CenterPoint Energy, Inc (Holding Co) · NYSE:CNP
CenterPoint Energy, Inc (Holding Co) — Merrill Lynch Texas Power Day 2005
37 slides from CenterPoint Energy, Inc (Holding Co)'s conference presentation, Mar 30, 2005
Slide 1: Merrill Lynch Texas Power Day
Merrill Lynch Texas Power Day March 30, 2005 David M. McClanahan President & Chief Executive Officer
Slide 2: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking Information From time to time we make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not historical facts. These statements are
Slide 3: Discussion Points
Discussion Points z Company Overview z Completing Transition Sale of Texas Genco Recovery of true-up balance z Post Transition Strategy: What’s Next March 30, 2005 Merrill Lynch Texas Power Day 3
Slide 4: Company Overview
Company Overview March 30, 2005 Merrill Lynch Texas Power Day 4
Slide 5: CenterPoint Energy: A low risk, diversified business with large scale
CenterPoint Energy A low risk, diversified business with large scale z Large-scale, diversified regulated domestic energy delivery business One of the nation’s largest combined gas and electric utilities Balanced mix of electric and natural gas assets • Minneapolis z Attractive service territori
Slide 6: Three core segments focused primarily on regulated domestic energy delivery
Three core segments focused primarily on regulated domestic energy delivery NYSE: CNP Divesting for $2.931 billion Electric Natural Gas Pipelines & Electric Transmission & Distribution Distribution Gathering Generation CenterPoint Energy CenterPoint Energy CenterPoint Energy Houston Electric, LLC Re
Slide 7: Financial Results- Consolidated
Financial Results- Consolidated Year ended December 31, 2004 ($ in millions, except per share amounts) Adjusted Operating Income* $900 Operating Income $ 864 811 $800 Other Income (Expense), net 256 743 703 Interest Expense (777) $700 Income Taxes (138) $600 Income from Continuing Operations $500 Be
Slide 8: Core Operating Income by business segment
Core Operating Income by business segment ($ in millions) $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 Electric Natural Gas Pipelines Transmission Distribution & & Gathering Distribution* 2002 2003 2004 * Operating income excludes ECOM, the Transition Bond Company and the Final Fuel Reconciliation
Slide 9: Completing Transition
CenterPoint Energy Completing Transition March 30, 2005 Merrill Lynch Texas Power Day 9
Slide 10: We are in the final stage of transition
We are in the final stage of transition NYSE:CNP- first day of trading Public Public Utility Utility Commission Commission of of TX TX Recover Texas Texas Adopts Adopts 19% 19% Public Public authorized RRI RRI authorized true-up balance Restructuring Restructuring Distribution Distribution $2.3+ IPO
Slide 11: Sale of Texas Genco
Sale of Texas Genco Final step pending approval $2.231 Sale Sale of of remainder remainder of of $2.231 billion billion received Texas Texas Genco, Genco, received for for Fossil Assets nuclear nuclear assets assets Fossil Assets ($700 ($700 million) million) 2004 2005 Signed Signed TGN TGN Definiti
Slide 12: Recovery of true-up balance
Recovery of true-up balance z December 2004: PUC Final Order authorized recovery of $2.3 billion $2.0 billion of true-up amount plus approximately $0.3 billion of interest on stranded costs from January 1, 2002 to August 31, 2004 Amount will be adjusted up for the principal portion of Excess Mit
Slide 13: Next steps
Next steps Sell Sell Securitization Securitization Texas Texas Genco Genco Texas Texas Genco Genco Bonds Bonds Step Step 11 Step Step 22 && closed closed closing closing Implement Implement TC TC 12/15/04 12/15/04 ($2.231 ($2.231 billion) billion) ($700 ($700 million) million) (~ (~ $1.7 $1.7 -- $1.
Slide 14: Post Transition Strategy- What's Next
Post Transition Strategy- What’s Next March 30, 2005 Merrill Lynch Texas Power Day 14
Slide 15: What's next
What’s next z We are disappointed with the true-up recovery but remain committed to our Vision, Strategy and Objectives PUC decision will not change our company direction Significant total monetization proceeds allow us to continue implementation of our business strategies z We will continue to
Slide 16: Financial objectives
Financial objectives z Maximize returns of regulated businesses Ensure gas LDCs are earning allowed rates of return Capture organic growth in existing service territories Implement productivity improvements company-wide; achieve first quartile performance z Build and expand complementary and s
Slide 17: Recent financial actions further strengthen company
Recent financial actions further strengthen company z Reduced debt by approximately $2.0 billion in the fourth quarter of 2004 z Contributed $476 million to the pension plan in 2004 z Negotiated three bank credit facilities in the first quarter 2005 which reduced interest costs, extended maturities,
Slide 18: CenterPoint Energy: A low risk, diversified business with large scale
CenterPoint Energy A low risk, diversified business with large scale z Large-scale, diversified regulated domestic energy delivery business • Minneapolis z Attractive service territories z Predictable, stable earnings and cash flow • Little Rock z Low risk, regulated businesses Houston • Natural Gas
Slide 19: Appendix
Appendix March 30, 2005 Merrill Lynch Texas Power Day 19
Slide 20: Company Management
Company Management March 30, 2005 Merrill Lynch Texas Power Day 20
