UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 10, 2015
CENTERPOINT ENERGY, INC.
(Exact name of registrant as specified in its charter)
| Texas | 1-31447 | 74-0694415 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| 1111 Louisiana Houston, Texas |
77002 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code: (713) 207-1111
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Conditions.
On August 10, 2015, CenterPoint Energy, Inc. (“CenterPoint Energy”) reported second quarter 2015 earnings. For additional information regarding CenterPoint Energy’s second quarter 2015 earnings, please refer to CenterPoint Energy’s press release attached to this report as Exhibit 99.1 (the “Press Release”), which Press Release is incorporated by reference herein.
Item 7.01 Regulation FD Disclosure.
CenterPoint Energy is holding a conference call to discuss its second quarter 2015 earnings on August 10, 2015. Information about the call can be found in the press release furnished herewith as Exhibit 99.1. For additional information regarding CenterPoint Energy’s second quarter 2015 earnings, please refer to the supplemental materials which are being posted on CenterPoint Energy’s website and are attached to this report as Exhibit 99.2 (the “Supplemental Materials”), which Supplemental Materials are incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
The information in the Press Release and the Supplemental Materials is being furnished, not filed, pursuant to Item 2.02 and 7.01, respectively. Accordingly, the information in the Press Release and the Supplemental Materials will not be incorporated by reference into any registration statement filed by CenterPoint Energy under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.
(d) Exhibits.
| EXHIBIT NUMBER |
EXHIBIT DESCRIPTION | |
| 99.1 | Press Release issued August 10, 2015 regarding CenterPoint Energy, Inc.’s second quarter 2015 earnings | |
| 99.2 | Supplemental Materials regarding CenterPoint Energy, Inc.’s second quarter 2015 earnings | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CENTERPOINT ENERGY, INC. | ||||||
| Date: August 10, 2015 | By: | /s/ Kristie L. Colvin | ||||
| Kristie L. Colvin | ||||||
| Senior Vice President and Chief Accounting Officer | ||||||
EXHIBIT INDEX
| EXHIBIT NUMBER |
EXHIBIT DESCRIPTION | |
| 99.1 | Press Release issued August 10, 2015 regarding CenterPoint Energy, Inc.’s second quarter 2015 earnings | |
| 99.2 | Supplemental Materials regarding CenterPoint Energy, Inc.’s second quarter 2015 earnings | |
Exhibit 99.1
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For more information contact Media: Leticia Lowe Phone 713.207.7702 Investors: David Mordy Phone 713.207.6500 |
| |
| For Immediate Release |
Page 1 of 6 | |||
CenterPoint Energy reports second-quarter 2015 earnings of
$0.18 per diluted share; reaffirms full-year guidance of
$1.00 – $1.10 per diluted share
| • | Company continues to execute strategy for timely recovery of capital through key rate filings in Texas and Minnesota |
| • | Enable Midstream reaffirmed 2015 distribution growth guidance and provided outlook of 3-7% per-unit annual distribution growth through 2017 |
| • | Company targets annual dividend growth in line with EPS growth through 2018 |
Houston, TX – August 10, 2015 - CenterPoint Energy, Inc. (NYSE: CNP) today reported net income of $77 million, or $0.18 per diluted share, for the second quarter of 2015, compared with $107 million, or $0.25 per diluted share for the same period of the prior year. On a guidance basis, for the second quarter 2015, CenterPoint Energy earned 19 cents per diluted share consisting of 13 cents from utility operations and 6 cents from midstream investments.
Utility operations produced $186 million of operating income for the second quarter of 2015, equal to operating income for the same quarter of the prior year. Equity income from midstream investments was $43 million for the second quarter of 2015, compared with $71 million for the same period in the prior year.
“We remain focused on investing in infrastructure to meet the needs of our growing customer base. Our utilities delivered strong financial results, and we continue to seek timely recovery of our investments,” said Scott M. Prochazka, president and chief executive officer of CenterPoint Energy. “Additionally, Enable is performing as expected in a challenging commodity market, and we remain confident in their growth strategy.”
Business Segments
Electric Transmission & Distribution
The electric transmission & distribution segment reported operating income of $158 million for the second quarter of 2015, consisting of $131 million from the regulated electric transmission & distribution utility operations (TDU) and $27 million related to securitization bonds. Operating income for the second quarter of 2014 was $145 million, consisting of $115 million from the TDU and $30 million related to securitization bonds.
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Page 2 of 6
Operating income for the TDU benefited primarily from higher usage largely due to a return to more normal weather ($13 million), higher net transmission-related revenues ($8 million) and continued strong customer growth ($5 million). These benefits were partially offset by reduced equity return related to true-up proceeds ($5 million).
Natural Gas Distribution
The natural gas distribution segment reported operating income of $19 million for the second quarter of 2015, compared with $30 million for the same period of 2014. Operating income was lower, primarily due to reduced usage as a result of colder than normal weather in 2014 ($5 million) and higher depreciation expense ($6 million).
Energy Services
The energy services segment reported operating income of $9 million for the second quarter of 2015, which included a mark-to-market accounting gain of $2 million, compared with $11 million for the same period of 2014, which included a mark-to-market accounting gain of $6 million. Excluding mark-to-market accounting gains, the $2 million increase in operating income in the second quarter of 2015 was due to improved margins and a decrease in operation and maintenance expenses.
Midstream Investments
The midstream investments segment reported $43 million of equity income for the second quarter of 2015, compared with $71 million in the same quarter of the prior year.
Cash distributions received in the second quarter of 2015 were $73 million. Further, Enable Midstream declared a quarterly cash distribution on July 22, 2015, from which CenterPoint Energy expects to receive approximately $74 million. This represents an increase of approximately 1.1 percent over the prior quarterly distribution.
Enable Midstream provided outlook for per unit distributions to grow at 3-7 percent annually through 2017. Please refer to their August 5, 2015, earnings press release for details.
Dividend Declaration
On July 24, 2015, CenterPoint Energy’s board of directors declared a regular quarterly cash dividend of $0.2475 per share of common stock payable on September 10, 2015, to shareholders of record as of the close of business on August 14, 2015.
Dividend Growth Outlook
CenterPoint Energy is targeting 4-6 percent annual earnings per share growth on a guidance basis through 2018, inclusive of midstream investments, and anticipates dividend growth to be in line with EPS growth. CenterPoint Energy remains committed to providing a secure dividend with stable, competitive growth. Consistent with this strategy, CenterPoint Energy’s board of directors will continue to review quarterly dividends, which will be based upon factors such as recent and projected earnings growth and financial liquidity.
