Portland General Electric Announces Third Quarter 2020 Results
PORTLAND, Ore., Oct. 30, 2020 /PRNewswire/ -- Portland General Electric Company (NYSE: POR) today reported a net loss based on generally accepted accounting principles (GAAP) of $17 million, or 19 cents per diluted share, for the third quarter of 2020, which reflects the $1.09 loss per diluted share from previously disclosed trading losses. After adjusting for the impact of third quarter trading losses, non-GAAP net income was $80 million, or 90 cents per diluted share. This compares with GAAP net income of $55 million, or 61 cents per diluted share, for the third quarter of 2019.
"We continue to deliver strong operating performance, notwithstanding the financial impact of the isolated trading losses and wildfires this quarter," said Maria Pope, PGE president and CEO. "I'm proud that our team acted decisively and demonstrated resilience and unwavering dedication to our customers. Looking ahead, we remain committed to making the right investments to meet the needs of Oregonians and drive value for shareholders."
Third Quarter 2020 Earnings Compared to Third Quarter 2019 Earnings
Total revenues increased as a result of higher residential and industrial demand, which increased 9% on the strength of growth in the high-tech and digital service sectors. These increases were partially offset by lower commercial demand and the effects of the decoupling mechanism.
The cost of purchased power increased and was primarily driven by losses from the Company's energy portfolio. Other operating expenses declined due to lower outside service expense, reduced plant maintenance expense and lower distribution expense. Administrative expenses declined due to lower employee benefits expense.
Company Updates
Capital investment plan
The Company announced a $100 million increase to its capital plan through 2021. These investments in grid resiliency, system modernization and infrastructure to serve new large customers will enhance the Company's ability to deliver safe, clean, reliable and affordable energy.
Wildfires
In 2020, Oregon experienced one of the most destructive wildfire seasons on record, with over one million acres of land burned. The Company is not aware of any wildfires caused by PGE equipment. On October 20, 2020, the Oregon Public Utilities Commission approved PGE's application to defer costs associated with damage restoration from these wildfires. PGE continues to assess the damage to its infrastructure and expects regulatory recovery of prudently incurred restoration costs.
Energy trading activities
The Company's energy portfolio experienced realized losses of $127 million in the third quarter. The PGE Board of Directors Special Committee review of the energy trading losses and the Company's procedures and controls related to the trading is ongoing.
2020 Earnings Guidance
PGE is reaffirming its 2020 earnings guidance of $1.40 to $1.60 per diluted share and expects to be in the upper half of this range. This guidance reflects the following assumptions:
-- Revised increase in annual retail deliveries of 1%, weather adjusted,
year over year;
-- Average hydro conditions for the year;
-- Wind generation based on five years of historical levels or forecast
studies when historical data is not available;
-- Normal thermal plant operations;
-- Operating and maintenance expense between $550 million and $570 million,
which assumes deferral of the incremental full-year forecasted bad debt
expense in excess of $6 million due to moratoriums on collection
activities and customer disconnects; and
-- Depreciation and amortization expense between $410 million and $430
million.
Third Quarter 2020 Earnings Call and Webcast -- October 30, 2020
PGE will host a conference call with financial analysts and investors on Friday, October 30, 2020, at 11 a.m. ET. The conference call will be webcast live on the PGE website at investors.portlandgeneral.com. A replay of the call will be available beginning at 2 p.m. ET on Friday, October 30, 2020, through 1 p.m. ET on Friday, November 6, 2020.
Maria Pope, president and CEO; Jim Lobdell, senior vice president of Finance, CFO, and treasurer; and Jardon Jaramillo, senior director, Investor Relations, Treasury, and Risk Management, will participate in the call. Management will respond to questions following formal comments.
Non-GAAP Financial Measures
Management believes that excluding the effects of the energy trading losses provides a meaningful representation of the Company's comparative earnings per share. The Company has adjusted this amount to maintain comparability between periods. The effect of the energy trading losses was $1.09 per diluted share. PGE's reconciliations of non-GAAP earnings for the three and nine months ended September 30, 2020 are below.
