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| EX-99 - EX-99 - PUBLIC SERVICE ENTERPRISE GROUP INC | d385034dex99.htm |
| 8-K - FORM 8-K - PUBLIC SERVICE ENTERPRISE GROUP INC | d385034d8k.htm |
 Public
Service Enterprise Group PSEG Earnings Conference Call
1 st Quarter 2017 April 28, 2017 EXHIBIT 99.1 |
 1 Forward-Looking Statements 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.
|
 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. Non-GAAP Operating Earnings exclude the impact of returns (losses) associated with the Nuclear Decommissioning Trust (NDT), Mark-to-Market (MTM)
accounting and material one-time items. 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. The last two slides in this presentation (Slides A and B) include a list of items excluded from Net Income/(Loss) to reconcile to non-GAAP Operating
Earnings and non-GAAP Adjusted EBITDA with a reference to those slides included on
each of the slides where the non-GAAP information
appears. 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. 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. The presentation of non-GAAP Operating Earnings and non-GAAP Adjusted EBITDA 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 and 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 Operating Earnings and non-GAAP Adjusted EBITDA guidance, PSEG is unable to
reconcile these non-GAAP financial measures 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. These materials and other financial releases can be found on the PSEG website at www.pseg.com , under the Investors tab. 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 at http://investor.pseg.com/rss . |
 PSEG
2017 Q1 Review
Ralph Izzo Chairman, President and Chief Executive Officer |
 4 PSEG Q1 Results Summary – Solid Results Quarter ended March 31
* See Slide A for Items excluded from Net Income to reconcile to Operating Earnings
(non-GAAP). $ millions (except EPS)
2017 2016 Net Income $ 114 $ 471 Reconciling Items 352 (8) Operating Earnings (non-GAAP)* $ 466 $ 463 EPS from Net Income $ 0.22 $ 0.93 EPS from Operating Earnings (non-GAAP)* $ 0.92 $ 0.91 |
 5 First Quarter Highlights Net Income of $0.22 vs. Net Income of $0.93 per share in Q1 2016 Non-GAAP Operating Earnings* results of $0.92 vs. $0.91 per share in Q1 2016
Net Income reflects decision to retire Hudson-Mercer in June 2017 and REMA lease
reserve PSE&G achieved 13% growth in Q1 Net Income over Q1 2016,
supported by increased investment in transmission and distribution
PSEG Power results aided by continued cost containment
Operational excellence Nuclear performance achieved 100% capacity factor for Q1 Disciplined capital investment – producing results PSEG expected to invest ~$4.7 billion in 2017, consisting primarily of $3.4 billion at PSE&G
and $1.2 billion at PSEG Power
Regulatory/Legislative Focus: NJ Needs Nuclear advocacy efforts; Energy
Efficiency extension and expansion filing in March
Major capital initiatives on track: Bridgeport Harbor 5 received all needed
permits to begin construction phase
* See Slide A for Items excluded from Net Income to reconcile to Operating
Earnings (non-GAAP). PSEG Q1 2017 – Achieved Solid Financial Results |
 6 2016 2017E $2.80 - $3.00E PSEG Reaffirming 2017 Full-Year Guidance $2.90 Growth in utility infrastructure investment continues to drive a higher regulated earnings contribution in 2017 Non-GAAP Operating Earnings* and 2017 Guidance * See Slide A for Items excluded from Net Income to reconcile to Operating Earnings (non-GAAP). E =
Estimate. |
 PSEG
2017 Q1 Operating Company Review
Dan Cregg EVP and Chief Financial Officer |
 8 PSEG – Q1 Results by Subsidiary GAAP Net Income/(Loss) 2017 2016 Change PSE&G $ 0.59 $ 0.52 $ 0.07 PSEG Power $ (0.34) $ 0.38 $ (0.72) PSEG Enterprise/Other $ (0.03) $ 0.03 $ (0.06) Total PSEG $ 0.22 $ 0.93 $ (0.71) Non-GAAP Operating Earnings* 2017 2016 Change PSE&G $ 0.59 $ 0.52 $ 0.07 PSEG Power $ 0.30 $ 0.36 $ (0.06) PSEG Enterprise/Other $ 0.03 $ 0.03 $ - Total PSEG $ 0.92 $ 0.91 $ 0.01 *See Slide B for Items excluded from Net Income/(Loss) to reconcile to Operating Earnings (non-GAAP) for PSEG Power and PSEG
Enterprise/Other. PSEG Q1 EPS Summary –
Quarter ended March 31 |
 9 PSEG EPS Reconciliation – Q1 2017 versus Q1 2016 * See Slide A for Items excluded from Net Income to reconcile to Operating Earnings (non-GAAP).
