Dominion Energy Announces Third-Quarter Earnings

- Third-quarter 2019 GAAP (reported) earnings of $1.17 per share
- Third-quarter 2019 operating earnings of $1.18 per share
- Company narrows 2019 operating earnings guidance; affirms midpoint

RICHMOND, Va., Nov. 1, 2019 /PRNewswire/ -- Dominion Energy (NYSE: D) today announced unaudited reported earnings determined in accordance with Generally Accepted Accounting Principles (reported earnings) for the three months ended Sept. 30, 2019, of $975 million ($1.17 per share) compared with net income of $854 million ($1.30 per share) for the same period in 2018. 

Operating earnings for the three months ended Sept. 30, 2019, were $967 million ($1.18 per share), compared with operating earnings of $758 million ($1.15 per share) for the same period in 2018. 

Operating earnings are defined as reported earnings adjusted for certain items.  Details of operating earnings as compared to prior periods, business segment results and detailed descriptions of items included in reported earnings but excluded from operating earnings can be found on Schedules 1, 2, 3 and 4 of this release. 

Thomas F. Farrell, II, chairman, president and chief executive officer, said:

"Strong performance across our business units, combined with favorable weather, resulted in operating earnings per share above the midpoint of our quarterly guidance range.  Weather-normalized results were also above the midpoint of our guidance range.

"Year-to-date results and our fourth-quarter outlook are supportive of a narrowing of our existing 2019 operating earnings guidance range to $4.15 to $4.30 per share."

Fourth-quarter operating earnings guidance
Dominion Energy expects fourth quarter operating earnings in the range of $1.10 to $1.25 per share, compared to fourth-quarter 2018 operating earnings of $0.89 per share.  Positive drivers include the absence of a Millstone refueling outage, growth from regulated investment across electric and gas utility programs, the contribution from the Southeast Energy Group, the commencement of the Millstone zero-carbon contract, net capacity expense improvement and the impact of O&M initiatives.  The company expects negative drivers for the quarter to include the impact of 2018 asset sales, share issuances and a return to normal weather.

Conference call today
The company will host its third-quarter earnings conference call at 10 a.m. ET on Friday, Nov. 1, 2019.  Management will discuss third-quarter financial results and other matters of interest to the financial community. 

Domestic callers should dial (866) 710-0179.   International callers should dial (334) 323-0520.  The passcode for the conference call is "Dominion."  Participants should dial in 10 to 15 minutes prior to the scheduled start time. 

A live webcast of the conference call, including accompanying slides and other financial information, will be available on the investor information pages at investors.dominionenergy.com.

A replay of the conference call will be available beginning at about 2 p.m. ET Nov. 1 and lasting until 11 p.m. ET Nov. 8.  Domestic callers may access the recording by dialing (877) 919-4059.  International callers should dial (334) 323-0140.  The PIN for the replay is 60280652.  Additionally, a replay of the webcast will be available on the investor information pages by the end of the day Nov. 1.

Important note to investors regarding operating, reported earnings
Dominion Energy uses operating earnings as the primary performance measurement of its earnings guidance and results for public communications with analysts and investors.  Dominion Energy also uses operating earnings internally for budgeting, for reporting to the Board of Directors, for the company's incentive compensation plans and for its targeted dividend payouts and other purposes. Dominion Energy management believes operating earnings provide a more meaningful representation of the company's fundamental earnings power.

In providing its operating earnings guidance, the company notes that there could be differences between expected reported earnings and estimated operating earnings for matters such as, but not limited to, acquisitions, divestitures or changes in accounting principles.  At this time, Dominion Energy management is not able to estimate the aggregate impact of these items on future period reported earnings.

About Dominion Energy
Nearly 7.5 million customers in 18 states energize their homes and businesses with electricity or natural gas from Dominion Energy (NYSE: D), headquartered in Richmond, Va. The company is committed to sustainable, reliable, affordable and safe energy and is one of the nation's largest producers and transporters of energy with more than $100 billion of assets providing electric generation, transmission and distribution, as well as natural gas storage, transmission, distribution and import/export services. The company expects to cut generating fleet carbon dioxide emissions 55 percent by 2030 and reduce methane emissions from its gas assets 50 percent by 2030. Please visit DominionEnergy.com to learn more.

