NEWARK, N.J., Feb. 24, 2017 /PRNewswire/ -- (NYSE: PEG)
Public Service Enterprise Group (PSEG) reported 2016 Net Income of
$887 million, or $1.75 per share as compared to Net Income of
$1,679 million, or $3.30 per share for 2015. Non-GAAP Operating
Earnings for the year 2016 were $1,475
million or $2.90 per share
compared to 2015 non-GAAP Operating Earnings of $1,476 million or $2.91 per share. Net Income for 2016 was largely
impacted by expenses associated with the early retirement of
coal-gas units at the Hudson and Mercer generating stations and reserves for a
leveraged lease impairment. Net Income for 2015 includes insurance
proceeds for the recovery of storm costs.
PSEG also reported a Net Loss for the fourth quarter of 2016 of
$98 million, or $0.19 per share. This compares to fourth
quarter 2015 Net Income of $309
million, or $0.60 per share.
Non-GAAP Operating Earnings for the fourth quarter of 2016 were
$279 million, or $0.54 per share compared to fourth quarter 2015
non-GAAP Operating Earnings of $255
million, or $0.50 per share.
Net Loss in the fourth quarter reflects the impact of incremental
depreciation expense and other expenses of $555 million pre-tax associated with the early
retirement of the Hudson and
Mercer coal/gas-fired generating
stations.
"We delivered strong results in 2016 with full year non-GAAP
Operating Earnings solidly within the range of our guidance" said
Ralph Izzo, chairman, president and
chief executive officer. "Continued growth at our regulated utility
and a disciplined approach to expenses across Enterprise supported
results. The Board's recent decision to increase the common
dividend by 4.9% to the indicative annual level of $1.72 per share represents confidence in our
firm's investment strategy and an acknowledgment of our strong
financial condition."
Management uses non-GAAP Operating Earnings in its internal
analysis, and in communications with investors and analysts, as a
consistent measure for comparing PSEG's financial performance to
previous financial results. Non-GAAP Operating Earnings exclude the
impact of returns (losses) associated with the Nuclear
Decommissioning Trust (NDT), Mark-to-Market (MTM) accounting and
material one-time items such as the previously noted Hudson and Mercer retirements and lease impairment.
The tables below provide a reconciliation of PSEG's Net Income
to non-GAAP Operating Earnings for the full year and fourth
quarter. See Attachment 11 for a complete list of items
excluded from Net Income in the determination of non-GAAP Operating
Earnings. The presentation of non-GAAP Operating Earnings is
intended to complement, and should not be considered an alternative
to, the presentation of Net Income, which is an indicator of
financial performance determined in accordance with GAAP. In
addition, non-GAAP Operating Earnings as presented in this release
may not be comparable to similarly titled measures used by other
companies.
PSEG CONSOLIDATED
RESULTS (unaudited)
|
Full-Year
Comparative Results
|
2016 and
2015
|
|
|
Income
|
|
Diluted
Earnings
|
|
($
millions)
|
|
Per Share
|
|
2016
|
2015
|
|
2016
|
2015
|
Net
Income
|
$
887
|
$1,679
|
|
$1.75
|
$3.30
|
Reconciling
Items*
|
588
|
(203)
|
|
1.15
|
(0.39)
|
Non-GAAP Operating
Earnings
|
$1,475
|
$1,476
|
|
$2.90
|
$2.91
|
|
|
Avg.
Shares
|
508M
|
508M
|
*See Attachment
11
|
|
|
|
|
|
PSEG CONSOLIDATED
RESULTS (unaudited)
|
Fourth Quarter
Comparative Results
|
2016 and
2015
|
|
|
Income/(Loss)
|
|
Diluted
Earnings
|
|
($
millions)
|
|
Per Share
|
|
2016
|
2015
|
|
2016
|
2015
|
Net
Income/(Loss)
|
$(98)
|
$309
|
|
$(0.19)
|
$0.60
|
Reconciling
Items*
|
377
|
(54)
|
|
0.73
|
(0.10)
|
Non-GAAP Operating
Earnings
|
$279
|
$255
|
|
$0.54
|
$0.50
|
|
|
Avg.
