Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - PUBLIC SERVICE ENTERPRISE GROUP INC | d175274d8k.htm |
| EX-99 - EX-99 - PUBLIC SERVICE ENTERPRISE GROUP INC | d175274dex99.htm |
 Public
Service Enterprise Group PSEG Earnings Conference Call
1 st Quarter 2016 April 29, 2016 EXHIBIT 99.1 |
 1 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: •
adverse changes in the demand for or ongoing low pricing of the
capacity and energy that we sell into wholesale electricity markets, • adverse changes in energy industry law, policies and regulations, including market structures and transmission
planning, •
any inability of our transmission and distribution businesses to
obtain adequate and timely rate relief and regulatory approvals from federal and state regulators, including prudency reviews and disallowances, • any deterioration in our credit quality or the credit quality of our counterparties,
•
changes in federal and state environmental regulations and
enforcement that could increase our costs or limit our operations, • adverse outcomes of any legal, regulatory or other proceeding, settlement, investigation or claim applicable to us and/or the energy industry, • changes in nuclear regulation and/or general developments in the nuclear power industry, including various impacts from
any accidents or incidents experienced at our facilities or by others in the industry, that could limit operations or increase the cost of our nuclear generating units,
•
actions or activities at one of our nuclear units located on a
multi-unit site that might adversely affect our ability to continue to operate that unit or other units located at the same site, • any inability to manage our energy obligations, available supply and risks,
•
delays or unforeseen cost escalations in our construction and
development activities, or the inability to recover the carrying amount of our assets, • availability of capital and credit at commercially reasonable terms and conditions and our ability to meet cash
needs, •
increases in competition in energy supply markets as well as for
transmission projects, •
changes in technology, such as distributed generation and micro
grids, and greater reliance on these technologies,
•
changes in customer behaviors, including increases in energy
efficiency, net-metering and demand response,
•
adverse performance of our decommissioning and defined benefit
plan trust fund investments and changes in funding requirements, • any equipment failures, accidents, severe weather events or other incidents that impact our ability to provide safe and
reliable service to our customers, and any inability to obtain sufficient insurance coverage or recover proceeds of insurance with respect to such events,
•
acts of terrorism, cybersecurity attacks or intrusions that
could adversely impact our businesses, •
delays in receipt of necessary permits and
approvals for our construction and development activities, • any inability to achieve, or continue to sustain, our expected levels of operating performance,
•
changes in the cost of, or interruption in the supply of, fuel
and other commodities necessary to the operation of our generating units, • an extended economic recession, • an inability to realize anticipated tax benefits or retain tax credits,
•
challenges associated with recruitment and/or retention of a
qualified workforce, and •
changes in the credit quality and the ability of lessees to meet
their obligations under our domestic leveraged leases. 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 or results of operations. 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 if
internal estimates change, 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. |
 2 GAAP Disclaimer PSEG presents Operating Earnings and Adjusted Earnings Before Interest, Taxes, Depreciation
and Amortization (EBITDA) in addition to its Net Income reported in accordance with
accounting principles generally accepted in the United States (GAAP).
Operating Earnings and Adjusted EBITDA are non-GAAP financial
measures that differ from Net Income. Operating Earnings exclude gains or
losses associated with Nuclear Decommissioning Trust (NDT), Mark-to-Market (MTM) accounting, and other material one-time items. PSEG presents Operating Earnings
because management believes that it is appropriate for investors to consider results
excluding these items in addition to the results reported in accordance
with GAAP. PSEG believes that the non-GAAP financial measure of
Operating Earnings provides a consistent and comparable measure of
performance of its businesses to help shareholders understand performance trends. PSEG is presenting Adjusted EBITDA because it provides investors with additional information to
compare our business performance to other companies and understand performance trends.
