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8-K - FORM 8-K - ONCOR ELECTRIC DELIVERY CO LLC | d388275d8k.htm |
Exhibit 99.1
ONCOR
Second Quarter 2012 Investor Call
July 31, 2012
Oncor Electric Delivery
Forward Looking Statements
This presentation contains forward-looking statements, which are subject to various risks and uncertainties. Discussion of risks and uncertainties that could cause actual results to differ materially from managements current projections, forecasts, estimates and expectations is contained in filings made by Oncor Electric Delivery Company LLC (Oncor) with the Securities and Exchange Commission (SEC). Specifically, Oncor makes reference to the section entitled Risk Factors in its annual and quarterly reports. In addition to the risks and uncertainties set forth in Oncors SEC filings, the forward-looking statements in this presentation could be affected by, among other things: prevailing governmental policies and regulatory actions; legal and administrative proceedings and settlements, including the exercise of equitable powers by courts; weather conditions and other natural phenomena; acts of sabotage, wars or terrorist or cyber security threats or activities; economic conditions, including the impact of a recessionary environment; unanticipated population growth or decline, or changes in market demand and demographic patterns; changes in business strategy, development plans or vendor relationships; unanticipated changes in interest rates or rates of inflation; unanticipated changes in operating expenses, liquidity needs and capital expenditures; inability of various counterparties to meet their financial obligations to Oncor, including failure of counterparties to perform under agreements; general industry trends; hazards customary to the industry and the possibility that Oncor may not have adequate insurance to cover losses resulting from such hazards; changes in technology used by and services offered by Oncor; significant changes in Oncors relationship with its employees; changes in assumptions used to estimate costs of providing employee benefits, including pension and other post-retirement employee benefits, and future funding requirements related thereto; significant changes in critical accounting policies material to Oncor; commercial bank and financial market conditions, access to capital, the cost of such capital, and the results of financing and refinancing efforts, including availability of funds in the capital markets and the potential impact of disruptions in US credit markets; circumstances which may contribute to future impairment of goodwill, intangible or other long-lived assets; financial restrictions under Oncors revolving credit facility and indentures governing its debt instruments; Oncors ability to generate sufficient cash flow to make interest payments on its debt instruments; actions by credit rating agencies; and Oncors ability to effectively execute its operational strategy. Any forward-looking statement speaks only as of the date on which it is made, and Oncor undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events.
Regulation G
This presentation includes certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measures is included in this presentation, which is available on Oncors website, www.oncor.com, under the News tab in the Investor Information section, and also filed with the SEC.
Oncor Electric Delivery 1
2nd Quarter 2012 Investor Call Agenda
Financial Overview David Davis
Chief Financial Officer
Operational Review Bob Shapard
Chairman and CEO
Q&A
Oncor Electric Delivery 2
Growth In Points Of Delivery And Improved Usage Drove Q2 2012 Residential Volumes