This release contains certain forward-looking statements, including forecasted operating earnings fourth-quarter and full-year 2019 and beyond which are subject to various risks and uncertainties.  Factors that could cause actual results to differ include, but are not limited to: unusual weather conditions and their effect on energy sales to customers and energy commodity prices; extreme weather events and other natural disasters; federal, state and local legislative and regulatory developments; changes to federal, state and local environmental laws and regulations, including proposed carbon regulations; cost of environmental compliance; changes in enforcement practices of regulators relating to environmental standards and litigation exposure for remedial activities; capital market conditions, including the availability of credit and the ability to obtain financing on reasonable terms; fluctuations in interest rates; changes in rating agency requirements or credit ratings and their effect on availability and cost of capital; impacts of acquisitions, divestitures, transfers of assets by Dominion Energy to joint ventures and retirements of assets based on asset portfolio reviews; receipt of approvals for, and timing of, closing dates for other acquisitions and divestitures; changes in demand for Dominion Energy's services; additional competition in Dominion Energy's industries; changes to regulated rates collected by Dominion Energy; changes in operating, maintenance and construction costs; timing and receipt of regulatory approvals necessary for planned construction or expansion projects and compliance with conditions associated with such regulatory approvals; adverse outcomes in litigation matters or regulatory proceedings; and the inability to complete planned construction projects within time frames initially anticipated.   Other risk factors are detailed from time to time in Dominion Energy's quarterly reports on Form 10-Q and most recent annual report on Form 10-K filed with the Securities and Exchange Commission.

 

Dominion Energy, Inc.

Consolidated Statements of Income *

Unaudited (GAAP Based)

(millions, except per share amounts)

                 
   

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

   

2019

 

2018

 

2019

 

2018

                 

Operating Revenue

 

$       4,269

 

$        3,451

 

$     12,097

 

$    10,005

Operating Expenses

               

Electric fuel and other energy-related purchases

 

774

 

761

 

2,283

 

2,128

Purchased electric capacity

 

11

 

50

 

74

 

87

Purchased gas

 

153

 

5

 

1,110

 

409

Other operations and maintenance1

 

1,095

 

782

 

4,527

 

2,585

Depreciation, depletion and amortization

 

679

 

526

 

1,991

 

1,487

Other taxes

 

243

 

177

 

819

 

542

Total operating expenses

 

2,955

 

2,301

 

10,804

 

7,238

Income from operations

 

1,314

 

1,150

 

1,293

 

2,767

Other income

 

173

 

373

 

653

 

658

Interest and related charges

 

451

 

378

 

1,372

 

1,053

Income from operations including noncontrolling interests
    before income tax expense

 

1,036

 

1,145

 

574

 

2,372

Income tax expense

 

51

 

262

 

208

 

485

Net Income Including Noncontrolling Interests

 

985

 

883

 

366

 

1,887

Noncontrolling Interests

 

10

 

29

 

17

 

81

Net Income Attributable to Dominion Energy

 

$          975

 

$           854

 

$          349

 

$      1,806

Earnings Per Common Share

               

Net income attributable to Dominion Energy - Basic

 

$         1.19

 

$          1.31

 

$         0.42

 

$        2.77

Net income attributable to Dominion Energy - Diluted

 

1.17

 

1.30

 

0.39

 

2.77

                 

 

1) Includes impairment of assets and other charges.

 

* The notes contained in Dominion Energy's most recent quarterly report on Form 10-Q or annual report on Form 10-K are an

  integral part of the Consolidated Financial Statements.