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Page 3 of 6
Outlook for 2015
CenterPoint Energy reaffirms that its earnings estimate for 2015 utility operations is in the range of $0.71 - $0.75 per diluted share. The company expects its 2015 earnings estimate from midstream investments to be in the range of $0.29 - $0.35 per diluted share. On a consolidated basis, CenterPoint Energy reaffirms earnings on a guidance basis for 2015 in the range of $1.00 - $1.10 per diluted share. We anticipate utility operations earnings for 2015 near the high end of the range while midstream investments’ earnings are anticipated to be near the low end of the range provided.
The utility operations guidance range considers performance to date and certain significant variables that may impact earnings, such as weather, regulatory and judicial proceedings, throughput, commodity prices, effective tax rates, and financing activities. In providing this guidance, the company does not include other potential impacts, such as changes in accounting standards or unusual items, earnings from the change in the value of the ZENS securities and the related stocks, or the timing effects of mark-to-market accounting in the company’s energy service business.
In providing guidance for equity investments in midstream operations, the company assumes a 55.4 percent limited partner ownership interest in Enable Midstream and includes the amortization of our basis differential in Enable Midstream. The company’s guidance takes into account such factors as Enable Midstream’s most recent public outlook for 2015 dated August 5, 2015, and effective tax rates. The company does not include other potential impacts such as any changes in accounting standards or Enable Midstream’s unusual items.
Page 4 of 6
CenterPoint Energy, Inc. and Subsidiaries
Reconciliation of Net Income and diluted EPS to the basis used in providing 2015 annual earnings guidance
| Quarter Ended | Six Months Ended | |||||||||||||||
| June 30, 2015 | June 30, 2015 | |||||||||||||||
| Net Income (in millions) |
EPS | Net Income (in millions) |
EPS | |||||||||||||
| Consolidated as reported |
$ | 77 | $ | 0.18 | $ | 208 | $ | 0.48 | ||||||||
| Midstream Investments |
(27 | ) | (0.06 | ) | (60 | ) | (0.14 | ) | ||||||||
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| Utility Operations (1) |
50 | $ | 0.12 | 148 | $ | 0.34 | ||||||||||
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| Timing effects impacting CES (2): |
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| Mark-to-market (gain) losses |
(2 | ) | (0.01 | ) | 1 | - | ||||||||||
| ZENS-related mark-to-market (gains) losses: |
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| Marketable securities (3) |
(51 | ) | (0.12 | ) | (40 | ) | (0.09 | ) | ||||||||
| Indexed debt securities (4) |
60 | 0.14 | 44 | 0.10 | ||||||||||||
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| Utility operations earnings on an adjusted guidance basis |
$ | 57 | $ | 0.13 | $ | 153 | $ | 0.35 | ||||||||
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| Per the basis used in providing 2015 earnings guidance: |
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| Utility Operations on a guidance basis |
$ | 57 | $ | 0.13 | $ | 153 | $ | 0.35 | ||||||||
| Midstream Investments |
27 | 0.06 | 60 | 0.14 | ||||||||||||
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| 2015 Consolidated on guidance basis |
$ | 84 | $ | 0.19 | $ | 213 | $ | 0.49 | ||||||||
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| (1) | CenterPoint earnings excluding Midstream Investments |
| (2) | Energy Services segment |
| (3) | Time Warner Inc., Time Warner Cable Inc., Time Inc. and AOL Inc. |
| (4) | Includes amount associated with Verizon tender offer for AOL, Inc common stock |
Page 5 of 6
Filing of Form 10-Q for CenterPoint Energy, Inc.
Today, CenterPoint Energy, Inc. filed with the Securities and Exchange Commission (SEC) its Quarterly Report on Form 10-Q for the period ended June 30, 2015. A copy of that report is available on the company’s website, under the Investors section. Other filings the company makes with the SEC and certain documents relating to its corporate governance can also be found under the Investors section.
Webcast of Earnings Conference Call
CenterPoint Energy’s management will host an earnings conference call on Monday, August 10, 2015, at 10:30 a.m. Central time or 11:30 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.
CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution and energy services operations. The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. The company also owns a 55.4 percent limited partner interest in Enable Midstream Partners, a publicly traded master limited partnership it jointly controls with OGE Energy Corp., which owns, operates and develops natural gas and crude oil infrastructure assets. With more than 7,400 employees, CenterPoint Energy and its predecessor companies have been in business for more than 140 years. For more information, visit the website at www.CenterPointEnergy.com.
This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 regarding future earnings, and future financial performance and results of operations, including, but not limited to earnings guidance, targeted dividend growth rate and any other statements that are not historical facts are forward-looking statements. Each forward-looking statement contained in this news release speaks only as of the date of this release. Factors that could affect actual results include (1) state and federal legislative and regulatory actions or developments affecting various aspects of CenterPoint Energy’s businesses (including the businesses of Enable Midstream Partners (Enable Midstream)), including, among others, energy deregulation or re-regulation, pipeline integrity and safety, health care reform, financial reform, tax legislation, and actions regarding the rates charged by CenterPoint Energy’s regulated businesses; (2) state and federal legislative and regulatory actions or developments relating to the environment, including those related to global climate change; (3) timely and appropriate rate actions that allow recovery of costs and a reasonable return on investment; (4) the timing and outcome of any audits, disputes or other proceedings related to taxes; (5) problems with construction, implementation of necessary technology or other issues with respect to major capital projects that result in delays or in cost overruns that cannot be recouped in rates; (6) industrial, commercial and residential growth in CenterPoint Energy’s service territories and changes in market demand, including the effects of energy efficiency measures and demographic patterns; (7) the timing and extent of changes in commodity prices, particularly natural gas and natural gas liquids, and the effects of geographic and seasonal commodity price differentials, and the impact of commodity changes on producer related activities; (8) weather variations and other natural phenomena, including the impact on operations and capital from severe weather events; (9) any direct or indirect effects on CenterPoint Energy’s facilities, operations and financial condition resulting from terrorism, cyber-attacks, data security breaches or other attempts to disrupt its businesses or the businesses of third parties, or other catastrophic events; (10) the impact of unplanned facility outages; (11) timely and appropriate regulatory actions allowing securitization or other recovery of costs associated with any future hurricanes or natural disasters; (12) changes in interest rates or rates of inflation; (13) commercial bank and financial market conditions, CenterPoint Energy’s access to capital, the cost of such capital, and the results of its financing and refinancing efforts, including availability of funds in the debt capital markets; (14) actions by credit rating agencies; (15) effectiveness of CenterPoint Energy’s risk
