Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Q4 2011 Earnings Presentation
38 slides from Public Service Enterprise's earnings presentation, Feb 23, 2012
Slide 1: PSEG Earnings Conference Call, 4th Quarter and Year-end 2011
Public Service Enterprise Group PSEG Earnings Conference Call 4th Quarter and Year-end 2011 February 23, 2012
Slide 2: Forward-Looking Statement
Forward-Looking Statement Readers are cautioned that statements contained in this presentation about our future performance, including future revenues, earnings, strategies, prospects, consequences and all other statements that are not purely historical, are forward-looking statements for purposes o
Slide 3: GAAP Disclaimer
GAAP Disclaimer PSEG presents Operating Earnings in addition to its Net Income reported in accordance with accounting principles generally accepted in the United States (GAAP). Operating Earnings is a non-GAAP financial measure that differs from Net Income because it excludes gains or losses associa
Slide 4: 2011 Q4 and Full Year Review
PSEG 2011 Q4 and Full Year Review Ralph Izzo Chairman, President and Chief Executive Officer
Slide 5: Q4 Earnings Summary
Q4 Earnings Summary Quarter ended December 31 $ millions (except EPS) 2011 2010 Operating Earnings $ 237 $ 303 Reconciling Items, Net of Tax 123 (13) Income from Continuing Operations 360 290 Discontinued Operations, Net of Tax - (8) Net Income 360 282 EPS from Operating Earnings* $ 0.47 $ 0.60 4 *
Slide 6: Full-year Earnings Summary
Full-year Earnings Summary For the twelve months ended December 31 $ millions (except EPS) 2011 2010 Operating Earnings $ 1,389 $ 1,584 Reconciling Items, Net of Tax 18 (27) Income from Continuing Operations 1,407 1,557 Discontinued Operations, Net of Tax 96 7 Net Income 1,503 1,564 EPS from Operati
Slide 7: 2011 Earnings at Top End of Guidance
PSEG – 2011 9 2011 Earnings at Top End of Guidance 9 Operating earnings of $2.74 compared with guidance of $2.50 - $2.75 9 Another Year of Accomplishment, Despite Challenging Market Conditions 9 Hope Creek Nuclear produced record levels of generation 9 Record generation from CC fleet demonstrates be
Slide 8: 2012 Operating Earnings Guidance and Priorities
PSEG – 2012 9 Operating Earnings Guidance for 2012 of $2.25 - $2.50 per share 9 Power’s outlook influenced by low price for natural gas 9 PSE&G benefits from increased investment 9 Responding to Market Challenges 9 U.S District Court action proceeding on constitutionality of LCAPP law under Supremac
Slide 9: Introducing 2012 Guidance
PSEG – Introducing 2012 Guidance $3.12 $2.74 $2.25 - $2.50E 2010 Operating Earnings* 2011 Operating Earnings* 2012 Guidance 8 * See page 37 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
Slide 10: 2011 Q4 Operating Company Review
PSEG 2011 Q4 Operating Company Review Caroline Dorsa EVP and Chief Financial Officer
Slide 11: Q4 Operating Earnings by Subsidiary
Q4 Operating Earnings by Subsidiary Quarter ended December 31 Operating Earnings Earnings per Share $ millions (except EPS) 2011 2010 2011 2010 PSEG Power $ 134 $ 212 $ 0.27 $ 0.42 PSE&G 99 83 0.19 0.16 PSEG Energy Holdings (1) 5 - 0.01 Enterprise 5 3 0.01 0.01 Operating Earnings* $ 237 $ 303 $ 0.47
Slide 12: Full-year Operating Earnings by Subsidiary
Full-year Operating Earnings by Subsidiary For the year ended December 31 Operating Earnings Earnings per Share $ millions (except EPS) 2011 2010 2011 2010 PSEG Power $ 845 $ 1,091 $ 1.67 $ 2.15 PSE&G 521 430 1.03 0.85 PSEG Energy Holdings 5 49 0.01 0.10 Enterprise 18 14 0.03 0.02 Operating Earnings
Slide 13: EPS Reconciliation – Q4 2011 versus Q4 2010
PSEG EPS Reconciliation – Q4 2011 versus Q4 2010 0.70 $0.60 (.15) .03 (.01) $0.47 Lower Pricing (.12) Transmission .02 Lower Asset $ / share Sale Gains, 0.35 Coal Taxes and Capital Infrastructure Optimization .02 Investments .01 Other Lower Volume (.01) Weather (.02) O&M (.01) D&A (.01) D&A (.02) Ta