 

 

Schedule 1 - Segment Reported and Operating Earnings

       
                   

Unaudited

               

(millions, except earnings per share)

Three months ended September 30,

 
       

2019

 

2018

 

Change

 
                   

REPORTED EARNINGS1

     

$          975

 

$          854

 

$          121

 
                   

          Pre-tax loss (income)2

131

 

(199)

 

330

 

          Income tax2

(139)

 

103

 

(242)

 

Adjustments to reported earnings

(8)

 

(96)

 

88

 
                   

OPERATING EARNINGS

$          967

 

$          758

 

$          209

 

          By segment:

           

          Power Delivery

185

 

163

 

22

 

          Power Generation 

490

 

414

 

76

 

          Gas Infrastructure

232

 

264

 

(32)

 

          Southeast Energy3

147

 

-

 

147

 

          Corporate and Other

(87)

 

(83)

 

(4)

 
       

$          967

 

$          758

 

$          209

 
                   

Earnings Per Share (EPS):4

           

REPORTED EARNINGS 1

     

$         1.17

 

$         1.30

 

$        (0.13)

 

Adjustments to reported earnings (after tax)

0.01

 

(0.15)

 

0.16

 

OPERATING EARNINGS

$         1.18

 

$         1.15

 

$         0.03

 

          By segment:

           

          Power Delivery

0.23

 

0.25

 

(0.02)

 

          Power Generation

0.60

 

0.63

 

(0.03)

 

          Gas Infrastructure

0.29

 

0.40

 

(0.11)

 

          Southeast Energy3

0.18

 

-

 

0.18

 

          Corporate and Other

(0.12)

 

(0.13)

 

0.01

 
       

$         1.18

 

$         1.15

 

$         0.03

 
                   

Common Shares Outstanding (average, diluted)

813.0

 

654.9

     
                   

(millions, except earnings per share)

Nine months ended September 30,

 
       

2019

 

2018

 

Change

 
                   

REPORTED EARNINGS1

     

$          349

 

$       1,806

 

$      (1,457)

 
                   

          Pre-tax loss (income)2

 

2,427

 

251

 

2,176

 

          Income tax2

 

(317)

 

2

 

(319)

 

Adjustments to reported earnings

2,110

 

253

 

1,857

 
                   

OPERATING EARNINGS

$       2,459

 

$       2,059

 

$          400

 

          By segment:

           

          Power Delivery

496

 

464

 

32

 

          Power Generation

1,048

 

1,038

 

10

 

          Gas Infrastructure

838

 

840

 

(2)

 

          Southeast Energy3

361

 

-

 

361

 

          Corporate and Other

(284)

 

(283)

 

(1)

 
       

$       2,459

 

$       2,059

 

$          400

 
                   

Earnings Per Share (EPS):4

           

REPORTED EARNINGS1

     

$         0.39

 

$         2.77

 

$        (2.38)

 

Adjustments to reported earnings (after tax)

2.66

 

0.39

 

2.27

 

OPERATING EARNINGS

$         3.05

 

$         3.16

 

$        (0.11)

 

          By segment:

           

          Power Delivery

0.62

 

0.71

 

(0.09)

 

          Power Generation

1.30

 

1.59

 

(0.29)

 

          Gas Infrastructure

1.04

 

1.29

 

(0.25)

 

          Southeast Energy3

0.45

 

-

 

0.45

 

          Corporate and Other

(0.36)

 

(0.43)

 

0.07

 
       

$         3.05

 

$         3.16

 

$        (0.11)

 
                   

Common Shares Outstanding (average, diluted)

803.0

 

652.8

     
                   

 

1)

Determined in accordance with Generally Accepted Accounting Principles (GAAP).

2)

Adjustments to reported earnings are included in Corporate and Other segment reported GAAP earnings.  Refer to Schedules 2 and 3 for details, or find "GAAP Reconciliation"

 

in the Earnings Release Kit on Dominion Energy's website at www.dominionenergy.com/investors.

3)

New operating segment established in January 2019, in connection with Dominion Energy's merger with SCANA.