Page 6 of 6
management activities; (16) inability of various counterparties to meet their obligations; (17) non-payment for services due to financial distress of CenterPoint Energy’s customers; (18) the ability of GenOn Energy, Inc. (formerly known as RRI Energy, Inc.), a wholly owned subsidiary of NRG Energy, Inc., and its subsidiaries to satisfy their obligations to CenterPoint Energy and its subsidiaries; (19) the ability of retail electric providers, and particularly the largest customers of the TDU, to satisfy their obligations to CenterPoint Energy and its subsidiaries; (20) the outcome of litigation brought by or against CenterPoint Energy or its subsidiaries; (21) CenterPoint Energy’s ability to control costs, invest planned capital, or execute growth projects; (22) the investment performance of pension and postretirement benefit plans; (23) potential business strategies, including restructurings, joint ventures, and acquisitions or dispositions of assets or businesses, for which no assurance can be given that they will be completed or will provide the anticipated benefits to CenterPoint Energy; (24) acquisition and merger activities involving CenterPoint Energy or its competitors; (25) future economic conditions in regional and national markets and their effects on sales, prices and costs; (26) the performance of Enable Midstream, the amount of cash distributions CenterPoint Energy receives from Enable Midstream, and the value of its interest in Enable Midstream, and factors that may have a material impact on such performance, cash distributions and value, including certain of the factors specified above and: (A) the integration of the operations of the businesses contributed to Enable Midstream; (B) the achievement of anticipated operational and commercial synergies and expected growth opportunities, and the successful implementation of Enable Midstream’s business plan; (C) competitive conditions in the midstream industry, and actions taken by Enable Midstream’s customers and competitors, including the extent and timing of the entry of additional competition in the markets served by Enable Midstream; (D) the timing and extent of changes in the supply of natural gas and associated commodity prices, particularly natural gas and natural gas liquids, the competitive effects of the available pipeline capacity in the regions served by Enable Midstream, and the effects of geographic and seasonal commodity price differentials, including the effects of these circumstances on re-contracting available capacity on Enable Midstream’s interstate pipelines; (E) the demand for natural gas, NGLs and transportation and storage services; (F) changes in tax status; (G) access to growth capital; and (H) the availability and prices of raw materials for current and future construction projects; (27) effective tax rate; (28) other factors discussed in CenterPoint Energy’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as well as in CenterPoint Energy’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, and June 30, 2015, and other reports CenterPoint Energy or its subsidiaries may file from time to time with the Securities and Exchange Commission.
Use of Non-GAAP Financial Measures
In addition to presenting its financial results in accordance with generally accepted accounting principles (GAAP), CenterPoint Energy also provides guidance based on adjusted diluted earnings per share, which is a non-GAAP financial measure. 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. A reconciliation of net income and diluted earnings per share to the basis used in providing 2015 guidance is provided in this news release.
Management evaluates financial performance in part based on adjusted diluted earnings per share and believes that presenting this non-GAAP financial measure 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 by excluding items that Management does not believe most accurately reflect its fundamental business performance, which items include the items reflected in the reconciliation table of this news release. This non-GAAP financial measure should be considered as a supplement and complement to, and not as a substitute for, or superior to, the most directly comparable GAAP financial measure and may be different than non-GAAP financial measures used by other companies.
###
CenterPoint Energy, Inc. and Subsidiaries
Statements of Consolidated Income
(Millions of Dollars)
(Unaudited)
| Quarter Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Revenues: |
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| Electric Transmission & Distribution |
$ | 705 | $ | 698 | $ | 1,317 | $ | 1,327 | ||||||||
| Natural Gas Distribution |
427 | 532 | 1,620 | 2,019 | ||||||||||||
| Energy Services |
408 | 676 | 1,058 | 1,760 | ||||||||||||
| Other Operations |
3 | 3 | 7 | 7 | ||||||||||||
| Eliminations |
(11 | ) | (25 | ) | (37 | ) | (66 | ) | ||||||||
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| Total |
1,532 | 1,884 | 3,965 | 5,047 | ||||||||||||
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| Expenses: |
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| Natural gas |
529 | 880 | 1,883 | 2,923 | ||||||||||||
| Operation and maintenance |
488 | 469 | 986 | 948 | ||||||||||||
| Depreciation and amortization |
239 | 256 | 456 | 491 | ||||||||||||
| Taxes other than income taxes |
90 | 93 | 198 | 204 | ||||||||||||
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| Total |
1,346 | 1,698 | 3,523 | 4,566 | ||||||||||||
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| Operating Income |
186 | 186 | 442 | 481 | ||||||||||||
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| Other Income (Expense) : |
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| Gain on marketable securities |
79 | 72 | 62 | 42 | ||||||||||||
| Loss on indexed debt securities |
(91 | ) | (50 | ) | (67 | ) | (7 | ) | ||||||||
| Interest and other finance charges |
(89 | ) | (89 | ) | (178 | ) | (173 | ) | ||||||||
| Interest on transition and system restoration bonds |
(27 | ) | (30 | ) | (55 | ) | (60 | ) | ||||||||