Shares
|
508M
|
508M
|
*See Attachment
11
|
|
|
|
|
Ralph Izzo went on to say, "We
continue to pursue opportunities to enhance earnings and reduce
financial risk. Actions to transition our business mix in response
to changing market conditions have supported earnings. For 2017, we
forecast non-GAAP Operating Earnings of $2.80 - $3.00 per share. Based on the
growth in our regulated utility's investment program, PSE&G's
Net Income is forecast to grow 8.5% at the mid-point of 2017's
guidance to represent 66% of our forecast non-GAAP Operating
Earnings. Our investment program, coupled with the impact from
retirement of Hudson and
Mercer (which is excluded from our
non-GAAP Operating Earnings) is expected to improve the resiliency
of our infrastructure and the economic efficiency of our generating
fleet. Our ultimate goal is to provide an attractive earnings and
dividend profile as we also deliver value to the customer. Our
balance sheet remains strong, and we are well positioned to meet
our goals."
The following table outlines PSEG's 2016 non-GAAP Operating
Earnings by subsidiary and expectations for 2017.
|
2017 Non-GAAP
Operating Earnings Guidance and
2016 Non-GAAP
Operating Earnings
($ millions,
except EPS)
|
|
2017E
|
2016A
|
PSE&G
|
$945 -
$985
|
$889
|
PSEG Power
|
$435 -
$510
|
$514
|
PSEG
Enterprise/
|
|
|
Other
|
$35 - $35
|
$72
|
Non-GAAP Operating
Earnings
|
$1,415 -
$1,530
|
$1,475
|
Non-GAAP
EPS
|
$2.80 -
$3.00
|
$2.90
|
E =
Estimate A= Actual
|
|
|
Due to the forward looking nature of non-GAAP Operating Earnings
guidance, PSEG is unable to reconcile this non-GAAP financial
measure to the most directly comparable GAAP financial
measure. Management is unable to project certain reconciling
items, in particular MTM and NDT gains (losses), for future periods
due to market volatility.
Non-GAAP Operating Earnings Review and Outlook by Operating
Subsidiary
See Attachments 5 and 6 for detail regarding the
quarter-over-quarter and year-over-year reconciliations for each of
PSEG's businesses.
PSE&G
PSE&G reported Net Income of $193
million ($0.38 per share) for
the fourth quarter bringing full year Net Income to $889 million ($1.75
per share). On a comparative basis, PSE&G reported Net
Income of $156 million ($0.31 per share) and $787
million ($1.55 per share) for
the fourth quarter and full year 2015, respectively.
PSE&G's Net Income in the fourth quarter continued to
benefit from a return on its expanded investment in transmission
and distribution infrastructure.
Growth in PSE&G's investment in transmission, and the
absence of an adjustment to Net Income for bonus depreciation in
the year-ago quarter improved quarter-over-quarter Net Income
comparisons by $0.06 per share. More
normal weather conditions relative to unseasonably mild weather in
the year-ago quarter improved Net Income by $0.01 per share. A decline in O&M of
$0.03 per share and other expenses
was offset by an increase in depreciation expense and taxes.
PSE&G implemented a $121
million increase in revenue under the company's transmission
formula rate on January 1, 2017.
Transmission revenues are adjusted each year to reflect an update
of the company's investment program. PSE&G's investment in
transmission grew to $6.7 billion of
rate base at the end of 2016, or 44% of the company's consolidated
rate base of $15.2 billion at the end
of the year.
Electric sales, on a weather-normalized basis, were flat in the
fourth quarter compared to the year-ago period as an increase in
demand from the commercial sector offset a decline in sales to
residential and industrial customers. For the year, the continued
degradation of the industrial sector and increases in efficiency
offset the impact of residential customer growth on sales.
Weather-normalized firm gas sales declined slightly during the
fourth quarter compared to the year-ago quarter and declined 1.9%
for the full year.
PSE&G invested $2.8 billion
during 2016 to upgrade and expand its transmission and distribution
system. PSE&G upgraded 177 miles of gas pipes in more than 80
towns as it continues work under its three-year $905 million Gas System Modernization Program.
Upgrades to the electric distribution system continue under the
$1.2 billion Energy Strong
infrastructure program.