Residential Points of Delivery
Q2 11 vs. Q2 12; thousands of meters
1.1%
2,711
2,742
At 6/30/2011 At 6/30/2012
Residential GWH, Actual Q21 11 vs. Q2 12
0.9%
9,067
9,146
Q2 11 Q2 12
1 Unless otherwise indicated, reflects three months ended June 30.
Avg KWH/Residential Premise, Weather Adj Q2 11 vs. Q2 12
4.7%
3,104 2,966
Q2 11 Q2 12
Residential GWH, Weather Adj Q2 11 vs. Q2 12
5.8%
8,502 8,037
Q2 11 Q2 12
Oncor Electric Delivery 3
Large C&I Demand Continues to Show Signs of Improvement
Large C&I Ratchet MW Demand (Avg) Q21 11 vs. Q2 12
0.4%
17,295 17,366
Q2 11 Q2 12
Large C&I GWH, Actual Q2 11 vs. Q2 12
4.8%
16,214 16,992
Q2 11 Q2 12
1 Three months ended June 30.
Large C&I Actual MW Demand (Avg) Q2 11 vs. Q2 12
0.3%
15,849 15,898
Q2 11 Q2 12
Large C&I GWH, Weather Adj Q2 11 vs. Q2 12
5.3% 15,807 16,642
Q2 11 Q2 12
Oncor Electric Delivery 4
Summary of Financial Results1
Adjusted Operating Revenues Q22 11 vs. Q2 12; $ millions
10.3% 792 718
Q2 11 Q2 12
Adjusted Operating Cash Flow Q2 11 vs. Q2 12; $ millions
10.5%
283 256
Q2 11 Q2 12
Adjusted Net Income
Q2 11 vs. Q2 12; $ millions
104 19.5% 87
Q2 11 Q2 12
Adjusted EBITDA
Q2 11 vs. Q2 12 and TME2 6/30/11 vs TME 6/30/12; $ millions
1,630 10.1% 1,480
13.9% 382 435
Q2 11 Q2 12 TME 6/30/11 TME 6/30/12
1 Excludes impacts from transition bond debt and fair value accounting adjustments associated with the October 2007 merger.
2 Unless otherwise indicated, Q2 reflects three months ended June 30 and TME reflects twelve months ended June 30.
Oncor Electric Delivery 5
Ample Liquidity And Stable Credit Metrics
Secured Revolving Credit Facility1 Balances at June 30, 2012; $ millions
2,400
941
33
1,492
1,459
Revolver Capacity
Borrowings and Letters of Credit
Effective Remaining Capacity
Cash
Total Available Liquidity
Adjusted EBITDA/Cash Interest TME 6/30/11 vs. TME 6/30/12; Ratio2
4.7x 4.8x
TME 6/30/11 TME 6/30/12
Debt/Adjusted EBITDA
TME 6/30/11 vs. TME 6/30/12; Ratio
3.6x 3.7x
TME 6/30/11 TME 6/30/12
1 Oncors $2.4 billion revolving credit facility matures in 2016.
2 TME Twelve Months Ended
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Focused On Maintaining A Strong Financial Position
Proven track record of managing liquidity risk and maintaining financial discipline
$2.4B of credit facility capacity provides access to liquidity
Elimination of maturities until 2015 significantly mitigates refinancing risk while sustaining planned capital program
Solid Credit Ratings
Rating Outlook
Moodys Baa1 Negative
Standard & Poors A- Stable
Fitch Ratings BBB+ Stable
Maturity Schedule
Long-Term Debt1 Maturities 12 22; $ millions
500
324
550
126
1,200
12 13 14 15 16 17 18 19 20 21 22
1 Excludes transition bond debt.
Oncor Electric Delivery 7
2nd Quarter 2012 Investor Call Agenda
Financial Overview David Davis
Chief Financial Officer
Operational Review Bob Shapard
Chairman and CEO
Q&A
Oncor Electric Delivery 8
Appendix -
Regulation G Reconciliations and Supplemental Data
Oncor Electric Delivery 9
Financial Definitions
Measure Definition
Adjusted Operating Revenues (non-GAAP) Oncor operating revenues, less operating revenues of Oncor Electric Delivery Transition Bond Company LLC (BondCo)
Adjusted Net Income (non-GAAP) Oncor net income, less effects of purchase accounting and net income of BondCo
Adjusted Operating Cash Flow (non-GAAP) Oncor cash provided by operating activities, less BondCo cash provided by operating activities
Debt (non-GAAP) Oncor total debt, less transition bonds of BondCo
Total Debt (GAAP) Oncor long-term debt (including current portion), plus bank loans and commercial paper
Adjusted EBITDA (non-GAAP) Income from continuing operations before interest expense and related charges and provisions in lieu of income tax, plus depreciation and amortization and special items. EBITDA is a measure used by Oncor to assess performance.
Debt/Adjusted EBITDA (non-GAAP) Total debt less transition bonds divided by EBITDA. Transition, or securitization, bonds are serviced by a regulatory transition charge on wires rates and are therefore excluded from debt in credit reviews. Debt / EBITDA is a measure used by Oncor to assess credit quality.
Adjusted EBITDA/Cash Interest (non-GAAP) EBITDA divided by cash interest expense is a measure used by Oncor to assess credit quality.