Non-GAAP Earnings Reconciliation for
the three and nine months ended
September 30, 2020
(Dollars in millions, except EPS) Net Income (Loss) Diluted EPS
GAAP-based as reported for the three months ended September 30, 2020 $
(17) $
(0.19)
Exclusion of certain trading losses 127 1.42
Tax effect (1) (30) (0.33)
Non-GAAP-based as reported for the three months ended September 30, 2020 $
80 $
0.90
GAAP-based as reported for the nine months ended September 30, 2020 $
103 $
1.15
Exclusion of certain trading losses 127 1.42
Tax effect (1) (30) (0.33)
Non-GAAP-based as reported for the nine months ended September 30, 2020 $
200 $
2.24
---
(1) Tax effects are determined
based on the Company's
forecasted annual effective
tax rate applied to year-to-
date ordinary income or loss
The attached unaudited condensed consolidated statements of income and comprehensive income, condensed consolidated balance sheets and condensed consolidated statements of cash flows, as well as the supplemental operating statistics, are an integral part of this earnings release.
About Portland General Electric Company
Portland General Electric (NYSE: POR) is a fully integrated energy company based in Portland, Oregon, with operations across the state. The company serves approximately 900,000 customers with a service area population of 2 million Oregonians in 51 cities. PGE has 16 generation plants in five Oregon counties, and maintains and operates 14 public parks and recreation areas. For over 130 years, PGE has delivered safe, affordable and reliable energy to Oregonians. Together with its customers, PGE has the No. 1 voluntary renewable energy program in the U.S. PGE and its 3,000 employees are working with customers to build a clean energy future. In 2019, PGE, employees, retirees and the PGE Foundation donated $4.7 million and volunteered 32,900 hours with more than 700 nonprofits across Oregon. For more information visit portlandgeneral.com/news.
Safe Harbor Statement
Statements in this press release that relate to future plans, objectives, expectations, performance, events and the like may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding the Company's full-year earnings guidance (including expectations regarding annual retail deliveries, average hydro conditions, wind generation, normal thermal plant operations, operating and maintenance expense and depreciation and amortization expense) as well as other statements containing words such as "anticipates," "believes," "intends," "estimates," "promises," "expects," "should," "conditioned upon," and similar expressions. Investors are cautioned that any such forward-looking statements are subject to risks and uncertainties, including, without limitation: the outcome of the review being conducted by the Special Committee relating to energy trading losses; the impact of the recommendations of the Special Committee on the Company and its operations; the time and expense incurred in implementing the recommendations of the Special Committee; any reputational damage to the Company relating to the matters underlying the Special Committee's review; demand for electricity; the sale of excess energy during periods of low demand or low wholesale market prices; operational risks relating to the Company's generation facilities, including hydro conditions, wind conditions, disruption of fuel supply, and unscheduled plant outages, which may result in unanticipated operating, maintenance and repair costs, as well as replacement power costs; failure to complete capital projects on schedule or within budget, or the abandonment of capital projects, which could result in the Company's inability to recover project costs; the costs of compliance with environmental laws and regulations, including those that govern emissions from thermal power plants; changes in weather, hydroelectric and energy markets conditions, which could affect the availability and cost of purchased power and fuel; changes in capital market conditions, which could affect the availability and cost of capital and result in delay or cancellation of capital projects; the outcome of various legal and regulatory proceedings; general economic and financial market conditions; severe weather conditions, wildfires, and other natural phenomena and natural disasters that could result in operational disruptions, unanticipated restoration costs, or liability for third party property damage; cyber security breaches of the Company's customer information system or operating systems, which may affect customer bills or other aspects of our operations; and widespread health emergencies or outbreaks of infectious diseases such as the novel coronavirus disease (COVID-19), which may affect our financial position, results of operations and cash flows. As a result, actual results may differ materially from those projected in the forward-looking statements. All forward-looking statements included in this press release are based on information available to the Company on the date hereof and such statements speak only as of the date hereof. The Company expressly disclaims any current intention to update publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise. Prospective investors should also review the risks, assumptions and uncertainties listed in the Company's most recent annual report on Form 10-K and in other documents that the Company files with the United States Securities and Exchange Commission, including management's discussion and analysis of financial condition and results of operations and the risks described therein from time to time.
