Centerpoint Energy, Inc (holding Co) · NYSE:CNP
Centerpoint Energy, Inc (holding Co) — Q3 2020 Earnings Presentation
28 slides from Centerpoint Energy, Inc (holding Co)'s earnings presentation, Nov 6, 2020
Slide 1: Third Quarter 2020 Investor Update
THIRD QUARTER 2020 INVESTOR UPDATE NOVEMBER 5, 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
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: Takeaways: Robust Opportunity
TAKEAWAYS …. Solid Third Quarter Utility Performance Organic customer growth, disciplined O&M management, and rate relief Exceptional Customer Growth from Premium Jurisdictions Customer growth higher than historical national average in both natural gas and electric utilities Increased Level of Capit
Slide 5: Third Quarter Above Expectations: 2020 Guidance Basis Utility EPS Range Raised
THIRD QUARTER ABOVE EXPECTATIONS …. GAAP Diluted EPS was 13¢ for Third Quarter 2020 and ($2.10) Year-to-Date 2020. Please see slide 22 and 23 for a reconciliation from GAAP Diluted EPS to Guidance Basis EPS. 2020 GUIDANCE BASIS EPS Third YTD Full Year Quarter Electric (1) 32¢ 64¢ 72¢ – 75¢ Gas 1 45
Slide 6: New Model, New Plan
NEW MODEL, NEW PLAN …. Utility Investment – Grow Operational Excellence – Accelerate ✓ $16B five-year capital investment plan ✓ 1%-2% annual O&M reductions (3) (+$3B vs. prior) ✓ Productivity and continuous ✓ Top tier long-term rate base CAGR improvement mindset target of 10% (1) 1 2 ✓ Technology im
Slide 7: Utility Investment Grows: 5%-7% Guidance Basis Utility EPS Growth
1 UTILITY INVESTMENT – GROWS …. Industry Leading Long-Term Capital Investment Plan Rate Base Growth (1) 2020 – 2024 (old) 2021 – 2025 (new) 10% $16B +$3B / +23% $13B Capex 9% 9% 8% 8% 7% 7% 7% 7% 7% 7% 7% Median: 7% 6% 6% 6% 5% Electric T&D Generation Technology Gas LDC 4% Gas LDC Electric T&D Gener
Slide 8: Operational Excellence Accelerates
OPERATIONAL EXCELLENCE – 2 ACCELERATES …. Utility O&M Reduction Target (1) O&M Management Initiatives 1.6 ✓ Continuous improvement – Lean 1.5 ✓ Investment in productivity 1.4 $ Billions ✓ Work management ✓ Technology 2018 2020E 2025E ….QUALITY IMPROVEMENT AND COST REDUCTION Note: Refer to slide 2 fo
Slide 9: Customer Growth Creates Rate Headroom for Capex
3 CUSTOMER GROWTH – ORGANIC …. Customer Growth (1) Customer Rates $0.050 $0.045 $/kWh $0.040 $0.035 $0.030 $0.025 $0.020 2018 2019 2020 Houston Electric Other Texas utilities Average Houston Electric’s customer growth In line with average T&D rate (2) has been exceptional across utility peers in Tex
Slide 10: Constructive Regulation in Supportive Regulatory Jurisdictions
4 CONSTRUCTIVE REGULATION …. Regulation Features • Accelerated CapEx Recovery ✓ Transmission (TCOS) ✓ Distribution (DCRF) ✓ Gas Infrastructure (GRIP) ✓ Gas and Electric Transmission & Distribution (TDSIC) • Gas-Supportive Jurisdictions ✓ No operations in states with local building gas bans • Revenue
Slide 11: Our Model Is Simple
OUR MODEL IS SIMPLE …. Capital spending driving growth... ...while keeping customer rates down ↓ Consistent strong customer growth ↓ Focus on O&M and High cost management end of 5%-7% (1) $3B guidance ↓ Efficient financing and capex basis Utility balance sheet management EPS – no block equity range
Slide 12: The New CenterPoint Energy
THE NEW CENTERPOINT ENERGY Increased Utility Accelerated Operational Investment Excellence 1 2 4 3 Constructive regulation Organic Customer Growth ....5% - 7% GUIDANCE BASIS UTILITY EPS GROWTH EVERY YEAR. (1) WE MANAGE THE BUSINESS, SO YOU DON’T HAVE TO WORRY! Note: Refer to slide 2 for information
Slide 13: Thank You For Your Support
THANK YOU FOR YOUR SUPPORT Look forward to seeing you at our Investor Day – December 7 13
Slide 14: Appendix
e CenterPoint: Energy APPENDIX
Slide 15: Q3 2020 v Q3 2019 Guidance Basis EPS Drivers
Q3 2020 V Q3 2019 GUIDANCE BASIS (NON-GAAP) (1) EPS DRIVERS FOR CONTINUING OPERATIONS $0.08 Midstream Investments $0.10 $0.03 $0.05 Midstream Primary Drivers Investments $0.03 Rate increases, primarily capital recovery $0.03 Income Taxes $0.02 Customer Growth $0.05 Share count $0.04 COVID-
Slide 16: YTD Sept 2020 v 2019 Guidance Basis EPS Drivers
