Centerpoint Energy, Inc (holding Co) · NYSE:CNP
Centerpoint Energy, Inc (holding Co) — Q1 2018 Earnings Presentation
27 slides from Centerpoint Energy, Inc (holding Co)'s earnings presentation, May 4, 2018
Slide 1: 1st Quarter 2018 Investor Call
1st QUARTER 2018 INVESTOR CALL FINANCIAL PERFORMANCE CENTERPOINT VECTREN MERGER Company updates to high end of $1.50 - $1.60 2018 EPS guidance range May 4, 2018 Exhibit 99.2
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: Use of Non-GAAP Financial Measures
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 net income and diluted earnings per share, the Company also provides guidance based on adjusted ne
Slide 4: Agenda
Scott Prochazka – President and CEO First Quarter Results Business Segment Highlights Houston Electric Natural Gas Distribution Energy Services Midstream Investments Merger Strategic Rationale Earnings Trajectory Bill Rogers – Executive Vice President and CFO Business Segment Performance Utility Ope
Slide 5: First Quarter 2018 Performance
First Quarter 2018 Performance (1) Refer to slide 27 for reconciliation to GAAP measures and slide 3 for information on non-GAAP measures (2) Excluding ZENS and CES mark-to-market adjustments (3) Primarily due to the annual true-up of transition charges correcting for under-collections that occurred
Slide 6: Electric Transmission and Distribution Highlights
Electric Transmission and Distribution Highlights TDU core operating income was $99 million in Q1 2018 compared to $66 million in Q1 2017 Added almost 40,000 electric customers year over year Completed construction on and energized Brazos Valley Connection Project in March 2018, ahead of schedule an
Slide 7: Natural Gas Distribution Highlights
Natural Gas Distribution Highlights Natural Gas Distribution operating income was $156 million in Q1 2018 compared to $168 million in Q1 2017 Added more than 31,000 natural gas distribution customers year over year Minnesota rate case settlement filed in March Decoupling made a permanent part of the
Slide 8: Energy Services Highlights
Q1 2018 Adjusted Operating Income Operating income was $54 million in Q1 2018 compared to $20 million in Q1 2017, excluding a mark-to-market loss of $80 million and gain of $15 million, respectively Successful integration of recent acquisitions have resulted in commercial opportunities and improved
Slide 9: Midstream Investments Highlights
Midstream Investments Highlights Record quarterly natural gas gathered volumes, processed volumes, natural gas liquids production and intrastate transported volumes(1) 40 rigs are currently drilling wells to be connected to Enable’s gathering and processing systems(2) Enable does not expect to acces
Slide 10: CenterPoint – Vectren Combined Operations
CenterPoint – Vectren Combined Operations CenterPoint Natural Gas Distribution Electric Transmission and Distribution and Natural Gas Distribution Vectren Natural Gas Distribution Gas & Electric Regulated Generation Over 7 million regulated utility customers in 8 states Solid combined capital invest
Slide 11: CenterPoint – Vectren Merger Strategic Rationale
CenterPoint – Vectren Merger Strategic Rationale Complementary Capabilities Combining the Vectren and CenterPoint utilities positions the company as a customer-centric, technology-focused utility of the future CenterPoint experience with smart meters, intelligent grid, data management and leak detec
Slide 12: CenterPoint – Vectren Combined Business Profile
CenterPoint – Vectren Combined Business Profile Combined 2017 Operating Income and Equity Earnings(1) 5% (Other) Increased percentage of regulated earnings provides greater confidence in long-term earnings VISCO (part of Vectren “Other”) driven primarily by infrastructure enhancement projects across
Slide 13: Earnings Trajectory
Earnings Trajectory 2018 Update EPS guidance to the high end of the original $1.50 - $1.60(1)(2) range 2019/2020 Maintain expectation of 5 - 7% year-over-year guidance EPS growth rate in 2019(2) and 2020 2021 + Anticipate enhanced growth beyond 2020 due to: Solid capital investment plan and strong r
Slide 14: Agenda
Scott Prochazka – President and CEO First Quarter Results Business Segment Highlights Houston Electric Natural Gas Distribution Energy Services Midstream Investments Merger Strategic Rationale Earnings Trajectory Bill Rogers – Executive Vice President and CFO Business Segment Performance Utility Ope
