Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — FY2017 Earnings Presentation
36 slides from Public Service Enterprise's earnings presentation, Feb 23, 2018
Slide 1: PSEG Earnings Conference Call 4th Quarter & Full Year 2017
EXHIBIT 99.1 Public Service Enterprise Group PSEG Earnings Conference Call 4th Quarter & Full Year 2017 February 23, 2018
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: 2017 Q4 and Full Year Review
PSEG 2017 Q4 and Full Year Review Ralph Izzo Chairman, President and Chief Executive Officer
Slide 5: Exceeded mid-point of guidance in 2017, well positioned for 2018
PSEG – Exceeded mid-point of guidance in 2017, well positioned for 2018 Highlights Net Income of $1.88 vs. Net Loss of $(0.19) per share in Q4 2016; Net Income of $3.10 in 2017 vs. $1.75 per share in 2016 – Tax reform and early retirement of Hudson & Mercer influenced results Non-GAAP Operating Earn
Slide 6: Q4 Results Summary – Solid quarterly results
PSEG Q4 Results Summary – Solid quarterly results Quarter ended December 31 $ millions (except EPS) 2017 2016 Change Net Income/(Loss) $ 956 $ (98) $ 1,054 Reconciling Items (667) 377 (1,044) Operating Earnings (non-GAAP)* $ 289 $ 279 $ 10 EPS from Net Income/(Loss) $ 1.88 $ (0.19) $ 2.07 EPS from O
Slide 7: Full Year Results – Exceeded midpoint of guidance
Full Year Results – Exceeded midpoint of guidance Twelve Months ended December 31 $ millions (except EPS) 2017 2016 Change Net Income $ 1,574 $ 887 $ 687 Reconciling Items (86) 588 (674) Operating Earnings (non-GAAP)* $ 1,488 $ 1,475 $ 13 EPS from Net Income $ 3.10 $ 1.75 $ 1.35 EPS from Operating E
Slide 8: 2017 - Executing on Regulatory and Policy Initiatives
PSEG 2017 - Executing on Regulatory and Policy Initiatives NJ Distribution Base Rate Proceeding Filed NJ base rate review January 12, 2018 Long-Term Infrastructure Investment Platform In July, PSE&G filed for a 5-year, $2.7 billion extension of the Gas System Modernization Program (GSMP II) In Octob
Slide 9: 2018 Non-GAAP Earnings Guidance +6% over 2017
PSEG – 2018 Non-GAAP Earnings Guidance +6% over 2017 Tax reform and growth in utility infrastructure investment drives increase in earnings Non-GAAP Operating Earnings* Contribution by Subsidiary (%) 2017 Actual and 2018 Guidance $3.00 - $3.20E $2.93 PSE&G represents approximately two-thirds of 2018
Slide 10: Annual Dividend – Increased 4.7% to $1.80 per share
PSEG Annual Dividend – Increased 4.7% to $1.80 per share Building on a 111-year history of returning cash to our shareholders PSEG Annual Dividend Rate 5 year rate of growth: 4.6% 10 year rate of growth: 3.4% Payout 44% 43% 44% 50% 58% 56% 54% 54% 57% 59% 58%** Ratio *INDICATIVE ANNUAL 2018 PSEG COM
Slide 11: 2017 Q4 Operating Company Review
PSEG 2017 Q4 Operating Company Review Dan Cregg EVP and Chief Financial Officer
Slide 12: Q4 Results by Subsidiary
PSEG – Q4 Results by Subsidiary PSEG Q4 EPS Summary – Quarter ended December 31 GAAP Net Income/(Loss) 2017 2016 Change PSE&G $ 0.43 $ 0.38 $ 0.05 PSEG Power $ 1.20 $ (0.59) $ 1.79 PSEG Enterprise/Other $ 0.25 $ 0.02 $ 0.23 Total PSEG $ 1.88 $ (0.19) $ 2.07 Non-GAAP Operating Earnings* 2017 2016 Cha
Slide 13: EPS Reconciliation – Q4 2017 versus Q4 2016
PSEG EPS Reconciliation – Q4 2017 versus Q4 2016 Ongoing utility investment, cost control at Power and strong operations contributed to Q4 results Capacity 0.02 $2.00 Volume 0.01 $1.88 PSEG Transmission Gas Send-out Foundation 0.03 0.01 Contribution Re-contracting (0.03) $1.50 Energy Strong & GSMP (
