- Strong utility performance drives 2019 results well above upper
end of EPS guidance basis range of $1.60 - $1.70
- Sale of Energy Services and Infrastructure Services
businesses
- Announced 2020 Utility EPS guidance range of $1.10 - $1.20;
2020 Midstream Investments EPS expected range of $0.23 - $0.28
CenterPoint Energy, Inc. (NYSE: CNP) today reported income
available to common shareholders of $674 million, or $1.33 per
diluted share, for the full-year 2019, compared with $333 million,
or $0.74 per diluted share for the full-year 2018. On a guidance
basis, full-year 2019 earnings were $1.79 per diluted share,
excluding certain impacts associated with the Vectren merger (the
merger) and non-cash impairment charges recorded at Energy Services
and Midstream Investments. Full-year 2019 earnings, on a guidance
basis, included $0.12 of favorable weather and one-time tax
benefits. Full-year 2018 earnings, on a guidance basis and
excluding certain impacts associated with the merger, were $1.60
per diluted share.
Fourth quarter 2019 earnings were $0.25 per diluted share,
compared to $0.18 per diluted share for the fourth quarter of 2018.
On a guidance basis and excluding certain impacts associated with
the merger and non-cash impairment charges, fourth quarter 2019
earnings were $0.45 per diluted share, compared to $0.36 per
diluted share for the fourth quarter of 2018.
“I am very pleased with our 2019 results, driven by strong
utility performance, primarily as a result of customer growth and
disciplined cost management, as well as favorable weather and tax
related outcomes,” said John W. Somerhalder II, interim president
and chief executive officer of CenterPoint Energy. “The recently
announced agreements to sell our Energy Services and Infrastructure
Services businesses will further sharpen the company’s focus on our
core utility businesses, improving our business profile and
earnings quality, while at the same time strengthening our balance
sheet and enhancing our investment grade credit quality.”
Business Segments
Houston Electric - Transmission & Distribution
The Houston electric - transmission & distribution segment
reported operating income of $624 million for the full-year 2019,
consisting of $590 million from the regulated electric transmission
and distribution utility operations (TDU) and $34 million related
to securitization bonds. Operating income for the TDU for 2019
includes $10 million of merger-related expenses. Excluding
merger-related expenses, 2019 TDU operating income was $600
million.
Operating income for 2018 was $623 million, consisting of $568
million from the TDU and $55 million related to securitization
bonds. Excluding merger-related expenses, operating income for the
TDU benefited primarily from rate relief, lower operation and
maintenance expenses, customer growth and miscellaneous revenues,
primarily related to right-of-way revenues. These benefits were
partially offset by increased depreciation and amortization
expense, lower usage, lower revenues related to the Tax Cuts and
Jobs Act (TCJA) and lower equity return, primarily related to the
annual true-up of transition charges.
Indiana Electric – Integrated
The Indiana electric – integrated segment reported operating
income of $90 million for the full-year 2019. Operating income
includes $21 million of merger-related expenses. These results are
not comparable to 2018 as this segment was acquired in the merger
in February 2019.
Natural Gas Distribution
The natural gas distribution segment reported operating income
of $408 million for the full-year 2019. Operating income includes
$55 million of merger-related expenses. Excluding merger-related
expenses, 2019 natural gas distribution segment operating income
was $463 million. Natural gas distribution segment operating income
for the full-year 2018 was $266 million.
Excluding merger-related expenses, operating income increased
$136 million due to the gas utilities acquired in the merger in
February 2019. The remaining increase is primarily due to favorable
weather and usage, driven by timing of a decoupling mechanism in
Minnesota, rate relief, customer growth and lower operation and
maintenance expenses. These increases were partially offset by
increased depreciation and amortization expense.
Energy Services
The energy services segment reported operating income of $32
million for the full-year 2019, which included a mark-to-market
gain of $39 million and a non-cash impairment charge of $48 million
recorded for goodwill, compared with an operating loss of $47
million for 2018, which included a mark-to-market loss of $110
million. Excluding mark-to-market adjustments and the non-cash
impairment charge, operating income was $41 million for the
full-year 2019 compared to $63 million for 2018. Operating income,
excluding mark-to-market adjustments and the non-cash impairment
charge, decreased primarily as a result of a decrease in margin due
to fewer opportunities to optimize natural gas supply costs in 2019
relative to 2018.
Infrastructure Services
The infrastructure services segment reported operating income of
$95 million for the full-year 2019. Operating income includes $32
million of merger-related expenses. These results are not
comparable to 2018 as this segment was acquired in the merger in
February 2019.
Midstream Investments
The midstream investments segment reported $229 million of
equity income for the full-year 2019, which included the company's
share, $46 million, of the non-cash impairment charge Enable
Midstream Partners, LP (Enable) recorded for goodwill. Equity
income for 2018 was $307 million. For further detail, please refer
to Enable's investor materials provided during its 4th quarter
earnings call on February 19, 2020.
Corporate and Other
The corporate and other segment reported an operating loss of
$23 million for the full-year 2019, compared with an $11 million
operating loss for 2018. Operating income in 2019 included $79
million of merger-related expenses. Operating income for 2018
included $46 million of merger-related expenses.