Slide 14: EPS Reconciliation – Full-year 2011 versus 2010
PSEG EPS Reconciliation – Full-year 2011 versus Full- year 2010 3.25 $3.12 (.48) .18 (.09) .01 $2.74 2.60 Lower Asset Sale Interest Lower Pricing (.36) Transmission .05 Gains and and Other Impairment (.05) Coal Optimization .07 Capital Infrastructure Investments .06 Interest, Taxes 1.95 $ / share an
Slide 15: Meeting Challenges
PSEG – Meeting Challenges by: 9 Delivering superior results from our fleet of well positioned assets 9 Achieving earnings targets with focus on attaining top quartile performance across the enterprise 9 Investing in areas with attractive risk-adjusted returns that also support system reliability 9 M
Slide 16: Power 2011 Q4 Review
PSEG Power 2011 Q4 Review
Slide 17: Power – Q4 2011 EPS Summary
PSEG Power – Q4 2011 EPS Summary $ millions (except EPS) Q4 2011 Q4 2010 Variance Operating Revenues $ 1,493 $ 1,575 $ (82) Operating Earnings 134 212 (78) NDT Funds Related Activity, 0 15 (15) Net of Tax Mark-to-Market, Net of Tax 92 (28) 120 Income from Continuing Operations 226 199 27 Discontinue
Slide 18: Power EPS Reconciliation – Q4 2011 versus Q4 2010
PSEG Power EPS Reconciliation – Q4 2011 versus Q4 2010 0.50 $0.42 (.11) 0.40 (.05) 0.30 .01 $0.27 $ / share Lower Prices and Lower Volume (.06) O&M (.01) Taxes and 0.20 Lower Capacity Other D&A (.02) (.07) Call Premium Coal Optimization (.02) .02 0.10 0.00 Q4 2010 Q4 2011 operating operating earning
Slide 19: Power – Generation Measures
PSEG Power – Generation Measures PSEG Power – Generation (GWh) Quarter ended December 31 Twelve months ended December 31 15,000 60,000 -4.8% 56,727 -4.8% 53,980 12,811 12,201 16,224 15,918 -1.9% 3,532 3,830 +8.4% 10,932 7,937 2,286 897 7,500 30,000 7,474 +6.9% 29,571 30,125 +1.9% 6,993 0 0 2010 2011
Slide 20: Hedging Update
Hedging Update… Contracted Energy* 2012 2013 2014 Volume TWh 34 34 34 Base Load % Hedged 100% 85-90% 30-35% (Nuclear and Base Load Coal) Price $/MWh $59 $53 $57 Volume TWh 19 18 20 Intermediate Coal, Combined % Hedged 35-40% 0 0 Cycle, Peaking Price $/MWh $59 Volume TWh 53 52 54 Total % Hedged 75-80
Slide 21: Power – Fuel Costs
PSEG Power – Fuel Costs PSEG Power – Fuel Costs Twelve months ended Quarter ended December 31 December 31 ($ millions) 2010 2011 ($ millions) 2010 2011 Coal 78 31 Coal 405 302 Oil & Gas 160 136 Oil & Gas 764 666 Total Fossil 238 167 Total Fossil 1,169 968 Nuclear 41 46 Nuclear 164 182 Total Fuel Cos
Slide 22: Power – Gross Margin Performance
PSEG Power – Gross Margin Performance 9 Prices declined with reduction in energy and capacity pricing 9 Migration volumes in line with expectations, margins influenced by warmer-than-normal weather 9 Output influenced by weather and compression in dark spreads PSEG Power Gross Margin ($/MWh) Regiona
Slide 23: Market Perspective – 2012 BGS Auction Results
Market Perspective – 2012 BGS Auction Results Full Requirements Component Capacity Markets/RPM Growing Renewable Energy Requirements Component for Market Risk $111.50 $103.72 $102.51 $98.88 $95.77 $94.30 $83.88 ~ $32 ~ $43 Capacity $65.41 Load shape ~ $41 Transmission ~ $47 Congestion ~ $47
Slide 24: Power – Q4 2011 Operating Highlights
PSEG Power – Q4 2011 Operating Highlights Operations 9 Q4 2011 and full-year output declined by 4.8% 9 2011 capacity factor for PS share of nuclear fleet at 92.8% with record annual generation production for Hope Creek 9 Combined cycle output at record level; improvements in forced outage rate Regul
Slide 25: PSE&G 2011 Q4 Review
PSE&G 2011 Q4 Review
Slide 26: PSE&G – Q4 Earnings Summary
