Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Q3 2007 Earnings Presentation
36 slides from Public Service Enterprise's earnings presentation, Nov 1, 2007
Slide 1: PSEG Earnings Conference Call, 3rd Quarter 2007
Exhibit 99.1 Public Service Enterprise Group PSEG Earnings Conference Call 3rd Quarter 2007 November 1, 2007
Slide 2: Disclaimer Statement
Disclaimer Statement The statements contained in this communication about our and our subsidiaries’ future performance, including, without limitation, future revenues, earnings, strategies, prospects and all other statements that are not purely historical, are forward-looking statements for purposes
Slide 3: GAAP Disclaimer
GAAP Disclaimer PSEG presents Operating Earnings in addition to its Net Income reported in accordance with generally accepted accounting principles (GAAP). Operating Earnings is a non-GAAP financial measure that differs from Net Income because it excludes the impact of the sale of certain non-core d
Slide 4: 2007 Q3 Review
PSEG 2007 Q3 Review Ralph Izzo Chairman, President and Chief Executive Officer
Slide 5: Q3 2007 EPS Summary
Q3 2007 EPS Summary $ millions (except EPS) Q3 2007 Q3 2006 Operating Earnings $ 507 $ 370 Write Down of Assets ($ 7) -- Merger Related Costs -- $2 Income from Continuing Operations $ 500 $ 372 Discontinued Operations, net of tax $6 $2 Net Income $ 506 $ 374 EPS from Operating Earnings $ 2.00 $ 1.47
Slide 6: YTD Income Summary
YTD Income Summary Nine months ended September 30, $ millions (except EPS) 2007 2006 Operating Earnings $ 1,134 $ 754 Write Down of Assets ($ 7) ($ 178) Merger Costs - ($ 7) Income from Continuing Operations $ 1,127 $ 569 Discontinued Operations, net of tax ($ 17) $ 217 Net Income $ 1,110 $ 786 EPS
Slide 7: Earnings – Exceeding Expectations
Earnings – Exceeding Expectations + 10% + 40 – 45% $7.00 $5.60 - $6.10 $6.00 $4.90 - $5.30 $5.15 - $5.45 2007 Guidance $5.00 raised by $0.30 in March 2007 $4.00 $3.71 $3.00 Initial Guidance: $4.60 - $5.00 $2.00 $1.00 $0.00 2006 Operating Prior 2007 Guidance Current 2007 2008 Guidance Earnings* Guida
Slide 8: PSEG – Meeting Commitments
PSEG – Meeting Commitments 2007 earnings exceeding guidance Focus on core businesses Investments in Latin America received attractive values Pursuing expansion of peaking capacity Transmission investment Meeting commitment to system reliability with major expansion to transmission system / new peaki
Slide 9: 2007 Q3 Operating Company Review
PSEG 2007 Q3 Operating Company Review Tom O’Flynn Executive Vice President and Chief Financial Officer President – PSEG Energy Holdings
Slide 10: Q3 Operating Earnings by Subsidiary
Q3 Operating Earnings by Subsidiary Quarter ended September 30, $ Millions (except EPS) Operating Earnings Per Share 2007 2006 2007 2006 PSE&G $ 106 $ 86 $ 0.42 $ 0.34 PSEG Power 338 205 1.33 0.82 PSEG Energy Holdings 73 97 0.29 0.38 Enterprise (10) (18) (0.04) (0.07) PSEG $ 507 $ 370 $ 2.00 $ 1.47
Slide 11: YTD Operating Earnings by Subsidiary
YTD Operating Earnings by Subsidiary Nine months ended September 30, $ Millions (except EPS) Operating Earnings Per Share 2007 2006 2007 2006 PSE&G $ 299 $ 198 $ 1.18 $ 0.79 PSEG Power 744 413 2.93 1.64 PSEG Energy Holdings 134 193 0.53 0.76 Enterprise (43) (50) (0.17) (0.20) PSEG $ 1,134 $ 754 $ 4.
