Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Q2 2008 Earnings Presentation
33 slides from Public Service Enterprise's earnings presentation, Aug 4, 2008
Slide 1: PSEG Earnings Conference Call 2nd Quarter 2008
Public Service Enterprise Group PSEG Earnings Conference Call 2 nd Quarter 2008 August 1, 2008
Slide 2: Forward-Looking Statement
Forward-Looking Statement Readers are cautioned that statements contained in this presentation about our and our subsidiaries’ future performance, including future revenues, earnings, strategies, prospects and all other statements that are not purely historical, are forward-looking statements for pu
Slide 3: GAAP Disclaimer
GAAP Disclaimer PSEG presents Operating Earnings in addition to its Net Income reported in accordance with accounting principles generally accepted in the United States (GAAP). Operating Earnings is a non-GAAP financial measure that differs from Net Income because it excludes the impact of the sale
Slide 4: 2008 Q2 Review
PSEG 2008 Q2 Review Tom O’Flynn Executive Vice President and Chief Financial Officer
Slide 5: Q2 2008 Highlights
PSEG – Q2 2008 Highlights Solid earnings growth: Maintaining guidance of $2.80 - - $3.05 per share. Steady and consistently solid operations. Strong energy markets. Improved risk profile: SAESA sale closed. Lease transaction reserve: Substantial book reserves recognized for potential tax risk. Litig
Slide 6: Q2 2008 Earnings Summary
Q2 2008 Earnings Summary (6) Discontinued Operations $ 0.55 $ 0.64 EPS from Operating Earnings (150) Net Income / (Loss) (166) Income / (Loss) from Continuing Operations — (490) Lease Transaction Reserves $ 281 $ 324 Operating Earnings $ millions (except EPS) Quarter ended June 30,
Slide 7: YTD Earnings Summary
YTD Earnings Summary — (490) Lease Transaction Reserves Discontinued Operations, net of tax $ 1.19 $ 1.49 EPS from Operating Earnings Net Income Income from Continuing Operations — (1) Premium on Bond Redemption, net of tax $ 602 $ 759 Operating Earnings $ millions (except EPS) Six months ended June
Slide 8: 2008 Q2 Operating Company Review
PSEG 2008 Q2 Operating Company Review
Slide 9: Q2 Operating Earnings by Subsidiary
Q2 Operating Earnings by Subsidiary $ 281 (15) $ 187 $ 324 (4) $ 240 Operating Earnings Earnings per Share (0.03) (0.01) Enterprise $ 0.55 $ 0.64 Operating Earnings 0.09 0.08 PSEG Energy Holdings 0.12 0.10 PSE&G $ 0.37 $ 0.47 PSEG Power $ Millions (except EPS) Quarter ended June 30,
Slide 10: YTD Operating Earnings by Subsidiary
YTD Operating Earnings by Subsidiary $ 602 (33) $ 406 $ 759 (9) $ 515 Operating Earnings Earnings per Share (0.06) (0.02) Enterprise $ 1.19 $ 1.49 Operating Earnings 0.07 0.13 PSEG Energy Holdings 0.38 0.37 PSE&G $ 0.80 $ 1.01 PSEG Power $ Millions (except EPS) Six months ended June 30,
Slide 11: PSEG EPS Reconciliation – Q2 2007 versus Q2 2008
$0.55 .10 (.02) (.01) .02 $0.64 0.00 0.25 0.50 0.75 PSEG EPS Reconciliation – Q2 2007 versus Q2 2008 Q2 2008 operating earnings Q2 2007 operating earnings Interest .02 Recontracting and strong markets .10 MTM .08 O&M (.04) Depreciation, interest & NDT (.03) BGSS (.01) PSEG Power Transmission (.01) G
Slide 12: PSEG EPS Reconciliation – YTD 2007 versus YTD 2008
$1.19 .21 (.01) .06 .04 $1.49 1.00 1.50 PSEG EPS Reconciliation – YTD 2007 versus YTD 2008 Six months ended 6/30/2008 operating earnings Six months ended 6/30/2007 operating earnings Interest .04 Recontracting and strong markets .24 MTM .09 Depreciation, interest & NDT (.07) O&M (.04) BGSS (.01) PSE
Slide 13: Power
PSEG Power 2008 Q2 Review
Slide 14: Power – Q2 2008 EPS Summary
PSEG Power – Q2 2008 EPS Summary $ 318 $ 1,305 $ 1,623 Operating Revenues $ 0.10 $ 0.37 $ 0.47 EPS from Operating Earnings Net Income (3) — Discontinued Operations Income from Continuing Operations Operating Earnings Variance Q2 2007 Q2 2008 $ millions (except EPS)
Slide 15: PSEG Power EPS Reconciliation – Q2 2008 versus Q2 2007
$0.37 .10 .07 (.04) (.03) $0.47 0.00 0.20 0.40 0.60 0.80 Recontracting and strong markets PSEG Power EPS Reconciliation – Q2 2008 versus Q2 2007 Q2 2008 operating earnings Q2 2007 operating earnings MTM .08 BGSS (.01) Depreciation, Interest & NDT (.03) O&M
Slide 16: Power – Generation Measures
PSEG Power – Generation Measures 6,958 7,032 2,977 2,889 2,681 3,648 5,000 10,000 15,000 Quarter ended June 30, Total Nuclear Total Coal* Total Oil & Natural Gas * Includes figures for Pumped Storage PSEG Power – Generation (GWh) 12,616 13,569 14,414 14,296 6,119 6,546 4,993 6,426 10,000 20,000 30,0
Slide 17: Strong Pricing Supports Margin Improvement