Earnings Outlook
To provide greater transparency on utility earnings, 2020
guidance will be presented in two components, a guidance basis
Utility EPS range and a Midstream Investments EPS expected
range.
- 2020 guidance basis Utility EPS range of $1.10 - $1.20
- 2020 - 2024 target of 5 - 7% compound annual guidance basis
Utility EPS growth, using the 2020 range of $1.10 - $1.20 as the
starting EPS
- 2020 Midstream Investments EPS expected range is $0.23 -
$0.28
Utility EPS Guidance Range
- Utility EPS guidance range includes net income from Houston
Electric, Indiana Electric and Natural Gas Distribution business
segments, as well as after tax operating income from the Corporate
and Other business segment.
- The 2020 Utility EPS guidance range considers operations
performance to date and assumptions for certain significant
variables that may impact earnings, such as customer growth
(approximately 2% for electric operations and 1% for natural gas
distribution) and usage including normal weather, throughput,
recovery of capital invested through rate cases and other rate
filings, effective tax rates, financing activities and related
interest rates, regulatory and judicial proceedings and anticipated
cost savings as a result of the merger. The Utility EPS guidance
range also assumes an allocation of corporate overhead based upon
its relative earnings contribution. Corporate overhead consists of
interest expense, preferred stock dividend requirements and other
items directly attributable to the parent along with the associated
income taxes.
- Utility EPS guidance excludes:
- Certain integration and transaction-related fees and expenses
associated with the merger
- Severance costs
- Midstream Investments and allocation of associated corporate
overhead
- Results related to Infrastructure Services and Energy Services
prior to the anticipated closing of the sale of those businesses,
including anticipated costs and impairment resulting from the sale
of Infrastructure Services and Energy Services
- Earnings or losses from the change in value of ZENS and related
securities
- Changes in accounting standards
In providing this 2020 guidance, CenterPoint Energy uses a
non-GAAP measure of adjusted diluted earnings per share that does
not consider the items noted above and other potential impacts,
including unusual items, which could have a material impact on GAAP
reported results for the applicable guidance period. CenterPoint
Energy is unable to present a quantitative reconciliation of
forward looking adjusted diluted earnings per share because changes
in the value of ZENS and related securities is not estimable as it
is highly variable and difficult to predict due to various factors
outside of management’s control.
Midstream Investments EPS Expected Range
The 2020 Midstream Investments EPS expected range is $0.23 -
$0.28. In providing this EPS range for Midstream Investments, the
company assumes a 53.7 percent limited partner ownership interest
in Enable and includes the amortization of its basis differential
in Enable and assumes an allocation of CenterPoint Energy corporate
overhead based upon Midstream Investments relative earnings
contribution. The Midstream Investments EPS expected range takes
into account such factors as Enable’s most recent public outlook
for 2020 dated Feb. 19, 2020, and effective tax rates. The company
does not include other potential impacts such as any changes in
accounting standards, impairments or Enable’s unusual items.
Quarter Ended
December 31, 2019
December 31, 2018
Dollars in millions
Diluted EPS(1)
Dollars in millions
Diluted EPS(1)
Consolidated income available to common
shareholders and diluted EPS
$
128
$
0.25
$
90
$
0.18
Timing effects impacting CES
(2):
Mark-to-market (gains) losses (net of
taxes of $2 and $9) (3)
6
0.01
30
0.06
ZENS-related mark-to-market (gains)
losses:
Marketable securities (net of taxes of $16
and $19) (3)(4)
(60
)
(0.12
)
69
0.13
Indexed debt securities (net of taxes of
$16 and $18) (3)
60
0.12
(66
)
(0.13
)
Consolidated on a guidance
basis
$
134
$
0.26
$
123
$
0.24
Impacts associated with the Vectren
merger:
Impacts associated with the Vectren merger
(net of taxes of $1 and $2) (3)
17
0.03
37
0.07
Impact of increased share count on EPS
—
—
—
0.05
Total merger impacts
17
0.03
37
0.12
Loss on CenterPoint's share of Enable's
impairment of its goodwill (net of taxes of $11) (3)
35
0.07
—
—
Loss on impairment of Energy Services
goodwill (net of taxes of $3) (3)
45
0.09
—
—
Consolidated on a guidance basis,
excluding impacts associated with the Vectren merger and losses on
impairment of Energy Services and Midstream Investments
$
231
$
0.45
$
160
$
0.36
(1)
Quarterly diluted EPS on both a GAAP and
guidance basis are based on the weighted average number of shares
of common stock outstanding during the quarter, and the sum of the
quarters may not equal year-to-date diluted EPS
(2)
Energy Services segment
(3)
Taxes are computed based on the impact
removing such item would have on tax expense
(4)
Comprised of common stock of AT&T Inc.
and Charter Communications, Inc.