Slide 14: Year-to-Date Results by Subsidiary
PSEG – Year-to-Date Results by Subsidiary PSEG YTD EPS Summary – Twelve Months ended December 31 GAAP Net Income/(Loss) 2017 2016 Change PSE&G $ 1.92 $ 1.75 $ 0.17 PSEG Power $ 0.94 $ 0.04 $ 0.90 PSEG Enterprise/Other $ 0.24 $ (0.04) $ 0.28 Total PSEG $ 3.10 $ 1.75 $ 1.35 Non-GAAP Operating Earnings
Slide 15: EPS Reconciliation – YTD 2017 versus YTD 2016
PSEG EPS Reconciliation – YTD 2017 versus YTD 2016 Utility investment and cost control drove full year 2017 results $3.50 0.15 (0.01) (0.11) $3.10 $2.90 $2.93 $3.00 Transmission Capacity 0.05 Taxes $2.50 0.14 and Other Gas (0.05) Energy Strong & Send-out 0.02 GSMP recovery Interest $2.00 $1.75 0.06
Slide 16: PSE&G 2017 Q4 Review
PSE&G 2017 Q4 Review
Slide 17: PSE&G EPS Reconciliation – Q4 2017 versus Q4 2016
PSE&G EPS Reconciliation – Q4 2017 versus Q4 2016 Continued investment in reliability and resiliency offset higher O&M 0.60 0.50 0.05 (0.02) $0.41 $0.43 0.40 $0.38 $0.38 O&M 0.30 Transmission 0.03 Energy Strong 0.20 & GSMP recovery 0.01 0.10 Weather 0.01 0.00 Q4 2016 Q4 2016 Q4 2017 Q4 2017 Net Oper
Slide 18: PSE&G – Q4 & Full Year Weather Summary
PSE&G – Q4 & Full Year Weather Summary Winter Weather Summary (HHD) Monthly Heating Degree Days (HDD) FY 2017 vs. FY 2016 vs. FY Normal Q4 2017 vs. Q4 2016 vs. Q4 Normal 4,385 1,000 4,365 2017 900 934 2016 4,670 800 844 815 Normal 700 2,000 3,000 4,000 5,000 600 FY 2017 Winter weather was similar to
Slide 19: PSE&G 2018 Distribution Rate Case Filing Summary
PSE&G 2018 Distribution Rate Case Filing Summary • Dockets ER 18010029 (Electric) and GR 18010030 (Gas) • Filed January 12, 2018; Anticipate new rates Fourth Quarter 2018 • Test year – July 1, 2017 through June 30, 2018 (with certain pro forma adjustments) • Rate base of $9.6B ($5.6B E; $4B G) as of
Slide 20: PSE&G – Q4 Highlights
PSE&G – Q4 Highlights Operations PSE&G named “Most Reliable Utility” in the Mid-Atlantic region by ReliabilityOne for 16th year in a row On a weather normalized basis, total electric sales were down (0.4%) for the year, as declines in Residential and Industrial sales more than offset growth in the C
Slide 21: Power 2017 Q4 Review
PSEG Power 2017 Q4 Review
Slide 22: Power EPS Reconciliation – Q4 2017 versus Q4 2016
PSEG Power EPS Reconciliation – Q4 2017 versus Q4 2016 $1.20 1.20 Late Q4 weather, fewer outage-related days and stringent cost control drove results 0.30 0.03 0.01 $0.20 0.20 0.03 $0.13 Interest, Taxes and O&M Capacity 0.02 Other 0.10 Volume 0.01 Gas Send-out 0.01 Re-contracting (0.01) 0.00 Q4 2016
Slide 23: Power – Q4 Generation up 2% on improved nuclear output
PSEG Power – Q4 Generation up 2% on improved nuclear output PSEG Power – Generation (GWh)* PSEG Power – Capacity Factors (%) PSEG Power – Fuel Costs Quarter ended Quarter ended 11,755 11,999 December 31, December 31, 12,000 2016 2017 ($ millions) 2016 2017 3,124 3,023 10,000 Combined Gas $ 58 $ 75 8
Slide 24: Power – YTD Generation down ~1% on mild Q1/Q3 weather
PSEG Power – YTD Generation down ~1% on mild Q1/Q3 weather PSEG Power – Generation (GWh)* PSEG Power – Capacity Factors (%) PSEG Power – Fuel Costs Twelve months Twelve months ended ended December 31, 60,000 51,510 51,089 December 31, ($ millions) 2016 2017 50,000 2016 2017 Gas $ 272 $ 300 17,181 13