For the 15th year in a row, PSE&G's work to
protect and strengthen the system yielded recognition as the most
reliable electric utility in the Mid-Atlantic.
PSE&G's Net Income for 2017 is forecasted at $945 million - $985 million.
PSEG Power
PSEG Power reported a Net Loss of $302
million ($0.59 per share) in
the fourth quarter of 2016 versus Net Income of $149 million ($0.29
per share) for the fourth quarter of 2015. For the full year 2016,
PSEG Power reported Net Income of $18
million ($0.04 per share)
versus Net Income for the full year 2015 of $856 million ($1.68
per share).
PSEG Power reported non-GAAP Operating Earnings of $69 million ($0.13
per share) for the fourth quarter of 2016 and non-GAAP Adjusted
EBITDA of $155 million bringing full
year non-GAAP Operating Earnings to $514
million ($1.01 per share) and
non-GAAP Adjusted EBITDA to $1,201
million. On a comparative basis, PSEG Power reported
non-GAAP Operating Earnings of $95
million ($0.19 per share) and
non-GAAP Adjusted EBITDA of $218
million for the fourth quarter of 2015 and non-GAAP
Operating Earnings of $653 million
($1.29 per share) and non-GAAP
Adjusted EBITDA of $1,435 million for
the full year 2015.
Management believes non-GAAP Adjusted EBITDA is useful to
investors and other users of our financial statements in evaluating
operating performance because it provides them with an additional
tool to compare business performance across companies and across
periods. Management also believes that non-GAAP Adjusted EBITDA is
widely used by investors to measure operating performance without
regard to items such as income tax expense, interest expense and
depreciation and amortization, which can vary substantially from
company to company depending upon, among other things, the book
value of assets, capital structure and whether assets were
constructed or acquired. Non-GAAP Adjusted EBITDA also allows
investors and other users to assess the underlying financial
performance of our fleet before management's decision to deploy
capital. Non-GAAP Adjusted EBITDA excludes the same items as our
non-GAAP Operating Earnings measure as well as income tax expense,
interest expense and depreciation and amortization. See Attachment
12 for a complete list of items excluded from Net Income in the
determination of non-GAAP Adjusted EBITDA. The presentation of
non-GAAP Adjusted EBITDA is intended to complement, and should not
be considered an alternative to the presentation of Net Income,
which is an indicator of financial performance determined in
accordance with GAAP. In addition, non-GAAP Adjusted EBITDA as
presented in this release may not be comparable to similarly titled
measures used by other companies.
Power's Net Loss for the fourth quarter reflects the impact of
incremental depreciation and other expenses of $555 million pre-tax associated with the decision
to retire the Hudson and
Mercer coal/gas-fired generating
stations on June 1, 2017. The
company's fourth quarter results also reflect the impact of a
decline in energy prices on output and margins.
A decline in the average price received on energy hedges reduced
Power's quarter-over-quarter non-GAAP Operating Earnings by
$0.05 per share. A reduction in
output was partially offset by an improvement in off-system gas
sales resulting in a net reduction of $0.01 per share in quarterly Net Income(Loss)
comparisons. An increase in O&M expense of $0.03 per share associated with the cost of a
planned refueling at Power's 100% owned Hope Creek nuclear station
was offset by a decline in taxes and other items.
Output from Power's generating facilities was 7.6% lower in the
fourth quarter compared to year-ago levels. Quarterly comparisons
were affected by the refueling outage at Hope Creek, major
maintenance on the gas-fired CCGTs during the shoulder period in
the market and lower demand. For the year, output was 6.7% lower.
The nuclear fleet operated at an average capacity factor of 86.9%
producing 29.6 TWh of energy (57% of total energy output for 2016).
Power's gas-fired CCGT fleet operated at an average capacity factor
of 57.2% for the year producing 16.4 TWh of energy (32% of 2016's
total energy output). The coal-fired fleet (primarily Keystone and
Conemaugh) generated 4.8 TWh of energy during the year (9% of
2016's total energy output) with the remaining output produced from
Power's peaking generating assets.