Higher Gas Send-out 0.02 Recontracting (0.09) ER&T Reserve (0.01) Lower Volume (0.01) O&M 0.03 Transmission 0.03 Gas Margin 0.02 Distribution O&M 0.02 Q1 2017 Net Income Q1 2016 Net Income PSEG Power PSE&G Enterprise/ Other Q1 2016 Operating Earnings (non-GAAP)* Q1 2017 Operating Earnings (non-GAAP)* PSEG-LI and Other $0.93 0.07 (0.06) 0.00 $0.91 $0.92 $0.22 Utility investment and cost control drove Q1 results $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 $1.00 |
 PSE&G 2017 Q1 Review |
 11 PSE&G – Q1 Summary of Results $ millions (except EPS) Q1 2017 Q1 2016 Variance Operating Revenues $ 1,812 $ 1,712 $ 100 Operating Expenses Energy Costs 753 729 24 Operation & Maintenance 367 382 (15) Depreciation & Amortization 171 139 32 Total Operating Expenses 1,291 1,250 41 Net Income $ 299 $ 262 $ 37 EPS from Net Income $ 0.59 $ 0.52 $ 0.07 |
 $0.52 0.05 0.02 $0.59 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 12 PSE&G EPS Reconciliation – Q1 2017 versus Q1 2016 Q1 2017 Net Income Q1 2016 Net Income Transmission 0.03 Gas Margin 0.02 Distribution O&M 0.02 |
 13 PSE&G – Monthly Heating Degree Days 1Q 2017 winter weather, as defined by heating degree days, was ~10% warmer than
normal; a colder than normal March offset a mild January and the warmest February
on record to make 1Q 2017 weather about the same as experienced in 1Q
2016. Monthly Heating Degree Days
Q1 2017 vs. Q1 2016 vs. Q1 Normal
1200 1000 800 600 400 200 0 January February March 1Q 2017 1Q 2016 1Q Normal |
 14 PSE&G – Q1 Operating Highlights FERC formula rate revenue increase of $121 million implemented on January 1 In March, PSE&G filed an extension and expansion of its award-winning Energy Efficiency programs; the
total filing proposes a ~$74 million investment in EE; the filing has been deemed
complete and a decision is expected from the NJBPU in Q3 2017
PSE&G will file its distribution base rate case with the NJBPU no
later than November 1, 2017 Operations
Regulatory and Market Environment PSE&G invested $752 million in capital expenditures in Q1 to upgrade and expand T&D infrastructure and
reliability as part of its planned $3.4 billion full-year capital
program PSE&G’s Q1 2017 earnings increased by $0.07 or ~13% to
$0.59 per share PSE&G’s
2017 Net Income guidance range remains unchanged at $945 - $985 million Financial Residential electric sales were flat on an actual and weather-normalized basis; industrial and commercial
electric sales increased by 2.5% due to a one time event and is not indicative of
ongoing C&I demand growth Total firm gas sales rose by 3% on a
weather-normalized basis, due to variability versus normal Winter
weather was warmer than normal in Q1 due to a warm January and the warmest February on record, offset by colder than normal March weather |
 PSEG
Power 2017 Q1 Review |
 16 PSEG Power – Q1 Summary of Results $ millions (except EPS) Q1 2017 Q1 2016 Variance Operating Revenues $1,284 $ 1,313 $ (29) Net Income/(Loss) (170) 192 (362) Reconciling Items 320 (8) 328 Operating Earnings (non-GAAP)* $ 150 $ 184 $ (34) EPS from Net Income/(Loss) $ (0.34) $ 0.38 $ (0.72) EPS from Operating Earnings (non-GAAP)* $ 0.30 $ 0.36 $ (0.06) Adjusted EBITDA (non-GAAP)* $ 359 $ 409 $ (50) *See Slide B for Items excluded from Net Income/(Loss) to reconcile to Operating Earnings (non-GAAP) and Adjusted EBITDA (non-GAAP) for
PSEG Power. |
 17 Higher Gas Send-out 0.02 Recontracting (0.09) Lower Volume (0.01) ER&T Reserve (0.01) PSEG Power EPS Reconciliation – Q1 2017 versus Q1 2016 O&M * See Slide B for Items excluded from Net Income/(Loss) to reconcile to Operating Earnings (non-GAAP) for PSEG Power.
0.40 0.00 0.30 0.20 0.10 -0.40 ($0.34) $0.38 Q1 2017 Net (Loss) Q1 2016 Net Income Q1 2016 Operating Earnings (non-GAAP)*
Q1 2017
Operating Earnings (non-GAAP)* $0.36 (0.09) 0.03 $0.30 |
 18 PSEG Power – Q1 Generation Measures 8,419 8,356 1,028 1,432 3,754 3,046 0 5,000 10,000 15,000 2016 2017 Total Nuclear Total Coal** Natural Gas * Excludes solar and Kalaeloa. ** Includes figures for Pumped Storage. Includes Hudson and Mercer when run on gas.