| Equity in earnings of unconsolidated affiliates |
43 | 71 | 95 | 162 | ||||||||||||
| Other - net |
13 | 9 | 24 | 18 | ||||||||||||
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| Total |
(72 | ) | (17 | ) | (119 | ) | (18 | ) | ||||||||
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| Income Before Income Taxes |
114 | 169 | 323 | 463 | ||||||||||||
| Income Tax Expense |
37 | 62 | 115 | 171 | ||||||||||||
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| Net Income |
$ | 77 | $ | 107 | $ | 208 | $ | 292 | ||||||||
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Reference is made to the Notes to the Consolidated Financial Statements
contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Selected Data From Statements of Consolidated Income
(Millions of Dollars, Except Share and Per Share Amounts)
(Unaudited)
| Quarter Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Basic Earnings Per Common Share |
$ | 0.18 | $ | 0.25 | $ | 0.48 | $ | 0.68 | ||||||||
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| Diluted Earnings Per Common Share |
$ | 0.18 | $ | 0.25 | $ | 0.48 | $ | 0.68 | ||||||||
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| Dividends Declared per Common Share |
$ | 0.2475 | $ | 0.2375 | 0.4950 | $ | 0.4750 | |||||||||
| Weighted Average Common Shares Outstanding (000): |
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| - Basic |
430,235 | 429,773 | 430,096 | 429,470 | ||||||||||||
| - Diluted |
431,733 | 431,409 | 431,594 | 431,106 | ||||||||||||
| Operating Income by Segment |
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| Electric Transmission & Distribution: |
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| Electric Transmission and Distribution Operations |
$ | 131 | $ | 115 | $ | 199 | $ | 190 | ||||||||
| Transition and System Restoration Bond Companies |
27 | 30 | 55 | 60 | ||||||||||||
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| Total Electric Transmission & Distribution |
158 | 145 | 254 | 250 | ||||||||||||
| Natural Gas Distribution |
19 | 30 | 165 | 192 | ||||||||||||
| Energy Services |
9 | 11 | 22 | 37 | ||||||||||||
| Other Operations |
- | - | 1 | 2 | ||||||||||||
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| Total |
$ | 186 | $ | 186 | $ | 442 | $ | 481 | ||||||||
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Reference is made to the Notes to the Consolidated Financial Statements
contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
| Electric Transmission & Distribution | ||||||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||||||
| June 30, | % Diff | June 30, | % Diff | |||||||||||||||||||||
| 2015 | 2014 | Fav/(Unfav) | 2015 | 2014 | Fav/(Unfav) | |||||||||||||||||||
| Results of Operations: |
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| Revenues: |
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| Electric transmission and distribution utility |
$ | 585 | $ | 554 | 6 | % | $ | 1,099 | $ | 1,056 | 4 | % | ||||||||||||
| Transition and system restoration bond companies |
120 | 144 | (17 | %) | 218 | 271 | (20 | %) | ||||||||||||||||
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| Total |
705 | 698 | 1 | % | 1,317 | 1,327 | (1 | %) | ||||||||||||||||
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| Expenses: |
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| Operation and maintenance |
315 | 300 | (5 | %) | 622 | 588 | (6 | %) | ||||||||||||||||
| Depreciation and amortization |
84 | 83 | (1 | %) | 167 | 164 | (2 | %) | ||||||||||||||||
| Taxes other than income taxes |
55 | 56 | 2 | % | 111 | 114 | 3 | % | ||||||||||||||||
| Transition and system restoration bond companies |
93 | 114 | 18 | % | 163 | 211 | 23 | % | ||||||||||||||||
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| Total |
547 | 553 | 1 | % | 1,063 | 1,077 | 1 | % | ||||||||||||||||
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| Operating Income |
$ | 158 | $ | 145 | 9 | % | $ | 254 | $ | 250 | 2 | % | ||||||||||||
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| Operating Income: |
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| Electric transmission and distribution operations |
$ | 131 | $ | 115 | 14 | % | $ | 199 | $ | 190 | 5 | % | ||||||||||||
| Transition and system restoration bond companies |
27 | 30 | (10 | %) | 55 | 60 | (8 | %) | ||||||||||||||||
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| Total Segment Operating Income |
$ | 158 | $ | 145 | 9 | % | $ | 254 | $ | 250 | 2 | % | ||||||||||||
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| Electric Transmission & Distribution Operating Data: |
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| Actual MWH Delivered |
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| Residential |
7,483,440 | 6,981,075 | 7 | % | 12,896,234 | 12,263,459 | 5 | % | ||||||||||||||||
| Total |
21,751,298 | 20,608,379 | 6 | % | 39,766,074 | 38,327,190 | 4 | % | ||||||||||||||||
| Weather (average for service area): |
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| Percentage of 10-year average: |
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| Cooling degree days |
102 | % | 87 | % | 15 | % | 97 | % | 83 | % | 14 | % | ||||||||||||
| Heating degree days |
8 | % | 205 | % | (197 | %) | 130 | % | 138 | % | (8 | %) | ||||||||||||
| Number of metered customers - end of period: |
||||||||||||||||||||||||
| Residential |
2,054,777 | 2,008,293 | 2 | % | 2,054,777 | 2,008,293 | 2 | % | ||||||||||||||||
| Total |
2,322,164 | 2,272,293 | 2 | % | 2,322,164 | 2,272,293 | 2 | % | ||||||||||||||||
| Natural Gas Distribution | ||||||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||||||
| June 30, | % Diff | June 30, | % Diff | |||||||||||||||||||||
| 2015 | 2014 | Fav/(Unfav) | 2015 | 2014 | Fav/(Unfav) | |||||||||||||||||||
| Results of Operations: |
||||||||||||||||||||||||
| Revenues |
$ | 427 | $ | 532 | (20 | %) | $ | 1,620 | $ | 2,019 | (20 | %) | ||||||||||||
| Natural gas |
152 | 251 | 39 | % | 908 | 1,290 | 30 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Gross Margin |
275 | 281 | (2 | %) | 712 | 729 | (2 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Expenses: |
||||||||||||||||||||||||
| Operation and maintenance |
169 | 168 | (1 | %) | 355 | 355 | - | |||||||||||||||||
| Depreciation and amortization |
55 | 49 | (12 | %) | 110 | 97 | (13 | %) | ||||||||||||||||
| Taxes other than income taxes |
32 | 34 | 6 | % | 82 | 85 | 4 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total |
256 | 251 | (2 | %) | 547 | 537 | (2 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating Income |
$ | 19 | $ | 30 | (37 | %) | $ | 165 | $ | 192 | (14 | %) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Natural Gas Distribution Operating Data: |
||||||||||||||||||||||||
| Throughput data in BCF |
||||||||||||||||||||||||
| Residential |
19 | 21 | (10 | %) | 116 | 128 | (9 | %) | ||||||||||||||||
| Commercial and Industrial |
56 | 55 | 2 | % | 144 | 151 | (5 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Throughput |
