Release and Selected Exhibits
Presentation and Complete Earnings Exhibits
SAN FRANCISCO, Calif.—PG&E Corporation's (NYSE: PCG) second-quarter 2015 net income after dividends on preferred stock (also called "income available for common shareholders") was $402 million or $0.83 per share, as reported in accordance with generally accepted accounting principles (GAAP). This compares with $267 million, or $0.57 per share, for the second quarter of 2014.
GAAP results include items that management does not consider part of the normal course of operations (items impacting comparability), which totaled $67 million pre-tax, or $0.08 per share, for the quarter. These items included accruals related to the expected disallowance of certain gas transmission capital expenditures that PG&E believes will be treated as part of the previously announced penalty resulting from the San Bruno investigation. Other items included expenses related to pipeline safety enhancement work, as well as legal and regulatory costs associated with natural gas matters. These were offset partially by insurance recoveries.
"We're committed to ongoing investment and innovation to meet the needs of our customers and to help California achieve its clean energy, environmental and economic goals. During the quarter, we delivered strong operational performance and took steps to mitigate the impact of California's drought and wildfires on our operations this summer. On the regulatory front, we saw progress toward simplifying rate structures and we filed our longer-term plans for continued grid modernization to meet our customers' evolving needs to integrate solar, utilize storage and adopt other innovations," said Tony Earley, Chairman, CEO and President of PG&E Corporation.
Second-Quarter Earnings from Operations
On a non-GAAP basis, excluding items impacting comparability, PG&E Corporation's earnings from operations for the second quarter of 2015 were $442 million, or $0.91 per share, up from $324 million, or $0.69 per share, during the same period in 2014. The largest factor contributing to this quarter-over-quarter increase was the timing of the final decision in the 2014 General Rate Case (GRC), which was received in the third quarter last year. Growth in rate base authorized in the GRC decision also contributed to the quarter-over-quarter difference. These and other positive items were offset in part by lower cost recovery due to the timing of the company's pending Gas Transmission rate case. A final decision in that case now appears likely in 2016, based on a revised schedule issued recently by the California Public Utilities Commission.
2015 Earnings Guidance
In light of the revised schedule for the Gas Transmission rate case, PG&E Corporation is updating 2015 guidance for non-GAAP earnings from operations. Updated guidance reflecting the timing of the decision is now $2.90 to $3.10 per share, compared with the previously issued range of $3.50 to $3.70 per share. On a GAAP basis, the range for projected earnings is now $1.51 to $1.83 per share, reflecting the impact of the penalties assessed by the CPUC as well as other items, compared with $1.93 to $2.25 per share previously. Guidance is based on various assumptions and forecasts, including those relating to expenses, authorized revenues, capital expenditures, rate base, and equity issuances.
PG&E Corporation discloses historical financial results and provides guidance based on "earnings from operations" in order to provide a measure that allows investors to compare the underlying financial performance of the business from one period to another, exclusive of items that management believes do not reflect the normal course of operations. Earnings from operations are not a substitute or alternative for consolidated income available for common shareholders presented in accordance with GAAP. See the accompanying tables for a reconciliation of the differences between results and guidance based on earnings from operations and results and guidance based on consolidated income available for common shareholders.
Supplemental Financial Information
In addition to the financial information accompanying this release, presentation slides for today's conference call with the financial community, including some of the assumptions and forecasts underlying 2015 EPS guidance, have been furnished to the Securities and Exchange Commission and are available on PG&E Corporation's website at: http://investor.pgecorp.com/financials/quarterly-earnings-reports/default.aspx.
Conference Call with the Financial Community to Discuss Financial Results
Today's call at 10:00 a.m., Eastern Time, is open to the public on a listen-only basis via webcast. Please visit http://investor.pgecorp.com/news-events/events-and-presentations/default.aspx for more information and instructions for accessing the webcast. The call will be archived on the website. Alternatively, a toll-free replay of the conference call may be accessed shortly after the live call through August 12, 2015, by dialing (866) 415-9493. International callers may dial (205) 289-3247. For both domestic and international callers, the confirmation code 24191# will be required to access the replay.
Management's statements providing guidance for PG&E Corporation's 2015 financial results and the underlying assumptions and forecasts constitute forward-looking statements that reflect management's judgment and opinions. These statements and assumptions are necessarily subject to various risks and uncertainties, the realization or resolution of which may be outside management's control. Actual results may differ materially. Factors that could cause actual results to differ materially include:
About PG&E Corporation
- developments that may occur in the federal criminal prosecution of the Utility, the CPUC's investigation of the Utility's natural gas distribution operations, and whether the CPUC's Safety and Enforcement Division imposes fines on the Utility with respect to self-reported or alleged noncompliance with safety regulations;
- the timing and outcome of the CPUC's investigation and the pending criminal investigations relating to communications between the Utility and the CPUC that may have violated the CPUC's rules regarding ex parte communications or are otherwise alleged to be improper, and whether such matters negatively affect the final outcomes of pending ratemaking proceedings;
- the Utility's ability to control its costs within the adopted levels of spending and the extent to which actual costs that are not recovered through rates exceed the forecast of unrecovered costs due to changes in cost forecasts or the scope and timing of planned work;
- the amount and timing of additional equity and debt issuances and whether PG&E Corporation and the Utility are able to continue accessing capital markets and other sources of debt and equity financing in a timely manner on acceptable terms;
- the impact that reductions in customer demand for electricity and natural gas have on the Utility's ability to make and recover its investments through rates and earn its authorized return on equity, and whether the Utility's business strategy to address the impact of growing distributed and renewable generation resources and changing customer demands is successful;
- changes in estimated environmental remediation costs, including costs associated with the Utility's natural gas compressor sites;
- the outcome of federal or state tax audits and the impact of any changes in federal or state tax laws, policies, regulations, or their interpretation; and
- the other factors disclosed in PG&E Corporation's and the Utility's joint Annual Report on Form 10-K for the year ended December 31, 2014 and Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 2015.
PG&E Corporation (NYSE: PCG) is a Fortune 200 energy-based holding company, headquartered in San Francisco. It is the parent company of Pacific Gas and Electric Company, California's largest investor-owned utility. PG&E serves nearly 16 million Californians across a 70,000 square-mile service area in Northern and Central California. For more information, visit http://www.pgecorp.com and www.pge.com.