Dominion Energy Announces Third-Quarter Earnings

- Third-quarter 2020 GAAP net income of $0.41 per share; operating earnings of $1.08 per share

- Company initiates fourth-quarter 2020 operating earnings guidance of $0.73 to $0.87 per share

- Company expects 2020 weather-normal operating EPS to be above the annual guidance midpoint

News provided by

Dominion Energy

Nov 05, 2020, 07:30 ET

RICHMOND, Va., Nov. 5, 2020 /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, 2020, of $356 million ($0.41 per share) compared with a net income of $975 million ($1.17 per share) for the same period in 2019. 

Operating earnings for the three months ended Sept. 30, 2020, were $916 million ($1.08 per share), compared to operating earnings of $946 million ($1.15 per share) for the same period in 2019.  The company estimates that its third-quarter 2020 operating earnings were positively impacted by $0.04 per share due to better-than-normal weather in its utility service areas.

The difference between GAAP and operating earnings for the three months ended Sept. 30, 2020, was primarily attributable to the recognition of a customer credit reinvestment offset for the benefit of customers in Virginia, charges associated with long-term contracted renewable portfolio outside the company's core service areas and net gains on nuclear decommissioning trust funds. 

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. 

Guidance

Dominion Energy expects fourth-quarter operating earnings in the range of $0.73 to $0.87 per share.

The company affirms its full-year 2020 operating earnings guidance range of $3.37 to $3.63 per share and expects weather-normal operating EPS for 2020 to be above the guidance range midpoint.

The company also affirms its long-term earnings and dividend growth guidance.

Webcast today

The company will host its third-quarter earnings conference call at 11 a.m. ET on Thursday, Nov. 5, 2020.  Management will discuss third-quarter financial results and other matters of interest to the financial community. 

A live webcast of the conference call, including accompanying slides and other financial information, will be available at investors.dominionenergy.com. A replay of the webcast will be available on the investor relations website by the end of the day Nov. 5.

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 63771662#.  Participants should dial in 10 to 15 minutes prior to the scheduled start time.  A replay of the conference call will be available beginning at about 3 p.m. ET Nov. 5 and lasting until 11 p.m. ET Nov. 12.  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 65141144. 

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 16 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 fourth-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


Nine Months Ended


September 30,


September 30,


2020

2019


2020

2019







Operating Revenue

$     3,607

$      3,782


$   10,651

$    10,506







Operating Expenses






Electric fuel and other energy-related purchases

594

769


1,758

2,250

Purchased electric capacity

23

11


36

74

Purchased gas

37

158


561

1,120

Other operations and maintenance1

2,128

952


4,683

4,043

Depreciation, depletion and amortization

595

586


1,751

1,713

Other taxes

203

202


663

698

  Total operating expenses

3,580

2,678


9,452

9,898







Income from operations

27

1,104


1,199

608







Other income

281

129


327

526

Interest and related charges

306

370


1,136

1,133

Income from continuing operations including noncontrolling






    interests before income tax expense (benefit)

2

863


390

1







Income tax expense (benefit)

(110)

(84)


(123)

161







Net Income (loss) from continuing operations including noncontrolling interests 

112

947


513

(160)







Net Income (loss) from discontinued operations including noncontrolling interests

19

38


(1,753)

526







Net Income (loss) including noncontrolling interests

$        131

$         985


$   (1,240)

$         366

Noncontrolling interests

(225)

10


(157)

17







Net Income (loss) attributable to Dominion Energy

$        356

$         975


$   (1,083)

$         349







Reported Income (loss) per common share from continuing
operations - diluted

$       0.42

$        1.12


$       0.83

$      (0.22)

Reported Income (loss) per common share from discontinued
operations - diluted

(0.01)

0.05


(2.21)

0.64

Reported Income (loss) per common share - diluted

$       0.41

$        1.17


$     (1.38)

$        0.42

Average shares outstanding, diluted

833.8

813.0


837.1

802.9



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 per share amounts)

Three months ended September 30,







2020


2019


Change














REPORTED EARNINGS1

$          356


$          975


$         (619)















Pre-tax loss (income)2

859


(21)


880




Income tax2

(299)


(8)


(291)



Adjustments to reported earnings

560


(29)


589














OPERATING EARNINGS

$          916


$          946


$           (30)




By segment:









Dominion Energy Virginia

613


629


(16)




Gas Distribution

64


43


21




Dominion Energy South Carolina

157


166


(9)




Contracted Assets

112


86


26




Corporate and Other

(30)


22


(52)







$          916


$          946


$           (30)














Earnings Per Share (EPS):3








REPORTED EARNINGS 1

$         0.41


$         1.17


$        (0.76)



Adjustments to reported earnings (after tax)

0.67


(0.02)


0.69



OPERATING EARNINGS

$         1.08


$         1.15


$        (0.07)




By segment:









Dominion Energy Virginia

0.74


0.77


(0.03)