Twelve Months Ended
December 31, 2019
December 31, 2018
Dollars in millions
Diluted EPS (1)
Dollars in millions
Diluted EPS (1)
Consolidated income available to common
shareholders and diluted EPS
$
674
$
1.33
$
333
$
0.74
Timing effects impacting CES
(2):
Mark-to-market (gains) losses (net of
taxes of $9 and $26) (3)
(30
)
(0.07
)
84
0.18
ZENS-related mark-to-market (gains)
losses:
Marketable securities (net of taxes of $59
and $5) (3)(4)
(223
)
(0.44
)
17
0.04
Indexed debt securities (net of taxes of
$61 and $49) (3)(5)
231
0.46
183
0.40
Consolidated on a guidance
basis
$
652
$
1.28
$
617
$
1.36
Impacts associated with the Vectren
merger:
Impacts associated with the Vectren merger
(net of taxes of $40 and $12) (3)
163
0.33
81
0.18
Impact of increased share count on EPS
—
0.02
—
0.06
Total merger impacts
163
0.35
81
0.24
Loss on CenterPoint's share of Enable's
impairment of its goodwill (net of taxes of $11) (3)
35
0.07
—
—
Loss on impairment of Energy Services
goodwill (net of taxes of $3) (3)
45
0.09
—
—
Consolidated on a guidance basis,
excluding impacts associated with the Vectren merger and losses on
impairment of Energy Services and Midstream Investments
$
895
$
1.79
$
698
$
1.60
(1)
Quarterly diluted EPS on both a GAAP and
guidance basis are based on the weighted average number of shares
of common stock outstanding during the quarter, and the sum of the
quarters may not equal year-to-date diluted EPS
(2)
Energy Services segment
(3)
Taxes are computed based on the impact
removing such item would have on tax expense
(4)
As of and after June 14, 2018, comprised
of common stock of AT&T Inc. and Charter Communications, Inc.
Prior to June 14, 2018, comprised of common stock of Time Warner
Inc. and Charter Communications, Inc. Results prior to January 31,
2018 also included common stock of Time Inc.
(5)
2018 results include amount associated
with the acquisition of Time Warner Inc. by AT&T Inc. as well
as the Meredith tender offer for Time Inc. common stock
Filing of Form 10-K for CenterPoint Energy, Inc.
Today, CenterPoint Energy, Inc. filed with the Securities and
Exchange Commission (SEC) its Annual Report on Form 10-K for the
fiscal year ended December 31, 2019. A copy of that report is
available on the company’s website, under the Investors section.
Investors and others should note that we may announce material
information using SEC filings, press releases, public conference
calls, webcasts, and the Investor Relations page of our website. In
the future, we will continue to use these channels to distribute
material information about the company and to communicate important
information about the company, key personnel, corporate
initiatives, regulatory updates and other matters. Information that
we post on our website could be deemed material; therefore we
encourage investors, the media, our customers, business partners
and others interested in our company to review the information we
post on our website.
Webcast of Earnings Conference Call
CenterPoint Energy’s management will host an earnings conference
call on Thursday, February 27, 2020, at 10:00 a.m. Central
time/11:00 a.m. Eastern time. Interested parties may listen to a
live audio broadcast of the conference call on the company’s
website under the Investors section. A replay of the call can be
accessed approximately two hours after the completion of the call
and will be archived on the website for at least one year.
Headquartered in Houston, Texas, CenterPoint Energy, Inc. is an
energy delivery company with regulated utility businesses in eight
states and a competitive energy businesses footprint in nearly 40
states. Through its electric transmission & distribution, power
generation and natural gas distribution businesses, the company
serves more than 7 million metered customers in Arkansas, Indiana,
Louisiana, Minnesota, Mississippi, Ohio, Oklahoma and Texas.
CenterPoint Energy’s competitive energy businesses include natural
gas marketing and energy-related services; energy efficiency,
sustainability and infrastructure modernization solutions; and
construction and repair services for pipeline systems, primarily
natural gas. The company also owns 53.7 percent of the common units
representing limited partner interests in Enable Midstream
Partners, LP, a publicly traded master limited partnership that
owns, operates and develops strategically located natural gas and
crude oil infrastructure assets. With approximately 14,000
employees and approximately $35 billion in assets, CenterPoint
Energy and its predecessor companies have been in business for more
than 150 years. For more information, visit CenterPointEnergy.com.
This news release includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based upon assumptions of
management which are believed to be reasonable at the time made and
are subject to significant risks and uncertainties. Actual events
and results may differ materially from those expressed or implied
by these forward-looking statements. Any statements in this news
release regarding future earnings, and future financial performance
and results of operations, including, but not limited to earnings
guidance, targeted dividend growth rate and any other statements
that are not historical facts are forward-looking statements. Each
forward-looking statement contained in this news release speaks
only as of the date of this release.