75 | 76 | (1 | %) | 260 | 279 | (7 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Weather (average for service area) |
||||||||||||||||||||||||
| Percentage of 10-year average: |
||||||||||||||||||||||||
| Heating degree days |
92 | % | 141 | % | (49 | %) | 109 | % | 128 | % | (19 | %) | ||||||||||||
| Number of customers - end of period: |
||||||||||||||||||||||||
| Residential |
3,112,902 | 3,080,462 | 1 | % | 3,112,902 | 3,080,462 | 1 | % | ||||||||||||||||
| Commercial and Industrial |
249,142 | 246,055 | 1 | % | 249,142 | 246,055 | 1 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total |
3,362,044 | 3,326,517 | 1 | % | 3,362,044 | 3,326,517 | 1 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
| Energy Services | ||||||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||||||
| June 30, | % Diff | June 30, | % Diff | |||||||||||||||||||||
| 2015 | 2014 | Fav/(Unfav) | 2015 | 2014 | Fav/(Unfav) | |||||||||||||||||||
| Results of Operations: |
||||||||||||||||||||||||
| Revenues |
$ | 408 | $ | 676 | (40 | %) | $ | 1,058 | $ | 1,760 | (40 | %) | ||||||||||||
| Natural gas |
388 | 653 | 41 | % | 1,012 | 1,698 | 40 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Gross Margin |
20 | 23 | (13 | %) | 46 | 62 | (26 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Expenses: |
||||||||||||||||||||||||
| Operation and maintenance |
9 | 10 | 10 | % | 21 | 22 | 5 | % | ||||||||||||||||
| Depreciation and amortization |
1 | 1 | - | 2 | 2 | - | ||||||||||||||||||
| Taxes other than income taxes |
1 | 1 | - | 1 | 1 | - | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total |
11 | 12 | 8 | % | 24 | 25 | 4 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating Income |
$ | 9 | $ | 11 | (18 | %) | $ | 22 | $ | 37 | (41 | %) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Mark-to-market gain (loss) |
$ | 2 | $ | 6 | (67 | %) | $ | (2 | ) | $ | 10 | (120 | %) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Energy Services Operating Data: |
||||||||||||||||||||||||
| Throughput data in BCF |
136 | 139 | (2 | %) | 321 | 323 | (1 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Number of customers - end of period |
18,073 | 17,746 | 2 | % | 18,073 | 17,746 | 2 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Other Operations | ||||||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||||||
| June 30, | % Diff | June 30, | % Diff | |||||||||||||||||||||
| 2015 | 2014 | Fav/(Unfav) | 2015 | 2014 | Fav/(Unfav) | |||||||||||||||||||
| Results of Operations: |
||||||||||||||||||||||||
| Revenues |
$ | 3 | $ | 3 | - | $ | 7 | $ | 7 | - | ||||||||||||||
| Expenses |
3 | 3 | - | 6 | 5 | (20 | %) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating Income |
$ | - | $ | - | - | $ | 1 | $ | 2 | (50 | %) | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Capital Expenditures by Segment
(Millions of Dollars)
(Unaudited)
| Quarter Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Capital Expenditures by Segment |
||||||||||||||||
| Electric Transmission & Distribution |
$ | 220 | $ | 183 | $ | 428 | $ | 370 | ||||||||
| Natural Gas Distribution |
153 | 147 | 244 | 230 | ||||||||||||
| Energy Services |
- | 1 | 1 | 2 | ||||||||||||
| Other Operations |
8 | 12 | 17 | 27 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 381 | $ | 343 | $ | 690 | $ | 629 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Interest Expense Detail
(Millions of Dollars)
(Unaudited)
| Quarter Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Interest Expense Detail |
||||||||||||||||
| Amortization of Deferred Financing Cost |
$ | 7 | $ | 7 | $ | 13 | $ | 13 | ||||||||
| Capitalization of Interest Cost |
(2 | ) | (3 | ) | (5 | ) | (6 | ) | ||||||||
| Transition and System Restoration Bond Interest Expense |
27 | 30 | 55 | 60 | ||||||||||||
| Other Interest Expense |
84 | 85 | 170 | 166 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Interest Expense |
$ | 116 | $ | 119 | $ | 233 | $ | 233 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Millions of Dollars)
(Unaudited)
| June 30, | December 31, | |||||||
| 2015 | 2014 | |||||||
| ASSETS | ||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 245 | $ | 298 | ||||
| Other current assets |
2,264 | 2,970 | ||||||
|
|
|
|
|
|||||
| Total current assets |
2,509 | 3,268 | ||||||
|
|
|
|
|
|||||
| Property, Plant and Equipment, net |
10,911 | 10,502 | ||||||
|
|
|
|
|
|||||
| Other Assets: |
||||||||
| Goodwill |
840 | 840 | ||||||
| Regulatory assets |
3,324 | 3,527 | ||||||
| Investment in unconsolidated affiliates |
4,471 | 4,521 | ||||||
| Other non-current assets |
547 | 542 | ||||||
|
|
|
|
|
|||||
| Total other assets |
9,182 | 9,430 | ||||||
|
|
|
|
|
|||||
| Total Assets |
$ | 22,602 | $ | 23,200 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities: |
||||||||
| Short-term borrowings |
$ | 24 | $ | 53 | ||||
| Current portion of transition and system restoration bonds long-term debt |
381 | 372 | ||||||
| Indexed debt |
149 | 152 | ||||||
| Current portion of other long-term debt |
397 | 271 | ||||||
| Other current liabilities |
2,174 | 2,627 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
3,125 | 3,475 | ||||||
|
|
|
|
|
|||||
| Other Liabilities: |
||||||||
| Accumulated deferred income taxes, net |
4,863 | 4,757 | ||||||
| Regulatory liabilities |
1,269 | 1,206 | ||||||
| Other non-current liabilities |
1,181 | 1,205 | ||||||
|
|
|
|
|
|||||
| Total other liabilities |
7,313 | 7,168 | ||||||
|
|
|
|
|
|||||
| Long-term Debt: |
||||||||
| Transition and system restoration bonds |
2,466 | 2,674 | ||||||
| Other |
5,148 | 5,335 | ||||||
|
|
|
|
|
|||||
| Total long-term debt |
7,614 | 8,009 | ||||||
|
|
|
|
|
|||||
| Shareholders’ Equity |
4,550 | 4,548 | ||||||
|
|
|
|
|
|||||
| Total Liabilities and Shareholders’ Equity |
$ | 22,602 | $ | 23,200 | ||||
|
|
|
|
|
|||||
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Condensed Statements of Consolidated Cash Flows
(Millions of Dollars)
(Unaudited)
| Six Months Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
| Cash Flows from Operating Activities: |
||||||||
| Net income |
$ | 208 | $ | 292 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
470 | 505 | ||||||
| Deferred income taxes |
4 | 13 | ||||||
| Write-down of natural gas inventory |
2 | - | ||||||
| Changes in net regulatory assets |
78 | 46 | ||||||
| Changes in other assets and liabilities |
354 | (143 | ) | |||||
| Other, net |
6 | (1 | ) | |||||
|
|
|
|
|
|||||
| Net Cash Provided by Operating Activities |
1,122 | 712 | ||||||
| Net Cash Used in Investing Activities |
(671 | ) | (659 | ) | ||||
| Net Cash Used in Financing Activities |
(504 | ) | (55 | ) | ||||
|
|
|
|
|
|||||
| Net Decrease in Cash and Cash Equivalents |
(53 | ) | (2 | ) | ||||
| Cash and Cash Equivalents at Beginning of Period |
298 | 208 | ||||||
|
|
|
|
|
|||||
| Cash and Cash Equivalents at End of Period |
$ | 245 | $ | 206 | ||||
|
|
|
|
|
|||||
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc.