Slide 15: Electric Transmission and Distribution Operating Income Drivers
Electric Transmission and Distribution Operating Income Drivers Q1 2017 v Q1 2018 (1) Excludes transition and system restoration bonds; please refer to slide 26 for more detail on core operating income (2) The retrospective adoption of ASU 2017-07 resulted in an increase to 2017 operating income of
Slide 16: Natural Gas Distribution Operating Income Drivers
Natural Gas Distribution Operating Income Drivers Q1 2017 v Q1 2018 (1) The retrospective adoption of ASU 2017-07 resulted in an increase to 2017 operating income of $4 million and a corresponding decrease to other income (2) Includes rate increases, exclusive of the impact of the the TCJA, of $22 m
Slide 17: Utility Operations Adjusted Diluted EPS Drivers
Utility Operations Adjusted Diluted EPS Drivers Q1 2017 v Q1 2018 (Guidance Basis) (1) Excludes equity return; please refer to slide 26 for more detail on core operating income. Utilizes the 2017 tax rate (benefit of 2018 tax rate captured in Other) (2) Excludes transition and system restoration bon
Slide 18: Consolidated Adjusted Diluted EPS Drivers
Consolidated Adjusted Diluted EPS Drivers Q1 2017 v Q1 2018 (Guidance Basis) Utility Operations Midstream Investments $0.37 $0.55 Midstream Investments Utility Operations (1) See previous slide (2) Uses an ownership percentage of 54.1% for Q1 2017 and 54.0% for Q1 2018 (3) Midstream Investments comp
Slide 19: Combined 2020 EPS Potential
Combined 2020 EPS Potential (in millions, except per share amounts) 2020 CenterPoint Net Income Forecast (High-end of $1.50 - $1.60 2018 guidance basis EPS range with 5 - 7% growth in 2019 and 2020)(1) $764 - $794 Vectren Net Income Forecast (Midpoint of $2.80 - $2.90 2018 guidance basis EPS range w
Slide 20: Financing Plan
Financing Plan CenterPoint remains committed to solid investment grade credit quality, targeting BBB or better credit ratings at publicly rated borrowing entities $2.5 billion CNP common equity and $3.5 billion of debt expected to be issued prior to close; equity issued in support of credit quality
Slide 21: Credit Outlook
Credit Outlook Current ratings and outlook Moody’s S&P Fitch Company/Instrument Rating Outlook (1) Rating CreditWatch (2) Rating Outlook (3) CenterPoint Energy Senior Unsecured Debt Baa1 Negative BBB+ Negative BBB Stable Houston Electric Senior Secured Debt A1 Stable A Negative A+ Stable CERC Corp.
Slide 22: Planned CERC Reorganization Activities
Planned CERC Reorganization Activities(1) Internal Spin of Midstream Investment out of CERC Objectives Move CERC toward a pure natural gas LDC company; providing better visibility of earnings CNP Midstream spin includes debt with that investment CERC’s pro-forma capital CNP Inc. CERC(2) CNP Midstrea
Slide 23: Agenda
Agenda Scott Prochazka – President and CEO First Quarter Results Business Segment Highlights Houston Electric Natural Gas Distribution Energy Services Midstream Investments Merger Strategic Rationale Earnings Trajectory Bill Rogers – Executive Vice President and CFO Business Segment Performance Util
Slide 24: Electric Transmission and Distribution Q1 2018 Regulatory Update
Electric Transmission and Distribution Q1 2018 Regulatory Update Mechanism Docket # Annual Increase (1) ($ in millions) Filing Date Effective Date Approval Date Additional Information DCRF 48226 N/A April 2018 September 2018 TBD Proposes an approximately $83 million revenue requirement starting Sept
Slide 25: Natural Gas Distribution Q1 2018 Regulatory Update
Natural Gas Distribution Q1 2018 Regulatory Update Jurisdiction Mechanism Docket # Annual Increase (1) ($ in millions) Filing Date Effective Date Approval Date Additional Information South Texas (RRC) Rate Case 10669 0.5 November 2017 TBD TBD Unanimous Settlement Agreement filed with the Railroad Co
Slide 26: Reconciliation: Operating Income to Core Operating Income
Reconciliation: Operating Income to Core Operating Income on a Guidance (Non-GAAP) Basis
Slide 27: Reconciliation: Net Income and Diluted EPS to Adjusted
Reconciliation: Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS Used in Providing Annual Earnings Guidance