Power is forecasting output for 2017 of 49 - 51 TWh – a slight
change from 51.5 TWh of energy produced in 2016. Following
completion of the Basic Generation Service (BGS) auction in
New Jersey in February 2017, Power enters the year with 100% of
its 2017 baseload generation hedged. Approximately 80% - 85% of
anticipated annual production is hedged at an average price of
$46 per MWh. Power has hedged
approximately 50 - 55% of its forecast generation in 2018 of 55 TWh
at an average price of $43 per MWh.
For 2019, Power has hedged 15 - 20% of forecast production of 60
TWh at an average price of $43 per
MWh. Power assumes BGS volumes will represent approximately 11TWh
in 2017 – consistent with 2016 deliveries of 11.1TWh under the BGS
contract.
The forecast increase in output for 2018 and 2019 reflects the
commercial start-up in mid-2018 of 1,300 MWs of new gas-fired
combined cycle capacity at the Keys Energy Center in Maryland and Sewaren in New
Jersey, and the mid-2019 commercial start-up of the 485 MW
gas-fired combined cycle power plant at Bridgeport Harbor,
Connecticut.
Power's non-GAAP Operating Earnings for 2017 are forecast at
$435 - $510 million. The forecast
represents non-GAAP Adjusted EBITDA for the full year 2017 of
$1,080 – $1,210 million.
Due to the forward looking nature of non-GAAP Adjusted EBITDA
guidance, PSEG is unable to reconcile this non-GAAP financial
measure to the most directly comparable GAAP financial measure.
Management is unable to project certain reconciling items, in
particular MTM and NDT gains (losses), for future periods due to
market volatility.
PSEG Enterprise/Other
PSEG Enterprise/Other reported Net Income for the fourth quarter
of 2016 of $11 million ($0.02 per share) compared to Net Income of
$4 million for the fourth quarter of
2015. For the full year, PSEG Enterprise/Other reported a Net Loss
of $20 million, ($0.04 per share) compared to Net Income in 2015
of $36 million ($0.07 per share). Net Income for the fourth
quarter and full year 2016 include pre-tax charges of $10 million and $147
million, respectively related to an impairment of leveraged
lease residual values and an estimated loss as a result of
liquidity issues currently facing NRG REMA.
Non-GAAP Operating Earnings for PSEG Enterprise/Other in the
fourth quarter 2016 were $17 million
($0.03 per share) compared to
$4 million in the year-ago quarter.
The results for the fourth quarter brought PSEG Enterprise/Other
non-GAAP Operating Earnings for the full year to $72 million ($0.14
per share) versus $36 million
($0.07 per share) in 2015.
The increase in non-GAAP Operating Earnings quarter-over-quarter
reflects the absence of certain corporate expenditures as well as
certain tax items at PSEG Energy Holdings and contractual payments
associated with the operation of PSEG Long Island.
For 2017, non-GAAP Operating Earnings for PSEG Enterprise/Other
are forecast to be $35 million.
Capital Expenditures
PSEG currently plans to invest approximately $10.2 billion over 2017 – 2019 primarily in
PSE&G (77%) and PSEG Power (23%).
Pension Expense
PSEG, at the end of 2016, merged its three qualified defined
benefit pension plans and the pension plans' assets into one plan.
As a result, total net periodic benefit costs are expected to
decrease by approximately $48 million
(net of amounts capitalized) in 2017 from what they would have been
without the merger of the plans, and total periodic benefit expense
in 2017 is also expected to be $22
million lower than 2016's level of expense. This is due to a
change in the amortization period for gains and losses for the
merged plan which resulted in lower amortization than that of the
individual plans.
