CenterPoint Energy Reports Fourth Quarter and Full-year 2020 Results

: Business Wire; Posted On Feb 25, 2021

CenterPoint Energy reported fourth quarter 2020 earnings of $0.27 per diluted share, $0.29 earnings per diluted share on a guidance basis
Full-year 2020 results show a loss of $1.79 per diluted share, and $1.40 earnings per diluted share on a guidance basis, with $1.17 from Utility Operations and $0.23 from Midstream Investments
Fourth quarter and full-year 2020 guidance basis results beat consensus and guidance
Raising 2021 Utility EPS guidance range to $1.24 - $1.26, and reiterating 6% - 8% Utility EPS guidance basis growth rate target and 10% rate base compound annual growth rate
CenterPoint Energy remains focused on customers, and is proud of its dedicated employees and the resiliency of its electric and gas systems during the February 2021 winter storm

HOUSTON--(BUSINESS WIRE)--CenterPoint Energy, Inc. (NYSE: CNP) today reported fourth quarter 2020 earnings of $0.27 per diluted common share, compared to $0.25 per diluted common share for the fourth quarter of 2019. On a guidance basis, fourth quarter 2020 earnings were $0.29 per diluted share, compared to $0.35 per diluted share for the fourth quarter of 2019.

CenterPoint Energy also reported a loss available to common shareholders of $949 million, or a loss of $1.79 per diluted share, for the full-year 2020, compared with income available to common shareholders of $674 million, or $1.33 per diluted share for the full-year 2019. Full year 2020 results included after-tax non-cash impairment charges of $1,269 million or $2.25 per diluted share, associated with the company's midstream investments. On a guidance basis, full-year 2020 earnings were $1.40 per diluted share, compared to $1.60 per diluted share for full-year 2019.

“Our service territories, particularly here in Texas, have been significantly impacted by the recent severe winter storm. Our thoughts are with our communities and our customers as they recover from the impacts of this storm,” said Dave Lesar, President and Chief Executive Officer of CenterPoint Energy.

“I am proud of our employees who went above and beyond to manage the impacts of the storm, the generation shortfall, and the resulting ERCOT electricity curtailment. We are also pleased with our system’s performance during this event and proud to report that over 98% of our 2.6 million electric customers had power within 12 hours of having the electricity supply made available to us.”

“We are proactively managing our near-term working capital needs resulting from the February winter storm. Today, we are pleased to announce we have secured $1.7 billion in financing commitments to help us bridge short term liquidity needs. We believe that this short-term financing, along with our existing credit facilities, will help provide ample liquidity for us to address any winter storm-related expenses.”

“Looking back to 2020, our strong guidance based results speak to the quality of our utility business and our ability to withstand headwinds due in part to our exceptional customer growth and timely recovery mechanisms. While maintaining our 6% - 8% guidance basis Utility EPS growth target and 10% rate base compound annual growth rate, we are raising our 2021 guidance basis Utility EPS range to $1.24 - $1.26.”

Lesar added, “We have also recently announced our support of the merger between Enable Midstream Partners, LP and Energy Transfer LP. We committed to taking a disciplined approach to minimizing our midstream exposure on our December 7^th Investor Day and this transaction is a big step for CenterPoint Energy as we deliver on our promises to our shareholders. By taking steps to significantly reduce the risk of our midstream investment and improve the liquidity of the underlying security, we can accelerate our transition to a fully regulated business model. We will keep you updated on the closing of the transaction and our plan to ultimately eliminate our midstream exposure.”

Earnings Outlook

Given the recently announced merger between Enable and Energy Transfer, CenterPoint Energy will only be presenting a guidance basis Utility EPS range for 2021 as Enable did not provide 2021 guidance during its recent earnings call.

In addition to presenting its financial results in accordance with GAAP, including presentation of income (loss) available to common shareholders and diluted earnings (loss) per share, CenterPoint Energy provides guidance based on guidance basis income and guidance basis diluted earnings per share, which are non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance that excludes or includes amounts that are not normally excluded or included in the most directly comparable GAAP financial measure.