 August 10, 2015
Second Quarter 2015 Earnings Call
• Regulatory Update • Guidance Reaffirmed • Dividend to Grow with Earnings Exhibit 99.2 |
 investors.centerpointenergy.com
2 Cautionary Statement This presentation contains statements concerning our expectations, beliefs, plans, objectives, goals, strategies, future events or performance or underlying assumptions (including future dividends) and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or implied by these statements. You
can generally identify our forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,”
“goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “projection,” “should,” “will,” or other similar words. The
absence of these words, however, does not mean that the
statements are not forward-looking. We have based our
forward-looking statements on our management's beliefs and assumptions based on information currently available to our management at the time the statements are made. We caution you that assumptions, beliefs, expectations, intentions, and projections about future events may and often do vary materially
from actual results. Therefore, we cannot assure you that actual results will not differ materially from those expressed or implied by our forward-looking statements.
Some of the factors that could cause actual results to differ from those
expressed or implied by our forward-looking statements include but are not limited to the timing and impact of future regulatory, legislative and IRS decisions, financial market conditions, future market conditions, economic and employment conditions, customer growth
and other factors described in CenterPoint Energy, Inc.’s Form 10-K for the period ended December 31, 2014 under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Certain Factors Affecting Future Earnings,” in CenterPoint Energy, Inc.’s Form 10-Q for the quarter ended June 30, 2015 under “Cautionary Statement Regarding
Forward-Looking Information,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of CenterPoint Energy, Inc. and Subsidiaries” and in other filings with the SEC by CenterPoint Energy, which can be found at www.centerpointenergy.com on the Investor Relations page or on the SEC’s website at www.sec.gov . This presentation contains time sensitive information that is accurate as of the date hereof. Some of the information in this
presentation in unaudited and may be subject to change. We undertake no obligation to update the information presented herein except as required by law.
Investors and others should note that we may announce material information
using SEC filings, press releases, public conference calls, webcasts and the Investors 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. Use of Non-GAAP Financial Measures In addition to presenting its financial results in accordance with generally accepted accounting principles (“GAAP”),
CenterPoint Energy also provides guidance based on adjusted diluted earnings per share, which is a non-GAAP financial measure. 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. A full reconciliation of net income and diluted earnings per share to the basis used in providing guidance is provided in this presentation on slide 22. Additionally, on slides 18 and 23, management presents a further adjustment and reconciliation
of adjusted diluted earnings per share to a 2014 baseline metric, which provides management’s starting point for forecasting earnings growth, by adjusting for unusual weather impacts, true-up variations and an unusual energy efficiency bonus. These additional adjustments are provided to further explain the basis for management’s guidance estimate. These non-GAAP financial measure should be considered as a supplement and complement to, and not as a substitute for, or superior to, the most directly comparable GAAP financial measure and may be different than non-GAAP financial measures used by other
companies. Management evaluates financial performance in part
based on adjusted diluted earnings per share and believes that presenting this non-GAAP financial measure 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 by excluding items that Management does not believe most accurately reflect its fundamental business performance, which items include the items reflected in the reconciliation table on page 22 of this presentation. This non-GAAP financial measure should be considered as a supplement and complement to, and not as a substitute for, or superior to, the most directly
comparable GAAP financial measure and may be different than non-GAAP financial measures used by other companies. |
 investors.centerpointenergy.com
3 Scott Prochazka – President and CEO Earnings Call Discussion Highlights Solid Second Quarter Results Utility Operations Update Midstream Investment Update |
 investors.centerpointenergy.com
$0.13 $0.10 $0.06 $0.11 2015 2014 $0.12 $0.14 $0.06 $0.11 2015 2014 4 Second Quarter 2015 Performance Highlights Q2 GAAP EPS Q2 2015 vs Q2 2014 Drivers (EPS on a Guidance Basis) $0.21 $0.18 $0.19 Q2 EPS on a Guidance Basis 2Q15 Utility Operations EPS on a Guidance Basis vs 2Q14 Baseline $0.25 Favorable Variance Unfavorable Variance Note: Refer to slide 22 for reconciliation to GAAP measures and slide 2 for information on non-GAAP measures Rate Relief Midstream Investments Equity Return related to True-up Customer Growth $0.13 $0.10 2015 2014 Baseline |
 investors.centerpointenergy.com
5 Midstream Investments Enable Q2 Outlook 3-7% per unit distribution growth outlook for 2016 and 2017 Enable 2016 volume growth outlook High single digit growth in natural gas gathering volumes ~25% growth in natural gas processing volumes Doubling of crude oil gathering volumes Producers continue to invest significant capital in the plays around Enable’s footprint,
including the SCOOP, STACK, Cana Woodford and Cleveland Sands plays.
