Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Q4 2016 Earnings Presentation
36 slides from Public Service Enterprise's earnings presentation, Feb 24, 2017
Slide 1: PSEG Earnings Conference Call 4th Quarter & Year-End 2016
EXHIBIT 99.1 Public Service Enterprise Group PSEG Earnings Conference Call 4th Quarter & Year-End 2016 February 24, 2017
Slide 2: Forward-Looking Statements
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 “forwa
Slide 3: GAAP Disclaimer
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
Slide 4: 2016 Q4 and Full Year Review
PSEG 2016 Q4 and Full Year Review Ralph Izzo Chairman, President and Chief Executive Officer
Slide 5: Q4 Results Summary – Solid quarterly results
Q4 Results Summary – Solid quarterly results Quarter ended December 31 $ millions (except EPS) 2016 2015 Net Income/(Loss) $ (98) $ 309 Reconciling Items 377 (54) Operating Earnings (non-GAAP)* $ 279 $ 255 EPS from Net Income/(Loss) $ (0.19) $ 0.60 EPS from Operating Earnings (non-GAAP)* $ 0.54 $ 0.
Slide 6: Full-Year Results Summary – At upper end of revised guidance
Full-Year Results Summary – At upper end of revised guidance Twelve Months ended December 31 $ millions (except EPS) 2016 2015 Net Income $ 887 $ 1,679 Reconciling Items 588 (203) Operating Earnings (non-GAAP)* $ 1,475 $ 1,476 EPS from Net Income $ 1.75 $ 3.30 EPS from Operating Earnings (non-GAAP)*
Slide 7: 2016 – Another Year of Successful Capital Deployment
PSEG 2016 – Another Year of Successful Capital Deployment Solid 2016 financial performance Net Loss of $(0.19) vs. Net Income of $0.60 per share in Q4 2015; Full-year Net Income of $1.75 vs. $3.30 per share in 2015; Decision to retire Hudson-Mercer units resulted in $555 million of incremental D&A i
Slide 8: Initiating 2017 Full-Year Guidance
PSEG Initiating 2017 Full-Year Guidance Growth in utility infrastructure investments continue to drive a higher regulated earnings contribution in 2017 Non-GAAP Operating Earnings* and 2017 Guidance $2.91 $2.90 $2.80 - $3.00E 2015 2016 2017E * See Slide A for Items excluded from Net Income to reconc
Slide 9: Annual Dividend – Increased 4.9% to $1.72 per share
PSEG Annual Dividend – Increased 4.9% to $1.72 per share Continuing an improved rate of growth in the dividend, building on a 110-year history of returning cash to the shareholder PSEG Annual Dividend Rate $1.80 $1.72* 10 year rate of growth: 3.9% $1.64 $1.60 $1.56 $1.48 $1.44 $1.42 $1.40 $1.37 $1.3
Slide 10: 2016 Q4 Operating Company Review
PSEG 2016 Q4 Operating Company Review Dan Cregg EVP and Chief Financial Officer
Slide 11: Q4 Results by Subsidiary
Q4 Results by Subsidiary Quarter ended December 31 Results Per Share $ millions (except Per Share amounts) 2016 2015 2016 2015 PSE&G (Net Income) $ 193 $ 156 $ 0.38 $ 0.31 PSEG Power (Net Income/(Loss)) $ (302) $ 149 $ (0.59) $ 0.29 PSEG Power (non- GAAP Operating Earnings*) $ 69 $ 95 $ 0.13 $ 0.19
Slide 12: EPS Reconciliation – Q4 2016 versus Q4 2015
PSEG EPS Reconciliation – Q4 2016 versus Q4 2015 Returns on expanded investment and cost control support results 0.80 0.70 $0.60 0.07 (0.06) 0.60 0.03 $0.54 $0.50 0.50 Recontracting/ Transmission Lower Prices (0.05) PSEG-LI 0.40 0.06 and Other Lower Volume/ 0.30 Weather 0.01 Higher Gas Send-out (0.0
Slide 13: Year-to-Date Results by Subsidiary
Year-to-Date Results by Subsidiary Twelve Months ended December 31 Results Per Share $ millions (except Per Share amounts) 2016 2015 2016 2015 PSE&G (Net Income) $ 889 $ 787 $ 1.75 $ 1.55 PSEG Power (Net Income) $ 18 $ 856 $ 0.04 $ 1.68 PSEG Power (non-GAAP Operating Earnings*) $ 514 $ 653 $ 1.01 $