Management evaluates CenterPoint Energy’s financial performance in part based on guidance basis income and guidance basis earnings per share. Management believes that presenting these non-GAAP financial measures enhances an investor’s understanding of CenterPoint Energy’s overall financial performance, by providing them with an additional meaningful and relevant comparison of current and anticipated future results across periods. The adjustments made in these non-GAAP financial measures exclude items that Management believes do not most accurately reflect the company’s fundamental business performance. These excluded items are reflected in the reconciliation tables of this news release, where applicable. CenterPoint Energy’s guidance basis income and guidance basis diluted earnings per share non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, income available to common shareholders and diluted earnings per share, which respectively are the most directly comparable GAAP financial measures. These non-GAAP financial measures also may be different than non-GAAP financial measures used by other companies.

(1) Utility EPS Guidance Range

The Utility EPS guidance range includes net income from Electric and Natural Gas segments, as well as after tax Corporate and Other operating income and an allocation of corporate overhead based upon the Utility’s relative earnings contribution. Corporate overhead consists primarily of interest expense, preferred stock dividend requirements, and other items directly attributable to the parent along with the associated income taxes.
The Utility EPS guidance excludes:
- Earnings or losses from the change in value of ZENS and related securities
- Certain expenses associated with merger integration
- Midstream Investments segment and associated income from the Enable preferred units and a corresponding amount of debt in addition to an allocation of associated corporate overhead and impact, including related expenses, associated with the merger between Enable and Energy Transfer
- Cost associated with the early extinguishment of debt
- Gain and impact, including related expenses, associated with gas LDC sales

In providing this guidance, CenterPoint Energy does not consider the items noted above and other potential impacts such as changes in accounting standards, impairments or other unusual items, which could have a material impact on GAAP reported results for the applicable guidance period. The 2021 Utility EPS guidance range also considers assumptions for certain significant variables that may impact earnings, such as customer growth and usage including normal weather, throughput, recovery of capital invested, effective tax rates, financing activities and related interest rates, and regulatory and judicial proceedings. In addition, the 2021 Utility EPS guidance range assumes a continued re-opening of the economy in CenterPoint Energy’s service territories throughout 2021. To the extent actual results deviate from these assumptions, the 2021 Utility EPS guidance range may not be met or the projected annual Utility EPS growth rate may change. CenterPoint Energy is unable to present a quantitative reconciliation of forward-looking guidance basis diluted earnings per share because changes in the value of ZENS and related securities, future impairments, and other unusual items are not estimable and are difficult to predict due to various factors outside of management’s control.

(2) Midstream Investments EPS Expected Range

Midstream guidance is not initiated at this time as a result of a pending merger between Enable and Energy Transfer. CenterPoint Energy will continue to record its share of Enable’s earnings as well as basis difference accretion, earnings from the Enable preferred distributions net of an associated amount of debt, interest on the Midstream note, and an allocation of corporate overhead based on Midstream Investment segment’s relative earnings contribution until the transaction closes.

Upon closing of the transaction, CenterPoint Energy’s investment in Energy Transfer will be accounted for as an equity method investment with a fair value option. Following the closing of the transaction, CenterPoint Energy will establish Midstream Investments EPS expected range based on the distributions from Energy Transfer and the debt and corporate allocations previously described as a component of our Midstream Investments, excluding market-to-market gains or losses recorded for the Energy Transfer investments.

Reconciliation of Consolidated income (loss) available to common shareholders and diluted earnings (loss) per share (GAAP) to guidance basis income and guidance basis diluted earnings per share (Non-GAAP)

Quarter Ended
December 31, 2020
	Utility Operations						Midstream Investments						Corporate and Other ⁽⁶⁾						CES⁽¹⁾ & CIS⁽²⁾(Disc. Operations)					Consolidated
	Dollars in millions			Diluted EPS ⁽³⁾			Dollars in millions			Diluted EPS ⁽³⁾			Dollars in millions			Diluted EPS ⁽³⁾			Dollars in millions			Diluted EPS ⁽³⁾		Dollars in millions			Diluted EPS ⁽³⁾
Consolidated income (loss) available to common shareholders and diluted EPS	$	119		$	0.21		$	49		$	0.09		$	(17	)	$	(0.03	)	$	—		$	—	$	151		$	0.27