Risks Related to CenterPoint Energy
Important factors that could cause actual results to differ
materially from those indicated by the provided forward-looking
information include risks and uncertainties relating to: (1) the
performance of Enable Midstream Partners, LP (Enable), the amount
of cash distributions CenterPoint Energy receives from Enable,
Enable’s ability to redeem the Enable Series A Preferred Units in
certain circumstances and the value of CenterPoint Energy’s
interest in Enable, and factors that may have a material impact on
such performance, cash distributions and value, including factors
such as: (A) competitive conditions in the midstream industry, and
actions taken by Enable’s customers and competitors, including the
extent and timing of the entry of additional competition in the
markets served by Enable; (B) the timing and extent of changes in
the supply of natural gas and associated commodity prices,
particularly prices of natural gas and natural gas liquids (NGLs),
the competitive effects of the available pipeline capacity in the
regions served by Enable, and the effects of geographic and
seasonal commodity price differentials, including the effects of
these circumstances on re-contracting available capacity on
Enable’s interstate pipelines; (C) the demand for crude oil,
natural gas, NGLs and transportation and storage services; (D)
environmental and other governmental regulations, including the
availability of drilling permits and the regulation of hydraulic
fracturing; (E) recording of goodwill, long-lived asset or other
than temporary impairment charges by or related to Enable; (F) the
timing of payments from Enable’s customers under existing
contracts, including minimum volume commitment payments; (G)
changes in tax status; and (H) access to debt and equity capital;
(2) CenterPoint Energy’s expected benefits of the merger with
Vectren Corporation (Vectren) and integration, including the
outcome of shareholder litigation filed against Vectren that could
reduce anticipated benefits of the merger, as well as the ability
to successfully integrate the Vectren businesses and to realize
anticipated benefits and commercial opportunities; (3) industrial,
commercial and residential growth in CenterPoint Energy’s service
territories and changes in market demand, including the demand for
CenterPoint Energy’s non-utility products and services and effects
of energy efficiency measures and demographic patterns; (4) the
outcome of the pending Houston Electric rate case; (5) timely and
appropriate rate actions that allow recovery of costs and a
reasonable return on investment; (6) future economic conditions in
regional and national markets and their effect on sales, prices and
costs; (7) weather variations and other natural phenomena,
including the impact of severe weather events on operations and
capital; (8) state and federal legislative and regulatory actions
or developments affecting various aspects of CenterPoint Energy’s
and Enable’s businesses, including, among others, energy
deregulation or re-regulation, pipeline integrity and safety and
changes in regulation and legislation pertaining to trade, health
care, finance and actions regarding the rates charged by our
regulated businesses; (9) tax legislation, including the effects of
the comprehensive tax reform legislation informally referred to as
the Tax Cuts and Jobs Act (which includes any potential changes to
interest deductibility) and uncertainties involving state
commissions’ and local municipalities’ regulatory requirements and
determinations regarding the treatment of excess deferred income
taxes and CenterPoint Energy’s rates; (10) CenterPoint Energy’s
ability to mitigate weather impacts through normalization or rate
mechanisms, and the effectiveness of such mechanisms; (11) the
timing and extent of changes in commodity prices, particularly
natural gas and coal, and the effects of geographic and seasonal
commodity price differentials; (12) the ability of CenterPoint
Energy’s and CERC’s non-utility business operating in the Energy
Services reportable segment to effectively optimize opportunities
related to natural gas price volatility and storage activities,
including weather-related impacts; (13) actions by credit rating
agencies, including any potential downgrades to credit ratings;
(14) changes in interest rates and their impact on CenterPoint
Energy’s costs of borrowing and the valuation of its pension
benefit obligation; (15) problems with regulatory approval,
legislative actions, construction, implementation of necessary
technology or other issues with respect to major capital projects
that result in delays or cancellations or in cost overruns that
cannot be recouped in rates; (16) the availability and prices of
raw materials and services and changes in labor for current and
future construction projects; (17) local, state and federal
legislative and regulatory actions or developments relating to the
environment, including, among other things those related to global
climate change, air emissions, carbon, waste water discharges and
the handling and disposal of coal combustion residuals (CCR) that
could impact the continued operation, and/or cost recovery of
generation plant costs and related assets; (18) the impact of
unplanned facility outages or other closures; (19) any direct or
indirect effects on CenterPoint Energy’s or Enable’s facilities,
operations and financial condition resulting from terrorism,
cyber-attacks, data security breaches or other attempts to disrupt
CenterPoint Energy’s businesses or the businesses of third parties,
or other catastrophic events such as fires, ice, earthquakes,
explosions, leaks, floods, droughts, hurricanes, tornadoes,
pandemic health events or other occurrences; (20) CenterPoint
Energy’s ability to invest planned capital and the timely recovery
of CenterPoint Energy’s existing and future investments, including
those related to the Indiana Electric’s anticipated Integrated
Resource Plan; (21) CenterPoint Energy’s ability to successfully
construct and operate electric generating facilities, including
complying with applicable environmental standards and the
implementation of a well-balanced energy and resource mix, as
appropriate; (22) CenterPoint Energy’s ability to control operation
and maintenance costs; (23) the sufficiency of CenterPoint Energy’s
insurance coverage, including availability, cost, coverage and
terms and ability to recover claims; (24) the investment
performance of CenterPoint Energy’s pension and postretirement
benefit plans; (25) commercial bank and financial market
conditions, CenterPoint Energy’s access to capital, the cost of
such capital, and the results of CenterPoint Energy’s financing and
refinancing efforts, including availability of funds in the debt