Slide 12: EPS Reconciliation – Q3 2006 versus Q3 2007
PSEG EPS Reconciliation – Q3 2006 versus Q3 2007 3.00 $0.51 $(.09) $.03 $2.00 2.00 Global $.08 Interest .03 $1.47 International .01 G&A .01 Recontracting/ Rate relief .06 Strong operations .55 Interest & taxes (.06) 1.00 Weather (.01) Texas – MTM & Appliance Service MTM (.03) Operations (.07) .01 O&
Slide 13: EPS Reconciliation – YTD 2006 versus YTD 2007
PSEG EPS Reconciliation – YTD 2006 versus YTD 2007 5.00 $1.29 $(0.23) $0.03 $4.47 Global Interest .03 4.00 Settlement & gain .04 $0.39 RGE (.04) $2.99 Recontracting / International strong operations Operations - Italy (.08), 3.00 1.16 Rate relief .23 SAESA .04 BGSS & other .18 Texas – MTM & Weather
Slide 14: Power 2007 Q3 Review
PSEG Power 2007 Q3 Review
Slide 15: Power – Q3 2007 EPS Summary
PSEG Power – Q3 2007 EPS Summary $ millions (except EPS) Q3 2007 Q3 2006 Variance Operating Revenues $ 1,580 $ 1,455 $ 125 Operating Earnings $ 338 $ 205 $ 133 Income from Continuing Operations $ 338 $ 207 $ 131 Discontinued Operations, net of tax $1 ($ 2) $3 Net Income $ 339 $ 205 $ 134 EPS from Op
Slide 16: Power EPS Reconciliation – Q3 2006 versus Q3 2007
PSEG Power EPS Reconciliation – Q3 2006 versus Q3 2007 1.50 .55 (.03) (.03) .02 1.33 Mark-to- O&M (.03) Other: Market (.03) Effective tax rate .03 Change in shares (.01) 1.00 .82 Recontracting & Strong operations .55 0.50 0.00 Q3 2006 Q3 2007 operating operating earnings earnings * See page 35 for I
Slide 17: Nuclear Fleet Maintains Strong Operating Performance
Nuclear Fleet Maintains Strong Operating Performance 100% 75% 50% 25% 0% Salem Hope Creek 2006 2007 Summer capacity factor averaging above 98% 16
Slide 18: Power – Generation Measures
PSEG Power – Generation Measures PSEG Power – Generation (MWh) 3rd Quarter Nine months ended 9/30 Trailing Twelve Months (ended 9/30/07) 16 15.2 45 60 15.0 40.1 40.8 52.3 53.9 3.8 4.0 7.1 9.0 8.4 10.8 12 30 40 11.2 10.0 15.0 13.9 3.9 3.8 8 15 20 4 7.3 7.4 21.8 21.8 28.9 29.2 0 0 0 2006 2007 2006 200
Slide 19: Prices and Operations Yield Margin Increase of 37% Quarter over Quarter
Prices and Operations Yield Margin Increase of 37% Quarter over Quarter PSEG Power Realized Gross Margin ($/MWh) $60 $56 $60 $50 $41 $40 $40 $38 $20 $20 $0 $0 Q3 2006 Q3 2007 9 Months 2006 9 Months 2007 18
Slide 20: RPM Capacity Auction – Transparent Pricing Model
RPM Capacity Auction – Transparent Pricing Model Results from PJM’s third capacity auction under the Reliability Pricing Model for the 2009-2010 delivery year provided strong price signals. Delivery Year ($MW/Day) Zones 2007 / 2008 2008 / 2009 2009 / 2010 Eastern MAAC $197.67 $148.80 $191.32 MAAC &
Slide 21: RPM is Working
RPM is Working RPM has had an influence on the market – forced outage rates declining, retirements slowing, more DSM bid into market. PSEG Power is taking steps to add 300 - 400MW ($250 - $350 million) of new gas-fired peaking capacity that could be bid into PJM’s Reliability Pricing Model (RPM) bas
Slide 22: Power – Q3 Highlights
PSEG Power – Q3 Highlights Operations: Generation output increased Nuclear: 1.1% Fossil: 2.4% Expects to be in a position to resume independent operation of Salem and Hope Creek by year-end NRC approval of Hope Creek 125 MW uprate expected by spring 2008 Markets: Benefiting from roll-off of below ma
Slide 23: PSE&G 2007 Q3 Review
PSE&G 2007 Q3 Review
Slide 24: PSE&G – Q3 2007 EPS Summary
PSE&G – Q3 2007 EPS Summary $ millions (except EPS) Q3 2007 Q3 2006 Variance Operating Revenues $ 2,106 $ 1,971 $ 135 Operating Earnings $ 106 $ 86 $ 20 Income from Continuing Operations/ $ 106 $ 87 $ 19 Net Income EPS from Operating Earnings $ 0.42 $ 0.34 $ 0.08 * See page 35 for Items excluded fro
