Centerpoint Energy, Inc (holding Co) · NYSE:CNP
Centerpoint Energy, Inc (holding Co) — FY2016 Earnings Presentation
38 slides from Centerpoint Energy, Inc (holding Co)'s earnings presentation, Feb 28, 2017
Slide 1: Full Year 2016 Earnings Call
Company reiterates 2017 EPS guidance of $1.25 – $1.33 Company targets upper end of 4-6% earnings growth range for 2018 Full Year 2016 Earnings Call February 28, 2017 Exhibit 99.2
Slide 2: Cautionary Statement
Cautionary Statement This presentation and the oral statements made in connection herewith contain statements concerning our expectations, beliefs, plans, objectives, goals, strategies, future operations, events, financial position, earnings, growth, costs, prospects, capital investments or performa
Slide 3: Earnings Call Highlights
Earnings Call Highlights Earnings Summary & Outlook 2016 Highlights Enable Midstream Highlights Midstream Investments Ownership Review Update Scott Prochazka – President and CEO
Slide 4: 2016 Guidance-Basis EPS Growth in Excess of 5% with Higher Growth Projected for 2017
2016 Guidance-Basis EPS Growth in Excess of 5% with Higher Growth Projected for 2017 (2) 2016 EPS 2015 - 2016 EPS on a Guidance (Non-GAAP) Basis + 2017 Guidance We anticipate 2017 EPS growth will be driven by: (1) As provided on Enable’s 4th quarter 2016 earnings call (2) Refer to slide 34 for recon
Slide 5: 2016 Highlights
Utility Operations Strong customer growth – over 90,000 new utility customers Total electric throughput up over 3% compared to 2015 Capital expenditures of ~$1.4 billion invested on behalf of our customers and total rate base growth of 5.4% Increased rate relief by $95 million Earned ROEs near autho
Slide 6: Highlights from Enable Midstream's Earnings Call on Feb. 21, 2017
Highlights from Enable Midstream’s Earnings Call on Feb. 21, 2017 #1 in Processing Capacity Enable is well-positioned to benefit from operational leverage associated with leading processing capacity investments Recent Commercial Success Benefits Increase Fee-based Margin P Reduce Commodity Exposure
Slide 7: Midstream Investments Ownership Review Update
Midstream Investments Ownership Review Update Criteria for Consideration of a Sale or Spin – sustainable value for our long-term shareholders Comparable earnings per share and dividends Improve visibility of future earnings Seek to maintain current credit ratings Ongoing Activities Evaluating OGE’s
Slide 8: Earnings Call Highlights
Earnings Call Highlights Operating Income Drivers Capital Investment Outlook Rate Base Outlook Tracy Bridge – EVP & President, Houston Electric
Slide 9: Electric Transmission and Distribution Operating Income Drivers 2015 vs 2016
2% YoY Customer Growth (1) (2) (4) (5) (3) Electric Transmission and Distribution Operating Income Drivers 2015 vs 2016 (1) Houston Electric’s customer count increased by 54,823 from 2,348,517 as of December 31, 2015 to 2,403,340 as of December 31, 2016 (2) 2015 TDU core operating income represents
Slide 10: Electric Transmission and Distribution Capital Investment Outlook
2016A 2017E 2018E 2019E 2020E 2021E Transmission 48% 50% 45% 47% 40% 31% Distribution 49% 46% 50% 49% 56% 64% Electric Transmission and Distribution Capital Investment Outlook $4.1 Billion 2017 – 2021 Capital Plan (1) Includes AFUDC (2) Capital expenditures related to the Brazos Valley Connection in
Slide 11: Electric Transmission and Distribution Rate Base Outlook
Electric Transmission and Distribution $6.2 Billion Projected 2021 Average Rate Base Capital Structure: 45% equity / 55% debt Rate Base Growth: 5.0% CAGR 2016-2021 Note: The estimated average annual rate base is subject to change due to actual capital investment, effects of bonus depreciation, defer
Slide 12: Earnings Call Highlights
Earnings Call Highlights Natural Gas Distribution Operating Income Drivers Capital Investment Outlook Rate Base Outlook Energy Services Results & Outlook Joe McGoldrick – EVP & President, Gas Division