Adjusted EBITDA excludes the same items as our Operating Earnings measure
as well as income tax expense, interest expense, depreciation and
amortization and major maintenance expense
costs at Power’s fossil generation facilities. This information is not intended to be viewed as an alternative to GAAP information. The last two slides in this presentation (Slides A and B)
include a list of items excluded from Net Income to reconcile to Operating Earnings and
Adjusted EBITDA with a reference to that slide included on each of the
slides where the non-GAAP information appears.
These materials and other financial releases can be found on the pseg.com website under
the investor tab, or at http://investor.pseg.com/
|
 PSEG
2016 Q1 Review
Ralph Izzo Chairman, President and Chief Executive Officer |
 4 Q1 Earnings Summary – Solid Operating Performance, Results Impacted by Extreme Weather Comparisons $ Millions (except EPS) 2016 2015 Operating Earnings* $ 463 $ 529 Reconciling Items, Net of Tax 8 57 Net Income $ 471 $ 586 EPS from Operating Earnings* $ 0.91 $ 1.04 Quarter ended March 31
* See Slide A for Items excluded from Net Income to reconcile to Operating
Earnings. |
 5 PSEG – Q1 2016 Highlights Solid Operating Earnings – Maintaining Guidance for 2016 Operating Earnings* of $0.91 per share vs. $1.04 per share in Q1 2015 Power results impacted by extremes in weather comparisons and low prices PSE&G’s expanded investment in transmission and distribution drives improvement
in earnings Operational Excellence PSEG Power operations performed well in Q1: Nuclear output up 7.5% on improvement in fleet capacity factor to 99.7% CCGT units improved fleet availability PSEG Disciplined Capital Investment Increased common dividend 5.1% to indicative annual rate of $1.64 per share Executing on our $16 billion capital program with ~75% directed toward PSE&G
infrastructure investments in reliability/resiliency/replacement programs
Construction commenced on Keys and Sewaren CCGTs for targeted commercial
operation in 2018 Power pursuing permits on new 485 MW CCGT plant at Bridgeport Harbor site * See Slide A for Items excluded from Net Income to reconcile to Operating Earnings. |
 6 $2.80 - $3.00E Maintaining 2016 Earnings Guidance $2.76 * See Slide A for Items excluded from Net Income to reconcile to Operating Earnings. E = Estimate. $2.91 Guidance assumes normal weather and unit operations 2014 2015 2016 Operating Earnings* Guidance |
 PSEG
2016 Q1 Operating Company Review
Dan Cregg EVP and Chief Financial Officer |
 8 Q1 Operating Earnings by Subsidiary $ Millions (except EPS) Operating Earnings Earnings per Share 2016 2015 2016 2015 PSE&G $ 262 $ 242 $ 0.52 $ 0.47 PSEG Power 184 278 0.36 0.55 PSEG Enterprise/Other 17 9 0.03 0.02 Operating Earnings* $ 463 $ 529 $ 0.91 $ 1.04 Quarter ended March 31 * See Slide A for Items excluded from Net Income to reconcile to Operating Earnings. |
 9 PSEG EPS Reconciliation – Q1 2016 versus Q1 2015 Q1 2016 Operating Earnings* Q1 2015 Operating Earnings* PSEG Power PSE&G PSEG Enterprise/ Other * See Slide A for Items excluded from Net Income to reconcile to Operating Earnings.
