Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Q2 2016 Earnings Presentation
22 slides from Public Service Enterprise's earnings presentation, Aug 2, 2016
Slide 1: Forward-Looking Statements
EXHIBIT 99 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 “
Slide 2: 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 3: PSEG's Strategy
PSEG’s Strategy Investment program delivering results Operational Excellence: Maintaining reliability and improving performance as we control costs in low price environment FinancialStrength: Strong financial position supports investment program and dividend DISCIPLINED growth INVESTMENT Disciplined
Slide 4: PSE&G's investment program
PSE&G’s investment program Meeting public policy goals and customer needs PSE&G Rate Base and Earnings 2011-2015 EPS CAGR: 11% PSE&G Earnings * DISTRIBUTION RATE BASE INCLUDES SOLAR AND ENERGY EFFICIENCY 11
Slide 5: Operating Earnings
Operating Earnings Disciplined investment program and focus on operational excellence have supported growth Operating Earnings* Contribution by Subsidiary Power’sdiverse fuel mix and dispatch $2.76 flexibility continue to ** generate strong earnings and free cash flow in low price environment ** PSE
Slide 6: Achieved ~11% annual earnings growth
Achieved ~11% annual earnings growth over the past four years through implementation of supportive rate mechanisms on our expanded capital program and cost control PSE&G Earnings Per Share $1.55 $1.43 $1.21 $1.03 $1.04 2011 2012 2013 2014 2015 24
Slide 7: Increasing investment across our portfolio
Increasing investment across our portfolio Transmission • Large portfolio of projects to meet ongoing reliability and life-cycle requirements Electric Distribution • Base spending • Infrastructure investment programs with clause recovery Energy Strong (ES) and related programs Electric System Modern
Slide 8: Solar – Investment supports New Jersey
Solar – Investment supports New Jersey policy objectives which have evolved with focus on utility-scale landfill solar 2016 – 2020 Incremental to base – 2011 – 2015 (base) Emergent and ongoing • Solar Loan I, II & III Requested S4A Extension • Solar Loan III Program • Solar 4 All (S4A) (for addition
Slide 9: PSE&G's 2016 earnings updated
PSE&G’s 2016 earnings updated to reflect first-half 2016 results, expanded investment programs and cost control over the balance of the year PSE&G Earnings ($ Millions) $900 -- $935E $787 $725 2014 2015 2016 Guidance E =ESTIMATE. UPDATED AS OF JULY 29, 2016, 37
Slide 10: Nuclear is a critical element of our success
Nuclear is a critical element of our success Salem Peach Bottom Hope Creek Units 2 and 3 Units 1 and 2 • Operated by PSEG Nuclear • Operated by PSEG Nuclear • Operated by Exelon • PSEG Ownership: 100% • PSEG Ownership: 57% • PSEG Ownership: 50% • Technology: Boiling Water • Technology: Pressurized •
Slide 11: Power's 2016 operating earnings range
Power’s 2016 operating earnings range adjusted to incorporate results from the first half of 2016 Power Operating Earnings* ($ Millions) $653 $642 $460 – $525E Net Income Net Income $760 $856 2014 2015 2016 Guidance *SEE SLIDE A FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO OPERATING EARNINGS.
Slide 12: Market Review: YTD 2016 impacted by weather
Market Review:YTD 2016 impacted by weather but forward gas and electric prices retain seasonal volatility 2016 - 2019 Z6 2016 - 2019 PJM West RTC PJM West vs. PS Zone Spark Spreads (2015-2019) FORWARDS AS OF JULY 25, 2016 62
Slide 13: Hedging Strategy: Designed to protect gross margin
Hedging Strategy: Designed to protect gross margin while leveraging the portfolio Jul-Dec 2016 2017 2018 Volume TWh 17 36 36 Base Load % Hedged 100% 80-85% 40-45% (Nuclear and Base Load Coal) Price $/MWh $50 $48 $46 Volume TWh 8 18 23 Intermediate Coal, Combined % Hedged 30-35% 0% 0% Cycle, Peaking
Slide 14: A higher regulated earnings mix
A higher regulated earnings mix due to growth in PSE&G earnings with a significant contribution from Power PSEG Operating Results $ Millions (except EPS) 2012 2013 2014 2015 2016E Guidance PSE&G $528 $612 $725 $787 $900 - $935 PSEG Power* $663 $710 $642 $653 $460 - $525 Enterprise/Other $45 ($13) $3
Slide 15: Strong financial position to support our business initiatives
Strong financial position to support our business initiatives in 2016 and beyond 2016 and Beyond Continuing strong earnings trend in 2016 with guidance Earnings of $2.80 to $3.00 per share Deploying significant capital at PSE&G for projects with contemporaneous returns Investment Pursuing Power proj
Slide 16: Opportunity for meaningful and sustainable dividend growth
Opportunityfor meaningful and sustainable dividend growth given significant contribution from PSE&G earnings and Power’s strong financial profile $2.00 Annual Dividend Per Share (2011-2016 CAGR: 3.7%) $1.84E $1.80 $1.77E $1.64 $1.60 $1.56 $1.48 $1.42 $1.44 $1.40 $1.37 $1.20 PSE&G EPS $1.00 $0.80 201
Slide 17: PSEG Summary
PSEG Summary • 2015 Operating Earnings of $2.91 were at the upper end of our upwardly revised guidance of $2.85 -$2.95 per share • Forecast high single-digit rate base growth at PSE&G on five year basis from 2015 to 2020, driven by investment in transmission and approved programs • Power’s investmen
Slide 18: PSEG Financial Highlights
PSEG Financial Highlights Maintaining full-year 2016 Operating Earnings guidance of $2.80 - $3.00 per share* Reaching the upper end of our guidance range in 2016 will be difficult even with improvements seen in the power markets, expectations for warm summer weather, normal operations and management
Slide 19: Our balance sheet remains strong
Our balance sheet remains strong June 30, 2016 $ Billions PSEG PSE&G Power Cash and Cash Equivalents $0.6 $0.2 $0.0 Short Term Debt $0.0 $0.0 N/A Long Term Debt(2) 10.9 7.5 2.9 Common Equity 13.3 8.0 6.3 Total Capitalization $24.2 $15.5 $9.2 Total Debt / Capitalization 45% 48% 32% PSE&G Regulated Eq
Slide 20: PSEG Energy Holdings
PSEG Energy Holdings Investment Portfolio Investment Balance * at 06/30/16 Equipment ($millions) Merchant Energy Leases NRG REMA Keystone, Conemaugh & Shawville (PA) $ 355 3 coal-fired plants (1,162 equity MW) NRG Energy, Inc. / Midwest Gen** Powerton & Joliet Generating Stations (IL) $ 218 2 coal-f
Slide 21: Items Excluded to Reconcile to Operating Earnings
Items Excluded from Income from Continuing Operations/Net Income to Reconcile to Operating Earnings PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED Consolidated Operating Earnings Reconciliation For the Year Ended Reconciling Items December 31, 2015 2014 2013 2012 ($ Million, Unaudited) Operating Earni
Slide 22: Items Excluded to Reconcile to Operating Earnings
Items Excluded from Income from Continuing Operations/Net Income to Reconcile to Operating Earnings PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED Consolidated Operating Earnings Reconciliation Three Months Ended Six Months Ended Year-Ended Reconciling Items June 30, June 30, December 31, 2016 2015 20
Public Service Enterprise Group — Q2 2016 Earnings Presentation on 6ix