YTD SEPT 2020 V 2019 GUIDANCE BASIS (NON-GAAP) (1) EPS DRIVERS FOR CONTINUING OPERATIONS $0.22 Midstream $0.08 Investments $0.16 $0.06 Midstream Investments Primary Drivers $0.13 Rate increases, primarily capital recovery $0.06 Customer Growth $0.04 O&M Management $0.03 Additional month of e
Slide 17: Indiana IRP Update
INDIANA IRP UPDATE PREFERRED PORTFOLIO TIMELINE (1) Proposed replacement of 730 MWs of Coal with approximately 700 – 1,000 MWs of Solar & Solar + Storage, 300 MWs of Wind, 460 MWs of natural gas CTs and 30 MWs of demand response 2025E Resource Mix Coal 12% Natural Gas Renewables 24% 64% Note: Refer
Slide 18: ESG: Environmental Stewardship Leader
ESG ENVIRONMENTAL STEWARDSHIP LEADER REDUCING GAS DISTRIBUTION ~96% REGULATED GAS LDC / T&D (1) GHG EMISSIONS Generation 4% ~30% reduction Gas LDC 45% T&D 51% 2012 2019 ✓ Generation represents ~4% of rate base (1) ✓ Elimination of cast iron pipelines across all legacy CNP gas jurisdictions by YE 201
Slide 19: ESG: Carbon Reduction Goal
ESG CARBON REDUCTION GOAL CENTERPOINT IS COMMITTED TO A CLEAN ENERGY FUTURE NEW GOALS TO REDUCE CARBON EMISSIONS from 2005 levels 70% 20–30% reduction from our operations reduction from gas customer usage by 2035 by 2040 ➢ Offering customers affordable conservation and energy-efficiency programs ➢ C
Slide 20: Strengthening Credit Quality
STRENGTHENING CREDIT QUALITY COMMITTED TO INVESTMENT-GRADE CREDIT CenterPoint has successfully executed a utility-focused strategy designed to improve its business risk profile and strengthen the balance sheet ✓ Diversified regulated utility asset base across the mid-continent region Target a strong
Slide 21: 2020 Guidance Basis EPS Considerations
2020 GUIDANCE BASIS EPS CONSIDERATIONS Translating Enable Guidance to CenterPoint’s Portion (in millions, except percentages and per share items) Guidance basis EPS before allocation of Corporate & Other Enable Net Income Attributable $195 - $235(2) to Common Units Midstream Utility Operations Corpo
Slide 22: Reconciliation: Income and Diluted EPS to Guidance Basis (Q3 2020)
RECONCILIATION: INCOME (LOSS) AND DILUTED EARNINGS (LOSS) PER SHARE TO GUIDANCE BASIS INCOME AND GUIDANCE BASIS DILUTED EPS USED IN PROVIDING ANNUAL EARNINGS GUIDANCE Quarter Ended September 30, 2020 Midstream Corporate and CES (1) & CIS (2) Utility Operations Investments Other (6) (Disc. Operations
Slide 23: Reconciliation: Income and Diluted EPS to Guidance Basis (YTD 2020)
RECONCILIATION: INCOME (LOSS) AND DILUTED EARNINGS (LOSS) PER SHARE TO GUIDANCE BASIS INCOME AND GUIDANCE BASIS DILUTED EPS USED IN PROVIDING ANNUAL EARNINGS GUIDANCE Year-to-Date September 30, 2020 (1) (2) Midstream Corporate and CES & CIS Utility Operations Investments Other (6) (Disc. Operations)
Slide 24: Reconciliation: Income and Diluted EPS to Guidance Basis (Q3 2019)
RECONCILIATION: INCOME (LOSS) AND DILUTED EARNINGS (LOSS) PER SHARE TO GUIDANCE BASIS INCOME AND GUIDANCE BASIS DILUTED EPS USED IN PROVIDING ANNUAL EARNINGS GUIDANCE Quarter Ended September 30, 2019 (1) (2) Midstream Corporate and CES & CIS Utility Operations Investments Other (6) (Disc. Operations
Slide 25: Reconciliation: Income and Diluted EPS to Guidance Basis (YTD 2019)
RECONCILIATION: INCOME (LOSS) AND DILUTED EARNINGS (LOSS) PER SHARE TO GUIDANCE BASIS INCOME AND GUIDANCE BASIS DILUTED EPS USED IN PROVIDING ANNUAL EARNINGS GUIDANCE Year-to-Date September 30, 2019 Midstream Corporate and CES (1) & CIS (2) Utility Operations Investments Other (6) (Disc. Operations)
Slide 26: CenterPoint Energy Adjusted Parent Debt as a Percentage of Total Debt
CENTERPOINT ENERGY ADJUSTED PARENT DEBT AS A PERCENTAGE OF TOTAL DEBT 12/31/2019 6/30/2020 9/30/2020 ($ in millions) Short-term Debt: Short-term borrowings - 19 37 Current portion of transition and system restoration bonds 231 206 208 Indexed debt (ZENS)** 19 17 16 Current portion of other long-term
Slide 27: 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 28: Ratio of Adjusted Cash From Operations Pre-Working Capital to 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) — Q3 2020 Earnings Presentation on 6ix