PSEG Power – Generation (GWh)* 13,201 12,834 PSEG Power – Capacity Factors (%) Quarter ended March 31 2016 2017 Combined Cycle PJM and NY 51.7% 41.8% Coal** NJ (Coal/Gas) 0.4% 0.0% PA 58.9% 83.5% CT 6.7% 9.6% Nuclear 99.7% 100% Quarter ended March 31 ($ millions) 2016 2017 Gas $ 66 $ 78 Coal 27 35 Total Fossil $ 93 $ 113 Nuclear 58 54 Total Fuel Cost $ 151 $ 167 Total Generation (GWh)
13,201 12,834 $ / MWh 11.44 13.01 PSEG Power – Fuel Costs |
 19 PSEG Power – Gross Margin Performance $0 $10 $20 $30 $40 $50 2015 2016 2017 $37 Quarter ended March 31 Lower hedge prices and decline in generation (1 fewer day of operation) Capacity revenues were flat vs. Q1 2016 Regional spark spread compressed in the quarter Regional Performance Region Q1 Gross Margin ($M) Q1 2017 Performance PJM $440 Recontracting at lower prices and lower volumes New England $32 Higher generation offset by lower hedges New York $8 Higher prices offset by lower generation PSEG Power Gross Margin ($/MWh) $47 $44 |
 Apr-Dec 2017 2018 2019 Volume TWh 25 34 34 Base Load % Hedged 100% 90-95% 35-40% (Nuclear and Base Load Coal) Price $/MWh $46 $41 $42 Volume TWh 10 19 26 Intermediate, Combined Cycle, % Hedged 65-70% 0% 0% Peaking Price $/MWh $46 $ - $ - Volume TWh 35-37 52-54 58-60 Total % Hedged 85-90% 55-60% 20-25% Price $/MWh $46 $41 $42 20 Hedging Update… Contracted Energy* * HEDGE PERCENTAGES AND PRICES AS OF MARCH 31, 2017. 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. |
 21 PSEG Power – Q1 Operating Highlights Q1 output down 2.8% as low energy prices and mild weather impacted economic dispatch
Nuclear fleet achieved average capacity factor of 100%, producing 8.4 TWhs of
energy CCGT fleet had a capacity factor of 42% versus 52% in Q1 2016 as
high availability remained
strong at >90% and produced 3 TWh of energy; Coal fleet produced 1.4 TWh of energy Operations Regulatory and Market Environment Financial 2017 expected generation output 49-50 TWh; BGS load projected at 11 TWhs Power has begun construction at Bridgeport Harbor 5, obtained all needed permits
in early April; target completion remains mid-2019
Construction on schedule and on budget at Keys and Sewaren 7 for targeted 2018
in-service Power’s total debt as a percentage of capitalization
at March 31 was 30% Power’s 2017 non-GAAP Operating Earnings
guidance range remains unchanged at $435 -
$510 million; non-GAAP Adjusted EBITDA guidance for 2017 remains
unchanged at $1,080 to $1,210 million |
 PSEG |
 23 PSEG Financial Highlights PSE&G earnings forecast to grow 8.5% to comprise 66% of PSEG’s 2017 non-GAAP Operating Earnings Focused on maintaining operating efficiency and customer reliability PSEG’s 5-Year capital spending forecast of $15 billion over 2017-2021
to be invested in PSE&G (82%) and Power (18%)
PSE&G infrastructure investment in reliability/resiliency/replacement
remains on track PSEG Power’s $2 billion investment in new generation, in PJM and New England, will improve fleet efficiency and geographic diversity Increased 2017 indicative common dividend by 4.9% to $1.72 per share Financial position remains strong: Positive cash from Power and increasing cash flow from operations at PSE&G supports
dividend growth and funds capital spending program without the need to issue
equity Debt as a percentage of capitalization was 47% at March 31
Reiterating 2017 non-GAAP Operating Earnings guidance of $2.80 -
$3.00 per share |
 24 PSEG 2017 Guidance - By Subsidiary Segment Operating Earnings Guidance and Prior Results (non-GAAP, except as noted)* $ millions 2017E 2016 PSEG Power $1,080 - $1,210 $1,201 PSEG Power Adjusted EBITDA (non-GAAP)* * See Slide A for Items excluded from Net Income to reconcile to Operating Earnings (non-GAAP) and Slide B for Items excluded from Net
Income/(Loss) to reconcile to Operating Earnings (non-GAAP) and