capital markets; (26) changes in rates of inflation; (27) inability
of various counterparties to meet their obligations to CenterPoint
Energy; (28) non-payment for CenterPoint Energy’s services due to
financial distress of its customers; (29) the extent and
effectiveness of CenterPoint Energy’s and Enable’s risk management
and hedging activities, including but not limited to, financial and
weather hedges and commodity risk management activities; (30)
timely and appropriate regulatory actions, which include actions
allowing securitization, for any future hurricanes or natural
disasters or other recovery of costs, including costs associated
with Hurricane Harvey; (31) CenterPoint Energy’s or Enable’s
potential business strategies and strategic initiatives, including
restructurings, joint ventures and acquisitions or dispositions of
assets or businesses, including the proposed sales of
Infrastructure Services and CES, which CenterPoint Energy and
Enable cannot assure will be completed or will have the anticipated
benefits to CenterPoint Energy or Enable; (32) the recording of
impairment charges, including any impairment associated with
Infrastructure Services and CES; (33) the performance of projects
undertaken by CenterPoint Energy’s non-utility businesses and the
success of efforts to realize value from, invest in and develop new
opportunities and other factors affecting those non-utility
businesses, including, but not limited to, the level of success in
bidding contracts, fluctuations in volume and mix of contracted
work, mix of projects received under blanket contracts, failure to
properly estimate cost to construct projects or unanticipated cost
increases in completion of the contracted work, changes in energy
prices that affect demand for construction services and projects
and cancellation and/or reductions in the scope of projects by
customers and obligations related to warranties and guarantees;
(34) acquisition and merger activities involving CenterPoint Energy
or its competitors, including the ability to successfully complete
merger, acquisition and divestiture plans; (35) CenterPoint
Energy’s or Enable’s ability to recruit, effectively transition and
retain management and key employees and maintain good labor
relations; (36) the outcome of litigation; (37) the ability of
retail electric providers (REPs), including REP affiliates of NRG
Energy, Inc. and Vistra Energy Corp., formerly known as TCEH Corp.,
to satisfy their obligations to CenterPoint Energy and its
subsidiaries; (38) changes in technology, particularly with respect
to efficient battery storage or the emergence or growth of new,
developing or alternative sources of generation; (39) the impact of
alternate energy sources on the demand for natural gas; (40) the
timing and outcome of any audits, disputes and other proceedings
related to taxes; (41) the effective tax rates; (42) the transition
to a replacement for the LIBOR benchmark interest rate; (43) the
effect of changes in and application of accounting standards and
pronouncements; and (44) other factors discussed in CenterPoint
Energy’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2019 and other reports CenterPoint Energy or its
subsidiaries may file from time to time with the Securities and
Exchange Commission.
Use of Non-GAAP Financial Measures by
CenterPoint Energy in Providing Guidance
In addition to presenting its financial results in accordance
with generally accepted accounting principles (GAAP), including
presentation of income available to common shareholders and diluted
earnings per share, CenterPoint Energy also provides guidance based
on adjusted income and adjusted diluted earnings per share, which
are non-GAAP financial measures. Generally, a non-GAAP financial
measure is a numerical measure of a company’s historical or future
financial performance that excludes or includes amounts that are
not normally excluded or included in the most directly comparable
GAAP financial measure.
To provide greater transparency on utility earnings, CenterPoint
Energy’s 2020 guidance will be presented in two components, a
guidance basis Utility EPS range and a Midstream Investments EPS
expected range. The 2020 Utility EPS guidance range includes net
income from Houston Electric, Indiana Electric and Natural Gas
Distribution business segments, as well as after tax operating
income from the Corporate and Other business segment. The 2020
Utility EPS guidance range considers operations performance to date
and assumptions for certain significant variables that may impact
earnings, such as customer growth (approximately 2% for electric
operations and 1% for natural gas distribution) and usage including
normal weather, throughput, recovery of capital invested through
rate cases and other rate filings, effective tax rates, financing
activities and related interest rates, regulatory and judicial
proceedings and anticipated cost savings as a result of the merger.
The 2020 Utility EPS guidance range also assumes an allocation of
corporate overhead based upon its relative earnings contribution.
Corporate overhead consists of interest expense, preferred stock
dividend requirements and other items directly attributable to the
parent along with the associated income taxes. Utility EPS guidance
excludes (a) certain integration and transaction-related fees and
expenses associated with the merger, (b) severance costs, (c)
Midstream Investments and associated allocation of corporate
overhead, (d) results related to Infrastructure Services and Energy
Services prior to the anticipated closing of the sale of those
businesses, including anticipated costs and impairment resulting
from the sale of Infrastructure Services and Energy Services, and
(e) earnings or losses from the change in value of ZENS and related
securities. In providing this guidance, CenterPoint Energy uses a
non-GAAP measure of adjusted diluted earnings per share that does
not consider other potential impacts, such as changes in accounting
standards or unusual items, which could have a material impact on
GAAP reported results for the applicable guidance period.
CenterPoint Energy is unable to present a quantitative
reconciliation of forward looking adjusted diluted earnings per
share because changes in the value of ZENS and related securities
is not estimable as it is highly variable and difficult to predict
due to various factors outside of management’s control.
The 2020 Midstream Investments EPS expected range assumes a 53.7
percent limited partner ownership interest in Enable and includes
the amortization of the Company’s basis differential in Enable and
assumes an allocation of CenterPoint Energy corporate overhead
based upon Midstream Investments relative earnings contribution.