ZENS-related mark-to-market (gains) losses:
Marketable securities (net of taxes of $8)⁽⁴⁾⁽⁵⁾	—			—			—			—			(27		)	(0.05		)	—			—		(27		)	(0.05		)
Indexed debt securities (net of taxes of $8)⁽⁴⁾	—			—			—			—			27			0.05			—			—		27			0.05

Impacts associated with the Vectren merger (net of taxes of $0)⁽⁴⁾	(2		)	—			—			—			—			—			—			—		(2		)	—

Severance costs (net of taxes of $1)⁽⁴⁾	2			—			—			—			—			—			—			—		2			—

Impacts associated with BREC activities (net of taxes of $0, $0)⁽⁴⁾	1			—			—			—			1			—			—			—		2			—

Impacts associated with Series C preferred stock
Preferred stock dividend requirement and amortization of beneficial conversion feature	—			—			—			—			19			0.04			—			—		19			0.04
Impact of increased share count on EPS if issued as common stock	—			(0.01		)	—			(0.01		)	—			—			—			—		—			(0.02		)
Total Series C preferred stock impacts	—			(0.01		)	—			(0.01		)	19			0.04			—			—		19			0.02

Corporate and Other Allocation	13			0.02			(9		)	(0.01		)	(3		)	(0.01		)	(1		)	—		—			—

Exclusion of Discontinued Operations ⁽⁷⁾	—			—			—			—			—			—			1			—		1			—

Consolidated on a guidance basis	$	133		$	0.22		$	40		$	0.07		$	—		$	—		$	—		$	—	$	173		$	0.29

(1) Energy Services segment
(2) Infrastructure Services segment
(3) Quarterly diluted EPS on both a GAAP and guidance basis are based on the weighted average number of shares of common stock outstanding during the quarter, and the sum of the quarters may not equal year-to-date diluted EPS
(4) Taxes are computed based on the impact removing such item would have on tax expense
(5) Comprised of common stock of AT&T Inc. and Charter Communications, Inc.
(6) Corporate and Other, plus income allocated to preferred shareholders
(7) Results related to discontinued operations are excluded from the company's guidance basis results

Quarter Ended
December 31, 2019
	Utility Operations						Midstream Investments						Corporate and Other ⁽⁶⁾						CES⁽¹⁾ & CIS⁽²⁾(Disc. Operations)						Consolidated
	Dollars in millions			Diluted EPS ⁽³⁾			Dollars in millions			Diluted EPS ⁽³⁾			Dollars in millions			Diluted EPS ⁽³⁾			Dollars in millions			Diluted EPS ⁽³⁾			Dollars in millions			Diluted EPS ⁽³⁾
Consolidated income (loss) available to common shareholders and diluted EPS	$	197		$	0.39		$	7		$	0.01		$	(96	)	$	(0.19	)	$	20		$	0.04		$	128		$	0.25

Timing effects impacting CES⁽¹⁾:
Mark-to-market (gains) losses (net of taxes of $2)⁽⁴⁾	—			—			—			—			—			—			6			0.01			6			0.01

ZENS-related mark-to-market (gains) losses:
Marketable securities (net of taxes of $16)⁽⁴⁾⁽⁵⁾	—			—			—			—			(60		)	(0.12		)	—			—			(60		)	(0.12		)
Indexed debt securities (net of taxes of $16)⁽⁴⁾	—			—			—			—			60			0.12			—			—			60			0.12

Impacts associated with the Vectren merger (net of taxes of $5, ($4), $0)⁽⁴⁾	(4		)	(0.01		)	—			—			17			0.04			4			—			17			0.03

Losses on impairment (net of taxes of $11, $3)⁽⁴⁾	—			—			35			0.07			—			—			45			0.09			80			0.16

Corporate and Other Allocation	(48		)	(0.10		)	(6		)	(0.01		)	79			0.15			(25		)	(0.04		)	—			—

Exclusion of Discontinued Operations ⁽⁷⁾	—			—			—			—			—			—			(50		)	(0.10		)	(50		)	(0.10		)