Adjusted EBITDA (non-GAAP). E = Estimate. $ millions
(except EPS) 2017E
2016 PSE&G (Net Income) $945 - $985 $889 PSEG Power $435 - $510 $514 PSEG Enterprise/Other $35 - $35 $72 Operating Earnings (non -GAAP)* $1,415 - $1,530 $1,475 Operating EPS (non -GAAP)* $2.80 - $3.00E $2.90 |
 PSEG
Liquidity as of March 31, 2017 25 |
 Reconciliation of Non-GAAP 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. A
2017 2016 2016 Net Income 114 $ 471 $ (Gain) Loss on Nuclear Decommissioning Trust (NDT) Fund Related Activity, pre-tax (PSEG Power) (17) 8 (Gain) Loss on Mark-to-Market (MTM), pre-tax (a) (PSEG Power) (10) (22) Hudson/Mercer Early Retirement, pre-tax (PSEG Power) 564 - Lease Related Activity, pre-tax (PSEG Enterprise/Other) 55 - Income Taxes related to Operating Earnings (non-GAAP) reconciling items (b) (240) 6 Operating Earnings (non-GAAP) 466 $ 463 $ PSEG Fully Diluted Average Shares Outstanding (in millions) 508 508 508 Net Income 0.22 $ 0.93 $ (Gain) Loss on NDT Fund Related Activity, pre-tax (PSEG Power) (0.03) 0.02 (Gain) Loss on MTM, pre-tax (a) (PSEG Power) (0.02) (0.05) Operating Earnings (non-GAAP) 0.92 $ 0.91 $ 2.90 $ (a) Includes the financial impact from positions with forward delivery months. PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED Consolidated Operating Earnings (non-GAAP) Reconciliation Three Months Ended Reconciling Items ($ millions, Unaudited) ($ Per Share Impact - Diluted, Unaudited) (b) Income tax effect calculated at 40.85% statutory rate, except for lease related activity which is calculated at a combined leveraged lease
effective tax rate and NDT related activity which is calculated at the
40.85% statutory rate plus a 20% tax on income (losses) from qualified NDT funds. March 31, Year Ended December 31, 887 $ 168 669 147 (391) 1,475 $ (5) 1.75 $ (0.01) 0.33 Hudson/Mercer Early Retirement, pre-tax (PSEG Power) 1.10 1.32 Lease Related Activity, pre-tax (PSEG Enterprise/Other) 0.11 0.29 Income Taxes related to Operating Earnings (non-GAAP) reconciling items (b) (0.46) 0.01 (0.78) - - |
 B Reconciliation of Non-GAAP Operating Earnings and Non-GAAP 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. 2017 2016 2016 Net Income (Loss) (15) $ 17 $ (20) $ Lease Related Activity, pre-tax 55 - 147 Income Taxes related to Operating Earnings (non-GAAP) reconciling items (a) (23) - (55) Operating Earnings (non-GAAP) 17 $ 17 $ 72 $ PSEG Fully Diluted Average Shares Outstanding (in millions) 508 508 508 (a) Income tax effect calculated at a combined leveraged lease effective tax rate.
PSEG Enterprise/Other ($ millions, Unaudited) Operating Earnings (non-GAAP) Reconciliation Reconciling Items Three Months Ended March 31, December 31, Year-Ended 2017 2016 2016 Net Income (Loss) (170) $ 192 $ 18 $ (Gain) Loss on NDT Fund Related Activity, pre-tax (17) 8 (5) (Gain) Loss on MTM, pre-tax (a) (10) (22) 168 Hudson/Mercer Early Retirement, pre-tax 564 - 669 Income Taxes related to Operating Earnings (non-GAAP) reconciling items (b) (217) 6 (336) Operating Earnings (non-GAAP) 150 $ 184 $ 514 $ Depreciation and Amortization, pre-tax (c) 92 80 329 Interest Expense, pre-tax (c) (d) 16 22 83 Income Taxes (c) 101 123 275 Adjusted EBITDA (non-GAAP) 359 $ 409 $ 1,201 $ PSEG Fully Diluted Average Shares Outstanding (in millions) 508 508 508 (a) Includes the financial impact from positions with forward delivery months. (c) Excludes amounts related to Operating Earnings (non-GAAP) reconciling items.
(d) Net of capitalized interest.
PSEG Power Operating Earnings (non-GAAP) and Adjusted EBITDA (non-GAAP)
Reconciliation Three Months Ended
Year Ended December 31, Reconciling Items March 31, ($ millions, Unaudited) (b) Income tax effect calculated at 40.85% statutory rate, except for NDT related activity which is calculated at the 40.85% statutory
rate plus a 20% tax on income (losses) from qualified NDT
funds. |