Enable has connected more wells year-to-date through July
2015 than the same period one year ago
To support rich gas volume growth in the Anadarko Basin, Enable continues to
add natural gas processing infrastructure
A 200 MMcf/d plant in Grady County, Oklahoma, expected in service during the
first quarter of 2016
Wildhorse plant, a newly announced 200 MMcf/d plant in Garvin County, Oklahoma, expected in service during the first quarter of 2017 Quarterly cash distribution increased to $0.316 per unit for the 2 nd quarter, representing an approximately 1% increase over the prior quarter Source: Enable Midstream Partners August 5 th , 2015, Press Release and Q2 Earnings Call |
 investors.centerpointenergy.com
6 Severe Storms Impacted Houston in April, May and June |
 investors.centerpointenergy.com
7 Tracy Bridge – EVP & President, Electric Division Earnings Call Discussion Highlights Electric Results Houston Growth Regulatory Update Raising our high voltage transmission towers to accommodate the new Highway US-99 corridor and to serve load growth |
 investors.centerpointenergy.com
$115 $131 $131 $13 $5 $8 ($5) ($2) ($3) $- $20 $40 $60 $80 $100 $120 $140 $160 Q2 2014 TDU Core Operating Income Usage, primarily weather Customer growth Rate relief Equity Return, primarily related to true- up proceeds O&M expense Depreciation and other Q2 2015 TDU Core Operating Income Electric Transmission and Distribution Operating Income Drivers: 2 nd Quarter 2014 vs 2 nd Quarter 2015 8 2% YoY Customer Growth 1 1 Houston Electric’s customer count increased from 2,272,293 as of June 30, 2014, to 2,322,164 as of June 30, 2015
2 Q2 2014 O&M versus Q2 2015 O&M, excluding costs with revenue offset
3 Net transmission related revenue 4 Right of Way revenue for 2Q 2015 was slightly above $1 million, in-line with 2Q 2014; YTD ROW revenue is approximately $9
million 4
2% YoY O&M Increase 2 3 |
 investors.centerpointenergy.com
9 Houston Electric: Residential Customers and Weather Normalized Residential Load vs. Houston Employment 2015 Residential customer growth rate through June 30, 2015: 2% annualized
Sources: 1 Company Provided 2 Texas Workforce Commission (Houston, Sugarland, Woodlands Metro) 1 1 2 Residential customer count grew 46,484 Q2 2014 to Q2 2015 Over 2% residential customer compound annual growth rate since 1990 |
 investors.centerpointenergy.com
Electric Transmission and Distribution:
Regulatory Update
DCRF – Distribution Cost Recovery Factor; TCOS – Transmission Cost of Service; EECRF – Energy Efficiency Cost Recovery Factor 10 Mechanism Expected Effective Date Annual Revenue Increase - $MM Comments Docket # DCRF Sept 2015 $13.0 (Settlement) Settlement unanimously approved on July 30, 2015 44572 TCOS 3Q 2015 $13.7 (Requested) Filed on June 26, 2015; based on an incremental increase in net plant of $87.6 MM 44881 EECRF 1Q 2016 $6.6 (Requested Incentive) Filed June 1, 2015; recovers expected program costs and a $6.6 MM performance incentive related to 2014’s energy efficiency program results 44783 Project Expected In- Service Capital - $MM Comments Docket # Brazos Valley Connection Mid-2018 $276 – 383 (Estimated) Routing and need decisions expected during 4Q 2015 44547 Rate Filings: Other Filings: |
 investors.centerpointenergy.com
11 Joe McGoldrick – EVP & President, Gas Division Earnings Call Discussion Highlights Gas Operations Results Regulatory Update Minnesota Belt Line Project Energy Services Update Using horizontal directional drilling to construct and install a new pipeline under the bed of the Arkansas River |
 investors.centerpointenergy.com
$30 $26 $19 $19 ($5) $1 $0 ($1) ($6) $0 $5 $10 $15 $20 $25 $30 $35 Q2 2014 Gas Utility Operating Income Usage, primarily weather Customer growth Rate relief O&M expense Depreciation and other Q2 2015 Gas Utility Operating Income 12 Natural Gas Utilities Operating Income Drivers: 2 nd Quarter 2014 vs 2 nd Quarter 2015 1% YoY Customer Growth 1 1% YoY O&M Growth 2 1 Natural Gas Utilities’ customer count increased from 3,326,517 on June 30, 2014, to 3,362,044 on June 30, 2015
2 Q2 2014 O&M versus Q2 2015 O&M, excluding costs with revenue offset |
 investors.centerpointenergy.com
Natural Gas Utilities: Regulatory Update
13 Jurisdiction Expected Effective Date Annual Revenue Increase - $MM Comments Docket # Minnesota Interim Rates 1 : October 2015 $54.1 (Requested) Rate case filed August 3, 2015; based on a 10.3% ROE and $213MM increase in rate base 15-424 Texas Coast September 2015 $4.9 (Settlement) Pending approval by the TX RRC; settlement established parameters for future GRIP filings GUD 10432 Rate Filings (in process): Jurisdiction Effective Date Annual Revenue Increase - $MM Comments Docket # South Texas July 2015 $4.0 Fourth Annual GRIP GUD 10435 Beaumont/ East Texas July 2015 $5.9 Second Annual GRIP GUD 10433 Rate Filings (approved): TX RRC – Texas Railroad Commission; GRIP – Gas Reliability Infrastructure Program 1 Interim rate amount to be determined |
 investors.centerpointenergy.com
The Belt Line
Supplies gas to more than 600,000
customers in the Minneapolis area
Replaces over 60 miles of 20’’ and
24’’ coupled steel pipe installed
primarily in the 1950s
The project is in its 4
th year and is expected to be completed in 2023, requiring over $400 million of capital Over $70 million invested to date The new pipe includes: remotely controlled valves, upgraded cathodic protection systems, and thicker, welded pipe with improved coating 14 Minnesota Belt Line Project One of many modernization construction projects, Belt Line is scheduled to be completed in 2023. The project is intended to improve system safety and reliability and reduce O&M costs |
 investors.centerpointenergy.com
$5 $7 $1 $1 $0 $2 $4 $6 $8 $10 $12 Q2 2014 Energy Services Operating Income Margin and Other O&M Expense Q2 2015 Energy Services Operating Income 15 Energy Services Operating Income Drivers: 2 nd Quarter 2014 vs 2 nd Quarter 2015 1 2 1 Operating income as reported in Q2 2014 was $11 million. Chart excludes mark-to-market gain of $6 million
2 Operating income as reported in Q2 2015 was $9 million. Chart excludes mark-to-market gain of $2 million
3 Energy Services’ customer count increased from 17,746 on June 30, 2014 to 18,073 on June 30, 2015
1.8% YoY Customer Growth 3 Lower O&M |
 investors.centerpointenergy.com
16 Bill Rogers – EVP & CFO Earnings Call Discussion Highlights Quarterly Drivers Dividend to Grow with Earnings Financing Plan Guidance Reaffirmed |
 investors.centerpointenergy.com
17 $0.10 $0.10 $0.01 ($0.01) $0.00 $0.02 $0.04 $0.06 $0.08 $0.10 $0.12 2014 Q2 Utility Operations on a Guidance Basis Q2 2014 EPS Impact due to Weather vs. Normal 2014-2015 Equity Return Variance Primarily from True- up Proceeds 2014 Q2 Utility Operations Baseline Q2 EPS Normalization GAAP to Guidance Basis to Baseline Note: Please refer to slide 22 for the full reconciliation table and slide 2 for
information on non-GAAP measures
Quarter Ended Quarter Ended June 30, 2014 June 30, 2015 Net Income (in millions) EPS Net Income (in millions) EPS Consolidated as reported 107 $
0.25
$
77
$
0.18 $
Midstream Investments
(44) (0.11)
(27)
(0.06) Utility Operations
(1) 63 0.14
$
50
0.12 $
Per the basis used in providing earnings guidance:
Utility Operations on a guidance basis
44 $
0.10 $
57 $
0.13 $
Midstream Investments
44 0.11 27 0.06 Consolidated on guidance basis
88 $
0.21 $
84 $
0.19 $
(1) CenterPoint earnings excluding Midstream Investments |
 investors.centerpointenergy.com
18 2014 Q2 Baseline EPS to 2015 Q2 EPS on a Guidance Basis The consolidated effective tax rate reported for the six months ended June 30, 2015 was 36% compared to 37% for the same period in 2014.