Transmission Earnings 0.04 Energy Strong Recovery 0.01 Weather (0.02) Distribution O&M, Taxes & Other 0.02 PSEG Long Island Taxes Lower Gas Send-Out/ Fixed Cost Recovery (0.12) Re-contracting and Lower Volume (0.09) Lower Capacity (0.04) O&M 0.05 Lower Interest & Other 0.01 $1.04 0.05 0.01 $0.91 (0.19) $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 |
 PSE&G 2016 Q1 Review |
 11 PSE&G – Q1 EPS Summary $ Millions (except EPS) Q1 2016 Q1 2015 Variance Operating Revenues $ 1,712 $ 2,002 $ (290) Operating Expenses Energy Costs 729 892 (163) Operation & Maintenance 382 412 (30) Depreciation & Amortization 139 247 (108) Total Operating Expenses 1,250 1,551 (301) Operating Earnings/Net Income $ 262 $ 242 20 EPS from Operating Earnings/Net Income $ 0.52 $ 0.47 $ 0.05 |
 12 PSE&G EPS Reconciliation – Q1 2016 versus Q1 2015 Transmission Earnings 0.04 Energy Strong Recovery 0.01 Weather (0.02) Distribution O&M, Taxes & Other Q1 2015 Operating Earnings* Q1 2016 Operating Earnings* * Operating Earnings is equal to Net Income. $0.47 0.03 0.02 $0.52 $0.00 $0.20 $0.40 $0.60 |
 13 PSE&G – Monthly Heating Degree Days 971 800 511 1,122 1,169 847 993 856 682 0 250 500 750 1000 1250 2016 2015 Normal January February March Q1 2016 Winter weather, as defined by heating degree days, was ~27% warmer than Q1 2015 (the coldest winter in 45 years) and ~10% warmer than normal Q1 2016 vs. Q1 2015 vs. Q1 Normal Source: New Jersey State Climatologist. |
 2015
– 2018E Rate Base
CAGR Growth of ~10% Distribution Transmission PSE&G’s spending drives high single-digit growth in rate base through 2020 with known investments ~$13.4B ~$17.7B ~$7.7B ~$5.7B ~$1.8B ~$10.2B ~$2.7B ~$9.3B Rate Base Growth 2015 Rate Base Potential Upside Potential 2020E Rate Base Approved 2020E Rate Base ~$1.6B ~$9.3B ~$8.4B ~$19.5B ~$1.6B ~$21.1B 2015 – 2020E Rate Base CAGR Growth of ~8% Rate Base Growth 2015 – 2020E Potential Rate Base CAGR Growth of ~10% ~$4.3B ~$21.1B Transmission ~52% Transmission ~43% Approved 2018E Rate Base 14 |
 Continued
identification of investment opportunities focused on improving reliability
for our customers 2016-2020E PSE&G
Capital Spending E = ESTIMATE. DATA AS OF MARCH
2016 15 |
 16 PSE&G – Q1 2016 Operating Highlights Implemented annual increase in transmission revenue of $146 million in January 2016
Energy Strong programs continue on-schedule
GSMP investment program beginning
PSE&G invested ~$725 million during Q1 as part of its full-year, $3 billion
investment program to upgrade the electric and gas transmission and
distribution system PSE&G issued $850 million of Medium Term Notes
consisting of $300 million of 5-year notes at 1.9% and $550 million
of 30 year notes at 3.8%, and retired $171 million of 6.75% long-term debt at maturity PSE&G Operating Earnings* forecast for full-year 2016 is unchanged at $875 million to $925 million
Financial Q1 2016 was the 5 th warmest in our records vs. Q1 2015 – the coldest winter in 45 years Heating degree days were 27% below Q1 2015 and 10% below normal Weather normalized electric sales were lower by 1.8% for Q1 but flat on a trailing 12 month basis
Weather normalized gas sales were lower by 0.3% for the quarter, led by a 1.5% decline
in heating demand from residential segment (influenced by large weather
adjustment quarter over quarter); For the trailing 12 months, gas sales
have increased by 1.8% O&M remains well controlled
* Operating Earnings is equal to Net Income.