PSE&G – Q4 Earnings Summary $ millions (except EPS) Q4 2011 Q4 2010 Variance Operating Revenues $ 1,608 $ 1,882 $ (274) Operating Expenses Energy Costs 827 1,083 (256) Operation & Maintenance 358 358 - Depreciation & Amortization 171 187 (16) Taxes Other than Income Taxes 31 35 (4) Total Operating E
Slide 27: PSE&G EPS Reconciliation – Q4 2011 versus Q4 2010
PSE&G EPS Reconciliation – Q4 2011 versus Q4 2010 0.25 0.20 .03 (.02) .03 $0.19 (.01) $0.16 0.15 $ / share Weather D&A Taxes and Transmission Other and Other Investments 0.10 0.05 0.00 Q4 2010 Q4 2011 operating operating earnings* earnings* 26 * See page 37 for Items excluded from Income from Contin
Slide 28: PSE&G – Q4 Operating Highlights
PSE&G – Q4 Operating Highlights Operations 9 Heating Degree Days 24% below level experienced in 2010 and 18% below normal 9 O&M remains under control 9 Focused on maintaining reliability Regulatory and Market Environment 9 Annual transmission revenue increase of $94 million effective on January 1, 2
Slide 29: Energy Holdings 2011 Q4 Review
PSEG Energy Holdings 2011 Q4 Review
Slide 30: Energy Holdings – Q4 2011 Earnings Summary
PSEG Energy Holdings – Q4 2011 Earnings Summary $ millions (except EPS) Q4 2011 Q4 2010 Variance Operating Earnings $ (1) $ 5 $ (6) Lease Transaction Loss (3) - (3) Gain on Asset Sale 34 - 34 Net Income $ 30 $ 5 $ 25 EPS from Operating Earnings* $ 0.00 $ 0.01 $ (0.01) 29 * See page 37 for Items excl
Slide 31: Energy Holdings EPS Reconciliation – Q4 2011 versus Q4 2010
PSEG Energy Holdings EPS Reconciliation – Q4 2011 versus Q4 2010 0.05 $ / share Lower Asset Sale Gains, Taxes and 2009 Lease Other Sales $0.01 (.01) $0.00 0.00 Q4 2010 Q4 2011 operating operating earnings* earnings* 30 * See page 37 for Items excluded from Income from Continuing Operations to reconc
Slide 32: Energy Holdings – Q4 Operating Highlights
PSEG Energy Holdings – Q4 Operating Highlights Financial 9 Definitive agreement reached with the IRS that settles the tax treatment for challenged lease transactions (LILO/SILO) for all tax years 9 Qwest building sold in December 2011 for gain of $34 million 9 10-year LIPA management services agreem
Slide 33: PSEG
PSEG
Slide 34: Capital Expenditures 2012 - 2014
PSEG Capital Expenditures 2012 - 2014 9Spending on transmission represents 51% of total budget and 66% of PSE&G’s forecast level of spend 9Power’s environmental capital expenditures below $100 million/year 2012E 2013E 2014E 2012-14E PSE&G – Transmission $995 $1,320 $1,200 $3,515 – Distribution $660
Slide 35: Financial Highlights
PSEG Financial Highlights 9 2012 operating earnings guidance of $2.25 - $2.50 per share 9 Guidance by operating company 9 Financial risk associated with LILO/SILO investments eliminated 9 Financial position strengthened 9 Dividend increase continues practice of returning cash to shareholders 9 Debt
Slide 36: 2012 Operating Earnings Guidance - By Subsidiary
PSEG 2012 Operating Earnings Guidance - By Subsidiary $ millions (except EPS) 2012E 2011A PSEG Power $575 – $665 $ 845 PSE&G $530 – $560 $ 521 PSEG Energy Holdings/Parent $35 – $45 $ 23 Operating Earnings* $1,140 – $1,270 $ 1,389 Earnings per Share $ 2.25 – $ 2.50 $2.74 35 * See Page 37 for Items ex
Slide 37: Liquidity as of December 31, 2011
PSEG Liquidity as of December 31, 2011 Expiration Total Available Company Facility Date Facility Usage Liquidity ($Millions) PSE&G 5-year Credit Facility Apr-16 $600 $0 $600 PSEG / 5-Year Credit Facility (Power) Dec-12 $1,525 1 $75 $1,450 Power 5-Year Credit Facility (Power) Apr-16 $1,000 $0 $1,000
Slide 38: Items Excluded from Income from Continuing Operations to Reconcile to Operating Earnings
Items Excluded from Income from Continuing Operations to Reconcile to Operating Earnings PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings (Unaudited) For the Three Months Ended For the Year Ended Pro-forma Adjustments, n
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