POR
Source: Portland General Company
Media Contact: Investor Contact:
Brianne Hyder Jardon Jaramillo
Corporate Communications Investor Relations
Phone: 503-464-8596 Phone: 503-464-7051
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(Dollars in millions, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---
2020 2019 2020 2019
---
Revenues:
Revenues, net $
556 $
538 $
1,589 $
1,570
Alternative revenue programs, net of amortization (9) 4 5
Total revenues 547 542 1,589 1,575
Operating expenses:
Purchased power and fuel 292 165 554 449
Generation, transmission and distribution 65 78 215 241
Administrative and other 63 74 208 223
Depreciation and amortization 108 103 320 305
Taxes other than income taxes 35 34 104 101
Total operating expenses 563 454 1,401 1,319
Income (loss) from operations (16) 88 188 256
Interest expense, net 35 32 102 95
Other income:
Allowance for equity funds used during construction 4 2 11 7
Miscellaneous income, net 3 3 2 5
Other income, net 7 5 13 12
Income (loss) before income tax expense (44) 61 99 173
Income tax expense (benefit) (27) 6 (4) 20
Net income (loss) (17) 55 103 153
Other comprehensive income (loss) - 1 2
Comprehensive income (loss) $
(17) $
55 $
104 $
155
Weighted-average common shares outstanding (in thousands):
Basic 89,509 89,372 89,476 89,346
Diluted 89,509 89,594 89,629 89,555
Earnings per share:
Basic $
(0.19) $
0.61 $
1.16 $
1.71
Diluted $
(0.19) $
0.61 $
1.15 $
1.70
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
(Unaudited)
September 30, December 31,
2020 2019
---
ASSETS
---
Current assets:
Cash and cash equivalents $
253 $
30
Accounts receivable, net 250 253
Inventories 86 96
Regulatory assets-current 8 17
Other current assets 123 104
Total current assets 720 500
Electric utility plant, net 7,371 7,161
Regulatory assets-noncurrent 527 483
Nuclear decommissioning trust 47 46
Non-qualified benefit plan trust 39 38
Other noncurrent assets 165 166
Total assets $
8,869 $
8,394
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, continued
(Dollars in millions)
(Unaudited)
September 30, December 31,
2020 2019
---
LIABILITIES AND SHAREHOLDERS' EQUITY
---
Current liabilities:
Accounts payable $
139 $
165
Liabilities from price risk management activities-
current 16 23
Short-term debt 225
Current portion of long-term debt 160
Current portion of finance lease obligation 16 16
Accrued expenses and other current liabilities 368 315
Total current liabilities 924 519
Long-term debt, net of current portion 2,657 2,597
Regulatory liabilities-noncurrent 1,375 1,377
Deferred income taxes 378 378
Unfunded status of pension and postretirement plans 250 247
Liabilities from price risk management activities-
noncurrent 138 108
Asset retirement obligations 251 263
Non-qualified benefit plan liabilities 99 103
Finance lease obligations, net of current portion 131 135
Other noncurrent liabilities 71 76
Total liabilities 6,274 5,803
Shareholders' Equity:
Preferred stock, no par value, 30,000,000 shares
authorized; none issued and -
outstanding as of September 30, 2020 and December 31, 2019
Common stock, no par value, 160,000,000 shares
authorized; 89,509,783 and 1,226 1,220
89,387,124 shares issued and outstanding as of September 30, 2020
and
December 31, 2019, respectively
Accumulated other comprehensive loss (9) (10)
Retained earnings 1,378 1,381
Total shareholders' equity 2,595 2,591
Total liabilities and shareholders' equity $
8,869 $
8,394
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended September 30,
2020 2019
---
Cash flows from operating activities:
Net income $
103 $
153
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 320 305
Deferred income taxes (14) 3
Pension and other postretirement benefits 17 16
Allowance for equity funds used during construction (11) (7)