Consolidated on a guidance basis	$	145		$	0.28		$	36		$	0.07		$	—		$	—		$	—		$	—		$	181		$	0.35

(1) Energy Services segment
(2) Infrastructure Services segment
(3) Quarterly diluted EPS on both a GAAP and guidance basis are based on the weighted average number of shares of common stock outstanding during the quarter, and the sum of the quarters may not equal year-to-date diluted EPS
(4) Taxes are computed based on the impact removing such item would have on tax expense
(5) Comprised of common stock of AT&T Inc. and Charter Communications, Inc.
(6) Corporate and Other, plus income allocated to preferred shareholders
(7) Results related to discontinued operations are excluded from the company's guidance basis results

Twelve Months Ended
December 31, 2020
	Utility Operations						Midstream Investments						Corporate and Other ⁽⁶⁾						CES⁽¹⁾ & CIS⁽²⁾(Disc. Operations)						Consolidated
	Dollars in millions			Diluted EPS ⁽³⁾			Dollars in millions			Diluted EPS ⁽³⁾			Dollars in millions			Diluted EPS ⁽³⁾			Dollars in millions			Diluted EPS ⁽³⁾			Dollars in millions			Diluted EPS ⁽³⁾
Consolidated income (loss) available to common shareholders and diluted EPS	$	508		$	0.95		$	(1,116	)	$	(2.10	)	$	(159	)	$	(0.30	)	$	(182	)	$	(0.34	)	$	(949	)	$	(1.79	)

Timing effects impacting CES⁽¹⁾:
Mark-to-market (gains) losses (net of taxes of $3)⁽⁴⁾	—			—			—			—			—			—			(10		)	(0.02		)	(10		)	(0.02		)

ZENS-related mark-to-market (gains) losses:
Marketable securities (net of taxes of $11)⁽⁴⁾⁽⁵⁾	—			—			—			—			(38		)	(0.07		)	—			—			(38		)	(0.07		)
Indexed debt securities (net of taxes of $13)⁽⁴⁾	—			—			—			—			47			0.09			—			—			47			0.09

Impacts associated with the Vectren merger (net of taxes of $1, $3)⁽⁴⁾	3			0.01			—			—			12			0.02			—			—			15			0.03

Severance costs (net of taxes of $4, $0)⁽⁴⁾	13			0.03			—			—			2			—			—			—			15			0.03

Impacts associated with BREC activities (net of taxes of $0, $0)⁽⁴⁾	1			—			—			—			1			—			—			—			2			—

Impacts associated with the sales of CES⁽¹⁾and CIS⁽²⁾(net of taxes of $10)⁽⁴⁾	—			—			—			—			—			—			217			0.41			217			0.41

Impacts associated with Series C preferred stock
Preferred stock dividend requirement and amortization of beneficial conversion feature	—			—			—			—			58			0.11			—			—			58			0.11
Impact of increased share count on EPS if issued as common stock	—			(0.06		)	—			0.12			—			0.01			—			—			—			0.07
Total Series C preferred stock impacts	—			(0.06		)	—			0.12			58			0.12			—			—			58			0.18

Losses on impairment (net of taxes of $0, $408)⁽⁴⁾	185			0.33			1,269			2.25			—			—			—			—			1,454			2.58

Corporate and Other Allocation	(48		)	(0.09		)	(22		)	(0.04		)	77			0.14			(7		)	(0.01		)	—			—

Exclusion of Discontinued Operations ⁽⁷⁾	—			—			—			—			—			—			(18		)	(0.04		)	(18		)	(0.04		)

Consolidated on a guidance basis	$	662		$	1.17		$	131		$	0.23		$	—		$	—		$	—		$	—		$	793		$	1.40

(1) Energy Services segment
(2) Infrastructure Services segment
(3) Quarterly diluted EPS on both a GAAP and guidance basis are based on the weighted average number of shares of common stock outstanding during the quarter, and the sum of the quarters may not equal year-to-date diluted EPS
(4) Taxes are computed based on the impact removing such item would have on tax expense
(5) Comprised of common stock of AT&T Inc. and Charter Communications, Inc.
(6) Corporate and Other, plus income allocated to preferred shareholders
(7) Results related to discontinued operations are excluded from the company's guidance basis results