Regulatory and Market Environment Operations |
 PSEG
Power 2016 Q1 Review |
 18 PSEG Power – Q1 Earnings Summary $ Millions (except EPS) Q1 2016 Q1 2015 Variance Operating Revenues $ 1,313 $ 1,725 $ (412) Operating Earnings* $ 184 $ 278 $ (94) Reconciling Items, Net of Tax* 8 57 (49) Net Income $ 192 $ 335 $ (143) EPS from Operating Earnings* $ 0.36 $ 0.55 $ (0.19) Adjusted EBITDA** $ 416 $ 626 $ (210) * See Slide A for Items excluded from Net Income to reconcile to Operating Earnings; Includes the financial impact from Mark-to-Market positions with forward delivery months. ** See Slide B for a reconciliation of Adjusted EBITDA to Operating Earnings and Net Income. E = Estimate.
|
 19 Lower Gas Send-Out and Fixed Cost Recovery (0.12) Re-Contracting and Lower Volume (0.09) Capacity (0.04) PSEG Power EPS Reconciliation – Q1 2016 versus Q1 2015 Q1 2016 Operating Earnings* Q1 2015 Operating Earnings* O&M 0.05 Lower Interest and Other 0.01 * See Slide A for Items excluded from Net Income to reconcile to Operating Earnings.
$0.55 0.06 $0.36 $0.00 $0.25 $0.50 $0.75 (0.25) |
 PSEG
Power’s Q1 2016 and Full-Year 2016 Guidance for Adjusted EBITDA
Three Months Ended March 31, Full-Year 2016 Guidance 2016 2015 Low High $184 $278 $490 $540 Fossil Major Maintenance, pre-tax 7 49 80 80 Depreciation & Amortization, pre-tax 80 77 340 340 Interest Expense, pre-tax*** 22 31 80 80 Income Taxes 123 191 330 360 $416 $626 $1,320E $1,400E 20 PSEG Power - Adjusted EBITDA* * See Slide B for a reconciliation of Adjusted EBITDA to Operating Earnings and Net Income. E =
Estimate. ** See
Slide A for Items excluded from Net Income to reconcile to Operating Earnings; Includes the financial impact from Mark-to-Market positions with forward delivery months. *** Net of capitalized interest. Operating Earnings** ($ Millions) Adjusted EBITDA* Add: |
 21 PSEG Power – Generation Measures 7,832 8,419 4,177 3,754 1,028 2,529 0 7,500 15,000 2015 2016 Quarter ended March 31 Total Nuclear Total Coal* Oil & Natural Gas Generation by Fuel (GWh)** 13,201 Quarter ended March 31 * Includes figures for Pumped Storage. Also includes natural gas fuel switching intervals. ** Excludes Solar and
Kalaeloa 2015
2016 Combined Cycle PJM and NY 55% 52% Coal* NJ (Coal/Gas) 17% 0.4% PA 91% 59% CT 68% 7% Nuclear 95% 99.7% 14,538 Fleet Capacity Factors (%) |
 22 PSEG Power – Fuel Costs Quarter ended March 31 ($ Millions) 2015 2016 Coal $82 $27 Oil & Gas 247 66 Total Fossil 329 93 Nuclear 55 58 Total Fuel Cost $384 $151 Total Generation (GWh) 14,538 13,201 $ / MWh 26.41 11.44 PSEG Power – Fuel Costs |
 23 PSEG Power – Gross Margin Performance $47 $44 Quarter ended March 31 Q1 spot prices significantly lower across PJM, ISO-NE, and NYISO versus year ago,
driven by abnormally warm weather and related lack of demand
Capacity revenue affected by HEDD retirements in Q2 2015
Access to lower-cost Marcellus gas continues to benefit spark spreads relative to
market Q1 2016 Regional Performance
Region Gross Margin ($M) Comment PJM $515 Lower prices on hedged output combined with lower wholesale market prices and a decline in capacity revenue from HEDD retirements New England $51 Hedging profile improved margins offsetting lower market prices New York $12 Higher volumes with improved fuel availability PSEG Power Gross Margin ($/MWh) $50 $0 $15 $30 $45 $60 2014 2015 2016 |