The Midstream Investments EPS expected range takes into account
such factors as Enable’s most recent public outlook for 2020 dated
Feb. 19, 2020, and effective tax rates. The company does not
include other potential impacts such as any changes in accounting
standards, impairments or Enable’s unusual items.
Management evaluates the company’s financial performance in part
based on adjusted income and adjusted diluted earnings per share.
Management believes that presenting these non-GAAP financial
measures enhances an investor’s understanding of CenterPoint
Energy’s overall financial performance by providing them with an
additional meaningful and relevant comparison of current and
anticipated future results across periods. The adjustments made in
these non-GAAP financial measures exclude items that Management
believes does not most accurately reflect the company’s fundamental
business performance. These excluded items are reflected in the
reconciliation tables of this news release, where applicable.
CenterPoint Energy’s adjusted income and adjusted diluted earnings
per share non-GAAP financial measures should be considered as a
supplement to, and not as a substitute for, or superior to, income
available to common shareholders and diluted earnings per share,
which respectively are the most directly comparable GAAP financial
measures. These non-GAAP financial measures also may be different
than non-GAAP financial measures used by other companies.
CenterPoint Energy, Inc. and
Subsidiaries
Statements of Consolidated
Income
(Millions of Dollars)
(Unaudited)
Quarter Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Revenues:
Utility revenues
$
1,907
$
1,629
$
7,162
$
6,163
Non-utility revenues
1,323
1,407
5,139
4,426
Total
3,230
3,036
12,301
10,589
Expenses:
Utility natural gas, fuel and purchased
power
505
451
1,683
1,410
Non-utility cost of revenues, including
natural gas
1,016
1,437
4,029
4,364
Operation and maintenance
934
621
3,550
2,335
Depreciation and amortization
300
261
1,287
1,243
Taxes other than income taxes
125
99
478
406
Goodwill impairment
48
—
48
—
Total
2,928
2,869
11,075
9,758
Operating Income
302
167
1,226
831
Other Income (Expense):
Gain (loss) on marketable securities
76
(88
)
282
(22
)
Gain (loss) on indexed debt securities
(76
)
84
(292
)
(232
)
Interest and other finance charges
(139
)
(102
)
(528
)
(361
)
Interest on Securitization Bonds
(8
)
(13
)
(39
)
(59
)
Equity in earnings of unconsolidated
affiliates, net
17
99
230
307
Other, net
10
34
50
50
Total
(120
)
14
(297
)
(317
)
Income Before Income Taxes
182
181
929
514
Income tax expense
25
61
138
146
Net Income
157
120
791
368
Preferred stock dividend requirement
29
30
117
35
Income Available to Common
Shareholders
$
128
$
90
$
674
$
333
Reference is made to the Combined Notes to the
Consolidated Financial Statements contained in the Annual Report on
Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Selected Data From Statements
of Consolidated Income
(Millions of Dollars, Except
Share and Per Share Amounts)
(Unaudited)
Quarter Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Basic Earnings Per Common Share
$
0.25
$
0.18
$
1.34
$
0.74
Diluted Earnings Per Common Share
$
0.25
$
0.18
$
1.33
$
0.74
Dividends Declared per Common Share
$
0.2875
$
0.5650
$
0.8625
$
1.1200
Dividends Paid per Common Share
$
0.2875
$
0.2775
$
1.1500
$
1.1100
Weighted Average Common Shares Outstanding
(000):
- Basic
502,241
500,437
502,050
448,829
- Diluted
505,348
504,073
505,157
452,465
Operating Income (Loss) by Reportable
Segment
Houston Electric T&D:
TDU
$
95
$
88
$
590
$
568
Bond Companies
7
12
34
55
Total Houston Electric T&D
102
100
624
623
Indiana Electric Integrated
26
—
90
—
Natural Gas Distribution
167
100
408
266
Energy Services
(32
)
(27
)
32
(47
)
Infrastructure Services
45
—
95
—
Corporate and Other
(6
)
(6
)
(23
)
(11
)
Total
$
302
$
167
$
1,226
$
831
Reference is made to the Combined Notes to the
Consolidated Financial Statements contained in the Annual Report on
Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by
Segment
(Millions of Dollars, Except
Throughput and Customer Data)
(Unaudited)
Houston Electric
T&D
Quarter Ended December
31,
% Diff
Year Ended December
31,
% Diff
2019
2018
Fav/Unfav
2019
2018
Fav/Unfav
Revenues:
TDU
$
641
$
629
2
%
$
2,684
$
2,638
2
%
Bond Companies
42
101
(58
)%
312
594
(47
)%
Total
683
730
(6
)%
2,996
3,232
(7
)%
Expenses:
Operation and maintenance, excluding Bond
Companies
390
388
(1
)%
1,470
1,444
(2
)%
Depreciation and amortization, excluding
Bond Companies
95
93
(2
)%
377
386
2
%
Taxes other than income taxes
61
60
(2
)%
247
240
(3
)%
Bond Companies
35
89
61
%
278
539
48
%
Total expenses
581
630
8
%
2,372
2,609
9
%
Operating Income
$
102
$
100
2
%
$
624
$
623
—
Operating Income:
TDU
$
95
$
88
8
%
$
590
$
568
4
%
Bond Companies
7
12
(42
)%
34
55
(38
)%
Total Segment Operating Income
$
102
$
100
2
%
$
624
$
623
—
Actual MWH Delivered
Residential
5,942,089
5,919,117
—
30,334,230
30,405,434
—
Total
20,763,160
20,062,233
3
%
92,179,772
90,408,834
2
%
Weather (percentage of 10-year average
for service area):
Cooling degree days
105
%
91
%
14
%
106
%
103
%
3
%
Heating degree days
102
%
119
%
(17
)%
96
%
104
%
(8
)%
Number of metered customers - end of
period:
Residential
2,243,188
2,198,225
2
%
2,243,188
2,198,225
2
%
Total
2,534,286
2,485,370
2
%
2,534,286
2,485,370
2
%
Indiana Electric Integrated
(1)
Quarter Ended December 31,
2019
Year Ended December 31, 2019
(1)
Revenues
$
135
$
523
Utility natural gas, fuel and purchased
power
37
149
Revenues less Utility natural gas, fuel
and purchased power
98
374
Expenses:
Operation and maintenance
43
179
Depreciation and amortization
25
91
Taxes other than income taxes
4
14
Total expenses
72
284
Operating Income
$
26
$
90
Actual MWH Delivered
Retail
1,033
4,310
Wholesale
85
376
Total
1,118
4,686
Number of metered customers - end of
period:
Residential
128,947
128,947
Total
147,942
147,942
(1)
Represents February 1, 2019
through December 31, 2019 results only due to the Merger.