Slide 13: Natural Gas Distribution Operating Income Drivers 2015 vs 2016
1% YoY Customer Growth (1) (3) Natural Gas Distribution Operating Income Drivers 2015 vs 2016 (1) Natural Gas Distribution’s customer count increased by 35,578 from 3,403,766 as of December 31, 2015 to 3,439,344 as of December 31, 2016 (2) Rate increases of $55 million, primarily from the 2015 Minne
Slide 14: Natural Gas Distribution Capital Investment Outlook
Capital Recovery Method 2016A 2017E 2018E 2019E 2020E 2021E Annual Mechanisms 27% 57% 63% 57% 63% 63% Rate Cases 73% 43% 37% 43% 37% 37% Natural Gas Distribution Capital Investment Outlook $2.7 Billion 2017 – 2021 Capital Plan (1) Includes AFUDC (1)
Slide 15: Natural Gas Distribution Rate Base Outlook
Natural Gas Distribution $3.7 Billion Projected 2021 Average Rate Base Rate Base Growth: 6.6% CAGR 2016-2021 Rate Base Capital Structure: 50.9% equity / 49.1% debt Note: The estimated average annual rate base is subject to change due to actual capital investment, effects of bonus depreciation, defer
Slide 16: Energy Services Results and Outlook
Energy Services Results and Outlook 2016 Operating Income Operating income was $41 million in 2016 compared to $38 million last year, excluding a mark-to-market loss of $21 million and a gain of $4 million, respectively 2017 Outlook Energy Services projected to contribute $45 – $55 million in operat
Slide 17: Earnings Call Highlights
Bill Rogers – EVP & CFO Earnings Call Highlights 2016 Earnings Drivers Liquidity & Capital Resources 2017 Guidance Outlook Tax Discussion
Slide 18: Reconciliation: Diluted EPS to Adjusted Diluted EPS
Reconciliation: Diluted EPS to Adjusted Diluted EPS Used in Providing Annual Earnings Guidance Q4 2016 Q4 2015 FY 2016 FY 2015 Diluted EPS as reported $0.23 $(1.18) $1.00 $(1.61) Loss on impairment of Midstream Investments - $1.44 - $2.69 Timing effects impacting CES $0.01 - $0.03 $(0.01) ZENS-relat
Slide 19: Utility Operations Adjusted Diluted EPS Drivers 2015 vs 2016
Utility Operations Adjusted Diluted EPS Drivers 2015 vs 2016 (Guidance Basis) (1) Excludes equity return; please refer to slide 33 for more detail on core operating income (2) The Equity Amortization schedule on page 38 details the increase between the 2015 and 2016 equity returns (3) 2016 income fr
Slide 20: Consolidated Adjusted Diluted EPS Drivers 2015 vs 2016
Consolidated Adjusted Diluted EPS Drivers 2015 vs 2016 (Guidance Basis) (1) See previous slide (2) Increased to $48 million in 2016 versus $8 million in 2015. Basis difference is being amortized over approximately 33 years. (3) Includes impact of Louisiana state tax law change; uses an average 2016
Slide 21: Liquidity and Capital Resources
2016 Adjusted FFO/Total Debt – 24% (1) Equity / Total Capital – 36% (1) Interest expense savings of $14 million with over $600 million of 6% plus debt retired in 2016 (1) 2017 Planned capital investment of approximately $1.5 billion Net incremental borrowings anticipated of $200 - $500 million; depe
Slide 22: 2017 Guidance Outlook
2017 Guidance Outlook Reiterate 2017 full-year guidance of $1.25 - $1.33 per diluted share $0.93 - $0.97 expected from utility operations $0.31 - $0.37 expected from midstream investments 2017 earnings growth expected to be driven by: Utility growth primarily driven by rate relief and continued cust
Slide 23: Tax Discussion
Tax Discussion
Slide 24: CenterPoint's Current Tax Position
CenterPoint’s Current Tax Position Effective Tax Rates CenterPoint’s 2016 Effective Tax Rate was 37% (projected rate of 36% plus the income tax expense recognized due to the Louisiana state tax law change) Cash Tax Rates CenterPoint’s 2016 cash tax rate was approximately 4% All remaining federal tax
Slide 25: CenterPoint's Deferred Tax Liability
CenterPoint’s Deferred Tax Liability CenterPoint has a net deferred tax liability of $5.3 billion as of Dec. 31, 2016 which would be reduced if a lower federal income tax rate is enacted December 31, 2016 ($ in millions) Utility Related (1) Non-Utility Related Total Deferred Tax Assets Benefits and