 24 Hedging Update Contracted Energy* * Hedge percentages and prices as of March 31, 2016. Revenues of full requirement load deals based on contract price, including renewable
energy credits, ancillary, and transmission components but excluding
capacity. Hedges include positions with MTM accounting treatment and options. Apr-Dec 2016 2017 2018 Volume TWh 26 36 36 Base Load % Hedged 100% 75-80% 35-40% (Nuclear and Base Load Coal) Price $/MWh $49 $49 $49 Volume TWh 14 19 24 Intermediate Coal, Combined % Hedged 25-30% 0% 0% Cycle, Peaking Price $/MWh $49 -- -- Volume TWh 39-41 54-56 59-61 Total % Hedged 70-75% 50-55% 20-25% Price $/MWh $49 $49 $49 |
 25 PSEG Power – Q1 Operating Highlights Q1 output down 9.2% to 13.2 GWh on warm winter weather and lower demand vs Q1 2015
Strong nuclear performance: GWh production up 7.5% resulting in a fleet capacity
factor of 99.7%
CCGT availability remains strong; production down 5% on lower demand
Operations Regulatory and Market Environment Financial U.S. Supreme Court unanimously upheld lower court ruling against Maryland subsidized
generation law and subsequently dismissed the New Jersey LCAPP case
Base load output in 2016 hedged at an average price of $49/MWh vs 2015
average hedge price of $52/MWh
2016 BGS load projection remains at 11-12 TWh
Power’s total debt as a percentage of capitalization at March 31 was
27% Power’s
2016 Operating Earnings* guidance range is $490 million to $540 million; Adjusted EBITDA** guidance for 2016 is $1.32 billion to $1.40 billion * See Slide A for Items excluded from Net Income to reconcile to Operating Earnings; Includes the financial impact from
Mark-to-Market positions with forward delivery months. ** See
Slide B for a reconciliation of Adjusted EBITDA to Operating Earnings and Net Income. E = Estimate. |
 PSEG |
 27 PSEG Financial Highlights Maintaining 2016 Operating Earnings* guidance of $2.80 - $3.00 per share Focused on maintaining operating efficiency and customer reliability Salem Q2 refueling outage extended to replace and repair baffle bolts in reactor vessel
PSE&G expected to contribute over 60% of 2016 Operating Earnings*
Infrastructure Spend PSE&G T&D spend for 2016 expected to be $3 billion Power has begun construction of its CCGT units in Maryland and New Jersey Financial position remains strong Positive cash from Power and increasing cash flow from operations at PSE&G support
dividend growth and fund capital spending program without the need to issue
equity Debt as a percentage of capitalization was 44% at March
31 Increased common dividend 5.1% to indicative annual rate of $1.64 per
share Increasing regulated earnings mix supports opportunity for dividend
growth * See Slide A for Items excluded from Net Income to reconcile to
Operating Earnings. |
 28 PSEG 2016 Operating Earnings Guidance - By Subsidiary $ Millions (except EPS) 2016E 2015 PSE&G $875 - $925 $787 PSEG Power $490 - $540 $653 PSEG Enterprise/Other $60 - $60 $36 Operating Earnings* $1,425 - $1,525 $1,476 Earnings per Share $2.80 - $3.00E $2.91 */**See Slide A for Items excluded from Net Income to reconcile to Operating Earnings and Slide B for Items excluded from Net Income to reconcile to Operating Earnings and Adjusted EBITDA. See Slide 20 for a reconciliation of Operating Earnings and Adjusted EBITDA for 2016E.