Slide 25: Power – Gross Margin Performance
PSEG Power – Gross Margin Performance Market prices improved across PJM, NE and NY Capacity revenues step up June 2017 through May 2018 PSEG Power Gross Margin ($/MWh) Regional Performance Quarter ended Twelve Months ended Q4 Gross December 31 December 31 Region Margin ($M) Q4 2017 Performance $50 $
Slide 26: NJ Basic Generation Service (BGS) 2018 Auction Results
NJ Basic Generation Service (BGS) 2018 Auction Results Increase in Full Requirements Component Due to: Growing Renewable Energy/Transmission Component for Market Risk Offset by Decline in Energy and Capacity Prices $97.39 $99.54 $96.38 $90.78 $91.77 Capacity ~ $62 ~ $63 Load shape ~ $61 Transmission
Slide 27: Hedging Update – Reflects recent BGS auction
Hedging Update – Reflects recent BGS auction Contracted Energy* 2018 2019 2020 Volume TWh 35 34 35 Base Load % Hedged 100% 95-100% 50-55% (Nuclear and Base Load Coal) Price $/MWh $40 $38 $38 Volume TWh 20-22 25-27 28-30 Intermediate, Combined Cycle, % Hedged 50-60% 10-15% 0% Peaking Price $/MWh $40
Slide 28: Power – Q4 Highlights
PSEG Power – Q4 Highlights Operations Q4 output up 2% on higher nuclear production and higher energy prices; full-year 2017 generation of 51 TWh exceeded projected output of 49-50 TWh Nuclear fleet’s average capacity factor was ~90% in Q4, producing 7.7 TWh of energy; Full-year 2017 capacity factor
Slide 29: PSEG
PSEG
Slide 30: Tax Cuts and Jobs Act: PSEG well positioned
Tax Cuts and Jobs Act: PSEG well positioned Positive non-utility contribution to earnings, strong balance sheet maintained and lower customer bills mitigate the impact of T&D investment Federal Tax Reform PSE&G PSEG Power Enterprise/Other Customer rates lowered After-tax earnings and cash After-tax
Slide 31: Initiating PSEG 2018 Guidance - By Subsidiary
Initiating PSEG 2018 Guidance - By Subsidiary Segment Operating Earnings Guidance and Prior Results (non-GAAP, except as noted)* $ millions (except EPS) 2018E 2017 PSE&G $1,000 - $1,030 $963 PSEG Power $485 - $560 $505 PSEG Enterprise/Other $35 - $35 $20 Operating Earnings (non-GAAP)* $1,520 - $1,62
Slide 32: Financial Highlights
PSEG Financial Highlights Initiating 2018 non-GAAP Operating Earnings guidance of $3.00 - $3.20 per share PSE&G’s return of tax benefits reduces the customer bill PSEG’s 5-Year capital spending forecast of $13 - $15 billion over the 2018 – 2022 period mainly directed at PSE&G capital program PSE&G c
Slide 33: Liquidity as of December 31, 2017
PSEG Liquidity as of December 31, 2017 Expiration Total Available Company Facility Date Facility Usage Liquidity ($ Millions) PSE&G 5-year Credit Facility Mar-22 $600 $15 $585 PSEG Money Pool PSEG / Power 5-year Credit Facilities (PSEG) Mar-22 $1,500 $556 $944 5-Year Credit Facilities (Power) Mar-22
Slide 34: 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
Slide 35: Reconciliation of Non-GAAP Operating Earnings and Non-GAAP Adjusted EBITDA
Reconciliation of Non-GAAP Operating Earnings and Non-GAAP Adjusted EBITDA B 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).
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 and Adjusted EBITDA as non-GAAP financial measures and how they differ from Net Income/(Loss). C
Public Service Enterprise Group — FY2017 Earnings Presentation on 6ix