Decoupling mechanism deferrals, net of amortization - (6)
Amortization of net benefits due to Tax Reform (17) (16)
Other non-cash income and expenses, net 38 38
Changes in working capital:
(Increase)/decrease in accounts receivable, net (3) 50
Decrease/(increase) in inventories 10 (7)
(Increase)/decrease in margin deposits (6) 4
Increase/(decrease) in accounts payable and accrued liabilities 24 (25)
Other working capital items, net 27 25
Other, net (46) (31)
Net cash provided by operating activities 442 502
Cash flows from investing activities:
Capital expenditures (549) (407)
Sales of Nuclear decommissioning trust securities 6 11
Purchases of Nuclear decommissioning trust securities (5) (8)
Other, net (3) (2)
Net cash used in investing activities (551) (406)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 319 200
Payments on long-term debt (98) (300)
Borrowings on short-term debt 275
Repayments of short-term debt (50)
Dividends paid (103) (99)
Other (11) (5)
Net cash provided by (used in) financing activities 332 (204)
Increase (Decrease) in cash and cash equivalents 223 (108)
Cash and cash equivalents, beginning of period 30 119
Cash and cash equivalents, end of period $
253 $
11
Supplemental cash flow information is as follows:
Cash paid for interest, net of amounts capitalized $
70 $
73
Cash paid for income taxes 9 21
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS
(Unaudited)
Nine Months Ended September 30,
2020 2019
---
Revenues (dollars in millions):
Retail:
Residential $
747 47 $
713 45
% %
Commercial 463 29 479 31
Industrial 162 10 144 9
Direct Access 35 2 34 2
Subtotal 1,407 88 1,370 87
Alternative revenue programs, net of amortization - 5
Other accrued revenues, net 13 1 17 1
Total retail revenues 1,420 89 1,392 88
Wholesale revenues 130 8 125 8
Other operating revenues 39 3 58 4
Total revenues $
1,589 100 $
1,575 100
% %
===
Energy deliveries (MWhs in thousands):
Retail:
Residential 5,621 30 5,428 31
% %
Commercial 4,672 25 4,999 28
Industrial 2,552 13 2,332 13
Subtotal 12,845 68 12,759 72
Direct access:
Commercial 478 3 536 3
Industrial 1,114 6 1,093 6
Subtotal 1,592 9 1,629 9
Total retail energy deliveries 14,437 77 14,388 81
Wholesale energy deliveries 4,593 23 3,474 19
Total energy deliveries 19,030 100 17,862 100
% %
===
Average number of retail customers:
Residential 789,726 88 778,285 88
% %
Commercial 110,185 12 109,509 12
Industrial 194 194
Direct access 634 633
Total 900,739 100 888,621 100
% %
===
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS, continued
(Unaudited)
Nine Months Ended September 30,
2020 2019
---
Sources of energy (MWhs in thousands):
Generation:
Thermal:
Natural gas 5,767 32 6,199 36
% %
Coal 2,752 15 3,163 19
Total thermal 8,519 47 9,362 55
Hydro 919 5 1,098 7
Wind 1,720 9 1,418 8
Total generation 11,158 61 11,878 70
Purchased power:
Term 5,585 31 4,177 24
Hydro 1,202 7 807 5
Wind 256 1 223 1
Total purchased power 7,043 39 5,207 30
Total system load 18,201 100 17,085 100
% %
===
Less: wholesale sales (4,593) (3,474)
Retail load requirement 13,608 13,611
The following table indicates the number of heating and cooling degree-days for the three months ended September 30, 2020 and 2019, along with 15-year averages based on weather data provided by the National Weather Service, as measured at Portland International Airport:
Heating Degree-days Cooling Degree-days
2020 2019 Avg. 2020 2019 Avg.
First Quarter 1,761 1,992 1,849
Second Quarter 554 467 636 99 102 89
July 11 3 7 180 176 182
August 1 6 197 216 195
September 35 80 65 115 70 71
Third Quarter 47 83 78 492 462 448
Year-to-date 2,362 2,542 2,563 591 564 537
(Decrease)/increase from the 15-year average (8) (1) 10 5
% % % %
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SOURCE Portland General Company
