NEWARK, N.J., July 28, 2017 /PRNewswire/ -- (NYSE: PEG)
Public Service Enterprise Group (PSEG) reported second quarter 2017
Net Income of $109 million or
$0.22 per share as compared to Net
Income of $187 million or
$0.37 per share reported for the
second quarter of 2016. Non-GAAP Operating Earnings for the
second quarter of 2017 were $316
million or $0.62 per share as
compared to Non-GAAP Operating Earnings for the second quarter of
2016 of $289 million or $0.57 per share. Net Income for the second
quarter of 2017 was affected by accelerated depreciation associated
with the June 1, 2017 retirement of
the Hudson and Mercer coal/gas generating stations.
Ralph Izzo, Chairman, President
and Chief Executive Officer said "PSEG's second quarter earnings
demonstrate the benefits of our utility investment program and
adherence to operating efficiently. We remain committed to
providing customers with affordable and resilient energy in a
manner that also provides investors with strong, sustainable
returns on capital. That commitment includes improving New Jersey's aging infrastructure, as
evidenced by our filing yesterday of a 5-year $2.7 billion extension of our Gas System
Modernization Program."
Management uses non-GAAP Operating Earnings in its internal
analysis, and in communications with investors and analysts, as a
consistent measure for comparing PSEG's financial performance to
previous financial results. Non-GAAP Operating Earnings exclude the
impact of returns(losses) associated with Nuclear Decommissioning
Trust (NDT), Mark-to-Market (MTM) accounting and material one-time
items such as the previously noted Hudson and Mercer retirements.
The table below provides a reconciliation of PSEG's Net Income
to non-GAAP Operating Earnings for the second quarter. See
Attachment 11 for a complete list of items excluded from Net Income
in the determination of non-GAAP Operating Earnings. The
presentation of non-GAAP Operating Earnings is intended to
complement, and should not be considered an alternative to, the
presentation of Net Income, which is an indicator of financial
performance determined in accordance with GAAP. In addition,
non-GAAP Operating Earnings as presented in this release may not be
comparable to similarly titled measures used by other
companies.
PSEG CONSOLIDATED
EARNINGS (unaudited)
|
Second Quarter
Comparative Results
|
2017 and
2016
|
|
|
Income
|
|
Diluted
Earnings
|
|
($
millions)
|
|
Per Share
|
|
2017
|
2016
|
|
2017
|
2016
|
Net
Income
|
$109
|
$187
|
|
$0.22
|
$0.37
|
Reconciling
Items*
|
207
|
102
|
|
0.40
|
0.20
|
Non-GAAP Operating
Earnings
|
$316
|
$289
|
|
$0.62
|
$0.57
|
|
|
Avg.
Shares
|
507M
|
508M
|
*See Attachment 11
GUIDANCE
Ralph Izzo went on to say, "We
generated strong financial results in the first half of the year,
and we are maintaining our non-GAAP Operating Earnings guidance for
2017 of $2.80 - $3.00 per share."
Non-GAAP Operating Earnings guidance by company for the full
year remains unchanged:
2017 Non-GAAP
Operating Earnings Guidance
($ millions,
except EPS)
|
|
2017E
|
PSE&G
|
$945 -
$985
|
PSEG Power
|
$435 -
$510
|
PSEG
Enterprise/Other
|
$35 - $35
|
|
|
Non-GAAP Operating
Earnings
|
$1,415 -
$1,530
|
Non-GAAP
EPS
|
$2.80 -
$3.00
|
|
|
E:
Estimate
|
|
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 earnings
reconciliations for 2017's second quarter and year-to-date for each
of PSEG's businesses.
PSE&G
PSE&G reported Net Income of $208
million ($0.41 per share) for
the second quarter of 2017 compared with Net Income of $179 million ($0.35
per share) for the second quarter of 2016.
PSE&G's results for the second quarter reflect the benefits
of its expanded investment program and regulatory mechanisms
providing for recovery of costs and continued control of growth in
operating expenses.
Growth in PSE&G's investment in transmission improved second
quarter Net Income comparisons by $0.04 per share. Investments made to enhance
system resiliency under the Energy Strong and Gas System
Modernization Program (GSMP) drove improved margin and second
quarter Net Income comparisons by $0.02 per share. An increase in depreciation
expense was offset by a reduction in O&M and other
expenses.
Economic conditions in New
Jersey continue to show steady improvement, particularly in
the level of employment. The impact on electric revenue in the
quarter from weather was favorable given warmer than normal
conditions which conversely reduced gas sales early in the quarter.
On a weather-normalized basis, electric and gas sales declined
modestly. On a trailing twelve month basis, weather-normalized
electric sales increased 0.1% year-over-year. Gas sales, on the
same basis, increased 0.4% with growth in demand from the
commercial sector.
PSE&G has had significant advances on a number of fronts.
The company filed for an extension of the Gas System Modernization
Program. PSE&G is proposing to invest up to $540 million per year for five years beginning in
2019. This program would accelerate the pace of replacement of its
aging cast iron and unprotected steel mains and associated
services. The filing is consistent with the draft regulations that
the NJ Board of Public Utilities (BPU) issued in June 2017 regarding infrastructure investment
programs.
PSE&G reached an agreement in principle with BPU Staff and
Rate Counsel related to its proposed extension of its investment in
Energy Efficiency. PSE&G would invest $69 million (more than 90% of its original
request) in energy efficiency equipment for hospitals, multi-family
housing and other sectors as well as provide for new residential
energy efficiency offerings for smart thermostats and data
analytics. This agreement is subject to review by the BPU.