4)

The calculation of operating earnings per share excludes the impact, if any, of fair value adjustments related to the Company's convertible preferred securities entered in

 

June 2019. Such fair value adjustments, if any, are required for the calculation of diluted reported earnings per share. No adjustments were necessary for the three months

 

ended June 30. For the three and nine months ended September 30, the fair value adjustment required for diluted reported earnings per share  calculation was $13 million

 

and $26 million, respectively. The calculation of reported and operating earnings per share includes the impact of preferred dividends of $7 million per quarter associated with

 

the Series A preferred stock equity units entered in June of 2019. See Form 10-Q for additional information.

 

Schedule 2 - Reconciliation of 2019 Operating Earnings to Reported Earnings

2019 Earnings (Nine months ended September 30, 2019) 

The  $2.4 billion pre-tax net effect of the adjustments included in 2019 reported earnings, but excluded from operating earnings, is primarily related to the following items:

  • $2.0 billion of merger and integration-related costs associated with the SCANA Combination, primarily reflecting $1 billion for refunds of amounts previously collected from retail electric customers of Dominion Energy South Carolina (DESC) for the NND Project, $427 million associated with a voluntary retirement program (which includes $112 million for employee benefit plan curtailment), and $316 million associated with litigation.
  • $805 million of charges at our regulated entities, primarily consisting of the retirement of electric generation facilities in cold reserve and certain automated meters and a purchase power contract termination.
  • $113 million benefit from the revision of certain asset retirement obligations for ash ponds and landfills at certain utility generation facilities, in connection with the enactment of Virginia legislation in March.
  • $364 million net gain related to our investments in nuclear decommissioning trust funds.

Dominion Energy also recorded $198 million after-tax charge for certain income tax-related regulatory assets acquired in the SCANA Combination for which Dominion Energy committed to forgo recovery.

 

(millions, except per share amounts)

1Q19

2Q19

3Q19

4Q19

YTD 2019

3

Reported earnings (loss)

($680)

$54

$975

 

$349

 

Adjustments to reported earnings 1:

           

    Pre-tax loss (income)

1,640

656

131

 

2,427

 

    Income tax

(87)

(91)

(139)

 

(317)

 
   

1,553

565

(8)

 

2,110

 

Operating earnings

$873

$619

$967

 

$2,459

 

Common shares outstanding (average, diluted)

793.1

802.6

813.0

 

803.0

 

Reported earnings (loss) per share 2

($0.86)

$0.05

$1.17

 

$0.39

 

Adjustments to reported earnings per share 2

1.96

0.72

0.01

 

2.66

 

Operating earnings per share 2

$1.10

$0.77

$1.18

 

$3.05

 
               

1) Adjustments to reported earnings are reflected in the following table:

           
   

1Q19

2Q19

3Q19

4Q19

YTD 2019

 

Pre-tax loss (income):

           

    Merger and integration-related costs

1,429

542

60

 

2,031

 

    Regulated asset and contract retirements/terminations

547

211

47

 

805

 

    Revision to ash pond and landfill closure costs

(113)

0

0

 

(113)

 

    Net gain on NDT funds

(253)

(83)

(28)

 

(364)

 

    Other

30

(14)

52

 

68

 
               
   

$1,640

$656

$131

 

$2,427

 

Income tax expense (benefit):  

           

   Tax effect of above adjustments to reported earnings *

(255)

(91)

(139)

 

(485)

 

   Write-off EDIT regulatory assets (SCANA)

198

0

0

 

198

 

   Other

(30)

0

0

 

(30)

 
               
   

($87)

($91)

($139)

 

($317)

 
               

 

* Income taxes for individual pre-tax items include current and deferred taxes using a transactional effective tax rate. For interim reporting purposes, such amounts

  may be adjusted in connection with the calculation of the Company's year-to-date income tax provision based on its estimated annual effective tax rate.