Slide 14: EPS Reconciliation – YTD 2016 versus YTD 2015
PSEG EPS Reconciliation – YTD 2016 versus YTD 2015 3.50 $3.30 3.25 0.20 (0.28) $2.91 0.07 $2.90 3.00 2.75 Transmission Recontracting/ 0.15 Lower Prices PSEG-LI, 2.50 Taxes and (0.16) Other Distribution 2.25 Margin 0.03 Lower Gas Send- Out and Fixed 2.00 Cost Recovery Distribution D&A and (0.13) $1.7
Slide 15: PSE&G 2016 Q4 Review
PSE&G 2016 Q4 Review
Slide 16: PSE&G – Q4 Summary of Results
PSE&G – Q4 Summary of Results $ millions (except EPS) Q4 2016 Q4 2015 Variance Operating Revenues $ 1,475 $ 1,402 $ 73 Operating Expenses Energy Costs 588 546 42 Operation & Maintenance 365 389 (24) Depreciation & Amortization 153 180 (27) Total Operating Expenses 1,106 1,115 (9) Net Income $ 193 $
Slide 17: PSE&G EPS Reconciliation – Q4 2016 versus Q4 2015
PSE&G EPS Reconciliation – Q4 2016 versus Q4 2015 0.50 0.07 0.00 $0.38 0.40 $0.31 O&M 0.03 0.30 D&A, Taxes Transmission & & Other (0.03) Distribution Margin 0.06 0.20 Electric Weather 0.01 0.10 0.00 Q4 2015 Q4 2016 Net Income Net Income Prior quarter results for reconciling items may not add to year
Slide 18: PSE&G – Monthly Heating Degree Days
PSE&G – Monthly Heating Degree Days Monthly Heating Degree Days Q4 2016 vs. Q4 2015 vs. Q4 Normal 900 800 700 Q4 16 Q4 15 Q4 Normal 600 500 400 300 200 100 0 October November December Q4 2016 winter weather, as defined by heating degree days, was ~38% colder than Q4 2015 (the warmest Q4 in our recor
Slide 19: PSE&G – Q4 Operating Highlights
PSE&G – Q4 Operating Highlights Operations Electric sales were flat both for the quarter and for the full year on a weather normalized basis; Weather adjusted gas sales declined slightly in Q4 and declined by 1.9% for the full year PSE&G recognized for the 15th year as the Mid-Atlantic region’s most
Slide 20: Power 2016 Q4 Review
PSEG Power 2016 Q4 Review
Slide 21: Power – Q4 Summary of Results
PSEG Power – Q4 Summary of Results $ millions (except EPS) Q4 2016 Q4 2015 Variance Operating Revenues $ 921 $ 1,082 $ (161) Net Income/(Loss) (302) 149 (451) Reconciling Items 371 (54) 425 Operating Earnings (non-GAAP)* $ 69 $ 95 $ (26) EPS from Net Income/(Loss) $ (0.59) $ 0.29 $ (0.88) EPS from O
Slide 22: Power EPS Reconciliation – Q4 2016 versus Q4 2015
PSEG Power EPS Reconciliation – Q4 2016 versus Q4 2015 - 0.40 - $0.29 0.30 $0.19 (0.06) 0.20 - (0.03) 0.03 $0.13 Recontracting/ 0.10 - Lower Prices (0.05) Interest, O&M Lower Volume/ Taxes and Higher Gas Other Send-out (0.01) 0.00 - Q4 2015 Q4 2015 Q4 2016 Q4 2016 Net Operating Operating Net (Loss)
Slide 23: Power – Q4 Generation Measures – Volume %
PSEG Power – Q4 Generation Measures – Volume % PSEG Power – Generation (GWh) PSEG Power – Capacity Factors (%) Quarter ended December 31 Quarter ended December 31 15,000 2015 2016 12,725 11,755 Combined Cycle PJM and NY 62.9% 41.5% 4,646 3,124 Coal* 814 1,343 7,500 NJ (Coal/Gas) 0.2% 0.8% PA 48.6% 7
Slide 24: Power – Full-Year Generation Measures – Volume %
PSEG Power – Full-Year Generation Measures – Volume % PSEG Power – Generation (GWh) PSEG Power – Capacity Factors (%) Twelve months ended December 31 Twelve months ended December 31 2015 2016 60,000 55,213 51,510 Combined Cycle 50,000 19,391 PJM and NY 64.2% 57.2% 17,181 40,000 5,809 Coal* 30,000 4,
Slide 25: Power – Fuel Costs