Oncor Electric Delivery 10
Table 1: Oncor Adjusted Operating Revenues Reconciliation
Three Months Ended June 30, 11 and 12 $ millions
Q2 11 Q2 12
Operating revenues Oncor 756 828
Less: Operating revenues BondCo (38) (36)
Adjusted operating revenues, excluding BondCo 718 792
Oncor Electric Delivery 11
Table 2: Oncor Adjusted Net Income Reconciliation
Three Months Ended June 30, 11 and 12 $ millions
Q2 11 Q2 12
Net income Oncor 92 107
Less: Effects of fair value accounting (after tax) (5) (3)
Less: Bondco net income - -
Adjusted net income, excluding BondCo 87 104
Oncor Electric Delivery 12
Table 3: Oncor Adjusted Operating Cash Flow Reconciliation
Three Months Ended June 30, 11 and 12 $ millions
Q2 11 Q2 12
Operating cash flow Oncor 279 305
Less: Operating cash flow BondCo (23) (22)
Adjusted operating cash flow, excluding BondCo 256 283
Oncor Electric Delivery 13
Table 4: Oncor Adjusted EBITDA Reconciliation
Three Months Ended June 30, 11 and 12 $ millions
Q2 11 Q2 12
Net income Oncor 92 107
Plus: Depreciation & amortization Oncor 178 192
Provision in lieu of income taxes Oncor 58 72
Interest expense Oncor 88 92
Equals: EBITDA Oncor 416 463
Less: Net income BondCo - -
Depreciation & amortization BondCo (29) (29)
Provision in lieu of income taxes BondCo - -
Interest expense BondCo (8) (7)
Effects of fair value accounting (pre tax) (7) (6)
Regulatory asset amortization in O&M expense 10 14
Oncor Adjusted EBITDA, excluding BondCo 382 435
Oncor Electric Delivery 14
Table 5: Oncor Adjusted EBITDA Reconciliation
Twelve Months Ended June 30, 11 and 12 $ millions
TME 11 TME 12
Net Income Oncor 354 392
Plus: Depreciation & amortization Oncor 692 745
Provision in lieu of income taxes Oncor 217 252
Interest expense Oncor 354 365
Equals: EBITDA Oncor 1,617 1,754
Less: Net income BondCo - -
Depreciation & amortization BondCo (112) (117)
Provision in lieu of income taxes BondCo - -
Interest expense BondCo (35) (29)
Effects of fair value accounting (pre tax) (31) (26)
Regulatory asset amortization in O&M expense 41 48
Oncor Adjusted EBITDA, excluding BondCo 1,480 1,630
Oncor Electric Delivery 15
Table 6: Oncor Total Debt Reconciliation
At June 30, 11 and 12 $ millions
11 12
Short-term debt- Oncor 580 935
Long-term debt due currently Oncor 491 121
Long-term debt, less due currently Oncor 4,902 5,460
Total debt Oncor, including BondCo 5,973 6,516
Less: Short-term debt BondCo - -
Long-term debt due currently BondCo (115) (121)
Long-term debt, less due currently BondCo (495) (372)
Fair value adjustment BondCo 3 2
Total Oncor debt, excluding BondCo 5,366 6,025
Oncor Electric Delivery 16
Table 7: Oncor Interest And Debt Coverages
Twelve Months Ended June 30, 11 and 12 $ millions
TME 11 TME 12 Ref Source
Interest expense and related charges Oncor 354 365
Amortization of debt fair value discount Oncor (1) -
Amortization of debt discount Oncor (4) (4)
AFUDC Oncor 2 7
Cash interest expense Oncor 351 368
Less: Interest expense BondCo (35) (29)
Cash interest expense, excluding BondCo 316 339 A
EBITDA, excluding BondCo 1,480 1,630 B Table 5
Total debt, excluding BondCo 5,366 6,025 C Table 6
EBITDA/cash interest ratio (B / A) 4.7x 4.8x
Debt/EBITDA ratio (C / B) 3.6x 3.7x
Oncor Electric Delivery 17