The following attachments can be found on www.pseg.com:
Attachment 1 - Consolidating Statements of Operations -- 3
months
Attachment 2 - Consolidating Statements of Operations -- 12 months
year ended
Attachment 3 - Capitalization Schedule
Attachment 4 - Condensed Consolidated Statements Of Cash Flows
Attachment 5 - Quarter-over-Quarter EPS Reconciliation
Attachment 6 - Year-over-Year EPS Reconciliation
Attachment 7 - Retail Sales and Revenues - electric
Attachment 8 - Retail Sales and Revenues - gas
Attachment 9 - Generation Measures
Attachment 10 - Statistical Measures
Attachment 11 – Consolidated Operating Earnings (non-GAAP)
Reconciliation
Attachment 12 – PSEG Power Operating Earnings (non-GAAP) and
Adjusted EBITDA, PSEG Enterprise/Other Reconciliation
FORWARD-LOOKING STATEMENTS
Certain of the matters discussed in this report 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 "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements are subject to risks and
uncertainties, which could cause actual results to differ
materially from those anticipated. Such statements are based on
management's beliefs as well as assumptions made by and information
currently available to management. When used herein, the words
"anticipate," "intend," "estimate," "believe," "expect," "plan,"
"should," "hypothetical," "potential," "forecast," "project,"
variations of such words and similar expressions are intended to
identify forward-looking statements. Factors that may cause actual
results to differ are often presented with the forward-looking
statements themselves. Other factors that could cause actual
results to differ materially from those contemplated in any
forward-looking statements made by us herein are discussed in
filings we make with the United States Securities and Exchange
Commission (SEC), including our Annual Report on Form 10-K and
subsequent reports on Form 10-Q and Form 8-K and available on our
website: http://www.pseg.com. These factors include, but are not
limited to:
- fluctuations in wholesale power and natural gas markets,
including the potential impacts on the economic viability of our
generation units;
- our ability to obtain adequate fuel supply;
- any inability to manage our energy obligations with available
supply;
- increases in competition in wholesale energy and capacity
markets;
- changes in technology related to energy generation,
distribution and consumption and customer usage patterns;
- economic downturns;
- third party credit risk relating to our sale of generation
output and purchase of fuel;
- adverse performance of our decommissioning and defined benefit
plan trust fund investments and changes in funding
requirements;
- changes in state and federal legislation and regulations;
- the impact of pending rate case proceedings;
- regulatory, financial, environmental, health and safety risks
associated with our ownership and operation of nuclear
facilities;
- adverse changes in energy industry laws, policies and
regulations, including market structures and transmission
planning;
- changes in federal and state environmental regulations and
enforcement;
- delays in receipt of, or an inability to receive, necessary
licenses and permits;
- adverse outcomes of any legal, regulatory or other proceeding,
settlement, investigation or claim applicable to us and/or the
energy industry;
- changes in tax laws and regulations;
- the impact of our holding company structure on our ability to
meet our corporate funding needs, service debt and pay
dividends;
- lack of growth or slower growth in the number of customers or
changes in customer demand;
- any inability of Power to meet its commitments under forward
sale obligations;
- reliance on transmission facilities that we do not own or
control and the impact on our ability to maintain adequate
transmission capacity;
- any inability to successfully develop or construct generation,
transmission and distribution projects;
- any equipment failures, accidents, severe weather events or
other incidents that impact our ability to provide safe and
reliable service to our customers;
- our inability to exercise control over the operations of
generation facilities in which we do not maintain a controlling
interest;
- any inability to maintain sufficient liquidity;
- any inability to realize anticipated tax benefits or retain tax
credits;
- challenges associated with recruitment and/or retention of key
executives and a qualified workforce;
- the impact of our covenants in our debt instruments on our
operations; and
- the impact of acts of terrorism, cybersecurity attacks or
intrusions.
All of the forward-looking statements made in this report are
qualified by these cautionary statements and we cannot assure you
that the results or developments anticipated by management will be
realized or even if realized, will have the expected consequences
to, or effects on, us or our business, prospects, financial
condition, results of operations or cash flows. Readers are
cautioned not to place undue reliance on these forward-looking
statements in making any investment decision. Forward-looking
statements made in this report apply only as of the date of this
report. While we may elect to update forward-looking statements
from time to time, we specifically disclaim any obligation to do
so, even in light of new information or future events, unless
otherwise required by applicable securities laws.
The forward-looking statements contained in this report are
intended to qualify for the safe harbor provisions of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as
amended.
From time to time, PSEG, PSE&G and PSEG Power release
important information via postings on their corporate website at
http://investor.pseg.com. Investors and other interested parties
are encouraged to visit the corporate website to review new
postings. The "Email Alerts" link at http://investor.pseg.com may
be used to enroll to receive automatic email alerts and/or Really
Simple Syndication (RSS) feeds regarding new postings.
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SOURCE PSE&G