Gas Distribution

0.08


0.05


0.03




Dominion Energy South Carolina

0.19


0.20


(0.01)




Contracted Assets

0.13


0.11


0.02




Corporate and Other

(0.06)


0.02


(0.08)







$         1.08


$         1.15


$        (0.07)














Common Shares Outstanding (average, diluted)

833.8


813.0
















(millions, except earnings per share)

Nine months ended September 30,







2020


2019


Change














REPORTED EARNINGS1

$      (1,083)


$          349


$      (1,432)















Pre-tax loss (income)2


4,572


1,967


2,605




Income tax2


(1,155)


(293)


(862)



Adjustments to reported earnings

3,417


1,674


1,743














OPERATING EARNINGS

$       2,334


$       2,023


$          311




By segment:









Dominion Energy Virginia

1,479


1,383


96




Gas Distribution

375


314


61




Dominion Energy South Carolina

326


332


(6)




Contracted Assets

295


296


(1)




Corporate and Other

(141)


(302)


161







$       2,334


$       2,023


$          311














Earnings Per Share (EPS):3








REPORTED EARNINGS1



$        (1.38)


$         0.42


$        (1.80)



Adjustments to reported earnings (after tax)

4.11


2.09


2.02



OPERATING EARNINGS

$         2.73


$         2.51


$         0.22




By segment:









Dominion Energy Virginia

1.77


1.72


0.05




Gas Distribution

0.45


0.39


0.06




Dominion Energy South Carolina

0.39


0.41


(0.02)




Contracted Assets

0.35


0.37


(0.02)




Corporate and Other

(0.23)


(0.38)


0.15







$         2.73


$         2.51


$         0.22














Common Shares Outstanding (average, diluted)

837.1


802.9








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 September 30, 2020.  For the nine months ended September 30, 2020, the fair value adjustment required for diluted reported earnings per share calculation was $28 million. For the three months ended September 30, 2019, the fair value adjustment required for diluted reported earnings per share calculation was $13 million. No adjustments were necessary for the nine months ended September 30, 2019.  In each quarter of 2020, 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 Reported Earnings to Operating Earnings

2020 Earnings (Nine months ended September 30, 2020)

The $4.6 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:

  • $2.6 billion net loss from discontinued operations associated with the sale of the Gas Transmission & Storage segment as well as the cancellation of the Atlantic Coast Pipeline project.
  • $812 million of charges primarily relating to the planned early retirement of electric generation facilities in Virginia and $200 million of charges for expected customer credit reinvestment offset for Virginia utility customers.
  • $626 million for an impairment charge attributable to Dominion Energy's interests in certain merchant solar generation facilities and a contract termination charge in connection with the sale of Fowler Ridge.









(millions, except per share amounts)

1Q20

2Q20

3Q20

4Q20

YTD 2020

3


Reported earnings (loss)

($270)

($1,169)

$356

$0

($1,083)



Adjustments to reported earnings 1:








    Pre-tax loss (income)

1,265

2,448

859

0

4,572



    Income tax

(207)

(649)

(299)

0

(1,155)





1,058

1,799

560

0

3,417



Operating earnings

$788

$630

$916

$0

$2,334



Common shares outstanding (average, diluted) 

838.2

839.4

833.8

0.0

837.1



Reported earnings (loss) per share 2

($0.34)

($1.52)

$0.41

$0.00

($1.38)



Adjustments to reported earnings per share 2

1.26

2.25

0.67

0.00

4.11



Operating earnings per share 2

$0.92

$0.73

$1.08

$0.00

$2.73












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










1Q20

2Q20

3Q20

4Q20

YTD 2020



Pre-tax loss (income):








    Discontinued operations - Gas Transmission & Storage segment *

(161)

2,691

90

0

2,620



    Regulated asset retirements and other charges

768

44

200

0

1,012



    Charges associated with interests in merchant renewable generation facilities

0

0

626

0

626



    Merger and integration-related costs

51

22

77

0

150



    Net (gain) loss on NDT funds

538

(393)

(190)

0

(45)



    Liability management and financing

31

18

13

0

62



    Mark-to-market impact of economic hedging activities

37

32

(46)

0

23



    Other **

1

34

89

0

124














$1,265

$2,448

$859

$0

$4,572



Income tax expense (benefit):   








   Tax effect of above adjustments to reported earnings ***

(224)

(649)

(230)

0

(1,103)



   Other

17

0

(69)

0

(52)














($207)

($649)

($299)

$0

($1,155)



* Amount excludes the 50% interest in Cove Point retained by the Company.

** Includes social justice commitments, allowance for credit risk on customer accounts and Tropical Storm Isaias.

*** 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 or for the three months ended September 30. For the three months ended June 30, the fair value adjustment required for

   diluted reported earnings per share calculation was $92 million. For the nine months ended September 30, the fair value adjustment required for diluted reported 

   earnings per share calculation was $28 million. 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.