Twelve Months Ended
December 31, 2019
	Utility Operations						Midstream Investments						Corporate and Other ⁽⁶⁾						CES⁽¹⁾ & CIS⁽²⁾(Disc. Operations)						Consolidated
	Dollars in millions			Diluted EPS ⁽³⁾			Dollars in millions			Diluted EPS ⁽³⁾			Dollars in millions			Diluted EPS ⁽³⁾			Dollars in millions			Diluted EPS ⁽³⁾			Dollars in millions			Diluted EPS ⁽³⁾
Consolidated income (loss) available to common shareholders and diluted EPS	$	670		$	1.32		$	131		$	0.26		$	(236	)	$	(0.46	)	$	109		$	0.21		$	674		$	1.33

Timing effects impacting CES⁽¹⁾:
Mark-to-market (gains) losses (net of taxes of $9)⁽⁴⁾	—			—			—			—			—			—			(30		)	(0.07		)	(30		)	(0.07		)

ZENS-related mark-to-market (gains) losses:
Marketable securities (net of taxes of $59)⁽⁴⁾⁽⁵⁾	—			—			—			—			(223		)	(0.44		)	—			—			(223		)	(0.44		)
Indexed debt securities (net of taxes of $61)⁽⁴⁾	—			—			—			—			231			0.46			—			—			231			0.46

Impacts associated with the Vectren merger
Merger impacts other than the increase in share count (net of taxes of $17, $19, $4)⁽⁴⁾	69			0.14			—			—			79			0.15			15			0.04			163			0.33
Impact of increased share count on EPS	—			0.02			—			—			—			—			—			—			—			0.02
Total merger impacts	69			0.16			—			—			79			0.15			15			0.04			163			0.35

Losses on impairment (net of taxes of $11, $3)⁽⁴⁾	—			—			35			0.07			—			—			45			0.09			80			0.16

Corporate and Other Allocation	(85		)	(0.17		)	(21		)	(0.04		)	149			0.29			(43		)	(0.08		)	—			—

Exclusion of Discontinued Operations ⁽⁷⁾	—			—			—			—			—			—			(96		)	(0.19		)	(96		)	(0.19		)

Consolidated on a guidance basis	$	654		$	1.31		$	145		$	0.29		$	—		$	—		$	—		$	—		$	799		$	1.60

(1) Energy Services segment
(2) Infrastructure Services segment
(3) Quarterly diluted EPS on both a GAAP and guidance basis are based on the weighted average number of shares of common stock outstanding during the quarter, and the sum of the quarters may not equal year-to-date diluted EPS
(4) Taxes are computed based on the impact removing such item would have on tax expense
(5) Comprised of common stock of AT&T Inc. and Charter Communications, Inc.
(6) Corporate and Other, plus income allocated to preferred shareholders
(7) Results related to discontinued operations are excluded from the company's guidance basis results

Filing of Form 10-K for CenterPoint Energy, Inc.

Today, CenterPoint Energy, Inc. filed with the Securities and Exchange Commission (SEC) its Annual Report on Form 10-K for the fiscal year ended December 31, 2020 ("2020 Form 10-K"). A copy of that report is available on the company’s website, under the Investors section. Investors and others should note that we may announce material information using SEC filings, press releases, public conference calls, webcasts, and the Investor Relations page of our website. In the future, we will continue to use these channels to distribute material information about the company and to communicate important information about the company, key personnel, corporate initiatives, regulatory updates and other matters. Information that we post on our website could be deemed material; therefore we encourage investors, the media, our customers, business partners and others interested in our company to review the information we post on our website.

Webcast of Earnings Conference Call

CenterPoint Energy’s management will host an earnings conference call on Thursday, February 25, 2021, at 7:00 a.m. Central time/8:00 a.m. Eastern time. Interested parties may listen to a live audio broadcast of the conference call on the company’s website under the Investors section. A replay of the call can be accessed approximately two hours after the completion of the call and will be archived on the website for at least one year.