Reference is made to the Combined Notes to the
Consolidated Financial Statements contained in the Annual Report on
Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and
Subsidiaries
Results of Operations by
Segment
(Millions of Dollars, Except
Throughput and Customer Data)
(Unaudited)
Natural Gas Distribution
(1)
Quarter Ended December
31,
% Diff
Year Ended December
31,
% Diff
2019
2018
Fav/Unfav
2019 (1)
2018
Fav/Unfav
Revenues
$
1,100
$
909
21
%
$
3,683
$
2,967
24
%
Utility natural gas, fuel and purchased
power
499
495
(1
)%
1,617
1,467
(10
)%
Revenues less Utility natural gas, fuel
and purchased power
601
414
45
%
2,066
1,500
38
%
Expenses:
Operation and maintenance
269
211
(27
)%
1,036
803
(29
)%
Depreciation and amortization
109
67
(63
)%
417
277
(51
)%
Taxes other than income taxes
56
36
(56
)%
205
154
(33
)%
Total expenses
434
314
(38
)%
1,658
1,234
(34
)%
Operating Income
$
167
$
100
67
%
$
408
$
266
53
%
Throughput data in BCF
Residential
86
63
37
%
246
186
32
%
Commercial and Industrial
132
77
71
%
458
285
61
%
Total Throughput
218
140
56
%
704
471
49
%
Weather (average for service
area)
Percentage of 10-year average:
Heating degree days
102
%
112
%
(10
)%
101
%
106
%
(5
)%
Number of customers - end of
period:
Residential
4,252,361
3,246,277
31
%
4,252,361
3,246,277
31
%
Commercial and Industrial
349,749
260,033
35
%
349,749
260,033
35
%
Total
4,602,110
3,506,310
31
%
4,602,110
3,506,310
31
%
(1) Includes acquired natural gas
operations February 1, 2019 through December 31, 2019 results only
due to the Merger.
Energy Services
Quarter Ended December
31,
% Diff
Year Ended December
31,
% Diff
2019
2018
Fav/Unfav
2019
2018
Fav/Unfav
Revenues
$
936
$
1,456
(36
)%
$
3,782
$
4,521
(16
)%
Non-utility cost of revenues, including
natural gas
892
1,455
39
%
3,588
4,453
19
%
Revenues less Non-utility cost of
revenues, including natural gas
44
1
4,300
%
194
68
185
%
Expenses:
Operation and maintenance
23
22
(5
)%
96
96
—
Depreciation and amortization
4
4
—
16
16
—
Taxes other than income taxes
1
2
50
%
2
3
33
%
Goodwill Impairment
48
—
—
48
—
—
Total expenses
76
28
(171
)%
162
115
(41
)%
Operating Income (Loss)
$
(32
)
$
(27
)
(19
)%
$
32
$
(47
)
168
%
Timing impacts of mark-to-market gain
(loss)
$
(8
)
$
(39
)
79
%
$
39
$
(110
)
135
%
Throughput data in BCF
345
362
(5
)%
1,305
1,355
(4
)%
Number of customers - end of
period
31,000
30,000
3
%
31,000
30,000
3
%
Reference is made to the Combined Notes to the
Consolidated Financial Statements contained in the Annual Report on
Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and
Subsidiaries
Results of Operations by
Segment
(Millions of Dollars, Except
Throughput and Customer Data)
(Unaudited)
Infrastructure Services
(1)
Quarter Ended December 31,
2019
Year Ended December 31, 2019
(1)
Revenues
$
341
$
1,190
Non-utility cost of revenues, including
natural gas
81
309
Revenues less Non-utility cost of
revenues, including natural gas
260
881
Expenses:
Operation and maintenance
204
734
Depreciation and amortization
11
50
Taxes other than income taxes
—
2
Total expenses
215
786
Operating Income
$
45
$
95
Backlog at period end:
Blanket contracts
$
628
$
628
Bid contracts
254
254
Total
$
882
$
882
(1) Represents February 1, 2019 through
December 31, 2019 results only due to the Merger.
