Public Service Enterprise Group Incorporated · NYSE:PEG

Public Service Enterprise — FY2018 Earnings Presentation

38 slides from Public Service Enterprise's earnings presentation, Feb 27, 2019

  1. Slide 1: PSEG Earnings Conference Call 4th Quarter & Full Year 2018

    Public Service Enterprise Group PSEG Earnings Conference Call 4th Quarter & Full Year 2018 February 27, 2019

  2. 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

  3. 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

  4. Slide 4: 2018 Q4 and Full Year Review

    PSEG 2018 Q4 and Full Year Review Ralph Izzo Chairman, President and Chief Executive Officer

  5. Slide 5: 2018 Highlights

    2018 Highlights  2018 Results Net Income per share of $0.39 in Q4 2018 vs. $1.88 in Q4 2017; Net Income per share of $2.83 in 2018 vs. $3.10 in 2017 Non-GAAP Operating Earnings* per share of $0.56 in Q4 2018 vs. $0.57 in Q4 2017; full-year, non-GAAP Operating Earnings* per share of $3.12 in 2018

  6. Slide 6: Q4 Results Summary

    PSEG Q4 Results Summary Quarter ended December 31 $ millions (except EPS) 2018 2017 Net Income $ 199 $ 956 Reconciling Items 85 (667) Operating Earnings (non-GAAP)* $ 284 $ 289 EPS from Net Income $ 0.39 $ 1.88 EPS from Operating Earnings (non-GAAP)* $ 0.56 $ 0.57 5 *See Slide A for Items excluded f

  7. Slide 7: Full Year Results

    Full Year Results Twelve Months ended December 31 $ millions (except EPS) 2018 2017 Net Income $ 1,438 $ 1,574 Reconciling Items 144 (86) Operating Earnings (non-GAAP)* $ 1,582 $ 1,488 EPS from Net Income $ 2.83 $ 3.10 EPS from Operating Earnings (non-GAAP)* $ 3.12 $ 2.93 6 *See Slide A for Items ex

  8. Slide 8: Executing on Regulatory and Policy Initiatives

    PSEG - Executing on Regulatory and Policy Initiatives Distribution Base Rate Case Settlement Approved  Constructive outcome provides customers and PSE&G a framework for rate stability; new rates with annual base revenue impact of $212 million went into effect November 1, moderated by annual tax adj

  9. Slide 9: Introducing 2019 Guidance

    PSEG – Introducing 2019 Guidance Ongoing investment in utility infrastructure drives increase in earnings Non-GAAP Operating Earnings* Contribution by Subsidiary 2018 Actual and 2019 Guidance $3.12 $3.15 - $3.35E PSE&G represents nearly 75% of 2019 Operating Earnings Guidance 2018 2019E** PSE&G PSEG

  10. Slide 10: Indicative Annual Dividend – Increased $0.08 to $1.88 per share

    PSEG Indicative Annual Dividend – Increased $0.08 to $1.88 per share Building on a 112-year history of returning cash to our shareholders PSEG Annual Dividend Rate 5 year rate of growth: 4.9% $2.00 $1.88 * $1.80 $1.80 $1.72 $1.64 $ Per Share $1.60 $1.56 $1.48 $1.40 $1.20 $1.00 2014 2015 2016 2017 20

  11. Slide 11: 2018 Q4 Operating Company Review

    PSEG 2018 Q4 Operating Company Review Dan Cregg EVP and Chief Financial Officer

  12. Slide 12: Q4 Results by Subsidiary

    PSEG – Q4 Results by Subsidiary PSEG Q4 EPS Summary – Quarter ended December 31 Net Income/(Loss) 2018 2017 Change PSE&G $ 0.47 $ 0.43 $ 0.04 PSEG Power $ (0.07) $ 1.20 $ (1.27) PSEG Enterprise/Other $ (0.01) $ 0.25 $ (0.26) Total PSEG $ 0.39 $ 1.88 $ (1.49) Non-GAAP Operating Earnings* 2018 2017 Ch

  13. Slide 13: EPS Reconciliation – Q4 2018 versus Q4 2017

    PSEG EPS Reconciliation – Q4 2018 versus Q4 2017 $2.00 $0.80 $1.88 $0.70 ~ ~ 0.06 (0.09) $0.60 $0.57 0.02 $0.56 Transmission 0.04 $0.50 Capacity 0.04 Taxes, $ / share Gas Margin 0.06 Interest Expense Re-contracting Electric Margin 0.02 (0.09) & Other $0.39 $0.40 Distribution O&M Volume 0.03 (0.05) G