PSEG Power – Fuel Costs PSEG Power – Fuel Costs Twelve months ended Quarter ended December 31 December 31 ($ millions) 2015 2016 ($ millions) 2015 2016 Coal 23 31 Coal 163 109 Oil & Gas 62 58 Oil & Gas 485 272 Total Fossil 85 89 Total Fossil 648 381 Nuclear 51 49 Nuclear 213 203 Total Fuel Cost 136
Slide 26: Power – Gross Margin Performance
PSEG Power – Gross Margin Performance Lower generation and lower hedge prices offset higher market prices Capacity revenues were flat vs. prior year Spark spreads compressed in the quarter PSEG Power Gross Margin ($/MWh) Regional Performance Quarter ended Twelve Months ended Q4 Gross December 31 Dec
Slide 27: Market Perspective – 2017 BGS Auction Results
Market Perspective – 2017 BGS Auction Results Full Requirements Component Capacity Markets/RPM Growing Renewable Energy/Transmission Component for Market Risk $97.39 $99.54 $96.38 $92.18 $90.78 Capacity Load shape ~ $62 ~ $63 Transmission ~ $59 ~ $58 Congestion ~ $53 Ancillary services Risk premium
Slide 28: Hedging Update
Hedging Update… Contracted Energy* 2017 2018 2019 Volume TWh 34 34 34 Base Load % Hedged 100% 80-85% 35-40% (Nuclear and Base Load Coal) Price $/MWh $46 $43 $43 Volume TWh 16 21 26 Intermediate, Combined Cycle, % Hedged 45-50% 0% 0% Peaking Price $/MWh $46 $- $- Volume TWh 49-51 54-56 59-61 Total %
Slide 29: Power – Q4 Operating Highlights
PSEG Power – Q4 Operating Highlights Operations Q4 output down 7.6% versus Q4 2015 due to Hope Creek refueling and planned CCGT major maintenance; Full-year generation was 6.7% lower Annual capacity factor for the nuclear fleet of 86.9% produced 29.6 TWh of energy; CCGT fleet had a capacity factor o
Slide 30: PSEG
PSEG
Slide 31: Financial Highlights
PSEG Financial Highlights Introducing2017 Introducing 2017non-GAAP non-GAAPOperating OperatingEarnings Earningsguidance guidanceofof$2.80 $2.80- $3.00 per share PSE&G earnings forecast to grow 8.5% to comprise 66% of PSEG’s 2017 non-GAAP Operating Earnings Focused on maintaining operating efficiency
Slide 32: 2017 Federal Tax Reform – PSEG is well positioned
2017 Federal Tax Reform – PSEG is well positioned Given positive non-utility contribution to earnings and a strong balance sheet, PSEG is well positioned for potential tax reform Assumption PSE&G PSEG Power PSEG Parent Customer rates lowered with After-tax earnings and cash After-tax earnings and ca
Slide 33: 2017 Guidance - By Subsidiary
PSEG 2017 Guidance - By Subsidiary Segment Operating Earnings Guidance and Prior Results (non-GAAP, except as noted)* $ millions (except EPS) 2017E 2016 2015 PSE&G (Net Income) $945 - $985 $889 $787 PSEG Power $435 - $510 $514 $653 PSEG Enterprise/Other $35 - $35 $72 $36 Operating Earnings (non-GAAP
Slide 34: Liquidity as of December 31, 2016
PSEG Liquidity as of December 31, 2016 33
Slide 35: Reconciliation of Non-GAAP Operating Earnings
Reconciliation of Non-GAAP Operating Earnings PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED Consolidated Operating Earnings (non-GAAP) Reconciliation Three Months Ended Year Ended Reconciling Items December 31, December 31, 2016 2015 2016 2015 ($ millions, Unaudited) Net Income (Loss) $ (98) $ 309 $
Slide 36: Reconciliation of Non-GAAP Operating Earnings and Non-GAAP Adjusted EBITDA
Reconciliation of Non-GAAP Operating Earnings and Non-GAAP Adjusted EBITDA PSEG Power Reconciliations Three Months Ended Year Ended Reconciling Items December 31, December 31, 2016 2015 2016 2015 ($ millions, Unaudited) Net Income (Loss) $ (302) $ 149 $ 18 $ 856 (Gain) Loss on NDT Fund Related Activ
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