2) The calculation of operating earnings per share excludes the impact, if any, of fair value adjustments related to the Company's convertible preferred securities

    entered in June 2019. Such fair value adjustments, if any, are required for the calculation of diluted reported earnings per share. No adjustments were necessary for

    the three months ended June 30. For the three and nine months ended September 30, the fair value adjustment required for diluted reported earnings per share

    calculation was $13 million and $26 million, respectively. The calculation of reported and operating earnings per share includes the impact of preferred dividends

    of $7 million per quarter associated with the Series A preferred stock equity units entered in June of 2019. See Form 10-Q for additional information.

3) YTD EPS may not equal sum of quarters due to share count difference and fair value adjustment associated with the convertible preferred securities.

 

 

Schedule 3 - Reconciliation of 2018 Operating Earnings to Reported Earnings

2018 Earnings (Twelve months ended December 31, 2018) 

The  $201 million pre-tax net effect of the adjustments included in 2018 reported earnings, but excluded from operating earnings, is primarily related to the following items:

  • $759 million net benefit associated with the sales of our non-core assets, primarily reflecting the gains on sales of certain merchant generation assets and our investment in Blue Racer.
  • $219 million impairment charge associated with gathering and processing assets.  
  • $215 million charge associated with Virginia legislation enacted in March that requires one-time rate credits of certain amounts to utility customers.  
  • $170 million net loss related to our investments in nuclear decommissioning trust funds.
  • $124 million charge associated with disallowance of FERC-regulated plant.
  • $81 million charge associated with the asset retirement obligations for ash ponds and landfills at certain utility generation facilities in connection with the enactment of Virginia legislation in April.
  • $74 million of restoration costs associated with major storms, primarily affecting our Virginia service territory.
  • $37 million of transaction and transition costs associated with the Dominion Energy Questar combination and the acquisition of SCANA Corporation.

 

(millions, except per share amounts)

1Q18

2Q18

3Q18

4Q18

YTD 20182

Reported earnings

$503

$449

$854

$641

$2,447

Adjustments to reported earnings 1:

         

    Pre-tax loss (income)

305

145

(199)

(50)

201

    Income tax expense (benefit)

(67)

(34)

103

1

3

   

238

111

(96)

(49)

204

Operating earnings

$741

$560

$758

$592

$2,651

Common shares outstanding (average, diluted)

650.5

653.1

654.9

660.9

654.9

Reported earnings per share

$0.77

$0.69

$1.30

$0.97

$3.74

Adjustments to reported earnings (after-tax)

0.37

0.17

(0.15)

(0.08)

0.31

Operating earnings per share

$1.14

$0.86

$1.15

$0.89

$4.05

             

1) Adjustments to reported earnings are reflected in the following table:

       
   

1Q18

2Q18

3Q18

4Q18

YTD 2018

Pre-tax loss (income):

         

    Sale of non-core assets

   

(70)

(689)

(759)

    Impairment of gathering & processing assets

     

219

219

    Impact of Virginia rate legislation

215

     

215

    Net (gain) loss on NDT funds

43

(50)

(149)

326

170

    FERC-regulated plant disallowance

 

122

2

 

124

    Future ash pond and landfill closure costs

 

81

   

81

    Storm costs

31

   

43

74

    Merger-related transaction and transition costs

16

9

3

9

37

    Other

 

(17)

15

42

40

             
   

$305

$145

($199)

($50)

$201

Income tax expense (benefit):

         

   Tax effect of above adjustments to reported earnings *

(67)

(34)

38

11

(52)

    Re-measurement of Deferred Tax balances **

   

47

(1)

46

    Valuation Allowance ***

   

18

(9)

9

   

($67)

($34)

$103

$1

$3

             

 

* Income taxes for individual pre-tax items include current and deferred taxes using a transactional effective tax rate. For interim reporting purposes,

 such amounts may be adjusted in connection with the calculation of the Company's year-to-date income tax provision based on its estimated

 annual effective tax rate.

         
             

** During 2018, the Companies recorded further adjustments to deferred taxes in accordance with recently released tax reform guidance and to revise estimates made at year-end 2017.