  14. Slide 14: Year-to-Date Results by Subsidiary

    PSEG – Year-to-Date Results by Subsidiary PSEG Full Year EPS Summary – Twelve Months ended December 31 Net Income 2018 2017 Change PSE&G $ 2.10 $ 1.92 $ 0.18 PSEG Power $ 0.72 $ 0.94 $ (0.22) PSEG Enterprise/Other $ 0.01 $ 0.24 $ (0.23) Total PSEG $ 2.83 $ 3.10 $ (0.27) Non-GAAP Operating Earnings*

  15. Slide 15: EPS Reconciliation – YTD 2018 versus YTD 2017

    PSEG EPS Reconciliation – YTD 2018 versus YTD 2017 $3.50 $3.10 0.20 (0.01) 0.00 $3.12 $2.93 $3.00 $2.83 Capacity 0.13 Taxes, Transmission 0.12 Interest Expense Re-contracting & Other $2.50 Gas Margin 0.11 (0.33) Volume 0.08 Electric Margin 0.05 $2.00 $ / share Gas Weather 0.04 Operations (0.01) Dist

  16. Slide 16: PSE&G 2018 Q4 Review

    PSE&G 2018 Q4 Review

  17. Slide 17: PSE&G EPS Reconciliation – Q4 2018 versus Q4 2017

    PSE&G EPS Reconciliation – Q4 2018 versus Q4 2017 $0.60 0.12 (0.06) $0.50 $0.47 $0.47 $0.43 $0.41 Distribution $0.40 O&M (0.05) $ / share Transmission 0.04 $0.30 Pension & OPEB** Gas Margin 0.06 0.02 Electric Margin Depreciation, $0.20 0.02 Interest Expense, Taxes & Other (0.03) $0.10 $0.00 Q4 2017

  18. Slide 18: PSE&G – Q4 & Full Year Weather Summary

    PSE&G – Q4 & Full Year Weather Summary Winter Weather Summary (HDD) Monthly Heating Degree Days (HDD) FY 2018 vs. FY 2017 vs. FY normal Q4 2018 vs. Q4 2017 vs. Q4 normal 1,000 Summary 4,770 HDD 4,385 2018 800 2017 Heating Degree Days 4,629 normal 600 2,000 3,000 4,000 5,000 FY 2018 Winter weather wa

  19. Slide 19: Energy Strong Program Filing

    Energy Strong Program Filing PSE&G filed its ES II infrastructure program in June 2018 which seeks to invest $2.5 billion, over a five-year period to further strengthen the utility’s electric and gas systems to better withstand storms, increase reliability and significantly enhance resiliency Electr

  20. Slide 20: Partnership for a Clean Energy Future

    Partnership for a Clean Energy Future PSE&G has proposed a ~$3.6 Billion investment program to provide cost-effective and innovative solutions supporting NJ’s clean energy goals  Energy Efficiency: Residential and C&I programs to lower energy bills and combat climate change ‒ Savings support 2% ele

  21. Slide 21: PSE&G's $11B - $16B investment program

    PSE&G’s $11B - $16B investment program focused on reliability, grid modernization and clean energy PSE&G Capital Spending 4,000 2019E – 2023E 3,500 3,000 CEF 2,500 $ Millions 2,000 ES II 1,500 1,000 500 0 2019E 2020E 2021E 2022E 2023E Transmission Gas Distribution Electric Distribution Renewables &

  22. Slide 22: 7% - 9% compound annual rate base growth

    Investment program provides opportunity for approximately 7% - 9% compound annual rate base growth 35,000 PSE&G Year-End Rate Base 2018 – 2023E 9% - 30,000 CEF ES II 7% - 25,000 20,000 $ Millions 15,000 10,000 5,000 0 2018 2019E 2020E 2021E 2022E 2023E Transmission Distribution 21 Hashed portion of

  23. Slide 23: PSE&G – Q4 Highlights

    PSE&G – Q4 Highlights Operations  Weather-normalized residential electric and gas sales were 0.6% and 3.3% higher for the year, respectively  PSE&G named “Most Reliable Utility” in the Mid-Atlantic region by ReliabilityOne for 17th year in a row Regulatory and Market Environment  PSE&G settled it

  24. Slide 24: Power 2018 Q4 Review

    PSEG Power 2018 Q4 Review

  25. Slide 25: Power EPS Reconciliation – Q4 2018 versus Q4 2017

    PSEG Power EPS Reconciliation – Q4 2018 versus Q4 2017 $1.20 $1.20 $0.25 ~ ~ $0.20 (0.04) $0.20 (0.05) $0.15 Capacity 0.04 $0.11 $ / share Re-contracting (0.09) $0.10 O&M 0.01 Volume 0.03 Depreciation (0.02) $0.05 Gas Operations (0.02) Interest Expense (0.03) Taxes & Other (0.01) $0.00 ($0.07) ($0.0