Slide 21: Skilled management team with significant regulatory and industry experience
Skilled management team with significant regulatory and industry experience David McClanahan (33/33) Gary Whitlock President & CEO Scott Rozzell (4/33) (4/30) EVP, General Counsel & Executive VP & CFO Corporate Secretary Tom Standish Byron R. Kelley David Tees Gary Cerny Dean Liollio Georgianna Nich
Slide 22: Business Segments
Business Segments March 30, 2005 Merrill Lynch Texas Power Day 22
Slide 23: CenterPoint Energy Houston Electric
CenterPoint Energy Houston Electric Electric Transmission & Distribution Utility z Focused strictly on energy delivery 5,000 square mile service area in and around Houston Approximately 1.84 million metered customers added nearly 47,000 metered customers in 2004, a 2.5% increase Reputation f
Slide 24: CenterPoint Energy Resources Corp. Natural Gas Distribution
CenterPoint Energy Resources Corp. Natural Gas Distribution z Three LDCs serving 3 million customers in 6 states One of U.S.’s largest natural gas distribution operations in terms of number of customers served z Attractive service territories Added 45,000 metered customers in 2004 Recognized f
Slide 25: CenterPoint Energy Resources Corp. Natural Gas Pipelines and Gathering
CenterPoint Energy Resources Corp. Natural Gas Pipelines and Gathering z Two FERC-regulated pipelines: Current system at or near capacity at peak Potential growth in ancillary services Potential expansion opportunity driven by U.S. supply shifts z An unregulated gas gathering subsidiary Mino
Slide 26: Vision and Strategy
Vision and Strategy March 30, 2005 Merrill Lynch Texas Power Day 26
Slide 27: Our corporate vision is simple and focused
Our corporate vision is simple and focused To Be Recognized As America’s Leading Our Vision Energy Delivery Company…and More z Focused on domestic energy delivery “…America’s… businesses Energy Delivery…” Focus on continental, U.S. market Focus on regulated energy delivery z Will pursue carefull
Slide 28: One Company, Get It Right and Grow
Our strategy is reflected in three simple phrases: One Company, Get It Right and Grow One Company Get It Right Grow z Create a single, high performance z Achieve high levels of service z Maintain focus on domestic culture reliability and customer energy delivery satisfaction z Refine business model
Slide 29: Reconciliation of Operating Income to Adjusted Operating Income - Consolidated
Reconciliation of Operating Income to Adjusted Operating Income - Consolidated (in Millions) 2002 2003 2004 Operating Income $1,440 $1,355 $864 ECOM (697) (661) -- Transition Bond Company (40) (38) (38) Final Fuel Reconciliation -- 87 (15) Adjusted Operating Income $703 $743 $811 March 30, 2005 Merr
Slide 30: Reconciliation of Operating Income to Adjusted Operating Income - Electric T&D
Reconciliation of Operating Income to Adjusted Operating Income – Electric Transmission & Distribution (in Millions) 2002 2003 2004 Operating Income $1,096 $1,020 $494 ECOM (697) (661) -- Transition Bond Company (40) (38) (38) Final Fuel Reconciliation -- 87 (15) Adjusted Operating Income $359 $408
Slide 31: Debt & Maturity Schedules
Debt & Maturity Schedules As of December 31, 2004 March 30, 2005 Merrill Lynch Texas Power Day 31
Slide 32: Principal amounts of external debt and trust preferred securities
Principal amounts of external debt and trust preferred securities As of December 31, 2004 ($ in millions) CenterPoint Energy, Inc. ZENS $ 107 (1) Convertible Senior Notes 830 Senior Notes 600 Collateralized Pollution Control Bonds First Mortgage Bond Collateral 151 (2) General Mortgage Bond Collater
Slide 33: Principal amounts of external debt and trust preferred securities
Principal amounts of external debt and trust preferred securities As of December 31, 2004 CenterPoint Energy, Inc. Call Feature Outstanding Rate Insurer Maturity Date Price $750 million Revolving Credit Facility $239,000,000 Variable 10/07/06 Current 100 ZENS $840,320,558 (3) (3) 09/15/29 Current 10
Slide 34: Principal amounts of external debt
Principal amounts of external debt As of December 31, 2004 CenterPoint Energy Houston Electric, LLC Call Feature Outstanding Rate Insurer Maturity Date Price First Mortgage Bonds $102,442,000 9.15% 03/15/21 NA NA General Mortgage Bonds $450,000,000 5.70% 03/15/13 Current (3) General Mortgage Bonds $
Slide 35: Principal amounts of external debt and trust preferred securities
Principal amounts of external debt and trust preferred securities As of December 31, 2004 CenterPoint Energy Resources Corp. Call Feature Outstanding Rate Maturity Date Price Debentures $145,070,000 8.90% 12/15/06 NA NA Convertible Subordinated Debentures $ 77,372,900 6.00% 3/15/12 Current 100 Deben
Slide 36: Principal amounts of external debt
Principal amounts of external debt As of December 31, 2004 CenterPoint Energy Transition Bond Company, LLC Call Feature Outstanding Rate Maturity Date Price Class A-1 2001-1 Transition Bonds $ 41,982,542 3.84% (1) (5) (5) Class A-2 2001-1 Transition Bonds $118,000,000 4.76% (2) (5) (5) Class A-3 200
Slide 37: Principal amounts of external debt and trust preferred securities
Principal amounts of external debt and trust preferred securities As of December 31, 2004 CenterPoint CenterPoint Transition (1) Year Energy Houston CERC Sub-total Bonds (2) Total 2005 1,310 367 1,677 47 $1,724 2006 239 (2) 152 391 54 $445 2007 (3) 6 6 60 $66 2008 200 (4) 306 506 66 $572 2009 6 6 73
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