power 2015 Q4 Review

  20. Slide 20: Power – Q4 EPS Summary

    PSEG Power – Q4 EPS Summary $ millions (except EPS) Q4 2015 Q4 2014 Variance Operating Revenues $ 1,082 $ 1,610 $ (528) Operating Earnings 95 91 4 Pro Forma Adjustments, 54 229 (175) Net of Tax** Net Income $ 149 $ 320 $ (171) EPS from Operating Earnings* $ 0.19 $ 0.18 $ 0.01 * See Slide A for Items

  21. Slide 21: Power EPS Reconciliation – Q4 2015 versus Q4 2014

    PSEG Power EPS Reconciliation – Q4 2015 versus Q4 2014 0.25 0.20 $0.18 (0.02) 0.03 $0.19 $ / share 0.15 Lower Capacity (0.04) Taxes and 0.10 Re-Contracting, Other Market Pricing & 0.05 Lower Gas Sales 0.02 0.00 Q4 2014 Q4 2015 Operating Operating Earnings* Earnings* *See Slide A for Items excluded f

  22. Slide 22: Power – Q4 Generation Measures – Volume %

    PSEG Power – Q4 Generation Measures – Volume % PSEG Power – Generation (GWh) PSEG Power – Capacity Factors (%) Quarter ended December 31 Quarter ended December 31 15,000 12,859 12,725 2014 2015 4,637 4,646 Combined Cycle PJM and NY 59.9% 64.2% 7,500 1,266 814 Coal* NJ (Coal/Gas) 0.7% 0.2% 6,956 7,26

  23. Slide 23: Power – Full-Year Generation Measures – Volume %

    PSEG Power – Full-Year Generation Measures – Volume % PSEG Power – Generation (GWh) PSEG Power – Capacity Factors (%) Twelve months ended December 31 Twelve months ended December 31 60,000 55,213 54,162 2014 2015 50,000 Combined Cycle 17,693 19,391 40,000 PJM and NY 56.0% 65.8% 7,361 5,809 30,000 Co

  24. Slide 24: Power – Fuel Costs

    PSEG Power – Fuel Costs PSEG Power – Fuel Costs Twelve months ended Quarter ended December 31 December 31 ($ millions) 2014 2015 ($ millions) 2014 2015 Coal 39 23 Coal 208 163 Oil & Gas 134 62 Oil & Gas 758 485 Total Fossil 173 85 Total Fossil 966 648 Nuclear 49 51 Nuclear 210 213 Total Fuel Cost 22

  25. Slide 25: Power – Q4 2015 Gross Margin Performance

    PSEG Power – Q4 2015 Gross Margin Performance  Favorable hedges offset declines in wholesale market prices  Capacity revenues affected by HEDD retirements in second half 2015  Market prices influenced by record mild weather  Access to Marcellus gas continues to provide fuel cost savings PSEG Pow

  26. Slide 26: Market Perspective – 2016 BGS Auction Results

    Market Perspective – 2016 BGS Auction Results Full Requirements Component Capacity Markets/RPM Growing Renewable Energy/Transmission Component for Market Risk $97.39 $99.54 $96.38 $92.18 $83.88  Capacity  Load shape ~ $53 ~ $59 ~ $62 ~ $63  Transmission  Congestion ~ $46  Ancillary services  R

  27. Slide 27: Hedging Update…

    Hedging Update… Contracted Energy* 2016 2017 2018 Volume TWh 36 36 36 Base Load % Hedged 100% 70-75% 25-30% (Nuclear and Base Load Coal) Price $/MWh $51 $50 $54 Volume TWh 19 19 24 Intermediate, Combined Cycle, % Hedged 15-20% 0% 0% Peaking Price $/MWh $51 - - Volume TWh 54-56 54-56 59-61 Total % He

  28. Slide 28: Power – Q4 2015 Operating Highlights

    PSEG Power – Q4 2015 Operating Highlights Operations  Q4 output down 1% over Q4 2014; full-year 2015 generation up 2% to 55.2 TWh on nuclear and CCGT production gains  Nuclear fleet capacity factor of 90.4% for 2015; nuclear output of 30 TWh was 3rd best run  New CCGT all-time production total of

  29. Slide 29: PSEG

    PSEG

  30. Slide 30: Financial Highlights

    PSEG Financial Highlights  Introducing 2016 operating earnings guidance of $2.80 - $3.00 per share  Focused on maintaining operating efficiency and customer reliability  PSE&G earnings forecast to grow 14% to comprise >60% of 2016’s operating earnings  PSEG capital spending forecast of $11.5 bil

  31. Slide 31: 2016 Operating Earnings Guidance - By Subsidiary

    PSEG 2016 Operating Earnings Guidance - By Subsidiary Segment Earnings Guidance and Prior Results $ millions (except EPS) 2016E 2015 2014 PSE&G $875 - $925 $787 $725 PSEG Power $490 - $540 $653 $642 PSEG Enterprise/Other $60 - $60 $36 $33 Operating Earnings* $1,425 - $1,525 $1,476 $1,400 Earnings pe

  32. Slide 32: Power's Adjusted EBITDA – Q4 2015, Full-Year 2015 and Full-Year 2016 Guidance

    PSEG Power’s Adjusted EBITDA – Q4 2015, Full-Year 2015 and Full-Year 2016 Guidance PSEG Power - Adjusted EBITDA* Three Months Ended Full-Year 2016 December 31, Full Year Guidance ($ in millions) 2015 2014 2015 2014 Low High Operating Earnings** $95 $91 $653 $642 $490 $540 Add: Fossil Major Maintenan

  33. Slide 33: Liquidity as of December 31, 2015

    PSEG Liquidity as of December 31, 2015 Expiration Total Available Company Facility Date Facility Usage Liquidity ($Millions) PSE&G 5-year Credit Facility Apr-20 $600 (A ) $167 $433 PSEG Money Pool PSEG / Power 5-Year Credit Facility (Power) Apr-19 $1,600 $161 $1,439 5-Year Credit Facility (Power) Ap

  34. Slide 34: Items Excluded from Net income to Reconcile to Operating Earnings

    Items Excluded from Net income to Reconcile to Operating Earnings PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED Consolidated Operating Earnings Reconciliation Three Months Ended Year-Ended Year-Ended Reconciling Items, net of tax December 31, December 31, December 31, 2015 2014 2015 2014 2013 ($ Mill

  35. Slide 35: Items Excluded from Net Income to Reconcile to Operating Earnings and Adjusted EBITDA

    Items Excluded from Net Income to Reconcile to Operating Earnings and Adjusted EBITDA PSEG Power Adjusted EBITDA Reconciliation Three Months Ended Year-Ended Reconciling Items December 31, December 31, 2015 2014 2015 2014 ($ Millions, Unaudited) Adjusted EBITDA $ 235 $ 271 $ 1,563 $ 1,584 Fossil Maj

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