Slide 25: PSE&G EPS Reconciliation – Q3 2006 versus Q3 2007
PSE&G EPS Reconciliation – Q3 2006 versus Q3 2007 0.50 .03 .42 .06 (.01) 0.40 .34 Weather: Other Electric (.01) Appliance service .01 Rate relief: 0.30 Interest expense, Gas .04 change in shares & other .02 Electric .02 0.20 0.10 0.00 Q3 2006 Q3 2007 operating operating earnings earnings * See page
Slide 26: PSE&G – Q3 Highlights
PSE&G – Q3 Highlights Operations Sales growth reflects: Weather normalized growth in residential and commercial electric customer demand of 3.2% and 3.6%, respectively Industrial electric demand reflects customer loss Weather – cooler than normal Mid-Atlantic ReliabilityOne Award – six years running
Slide 27: PSEG Energy Holdings 2007 Q3 Review
PSEG Energy Holdings 2007 Q3 Review
Slide 28: Energy Holdings – Q3 2007 EPS Summary
PSEG Energy Holdings – Q3 2007 EPS Summary $ millions (except EPS) Q3 2007 Q3 2006 Variance Operating Earnings $ 73 $ 97 ($ 24) Write Down of Assets ($ 7) -- ($ 7) Income from Continuing Operations $ 66 $ 97 ($ 31) Discontinued Operations, net of tax $5 $4 $1 Net Income $ 71 $ 101 ($ 30) EPS from Op
Slide 29: Energy Holdings EPS Reconciliation – Q3 2006 versus Q3 2007
PSEG Energy Holdings EPS Reconciliation – Q3 2006 versus Q3 2007 Global 0.45 .38 (.05) (.06) Resources .02 .29 0.30 Texas MTM (.06) Interest (.03) NWA settlement Operations (.01) .02 Taxes (.03) International Interest .02 SAESA .01 0.15 Lease income G&A .01 (.02) 0.00 Q3 2006 Q3 2007 operating opera
Slide 30: Energy Holdings – Q3 Highlights
PSEG Energy Holdings – Q3 Highlights Operations: Global Italian biomass generation plant resumed operations in June after extended outage; now at full capacity Latin America distribution businesses performing well Markets: Global Economic growth driving strong demand Valuations remain strong for int
Slide 31: Improved risk profile by reducing capital invested in non-strategic assets
Improved risk profile by reducing capital invested in non-strategic assets while increasing returns and sharpening focus on G&A Global’s Invested Capital Composition of Global’s Pre-tax Contribution by Region* $2.6B $317M** $13 4% $2.0B Other $900M 35% $1.8B 7% $205M-$225M** $150M $129 41% $150M 7%
Slide 32: 2007 Q3 Review
PSEG 2007 Q3 Review
Slide 33: Summary of Q3 Fundamental Factors
Summary of Q3 Fundamental Factors Operations Power’s generation output increased 1.7% over last year’s levels Domestic distribution and transmission assets provide safe and secure supply Latin America assets benefit from economic growth Markets Weather normalized electric demand growth within expect
Slide 34: Cash Outlook – Forecast Intact
Cash Outlook – Forecast Intact We remain comfortable with forecasted improvement in cash Operating income exceeding expectations Successful asset sales Planned rate mechanisms for transmission investments would provide cash recovery during construction Excess cash between $1.5 billion and $2.0 billi
Slide 35: Increasing 2007 Operating Earnings Guidance
Increasing 2007 Operating Earnings Guidance $ millions (except EPS) Current Prior PSEG Power $890 - $940 $ 840 - $920 PSE&G $360 - $380 $ 340 - $360 PSEG Energy Holdings $110 - $135 $120 - $135 Parent ($55) – ($45) ($55) – ($45) Operating Earnings $1,305 - $1,410 $1,245 - $1,370 Earnings per Share $
Slide 36: Items Excluded from Net Income to Reconcile to Operating Earnings
Items Excluded from Net Income to Reconcile to Operating Earnings Impact to PSEG EPS $ Millions (except EPS) Quarter Ended Sept. 30, Nine Months Ended Sept. 30, Quarter Ended Sept. 30, Nine Months Ended Sept. 30, 2007 2006 2007 2006 2007 2006 2007 2006 Merger related Costs: PSE&G $ - $ 1 $ - $ (1) P
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