The lower effective tax rate was primarily due to the lower Texas
tax rate enacted on June 15, 2015 and favorable permanent book-tax differences. Note: Please refer to slide 22 for the full reconciliation table and slide 2 for
information on non-GAAP measures
$0.10 $0.13 $0.02 $0.00 $0.01 $0.00 $0.02 $0.04 $0.06 $0.08 $0.10 $0.12 2014 Q2 Utility Operations Baseline Business Unit Results (including growth, weather, usage, depreciation and other) Interest Expense Income Tax Rate 2015 Q2 Utility Operations on a Guidance Basis Quarter Ended Quarter Ended June 30, 2014 June 30, 2015 Net Income (in millions) EPS Net Income (in millions) EPS Consolidated as reported 107 $
0.25 $
77 $
0.18 $
Midstream Investments
(44) (0.11) (27) (0.06) Utility Operations
(1) 63 0.14 $
50 0.12 $
Per the basis used in providing earnings guidance:
Utility Operations on a guidance basis
44 $
0.10 $
57 $
0.13 $
Midstream Investments
44 0.11 27 0.06 Consolidated on guidance basis
88 $
0.21 $
84 $
0.19 $
(1) CenterPoint earnings excluding Midstream Investments |
 investors.centerpointenergy.com
Dividend Growth Outlook
CenterPoint is targeting 4-6% annual EPS growth on a
guidance basis through 2018, inclusive of Midstream
Investments Annual dividend growth in line with EPS growth CenterPoint’s consolidated payout ratio is expected to remain above 90% with a utility operations payout ratio of 60-70% 30-40% of utility operations earnings expected to be used to fund utility growth 19 |
 investors.centerpointenergy.com
2015 $200 million matured in June 2015 $69 million maturity in October 2015 Anticipate ~ $400 million financing needs 2016 $325 million maturity in May 2016 Anticipate financing needs similar to 2015; dependent on such factors as bonus depreciation, capital investment plans and working capital 1 Excludes transition and system restoration bonds 2 If appropriate, we may consider equity financing through the limited use of our DRIP and benefits plans. In 2014, if CenterPoint had issued new shares rather than purchased shares for the Dividend Reinvestment and Savings
Benefit plans, share dilution would have averaged about 1%. The maximum
number of shares that could be issued under these plans in future
years depends upon participation in the plans Financing
Plan Utilize Debt Capacity and Limited Equity Issuance
2 20 $0 $100 $200 $300 $400 $500 $600 $700 2015 2016 2017 2018 Long-term Debt Maturities ($MM) 1 CNP CEHE CERC 50.0% 54.0% 58.0% 62.0% 66.0% 70.0% 2010 2011 2012 2013 2014 2015 Debt/Capital CNP has substantially reduced leverage over the last five years YTD 1 Expect to source majority of financing needs through commercial paper borrowings and fixed rate debt |
 2 Appendix |
 investors.centerpointenergy.com
22 Reconciliation: Net Income and diluted EPS to the Basis Used in Providing Annual Earnings Guidance Note: For information on non-GAAP measures, please refer to slide 2
Quarter Ended
Quarter Ended
June 30, 2015
June 30, 2014
Net Income (in millions) EPS Net Income (in millions) EPS Consolidated as reported 77 $
0.18 $
107 $
0.25 $
Midstream Investments
(27) (0.06) (44) (0.11) Utility Operations (1) 50 0.12 $
63 0.14 $
Timing effects impacting CES
(2) : Mark-to-market (gain) losses (2) (0.01) (4) (0.01) $
ZENS-related mark-to-market (gains) losses:
Marketable securities
(3) (51) (0.12) (47) (0.11) $
Indexed debt securities
(4) 60 0.14 32 0.08 $
Utility operations earnings on an adjusted guidance basis
57 $
0.13 $
44 $
0.10 $
Per the basis used in providing earnings guidance:
Utility Operations on a guidance basis
57 $
0.13 $
44 $
0.10 $
Midstream Investments
27 0.06 44 0.11 Consolidated on guidance basis 84 $
0.19 $
88 $
0.21 $
(1) CenterPoint earnings excluding Midstream Investments (2) Energy Services segment (3) Time Warner Inc., Time Warner Cable Inc., Time Inc. and AOL Inc. (4) 2015 Includes amount associated with Verizon tender offer for AOL, Inc common stock |
 investors.centerpointenergy.com
2014 EPS Reconciliation to 2015 Utility Operations
Guidance Range of $0.71 to $0.75 per diluted share
23 2014 Fully Diluted EPS $ 1.42 On an adjusted guidance basis: ZENS-related mark to market gains (0.12) CES MTM gain (0.04) Pension Curtailment loss 0.01 2014 Consolidated EPS on a guidance basis $ 1.27 Deferred Tax Benefit (0.07) 2014 Fully Adjusted EPS $ 1.20 Midstream Investments (0.44) 2014 Fully Adjusted Utility Operations EPS $ 0.76 (1) The Equity Amortization schedule on page 19 of the supplemental materials posted on February 26, 2015 details the decrease between the
2014 actual and 2015 projected equity returns
(2)
Information about the 2008 Energy Efficiency Cost Recovery Factor Appeals is
provided in the 2014 10-K Note: Please refer to slide 2
for information on non-GAAP measures 1
2 $0.76 $0.70 $0.71 - $0.75 ($0.03) ($0.02) ($0.01) $0.01 to $0.05 $0.40 $0.45 $0.50 $0.55 $0.60 $0.65 $0.70 $0.75 $0.80 2014 Fully Adjusted Utility Operations EPS Equity Return related to True-up Weather Energy Efficiency Remand Bonus 2014 Utility Operations Baseline Growth and Other Variables 2015 Utility Operations EPS Guidance Range $0.71 to $0.75 Q1 ($0.01) Q2 ($0.01) Q3 ($0.01) Q4 - Q1 ($0.05) Q2 $0.01 Q3 $0.01 Q4 $0.01 Q1 Q2 Q3 ($0.01) Q4 For 2014, normalized $0.76 of fully adjusted earnings to a baseline of $0.70. In comparing to Q2 of 2014, “baseline” was equal to guidance. Adjustments for each quarter can be seen in the tan boxes below. |