$0 $20 $40 $60 Strong Pricing Supports Margin Improvement $0 $20 $40 $60 PSEG Power Gross Margin* ($/MWh) $47 $54 $0 $20 $40 $60 2008E Quarter ended June 30, Six months ended June 30, Twelve months ended December 31, $46 $53 $50 * Includes MTM
Slide 18: Power – Q2 Operating Highlights
PSEG Power – Q2 Operating Highlights Output increased 7.6%. Nuclear fleet capacity factor improved slightly to 90.5%. Salem No. 2 steam generator replacement completed in 58 days – second fastest in industry. Hope Creek extended power uprate of 125MW; Salem No. 2 capacity expansion of 11MW. Signific
Slide 19: PSE&G
PSE&G 2008 Q2 Review
Slide 20: PSE&G – Q2 2008 Earnings Summary
PSE&G – Q2 2008 Earnings Summary ($ 0.02) $ 0.12 $ 0.10 EPS from Operating Earnings (11) Income from Continuing Operations/ Net Income (11) Operating Earnings $ 110 $ 1,748 $ 1,858 Operating Revenues Variance Q2 2007 Q2 2008 $ millions (except EPS)
Slide 21: PSE&G EPS Reconciliation – Q2 2008 versus Q2 2007
$0.12 (.02) .00 $0.10 0.00 0.05 0.10 0.15 0.20 PSE&G EPS Reconciliation – Q2 2008 versus Q2 2007 Q2 2008 operating earnings Q2 2007 operating earnings Margin: Transmission (.01) Gas (.01) O&M (.01) Depreciation, Taxes & Other .01
Slide 22: PSE&G – Q2 Operating Highlights
PSE&G – Q2 Operating Highlights Petitioned FERC in July for cost of service formula rates for existing and future transmission investments to be effective October 1, 2008. In May, filed in NJ for 20% increase in base prices for Gas commodity supply. New solar program ~40% subscribed; AMI pilot progr
Slide 23: Energy Holdings
PSEG Energy Holdings 2008 Q2 Review
Slide 24: Energy Holdings – Q2 2008 Earnings Summary
PSEG Energy Holdings – Q2 2008 Earnings Summary (490) — (490) Lease Transaction Reserves (500) (453) Income / (Loss) from Continuing Operations ($0.01) $ 0.09 $ 0.08 EPS from Operating Earnings (481) (437) Net Income / (Loss) (3) Discontinued Operations ($ 10) $ 47 $ 37 Operating Earnings Variance Q
Slide 25: PSEG Energy Holdings EPS Reconciliation – Q2 2008 versus Q2 2007
.02 (.05) $0.08 (.03) .02 .02 .01 $0.09 (.01) .01 0.00 0.05 0.10 0.15 PSEG Energy Holdings EPS Reconciliation – Q2 2008 versus Q2 2007 Q2 2008 operating earnings Q2 2007 operating earnings Effective tax rate Interest expense Texas - Operations .06 MTM (.05) Effective tax rate GLOBAL RESOURCES Bioene
Slide 26: Energy Holdings – Q2 Operating Highlights
PSEG Energy Holdings – Q2 Operating Highlights PSEG Global is continuing to explore options for its remaining $122 million of international investments in Italy, Venezuela and India. Texas assets benefiting from strong pricing. Closed on sale of SAESA. Recognized substantial book reserves related to
Slide 27: Texas Market Update
PSEG Market 28 - 30 19.04 19.42 16.52 $11.97 Spark Spread 125 - 145 43 - 45% 14% 10.00 2008 Forecast 48.7% 15% 6.76 54.4% 16% 10.82 54.6% 17% 6.34 $48 50.4% 25% $5.42 EBITDA ($M) Capacity Factors Reserve Margin Natural Gas NYMEX Texas Market Update
Slide 28: Impact of Lease Transaction Reserves
Impact of Lease Transaction Reserves 2Q 2008 results include a charge of $490 million: $135 million after-tax increase to the interest reserve recorded in Income Tax Expense. $355 million after-tax charge reflecting a change in assumptions relating to the amount paid and timing of cash flow for cert
Slide 29: Income Recognition – $355 Million Charge
$355 Income Recognition – $355 Million Charge (400) (200) 06/30/08 2009- 2014- 2019- 2024- 2029- Assumes issue is resolved with the IRS at current reserve levels involving $900 - $950 million cash outflow in or by 2010.
Slide 30: Review of Discretionary Cash/Liquidity
Review of Discretionary Cash/Liquidity
Slide 31: Discretionary Cash / Liquidity
Discretionary Cash / Liquidity $2.5 billion forecast of discretionary cash for 2008 – 2011 versus prior forecast of $3.0 billion. Revised figure reflects a higher than originally forecast payment of $900 - $950 million for taxes on our leveraged lease position over a period of several years, as well
Slide 32: Share Repurchase Authorized
PSEG – Share Repurchase Authorized Board authorized the repurchase of up to $750 million of common stock during an 18 month period. Improved risk profile: Sale of most of international assets completed. Recognition of substantial book reserves for leases. Credit ratings in line with objectives. Repr
Slide 33: Maintaining 2008 Operating Earnings Guidance
Maintaining 2008 Operating Earnings Guidance $2.80 - $3.05 $1,420 - $1,560 (15) – (10) 45 - 60 350 - 370 $1,040 - $1,140 Current Enterprise Earnings per Share Operating Earnings PSEG Energy Holdings PSE&G PSEG Power $ millions (except EPS)
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