  26. Slide 26: Power – Q4 Generation Measures

    PSEG Power – Q4 Generation Measures PSEG Power – Generation (GWh)* PSEG Power – Capacity Factors (%) PSEG Power – Fuel Costs Quarter ended Quarter ended 15,000 14,223 December 31 December 31 11,999 12,500 2017 2018 ($ millions) 2017 2018 5,300 10,000 3,023 Combined 39.6% 50.6% Gas $ 69 $ 124 1,301 1

  27. Slide 27: Power – YTD Generation Measures

    PSEG Power – YTD Generation Measures PSEG Power – Generation (GWh)* PSEG Power – Capacity Factors (%) PSEG Power – Fuel Costs Twelve Months Twelve Months 60,000 55,805 ended ended December 31 51,089 50,000 December 31 18,889 ($ millions) 2017 2018 13,947 2017 2018 40,000 Gas $ 291 $ 421 5,337 5,685

  28. Slide 28: Power – Gross Margin Performance

    PSEG Power – Gross Margin Performance  Higher generation from new units Keys and Sewaren 7 and increased weather driven demand  Capacity revenues step up June 2018 through May 2019  Lower average price on energy hedges PSEG Power Gross Margin ($/MWh) Regional Performance Quarter ended Twelve mont

  29. Slide 29: NJ BGS 2019 Auction Results

    NJ Basic Generation Service (BGS) 2019 Auction Results Increase in Full Requirements Component Due to: Growing Renewable Energy/Transmission Costs Partially Offset by Decline in Capacity Prices $99.54 $98.04 $96.38 $90.78 $91.77  Capacity ~ $62  Load shape ~ $63 ~ $61 ~ $66  Transmission ~ $58 $/

  30. Slide 30: Hedging Update – Reflects recent BGS auction results

    Hedging Update – Reflects recent BGS auction results Contracted Energy* 2019 2020 2021 Volume TWh 35 36 36 Base Load % Hedged 100% 95-100% 30-35% (Nuclear and Base Load Coal) Price $/MWh $37 $38 $42 Volume TWh 25-27 24-26 24-26 Intermediate, Combined Cycle, % Hedged 60-65% 0% 0% Peaking Price $/MWh

  31. Slide 31: Power – Q4 Highlights

    PSEG Power – Q4 Highlights Operations  Q4 output up 19% on higher CCGT production with two new units coming on line and higher demand; full-year 2018 generation of 56 TWh up 9% over 2017  Nuclear fleet’s average capacity factor was ~87% in Q4; full-year 2018 capacity factor was ~91%  CCGT fleet c

  32. Slide 32: PSEG

    PSEG

  33. Slide 33: 2019 Guidance - By Subsidiary

    PSEG 2019 Guidance - By Subsidiary Segment Operating Earnings Guidance and Prior Results (non-GAAP, except as noted)* $ millions (except EPS) 2019E 2018 PSE&G $1,200 - $1,230 $1,067 PSEG Power $395 - $460 $502 PSEG Enterprise/Other $5 - $10 $13 Operating Earnings (non-GAAP)* $1,600 - $1,700 $1,582 O

  34. Slide 34: Financial Highlights

    PSEG Financial Highlights  Initiating 2019 non-GAAP Operating Earnings guidance of $3.15 - $3.35 per share  Business mix for 2019 guidance reflects nearly 75% of Operating Earnings coming from our regulated utility PSE&G  PSEG’s 5-year capital spending forecast of $12 - $17 billion, primarily dir

  35. Slide 35: Liquidity as of December 31, 2018

    PSEG Liquidity as of December 31, 2018 34

  36. Slide 36: Reconciliation of Non-GAAP Operating Earnings

    Reconciliation of Non-GAAP Operating Earnings PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED Consolidated Operating Earnings (non-GAAP) Reconciliation Three Months Ended Year Ended Reconciling Items December 31, December 31, 2018 2017 2018 2017 ($ millions, Unaudited) Net Income $ 199 $ 956 $ 1,438 $

  37. Slide 37: Reconciliation of Non-GAAP Operating Earnings

    Reconciliation of Non-GAAP Operating Earnings PSE&G Operating Earnings (non-GAAP) Reconciliation Three Months Ended Year Ended Reconciling Items December 31, December 31, 2018 2017 2018 2017 ($ millions, Unaudited) Net Income $ 239 $ 220 $ 1,067 $ 973 Tax Reform - (10) - (10) Operating Earnings (non

  38. Slide 38: Reconciliation of Non-GAAP Operating Earnings and Non-GAAP Adjusted EBITDA

    Reconciliation of Non-GAAP Operating Earnings and Non-GAAP Adjusted EBITDA PSEG Power Operating Earnings (non-GAAP) and Adjusted EBITDA (non-GAAP) Reconciliation Three Months Ended Year Ended Reconciling Items December 31, December 31, 2018 2017 2018 2017 ($ millions, Unaudited) Net Income (Loss) $

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