PSE&G continues to progress towards its 2017 plan to invest
$3.4 billion in transmission and
distribution infrastructure upgrades.
The forecast of PSE&G's Net Income for 2017 remains
unchanged at $945 - $985 million.
PSEG Power
PSEG Power reported a Net Loss of $97
million ($0.19 per share) for
the second quarter of 2017 and non-GAAP Adjusted EBITDA of
$261 million compared with a Net Loss
of $11 million ($0.02 per share) and non-GAAP Adjusted EBITDA of
$250 million for the second quarter
of 2016. Non-GAAP Operating Earnings for the second quarter of 2017
were $97 million ($0.19 per share) versus $91 million ($0.18
per share) for the second quarter of 2016.
PSEG Power's Net Loss for the second quarter of 2017 reflects
the impact of incremental depreciation and other expenses of
$387 million, pre-tax, associated
with the retirement of the Hudson
and Mercer coal-fired generating
stations on June 1, 2017.
Power's operating results for the second quarter reflect
on-going programs to reduce operating expenses and an increase in
output which offset a decline in average hedge prices.
Non-GAAP Operating Earnings in the quarter increased
$0.01 per share as the result of a
June 1, 2017 increase in capacity
prices. Growth in output also improved second quarter non-GAAP
Operating Earnings comparisons by $0.01 per share. Lower average prices on energy
hedges reduced Power's non-GAAP Operating Earnings in the second
quarter by $0.03 per share. A
reduction in O&M associated with fewer nuclear and fossil
outage related days and the June 1
retirement of Hudson and
Mercer improved non-GAAP Operating
Earnings by $0.02 per share. A higher
level of depreciation was offset by a decline in interest
expense.
Output from Power's generating stations increased 4% in the
second quarter. The improvement reflects a decline in nuclear
refueling outage days to 46 from 76 outage related days in the
year-ago quarter. The nuclear fleet's capacity factor improved to
89.6% in the quarter from 82.7% producing 7.6 TWh of energy.
Power's gas-fired CCGT fleet operated at an average capacity factor
of 55.3% versus 62.3% producing 4.0 TWh of energy. An increase in
the price of gas improved the competitive performance of the coal
fleet. During the quarter, the coal fleet operated at an average
capacity factor of 32.6% versus 18.4% producing 1.4 TWh of
energy.
Power continues to forecast output for 2017 of 49 – 50 TWh.
Approximately 90% of production for the remainder of the year is
hedged at an average price of $46 per
MWh. Power has hedged approximately 65% - 70% of its forecast
production for 2018 of 52 – 54 TWh at an average price of
$41 per MWh. For 2019, Power has
hedged 25% - 30% of its forecast production of 58 – 60 TWh at an
average price of $41 per MWh. Power
continues to assume Basic Generation Service (BGS) volumes will
represent approximately 11 TWh of deliveries in 2017.
The forecast increase in output in both 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 generation unit in Bridgeport Harbor,
Connecticut.
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/(Loss) 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/(Loss), which is an indicator of financial performance 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.
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.
The forecast range of Power's 2017 non-GAAP Operating Earnings
and non-GAAP Adjusted EBITDA are unchanged at $435 million - $510 million and $1,080 - $1,210 million, respectively.
PSEG Enterprise/Other
PSEG Enterprise/Other reported a Net Loss of $2 million for the second quarter of 2017 versus
Net Income of $19 million
($0.04 per share) during the second
quarter of 2016. Non-GAAP Operating Earnings for the second
quarter of 2017 were $11 million
($0.02 per share) compared to
$19 million ($0.04 per share) for the second quarter of
2016.
The Net Loss for the second quarter of 2017 includes a pre-tax
charge of $22 million related to
on-going liquidity challenges facing NRG REMA, LLC (REMA) and
deterioration in market conditions affecting the residual value of
the leveraged lease portfolio. The decrease in non-GAAP Operating
Earnings quarter-over-quarter reflects the absence of certain tax
items recorded in 2016 at PSEG Energy Holdings and higher Parent
interest expense.
The forecast of PSEG Enterprise/Other non-GAAP Operating
Earnings for 2017 remains unchanged at $35
million.
Financing
PSEG closed the quarter ended June 30,
2017 with $430 million of cash
on its balance sheet with debt at the end of the quarter
representing approximately 49% of consolidated capital.
The following attachments can be found on www.pseg.com.
Attachment 1 - Consolidating Statements of Operations – 3
months
Attachment 2 – Consolidated Statement of Operations – 6 months
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 (non-GAAP) Reconciliation, PSEG Enterprise/Other
Operating Earnings (non-GAAP) Reconciliation
About PSEG:
Public Service Enterprise
Group (NYSE: PEG) is a publicly traded diversified energy company
with annual revenues of $9.1 billion.
Its operating subsidiaries are: Public Service Electric and Gas
Company (PSE&G), PSEG Power LLC, and PSEG Long Island.
Public Service Electric and Gas Company (PSE&G) is
New Jersey's oldest and largest
regulated gas and electric delivery utility, serving nearly
three-quarters of the state's population. PSE&G is the winner
of the ReliabilityOne Award for superior electric system
reliability.
PSEG Power LLC is an independent power producer that
generates and sells electricity in the PJM, New York and New England wholesale power
markets.
Visit PSEG
at:
www.pseg.com
PSEG on
Facebook
PSEG on Twitter
PSEG on
LinkedIn
PSEG blog, Energize!
FORWARD-LOOKING STATEMENT
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 "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. 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 presentation
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 presentation apply only as of the date of
this presentation. 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 presentation
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 Public Service Enterprise Group