About CenterPoint Energy, Inc.

As the only investor owned electric and gas utility based in Texas, CenterPoint Energy, Inc. (NYSE: CNP) is an energy delivery company with electric transmission and distribution, power generation and natural gas distribution operations that serve more than 7 million metered customers in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio, Oklahoma and Texas. As of December 31, 2020, the company owned approximately $33 billion in assets and also owned 53.7 percent of the common units representing limited partner interests in Enable Midstream Partners, LP, a publicly traded master limited partnership that owns, operates and develops strategically located natural gas and crude oil infrastructure assets. With approximately 9,500 employees, CenterPoint Energy and its predecessor companies have been in business for more than 150 years. For more information, visit CenterPointEnergy.com.

Forward-looking Statements

This news release includes, and the earnings conference call will include, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this news release, the words "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "goal," "intend," "may," "objective," "plan," "potential," "predict," "projection," "should," "target," "will" or other similar words are intended to identify forward-looking statements. These forward-looking statements are based upon assumptions of management which are believed to be reasonable at the time made and are subject to significant risks and uncertainties. Actual events and results may differ materially from those expressed or implied by these forward-looking statements. Any statements in this news release or on the earnings conference call regarding capital investments, rate base growth and our ability to achieve it, future earnings and guidance, including long-term growth rate, and future financial performance and results of operations, including with respect to regulatory actions, the expected closing of the merger between Enable and Energy Transfer, de-risking our midstream investment and improving the liquidity of our midstream investments, accelerating our transition to a fully regulated business model, our plan to eliminate our midstream exposure, value creation, opportunities and expectations and any other statements that are not historical facts are forward-looking statements. Each forward-looking statement contained in this news release or discussed on the earnings conference call speaks only as of the date of this release or the earnings conference call.

Important factors that could cause actual results to differ materially from those indicated by the provided forward-looking information include, but are not limited to, risks and uncertainties relating to: (1) the performance of Enable, the amount of cash distributions CenterPoint Energy receives from Enable, and the value of CenterPoint Energy’s interest in Enable; (2) CenterPoint Energy's expected benefits of the merger with Vectren Corporation (Vectren) and integration, including the ability to successfully integrate the Vectren businesses and to realize anticipated benefits and commercial opportunities; (3) financial market and general economic conditions, including access to debt and equity capital and the effect on sales, prices and costs; (4) industrial, commercial and residential growth in CenterPoint Energy’s service territories and changes in market demand; (5) actions by credit rating agencies, including any potential downgrades to credit ratings; (6) the timing and impact of future regulatory and legal proceedings; (7) legislative decisions, including tax and developments related to the environment such as global climate change, air emissions, carbon, waste water discharges and the handling of coal combustion residuals, among others, and CenterPoint Energy’s carbon reduction targets; (8) the impact of the COVID-19 pandemic; (9) the recording of impairment charges, including any impairments related to CenterPoint Energy’s investment in Enable; (10) weather variations and CenterPoint Energy’s ability to mitigate weather impacts, including impacts from the February 2021 winter storm event; (11) changes in business plans; (12) CenterPoint Energy's ability to fund and invest planned capital, including timely and appropriate rate actions that allow recovery of costs and a reasonable return on investment; (13) CenterPoint Energy’s or Enable’s potential business strategies and strategic initiatives, including the recommendations and outcomes of the Business Review and Evaluation Committee, restructurings, joint ventures and acquisitions or dispositions of assets or businesses, including our proposed sale of our Natural Gas businesses in Arkansas and Oklahoma and the proposed merger between Enable and Energy Transfer, which may not be completed or result in the benefits anticipated by CenterPoint Energy or Enable; (14) CenterPoint Energy’s ability to execute operations and maintenance management initiatives; and (15) other factors discussed in CenterPoint Energy’s 2020 Form 10-K, including in the “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Information” sections of such reports, and other reports CenterPoint Energy or its subsidiaries may file from time to time with the Securities and Exchange Commission.

Contacts

Media:
Natalie Hedde
Phone:
812.491.5105
Investors:
Philip Holder
Phone:
713.207.6500

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