Dominion Energy Announces Second-Quarter Earnings

RICHMOND, Va., July 31, 2020 /PRNewswire/ -- Dominion Energy (NYSE: D) today announced an unaudited net loss determined in accordance with Generally Accepted Accounting Principles (reported earnings) for the three months ended June 30, 2020 of $1.2 billion ($1.41 per share) compared with a net gain of $54 million ($0.05 per share) for the same period in 2019. 

Operating earnings for the three months ended June 30, 2020, were $706 million ($0.82 per share), compared with operating earnings of $619 million ($0.77 per share) for the same period in 2019.  The company estimates that its second-quarter 2020 operating earnings were negatively impacted by $0.03 per share due to worse than normal weather in its utility service territories.

The difference between GAAP and operating earnings for the three months ended June 30, 2020 was primarily attributable to impairment-related charges associated with the Atlantic Coast Pipeline and Supply Header projects and net gains on our nuclear decommissioning trust funds.  The difference between GAAP and operating earnings for the three months ended June 30, 2019 was primarily attributable to charges related to SCANA merger commitments.

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. 

Operating earnings guidance
Dominion Energy expects third-quarter operating earnings in the range of $0.85 to $1.05 per share.

The company affirms its full-year 2020 operating earnings guidance range of $3.37 to $3.63 per share.

Webcast today
The company will host its second-quarter earnings webcast at 10 a.m. ET on Friday, July 31, 2020.  Management will discuss second-quarter financial results and other matters of interest to the financial community. 

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

For those wishing to join telephonically, domestic callers should dial 1-800-341-6228.  International callers should dial 1-334-777-6993.  The passcode for the conference call is 69931782#.  Participants should dial in 10 to 15 minutes prior to the scheduled start time. 

A replay of the webcast will be available on the investor information pages by the end of the day July 31.  A telephonic replay will also be available beginning at about 2 p.m. ET July 31 and lasting until 11 p.m. ET Aug. 7.  Domestic callers may access the recording by dialing 1-877-919-4059.  International callers should dial 1-334-323-0140.  The PIN for the replay is 10013356. 

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 extreme weather events and other natural disasters.  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
More than 7 million customers in 20 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 to achieving net zero carbon dioxide and methane emissions from its power generation and gas infrastructure operations by 2050. Please visit DominionEnergy.com to learn more.

This release contains certain forward-looking statements, including forecasted operating earnings third-quarter and full-year 2020 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; extraordinary external events, such as the current pandemic health event resulting from COVID-19; 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 acquisitions and divestitures; the expected timing and likelihood of completion of the proposed transaction with Berkshire Hathaway Energy, including the ability to obtain the requisite regulatory approvals and the terms and conditions of such regulatory approvals; 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


Six Months Ended


June 30,


June 30,


2020

2019


2020

2019







Operating Revenue

$     3,585

$      3,970


$     8,081

$      7,828







Operating Expenses





 `

Electric fuel and other energy-related purchases

505

718


1,173

1,509

Purchased electric capacity

11

24


13

63

Purchased gas

74

227


501

957

Other operations and maintenance 1

1,526

1,595


3,337

3,432

Depreciation, depletion and amortization

673

661


1,346

1,312

Other taxes

256

284


540

576

  Total operating expenses

3,045

3,509


6,910

7,849







Income (loss) from operations

540

461


1,171

(21)







Other income (expense)2

(1,779)

92


(2,178)

480

Interest and related charges

449

452


939

921

Income (loss) from continuing operations including noncontrolling






    interests before income tax expense (benefit)

(1,688)

101


(1,946)

(462)







Income tax expense (benefit)

(556)

43


(575)

157







Net Income (loss) including noncontrolling interests

(1,132)

58


(1,371)

(619)







Noncontrolling interests

37

4


68

7







     Net Income (loss) attributable to Dominion Energy

$   (1,169)

$           54


$   (1,439)

$       (626)







Reported Income (loss) per common share - diluted

$     (1.41)

$        0.05


$     (1.75)

$      (0.78)

Average shares outstanding, diluted

839.4

802.6


838.8

797.8

1)  Includes impairment of assets and other charges.