Slide 26: Potential Tax Reform Implications
Potential Tax Reform Implications Using only the following assumptions (and assuming the current business segments) (1) Lower corporate tax rate of 20% 100% expensing of capital investments Permanent disallowance of interest deductibility CenterPoint should have the following impacts Accretive to EP
Slide 27: Appendix
Appendix
Slide 28: Consolidated Capital Plan
Consolidated Capital Investment Outlook (1) Includes AFUDC (1) (1) $7.0 Billion 2017 – 2021 Consolidated Capital Plan
Slide 29: Electric Transmission and Distribution 2016 Regulatory Update
DCRF – Distribution Cost Recovery Factor; TCOS – Transmission Cost of Service; EECRF – Energy Efficiency Cost Recovery Factor (1) Represents the new DCRF charge, not a year over year increase (2) Amounts are recorded when approved (3) Effective dates or approval dates not yet available and approved
Slide 30: Natural Gas Distribution 2016 Regulatory Update
Natural Gas Distribution 2016 Regulatory Update Jurisdiction Mechanism Docket # Annual Increase ($ in millions) Filing Date Effective Date Approval Date Additional Information Houston, South Texas, Beaumont/East Texas, Texas Coast (Railroad Commission) GRIP 10508, 10509, 10510, 10511 $18.2 March 201
Slide 31: Natural Gas Distribution 2016 Regulatory Update
Natural Gas Distribution 2016 Regulatory Update Jurisdiction Mechanism Docket # Annual Increase ($ in millions) Filing Date Effective Date Approval Date Additional Information Minnesota (MPUC) Rate Case 15-424 $27.5 August 2015 December 2016 June 2016 Interim increase of $47.8 million effective in O
Slide 32: Estimated Rate Filing Timelines as of December 31, 2016
Estimated Rate Filing Timelines as of December 31, 2016 Houston Electric (1) Natural Gas Distribution (1) (1) Rate filings and timelines are subject to change and may be impacted by factors such as regulatory, legislative and economic factors (2)
Slide 33: Reconciliation: Operating Income to Core Operating Income
Reconciliation: Operating Income to Core Operating Income on a Guidance (Non-GAAP) Basis Note: Refer to slide 2 for information on non-GAAP measures
Slide 34: Reconciliation: Net Income and Diluted EPS to Adjusted Net Income
Note: Refer to slide 2 for information on non-GAAP measures Reconciliation: Net Income (Loss) and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS Used in Providing Annual Earnings Guidance
Slide 35: Reconciliation: Net Income and Diluted EPS to Adjusted Net Income
Note: Refer to slide 2 for information on non-GAAP measures Reconciliation: Net Income (Loss) and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS Used in Providing Annual Earnings Guidance
Slide 36: Adjusted Funds From Operations (FFO)
Adjusted Funds From Operations (FFO) ($ in millions) Year Ended December 31, 2016 Year Ended December 31, 2015 Amounts included in Cash Flows from Operating Activities: Net income (loss) $ 432 $ (692) Depreciation and amortization 1,126 970 Amortization of deferred financing costs 26 27 Deferred inc
Slide 37: Ratio of Adjusted FFO/Total Debt Excluding Transition and System Restoration Bonds
Ratio of Adjusted FFO/Total Debt Excluding Transition and System Restoration Bonds ($ in millions) December 31, 2016 December 31, 2015 Short-term Debt: Short-term borrowings $ 35 $ 40 Current portion of transition and system restoration bonds* 411 391 Indexed debt (ZENS)** 114 145 Current portion of
Slide 38: Estimated Amortization for Pre-Tax Equity Earnings
Estimated Amortization for Pre-Tax Equity Earnings Associated with the Recovery of Certain Qualified Cost and Storm Restoration Costs The table provides the pre-tax equity return recognized by CenterPoint Energy, Inc. (CenterPoint Energy) during each of the years 2005 through 2016 related to CenterP