CenterPoint Energy Q2 2020 Earnings Report
Key Takeaways
CenterPoint Energy reported income available to common shareholders of $59 million, or $0.11 per diluted share, for the second quarter of 2020. On a guidance basis, second quarter 2020 earnings were $0.21 per diluted share, with $0.18 per diluted share from utility operations, inclusive of $0.06 unfavorable COVID-19 impact, and $0.03 per diluted share from midstream investments.
Utilities led company with strong second quarter results in spite of $0.06 COVID-19 impact
Reiterated 2020 Utility EPS guidance range of $1.10 - $1.20
Reiterated 5 - 7% Utility EPS CAGR, inclusive of anticipated COVID-19 impacts
Business Review and Evaluation Committee of the Board expected to deliver formal recommendations in October 2020
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CenterPoint Energy Revenue by Segment
Forward Guidance
CenterPoint Energy is focused on providing greater transparency on utility earnings by presenting 2020 guidance in two components: a guidance basis Utility EPS range of $1.10 - $1.20, and a Midstream Investments EPS expected range of $0.15 - $0.18.
Positive Outlook
- Reiterate 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, assuming the COVID-19 scenario range described below
- 2020 Midstream Investments EPS expected range is $0.15 - $0.18
- Utility EPS guidance range includes net income from Houston Electric, Indiana Electric and Natural Gas Distribution segments, as well as after tax operating income from the Corporate and Other segment
- 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, anticipated cost savings as a result of the merger and reflects dilution and earnings as if the Series C preferred stock were issued as common stock
Challenges Ahead
- Utility EPS guidance range incorporates a COVID-19 scenario range of $0.10 - $0.15 which assumes reduced demand levels and miscellaneous revenues with the second quarter as the peak and reflects anticipated deferral and recovery of certain incremental expenses, including bad debt.
- The COVID-19 scenario range also assumes a gradual re-opening of the economy in CenterPoint Energy's service territories, with anticipated reduced demand and lower miscellaneous revenues over the remainder of 2020.
- To the extent actual recovery deviates from these COVID-19 scenario range assumptions, the 2020 Utility EPS guidance range may not be met and our projected full-year guidance range may change.
- Utility EPS guidance excludes certain expenses associated with merger integration and Business Review and Evaluation Committee activities
- Utility EPS guidance excludes severance costs, Midstream Investments and associated allocation of corporate overhead, results related to Infrastructure Services and Energy Services, including costs and impairment resulting from the sale of those businesses, and earnings or losses from the change in value of ZENS and related securities
Revenue & Expenses
Visualization of income flow from segment revenue to net income