2)  Includes earnings (loss) from equity method investees.


* 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 per share amounts)

Three months ended June 30,



2020


2019


Change


 

REPORTED EARNINGS1

$      (1,169)


$            54


$      (1,223)









Pre-tax loss (income)2

2,568


656


1,912


Income tax2

(693)


(91)


(602)

Adjustments to reported earnings

1,875


565


1,310








OPERATING EARNINGS

$          706


$          619


$            87


By segment:







Dominion Energy Virginia

437


393


44


Gas Transmission & Storage

184


177


7


Gas Distribution

87


66


21


Dominion Energy South Carolina

75


95


(20)


Contracted Generation

21


13


8


Corporate and Other

(98)


(125)


27



$          706


$          619


$            87








Earnings Per Share (EPS):3






REPORTED EARNINGS 1

$        (1.41)


$         0.05


$        (1.46)

Adjustments to reported earnings (after tax)

2.23


0.72


1.51

OPERATING EARNINGS

$         0.82


$         0.77


$         0.05


By segment:







Dominion Energy Virginia

0.52


0.49


0.03


Gas Transmission & Storage

0.22


0.22


-


Gas Distribution

0.10


0.08


0.02


Dominion Energy South Carolina

0.09


0.12


(0.03)


Contracted Generation

0.03


0.02


0.01


Corporate and Other

(0.14)


(0.16)


0.02



$         0.82


$         0.77


$         0.05








Common Shares Outstanding (average, diluted)

839.4


802.6










(millions, except earnings per share)

Six months ended June 30,



2020


2019


Change








REPORTED EARNINGS1

$      (1,439)


$         (626)


$         (813)









Pre-tax loss (income)2

3,990


2,296


1,694


Income tax2

(914)


(178)


(736)

Adjustments to reported earnings

3,076


2,118


958








OPERATING EARNINGS

$       1,637


$       1,492


$          145


By segment:







Dominion Energy Virginia

866


754


112


Gas Transmission & Storage

405


399


6


Gas Distribution

312


271


41


Dominion Energy South Carolina

169


166


3


Contracted Generation

80


115


(35)


Corporate and Other

(195)


(213)


18



$       1,637


$       1,492


$          145








Earnings Per Share (EPS):3






REPORTED EARNINGS1

$        (1.75)


$        (0.78)


$        (0.97)

Adjustments to reported earnings (after tax)

3.66


2.65


1.01

OPERATING EARNINGS

$         1.91


$         1.87


$         0.04


By segment:







Dominion Energy Virginia

1.03


0.95


0.08


Gas Transmission & Storage

0.48


0.50


(0.02)


Gas Distribution

0.37


0.34


0.03


Dominion Energy South Carolina

0.20


0.21


(0.01)


Contracted Generation

0.10


0.14


(0.04)


Corporate and Other

(0.27)


(0.27)


-



$         1.91


$         1.87


$         0.04








Common Shares Outstanding (average, diluted)

838.8


797.8













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)

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, 2020 and the six months ended June 30, 2020 and 2019. For the three months ended June 30, 2019, the fair value adjustment required for diluted reported


earnings per share was $13 million.  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 2019 and $9 million associated with the Series B preferred stock equity units entered in


December 2019.  See Forms 10-Q and 10-K for additional information.

Schedule 2 - Reconciliation of 2020 Operating Earnings to Reported Earnings

2020 Earnings (Six months ended June 30, 2020)  

The $4.0 billion pre-tax net effect of the adjustments included in 2020 reported earnings, but excluded from operating earnings, is primarily related to the following items:

  • $2.8 billion charge relating to the cancellation of the Atlantic Coast Pipeline project and related Supply Header project.
  • $812 million of charges primarily relating to the planned early retirement of electric generation facilities in Virginia.
  • $145 million net loss related to our investments in nuclear decommissioning trust funds.