Corporate and Other
Quarter Ended December
31,
% Diff
Year Ended December
31,
% Diff
2019
2018
Fav/Unfav
2019 (1)
2018
Fav/Unfav
Revenues
$
85
$
4
2,025
%
$
300
$
15
1,900
%
Non-utility cost of revenues, including
natural gas
60
—
—
218
—
—
Revenues less Non-utility cost of
revenues, including natural gas
25
4
525
%
82
15
447
%
Expenses:
Operation and maintenance
7
(2
)
(450
)%
32
(16
)
(300
)%
Depreciation and amortization
22
9
(144
)%
66
33
(100
)%
Taxes other than income taxes
2
3
33
%
7
9
22
%
Total expenses
31
10
(210
)%
105
26
(304
)%
Operating Loss
$
(6
)
$
(6
)
—
$
(23
)
$
(11
)
(109
)%
(1) Includes acquired corporate and other
operations February 1, 2019 through December 31, 2019 results only
due to the Merger.
Reference is made to the Combined Notes to the
Consolidated Financial Statements contained in the Annual Report on
Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and
Subsidiaries
Results of Operations by
Segment
(Millions of Dollars, Except
Throughput and Customer Data)
(Unaudited)
Capital Expenditures by
Segment
Quarter Ended December
31,
Year Ended December
31,
2019
2018
2019 (1)
2018
Houston Electric T&D
$
311
$
283
$
1,033
$
952
Indiana Electric Integrated
48
—
183
—
Natural Gas Distribution
325
229
1,098
638
Energy Services
3
7
12
20
Infrastructure Services
15
—
67
—
Corporate and Other
57
75
194
110
Total
$
759
$
594
$
2,587
$
1,720
(1) Includes capital expenditures of
acquired businesses from February 1, 2019 through December 31, 2019
only due to the Merger.
Interest Expense
Detail
Quarter Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Amortization of Deferred Financing
Cost
$
7
$
14
$
29
$
48
Capitalization of Interest Cost
(7
)
(2
)
(36
)
(8
)
Securitization Bonds Interest Expense
8
13
39
59
Other Interest Expense
139
90
535
321
Total Interest Expense
$
147
$
115
$
567
$
420
Reference is made to the Combined Notes to the
Consolidated Financial Statements contained in the Annual Report on
Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Millions of Dollars)
(Unaudited)
December 31, 2019
December 31, 2018
ASSETS
Current Assets:
Cash and cash equivalents
$
241
$
4,231
Other current assets
3,606
2,794
Total current assets
3,847
7,025
Property, Plant and Equipment,
net
20,945
14,044
Other Assets:
Goodwill
5,164
867
Regulatory assets
2,117
1,967
Investment in unconsolidated
affiliates
2,408
2,482
Preferred units – unconsolidated
affiliate
363
363
Other non-current assets
595
261
Total other assets
10,647
5,940
Total Assets
$
35,439
$
27,009
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Current portion of securitization bonds
long-term debt
231
458
Indexed debt, net
19
24
Current portion of other long-term
debt
618
—
Other current liabilities
3,020
2,820
Total current liabilities
3,888
3,302
Other Liabilities:
Deferred income taxes, net
3,928
3,239
Regulatory liabilities
3,474
2,525
Other non-current liabilities
1,546
1,203
Total other liabilities
8,948
6,967
Long-term Debt:
VIE Securitization bonds
746
977
Other
13,498
7,705
Total long-term debt
14,244
8,682
Shareholders' Equity
8,359
8,058
Total Liabilities and Shareholders'
Equity
$
35,439
$
27,009
Reference is made to the Combined Notes to the
Consolidated Financial Statements contained in the Annual Report on
Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and
Subsidiaries
Condensed Statements of
Consolidated Cash Flows
(Millions of Dollars)
(Unaudited)
Year Ended December
31,
2019
2018
Net income
$
791
$
368
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
1,340
1,291
Deferred income taxes
69
48
Write-down of natural gas inventory
4
2
Equity in earnings of unconsolidated
affiliates
(230
)
(307
)
Distributions from unconsolidated
affiliates
261
267
Changes in net regulatory assets and
liabilities
(114
)
28
Changes in other assets and
liabilities
(492
)
427
Other, net
9
12
Net cash provided by operating
activities
1,638
2,136
Net cash used in investing
activities
(8,421
)
(1,207
)
Net cash provided by financing
activities
2,776
3,053
Net Increase (Decrease) in Cash, Cash
Equivalents and Restricted Cash
(4,007
)
3,982
Cash, Cash Equivalents and Restricted
Cash at Beginning of Year
4,278
296
Cash, Cash Equivalents and Restricted
Cash at End of Year
$
271
$
4,278
Reference is made to the Combined Notes
to the Consolidated Financial Statements contained in the Annual
Report on Form 10-K of CenterPoint Energy, Inc.
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Phone 713.825.9107 Investors: David Mordy Phone
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