             

*** In 3Q18, a valuation allowance was established against the portion of a deferred tax asset associated with the non-core assets that was no longer projected of being utilized to offset future taxable income. In 4Q18, the amount was adjusted based on management's assessment that it is more-likely-than-not that a portion of the deferred tax asset would be realized in 2018, to reduce tax expense associated with the sale.

             

2)  YTD EPS may not equal sum of quarters due to share count difference.

         

 

 

Schedule 4 - Reconciliation of 3Q19 Earnings to 3Q18

         
             

Preliminary, Unaudited

Three Months Ended

 

Nine Months Ended

(millions, except EPS)

September 30,

 

September 30,

   

2019 vs. 2018

 

2019 vs. 2018

   

Increase / (Decrease)

 

Increase / (Decrease)

Reconciling Items

Amount

EPS

 

Amount

EPS

             

Change in reported earnings (GAAP)

$121

($0.13)

 

($1,457)

($2.38)

             
 

Change in Pre-tax loss (income) 1

330

   

2,176

 
 

Change in Income tax 1

(242)

   

(319)

 

Adjustments to reported earnings

$88

$0.16

 

$1,857

$2.27

             

Change in consolidated operating earnings

$209

$0.03

 

$400

($0.11)

             

Power Delivery

         
 

Regulated electric sales:

         
 

Weather

$7

0.01

 

($2)

$0.00

 

Other

2

 

7

0.01

 

Rider investment

17

0.02

 

40

0.06

 

Other

(4)

0.00

 

(13)

(0.02)

 

Share dilution

(0.05)

 

(0.14)

 

Change in contribution to operating earnings

$22

($0.02)

 

$32

($0.09)

             

Power Generation

         
 

Regulated electric sales:

         
 

Weather

$16

0.02

 

($3)

 

Other

(3)

 

(9)

(0.01)

 

Electric capacity

30

0.05

 

27

0.04

 

Planned outage costs

3

 

(32)

(0.05)

 

Sale of merchant generation facilities

(36)

(0.05)

 

(69)

(0.11)

 

Renewable energy investment tax credits

22

0.03

 

30

0.04

 

Other

44

0.07

 

66

0.10

 

Share dilution

(0.15)

 

(0.30)

 

Change in contribution to operating earnings

$76

($0.03)

 

$10

($0.29)

             

Gas Infrastructure

         
 

Cove Point

$10

$0.01

 

$158

$0.24

 

Farmout transactions

(47)

(0.07)

 

(83)

(0.13)

 

Interest

(8)

(0.01)

 

(72)

(0.11)

 

Other

13

0.03

 

(5)

(0.01)

 

Share dilution

(0.07)

 

(0.24)

 

Change in contribution to operating earnings

($32)

($0.11)

 

($2)

($0.25)

             

Southeast Energy

$147

$0.18

 

$361

$0.45

             

Corporate and Other

         
 

Share dilution and other

($4)

$0.01

 

($1)

$0.07

 

Change in contribution to operating earnings

($4)

$0.01

 

($1)

$0.07

             
             

Change in consolidated operating earnings

$209

$0.03

 

$400

($0.11)

             

Change in adjustments included in reported earnings1

($88)

($0.16)

 

($1,857)

($2.27)

             

Change in consolidated reported earnings

$121

($0.13)

 

($1,457)

($2.38)

             
             

 

1)

Adjustments to reported earnings are included in Corporate and Other segment reported GAAP earnings.  

   
 

Refer to Schedules 2 and 3 for details, or find "GAAP Reconciliation" in the Earnings Release Kit on Dominion Energy's

 
 

website at www.dominionenergy.com/investors.

         

Note: Figures may not sum due to rounding

         

 

SOURCE Dominion Energy

For further information: Media: Ryan Frazier, (804) 819-2521 or C.Ryan.Frazier@dominionenergy.com; Financial analysts: Steven Ridge, (804) 929-6865 or Steven.D.Ridge@dominionenergy.com

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