(millions, except per share amounts)

1Q20

2Q20

3Q20

4Q20

YTD 2020

Reported earnings (loss)

($270)

($1,169)

$0

$0

($1,439)

Adjustments to reported earnings 1:






    Pre-tax loss (income)


1,422

2,568

0

0

3,990

    Income tax

(221)

(693)

0

0

(914)



1,201

1,875

0

0

3,076

Operating earnings

$931

$706

$0

$0

$1,637

Common shares outstanding (average, diluted)

838.2

839.4

0.0

0.0

838.8

Reported earnings (loss) per share 2

($0.34)

($1.41)

$0.00

$0.00

($1.75)

Adjustments to reported earnings per share 2

1.43

2.23

0.00

0.00

3.66

Operating earnings per share 2

$1.09

$0.82

$0.00

$0.00

$1.91








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







1Q20

2Q20

3Q20

4Q20

YTD 2020

Pre-tax loss (income):






    Cancellation of Atlantic Coast Pipeline and Supply Header projects

0

2,801

0

0

2,801

    Regulated asset retirements

768

44

0

0

812

    Net (gain) loss on NDT funds

538

(393)

0

0

145

    Merger and integration-related costs

51

22

0

0

73

    Mark-to-market impact of economic hedging activities

33

37

0

0

70

    Liability management and financing

31

18

0

0

49

    Allowance for credit risk on customer accounts *

0

22

0

0

22

    Other

1

17

0

0

18










$1,422

$2,568

$0

$0

$3,990

Income tax expense (benefit):  






   Tax effect of above adjustments to reported earnings **

(238)

(693)

0

0

(931)

   Other

17

0

0

0

17










($221)

($693)

$0

$0

($914)


* Represents estimate of future unrecoverable amounts from customers driven by economic and other factors related to the effects of COVID-19,

  including suspension of disconnections.






** 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 March 31 and June 30. In each quarter of 2020, the calculation of reported

   and operating earnings per share includes the impact of preferred dividends of $7 million associated with the Series A preferred stock equity units

   entered in June 2019 and $9 million associated with the Series B preferred stock equity units entered in December 2019. See Forms 10-Q and 10-K

   for additional information.






Schedule 3 - Reconciliation of 2019 Operating Earnings to Reported Earnings

2019 Earnings (Twelve months ended December 31, 2019)  

The $2.6 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:

  • $2.4 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 $641 million associated with litigation.
  • $783 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.
  • $553 million net gain related to our investments in nuclear decommissioning trust funds.

Dominion Energy also recorded $194 million 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

$1,009

$1,358


Adjustments to reported earnings 1:







    Pre-tax loss (income)

1,640

656

131

193

2,620


    Income tax

(87)

(91)

(139)

(214)

(531)




1,553

565

(8)

(21)

2,089


Operating earnings

$873

$619

$967

$988

$3,447


Common shares outstanding (average, diluted)

793.1

802.6

813.0

826.3

808.9


Reported earnings (loss) per share 2

($0.86)

$0.05

$1.17

$1.21

$1.62


Adjustments to reported earnings per share 2

1.96

0.72

0.01

(0.03)

2.62


Operating earnings per share 2

$1.10

$0.77

$1.18

$1.18

$4.24










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

378

2,409


    Regulated asset and contract retirements/terminations

547

211

47

(22)

783


    Revision to ash pond and landfill closure costs

(113)

0

0

0

(113)


    Net gain on NDT funds

(253)

(83)

(28)

(189)

(553)


    Other

30

(14)

52

26

94












$1,640

$656

$131

$193

$2,620


Income tax expense (benefit):  







   Tax effect of above adjustments to reported earnings *

(255)

(91)

(139)

(226)

(711)


   Write-off EDIT regulatory assets (SCANA)

198

0

0

(4)

194


   Other

(30)

0

0

16

(14)












($87)

($91)

($139)

($214)

($531)