E = Estimate. Segment Earnings Guidance and Prior Results
$ Millions
2016E 2015 PSEG Power $1,320 - $1,400 $1,563 PSEG Power Adjusted EBITDA** |
 PSEG
Liquidity as of March 31, 2016 29
Expiration Total Available Company Facility Date Facility Usage Liquidity ($ Millions) PSE&G 5-year Credit Facility Apr-20 $629 (A) $14 $615 PSEG Money Pool 5-Year Credit Facility (Power) Apr-19 $1,600 $202 $1,398 5-Year Credit Facility (Power) Apr-20 $1,000 (B) $9 $991 5-year Credit Facility (PSEG) Apr-19 $500 $10 $490 5-year Credit Facility (PSEG) Apr-20 $524 (C) $12 $512 Total Money Pool $3,624 $233 $3,391 Total $4,253 $247 $4,006 $0 (B) Power facility will be reduced by $48 million in April 2016, and $24 million in March 2018.
PSE&G ST Investment
$521 Total Liquidity Available $4,527 PSEG / Power (A) PSE&G facility will be reduced by $29 million in April 2016, and $14 million in March 2018;
facility was increased by $29 million in March 2016 in anticipation of the April
expiration. PSEG Money Pool ST Investment
(C) PSEG facility will be reduced by $23 million in April 2016, and $12 million in
March 2018; facility was increased by $24 million in March 2016 in
anticipation of the April expiration. |
 A Items Excluded from Net Income to Reconcile to Operating Earnings Please see Slide 2 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure
and how it differs from Net Income.
2016 2015 2015 2014 Operating Earnings 463 $ 529 $ 1,476 $ 1,400 $ Gain (Loss) on Nuclear Decommissioning Trust (NDT) Fund Related Activity (PSEG Power) (5) 2 8 68 Gain (Loss) on Mark-to-Market (MTM) (a) (PSEG Power) 13 (20) 93 66 Storm O&M, net of insurance recoveries (PSEG Power) - 75 102 (16) Net Income 471 $ 586 $ 1,679 $ 1,518 $ Fully Diluted Average Shares Outstanding (in Millions) 508 508 508 508 Operating Earnings 0.91 $ 1.04 $ 2.91 $ 2.76 $ Gain (Loss) on NDT Fund Related Activity (PSEG Power) (0.01) - 0.01 0.13 Gain (Loss) on MTM (a) (PSEG Power) 0.03 (0.04) 0.18 0.13 Storm O&M, net of insurance recoveries (PSEG Power) - 0.15 0.20 (0.03) Net Income 0.93 $ 1.15 $ 3.30 $ 2.99 $ (a) Includes the financial impact from positions with forward delivery months. ($ Millions, Unaudited) ($ Per Share Impact - Diluted, Unaudited) PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED Reconciling Items, net of tax Three Months Ended Consolidated Operating Earnings Reconciliation Year-Ended March 31, December 31, |
 Items
Excluded from Net Income to Reconcile to Operating Earnings and Adjusted
EBITDA Please see Slide 2 for an explanation of PSEG’s use of Operating
Earnings and Adjusted EBITDA as non-GAAP financial measures and how they
differ from Net Income. B
2016 2015 2015 2014 Adjusted EBITDA 416 $ 626 $ 1,563 $ 1,584 $ Fossil Major Maintenance, pre-tax (7) (49) (128) (144) Depreciation and Amortization, pre-tax (b) (80) (77) (301) (291) Interest Expense, pre-tax (b)(c) (22) (31) (120) (120) Income Taxes (b) (123) (191) (361) (387) Operating Earnings 184 $ 278 $ 653 $ 642 $ Gain (Loss) on NDT Fund Related Activity, pre-tax (8) 7 24 138 Gain (Loss) on MTM, pre-tax (a) 22 (34) 157 111 Storm O&M, net of insurance recoveries, pre-tax - 127 172 (27) Income Taxes related to Operating Earnings reconciling items (6) (43) (150) (104) Net Income 192 $ 335 $ 856 $ 760 $ (a) Includes the financial impact from positions with forward delivery months. (b) Excludes amounts related to Operating Earnings reconciling items. ($ Millions, Unaudited) Reconciling Items PSEG Power Adjusted EBITDA Reconciliation March 31, Three Months Ended Year-Ended December 31, (c) Net of capitalized interest. |