Dominion Energy Announces Second-Quarter Earnings

RICHMOND, Va., July 31, 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 June 30, 2019 of $54 million ($0.05 per share) compared with net income of $449 million ($0.69 per share) for the same period in 2018. 

Operating earnings for the three months ended June 30, 2019, were $619 million ($0.77 per share), compared with operating earnings of $560 million ($0.86 per share) for the same period in 2018.  The difference between GAAP and operating earnings was primarily attributable to charges related to SCANA merger integration and a voluntary retirement program.

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.  Adjusted for normal weather, quarterly results were at the midpoint of our guidance representing solid execution for the quarter.

"Year-to-date results and our second half outlook are supportive of our existing 2019 operating earnings guidance range of $4.05 to $4.40 per share.

"During the quarter we continued to take steps to execute on our five-year growth capital plan of approximately $26 billion including commencing the construction of our $300 million offshore wind pilot project located off the coast of Virginia and narrowing the site-selection process for our proposed pumped storage facility in Southwest Virginia.  These, and other similar regulated investment programs, will ensure that our customers enjoy affordable, reliable and increasingly low-carbon sources of energy for decades to come.

"We were also pleased, though not surprised, that many of our state regulated utility service areas were ranked in the top 10 of a prominent national survey of the top states for business, including Virginia, which was ranked No. 1.  We continue to believe that our high-quality regulated operations offer investors a differentiated exposure to the very best environments for infrastructure growth."

Third-quarter operating earnings guidance
Dominion Energy expects third quarter operating earnings in the range of $1.00 to $1.20 per share, compared to third-quarter 2018 operating earnings of $1.15 per share.  Positive drivers include growth from regulated investment across electric and gas utility programs, O&M control initiatives, and the contribution from the Southeast Energy Group. The company expects negative drivers for the quarter to include the impact of 2018 asset sales, share issuances, timing of farmouts, and a return to normal weather.

Conference call today
The company will host its second-quarter earnings conference call at 10 a.m. ET on Wednesday, July 31, 2019.  Management will discuss second-quarter financial results and other matters of interest to the financial community. 

Domestic callers should dial (866) 710-1079.   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 about 2 p.m. ET July 31 and lasting until 11 p.m. ET Aug. 7.  Domestic callers may access the recording by dialing (877) 919-4059.  International callers should dial (334) 323-0140.  The PIN for the replay is 72677184.  Additionally, a replay of the webcast will be available on the investor information pages by the end of the day July 31.

Important note to investors regarding operating and 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 80 percent by 2050 and reduce methane emissions from its gas assets 50 percent by 2030. Please visit www.DominionEnergy.com to learn more.

This release contains certain forward-looking statements, including forecasted operating earnings third-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 or most recent annual report on Form 10-K filed with the Securities and Exchange Commission.

Schedule 2 - Reconciliation of 2019 Reported Earnings to Operating Earnings

2019 Earnings (Six months ended June 30, 2019)  

The  $2.3 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, $423 million associated with a voluntary retirement program (which includes $112 million for employee benefit plan curtailment), and $278 million associated with litigation.
• $758 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.
• $336 million net gain related to our investments in nuclear decommissioning trust funds.

Dominion 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.  

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.

SOURCE Dominion Energy