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 2019 Reported Earnings to Operating Earnings

2019 Earnings (Twelve months ended December 31, 2019)

The $2.0 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, $383 million associated with a voluntary retirement program (which includes $111 million for employee benefit plan curtailment), and $641 million associated with litigation.
  • $769 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.
  • $612 million of net income from discontinued operations primarily associated with the sale of the Gas Transmission & Storage segment.
  • $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)

1,484

504

(21)

(24)

1,943


    Income tax

(111)

(174)

(8)

(133)

(426)




1,373

330

(29)

(157)

1,517


Operating earnings

$693

$384

$946

$852

$2,875


Common shares outstanding (average, diluted) 

793.1

802.5

813.0

826.3

808.9


Reported earnings (loss) per share 2

($0.86)

$0.07

$1.17

$1.21

$1.62


Adjustments to reported earnings per share 2

1.73

0.41

(0.02)

(0.19)

1.91


Operating earnings per share 2

$0.87

$0.48

$1.15

$1.02

$3.53










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

1,428

497

59

376

2,360


    Regulated asset and contract retirements/terminations

547

197

47

(22)

769


    Discontinued operations - Gas Transmission & Storage segment *

(154)

(117)

(125)

(216)

(612)


    Revision to ash pond and landfill closure costs

(113)

0

0

0

(113)


    Net gain on NDT funds

(253)

(83)

(28)

(189)

(553)


    Other

29

10

26

27

92












$1,484

$504

($21)

($24)

$1,943


Income tax expense (benefit):   







   Tax effect of above adjustments to reported earnings **

(279)

(174)

(8)

(145)

(606)


   Write-off EDIT regulatory assets (SCANA)

198

0

0

(4)

194


   Other

(30)

0

0

16

(14)












($111)

($174)

($8)

($133)

($426)










* Amount excludes the 50% interest in Cove Point retained by the Company.

** 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 3Q20 Earnings to 3Q19















Preliminary, Unaudited

Three Months Ended


Nine Months Ended


(millions, except EPS)

September 30,


September 30,




2020 vs. 2019


2020 vs. 2019




Increase / (Decrease)


Increase / (Decrease)


Reconciling Items

Amount

EPS


Amount

EPS










Change in reported earnings (GAAP)

($619)

($0.76)


($1,432)

($1.80)











Change in Pre-tax loss (income) 1

880



2,605




Change in Income tax 1

(291)



(862)



Adjustments to reported earnings

$589

$0.69


$1,743

$2.02










Change in consolidated operating earnings

($30)

($0.07)


$311

$0.22










Dominion Energy Virginia 








Regulated electric sales:








Weather

($2)

$0.00


($50)

($0.06)



Other

(7)

(0.01)


(18)

(0.02)



Rate adjustment clause equity return

21

0.03


76

0.09



Electric capacity

(6)

(0.01)


27

0.04



Select operations and maintenance expense2

(1)

0.00


47

0.06



Depreciation & amortization

12

0.02


33

0.04



Renewable energy investment tax credits

(29)

(0.04)


(10)

(0.01)



Other

(4)

0.00


(9)

(0.01)



Share dilution


(0.02)



(0.08)



Change in contribution to operating earnings

($16)

($0.03)


$96

$0.05










Gas Distribution








Regulated gas sales:








Weather

$0

0.00


($2)

($0.00)



Other

(2)

(0.00)


10

0.01



Select operations and maintenance expense2

0

0.00


12

0.02



Interest expense, net

14

0.02


25

0.03



Other

9

0.01


16

0.02



Share dilution


0.00



(0.02)



Change in contribution to operating earnings

$21

$0.03


$61

$0.06










Dominion Energy South Carolina 








Regulated electric sales:








Weather

($9)

($0.01)


($23)

($0.03)



Other

15

0.02


16

0.02



Regulated gas sales

2

0.00


8

0.01



Interest expense, net

11

0.01


21

0.03



Other

(28)

(0.03)


(28)

(0.03)



Share dilution


0.00



(0.02)



Change in contribution to operating earnings

($9)

($0.01)


($6)

($0.02)










Contracted Assets








Margin

$32

$0.03


($11)

($0.02)



Select operations and maintenance expense2

(7)

(0.01)


1

0.00



Renewable energy investment tax credits

0

0.00


7

0.01



Interest expense, net

3

0.00


10

0.01



Other

(2)

0.00


(8)

(0.01)



Share dilution


0.00



(0.01)



Change in contribution to operating earnings

$26

$0.02


($1)

($0.02)










Corporate and Other 








Share dilution and other

($52)

($0.08)


$161

$0.15



Change in contribution to operating earnings

($52)

($0.08)


$161

$0.15


















Change in consolidated operating earnings

($30)

($0.07)


$311

$0.22










Change in adjustments included in reported earnings1

($589)

($0.69)


($1,743)

($2.02)










Change in consolidated reported earnings

($619)

($0.76)


($1,432)

($1.80)











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.

Note: Figures may not sum due to rounding

SOURCE Dominion Energy