* 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 months ended September 30, the fair value adjustment required for diluted reported earnings per share


   calculation was $13 million. For the three and twelve months ended December 31, the fair value adjustment required for diluted reported earnings per share


   calculation was $1 million and  $28 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 and $2 million associated with the Series B


   preferred stock equity units entered in December of 2019. See Forms 10-Q and 10-K 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 4 - Reconciliation of 2Q20 Earnings to 2Q19













Preliminary, Unaudited

Three Months Ended


Six Months Ended

(millions, except EPS)

June 30,


June 30,



2020 vs. 2019


2020 vs. 2019



Increase / (Decrease)


Increase / (Decrease)

Reconciling Items

Amount

EPS


Amount

EPS








Change in reported earnings (GAAP)

($1,223)

($1.46)


($813)

($0.97)









Change in Pre-tax loss (income) 1

1,912



1,694



Change in Income tax 1

(602)



(736)


Adjustments to reported earnings

$1,310

$1.51


$958

$1.01








Change in consolidated operating earnings

$87

$0.05


$145

$0.04








Dominion Energy Virginia







Regulated electric sales:







Weather

($22)

($0.03)


($48)

($0.06)


Other

(15)

(0.02)


(11)

(0.01)


Rate adjustment clause equity return

32

0.04


55

0.07


Electric capacity

9

0.01


33

0.04


Select operations and maintenance expense2

32

0.04


53

0.06


Depreciation & amortization

9

0.01


21

0.02


Renewable energy investment tax credits

(10)

(0.01)


19

0.02


Other

9

0.01


(10)

(0.01)


Share dilution


(0.02)



(0.05)


Change in contribution to operating earnings

$44

$0.03


$112

$0.08








Gas Transmission & Storage







Noncontrolling interest

($24)

(0.03)


($44)

($0.06)


Select operations and maintenance expense2

6

0.01


9

0.01


Interest expense, net

23

0.03


49

0.06


Other

2

0.00


(8)

0.00


Share dilution


(0.01)



(0.03)


Change in contribution to operating earnings

$7

$0.00


$6

($0.02)








Gas Distribution







Regulated gas sales:







Weather

$3

0.00


($2)

$0.00


Other

1

0.00


12

0.01


Select operations and maintenance expense2

8

0.01


12

0.02


Interest expense, net

5

0.01


11

0.01


Other

4

0.00


8

0.01


Share dilution


0.00



(0.02)


Change in contribution to operating earnings

$21

$0.02


$41

$0.03








Dominion Energy South Carolina







Regulated electric sales:







Weather

($23)

($0.03)


($14)

($0.02)


Other

(4)

0.00


1

0.00


Regulated gas sales

2

0.00


6

0.01


Interest expense, net

2

0.00


10

0.01


Other

3

0.01


0

0.00


Share dilution


(0.01)



(0.01)


Change in contribution to operating earnings

($20)

($0.03)


$3

($0.01)








Contracted Generation







Margin

($6)

($0.01)


($50)

($0.06)


Select operations and maintenance expense2

8

0.01


8

0.01


Renewable energy investment tax credits

7

0.01


7

0.01


Other

(1)

0.00


0

0.00


Share dilution


0.00



0.00


Change in contribution to operating earnings

$8

$0.01


($35)

($0.04)








Corporate and Other







Share dilution and other

$27

$0.02


$18

$0.00


Change in contribution to operating earnings

$27

$0.02


$18

$0.00















Change in consolidated operating earnings

$87

$0.05


$145

$0.04








Change in adjustments included in reported earnings1

($1,310)

($1.51)


($958)

($1.01)








Change in consolidated reported earnings

($1,223)

($1.46)


($813)

($0.97)















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.






2)

Includes salaries, wages, and benefits and outage expenses (DEV and Contracted Generation segment).


Note: Figures may not sum due to rounding






 

Cision View original content:http://www.prnewswire.com/news-releases/dominion-energy-announces-second-quarter-earnings-301103610.html

SOURCE Dominion Energy

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