Dominion Energy Announces First-Quarter Earnings

RICHMOND, Va., May 5, 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 March 31, 2020 of $270 million ($0.34 per share) compared with a net loss of $680 million ($0.86 per share) for the same period in 2019.

Operating earnings for the three months ended March 31, 2020, were $931 million ($1.09 per share), compared with operating earnings of $873 million ($1.10 per share) for the same period in 2019. The company estimates that its first-quarter 2020 operating earnings were negatively impacted by $0.09 per share due to milder than normal weather in its utility service territories.

The difference between GAAP and operating earnings for the three months ended March 31, 2020 was primarily attributable to a non-cash charge related to the planned early retirement of certain coal and oil-fired generating units in Virginia, consistent with the requirements of the recently enacted Virginia Clean Economy Act, and unrealized losses on our nuclear decommissioning trust funds. The difference between GAAP and operating earnings for the three months ended March 31, 2019 was primarily attributable to charges related to SCANA merger commitments and the early retirement of certain cold-reserve Virginia utility generating units.

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 second-quarter operating earnings in the range of $0.75 to $0.85 per share, compared to second-quarter 2019 operating earnings of $0.77 per share.

The company affirms its full-year 2020 operating earnings guidance range of $4.25 to $4.60 per share.

Conference call today

The company will host its first-quarter earnings conference call at 10 a.m. ET on Tuesday, May 5, 2020. Management will discuss first-quarter financial results and other matters of interest to the financial community.

Domestic callers should dial 1-800-341-6228. International callers should dial 1-334-777-6993. The passcode for the conference call is 47792145#. 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 May 5 and lasting until 11 p.m. ET May 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 64127851. Additionally, a replay of the webcast will be available on the investor information pages by the end of the day May 5.

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 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 is committed 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 second-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; 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


                                                                                                                                                    March 31,



                                                                                                                                  2020                         2019






     
              Operating Revenue                                                                                              $4,496                       $3,858






     
              Operating Expenses



     Electric fuel and other energy-related purchases                                                                             668                          791



     Purchased electric capacity                                                                                                    2                           39



     Purchased gas                                                                                                                427                          730



     Other operations and maintenance(1)                                                                                        1,811                        1,837



     Depreciation, depletion and amortization                                                                                     673                          651



     Other taxes                                                                                                                  284                          292




       Total operating expenses                                                                                                 3,865                        4,340






     Income from operations                                                                                                       631                        (482)






     Other income (expense)                                                                                                     (399)                         388



     Interest and related charges                                                                                                 490                          469




     Income from continuing operations including noncontrolling



         interests before income tax expense                                                                                    (258)                       (563)





     Income tax expense (benefit)                                                                                                (19)                         114






     Net loss including noncontrolling interests                                                                                (239)                       (677)






     Noncontrolling interests                                                                                                      31                            3






     
              Net loss attributable to Dominion Energy                                                                       $(270)                      $(680)





     
              Reported loss per common share - diluted                                                                      $(0.34)                     $(0.86)



     Average shares outstanding, diluted                                                                                        838.2                        793.1





     
              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 March 31,



                                                                                                                                                                                                                                      2020                                2019           
     
     
     Change






     
                REPORTED EARNINGS(1)                                                                                                                                                                                     $(270)              $(680)                            $410




                                                                        
     Pre-tax loss (income)(2)                                                                                                                                     1,422                               1,640                  (218)


                                                                        
     Income tax(2)                                                                                                                                                (221)                               (87)                 (134)




     Adjustments to reported earnings                                                                                                                                                                                               1,201                               1,553                  (352)





     
                OPERATING EARNINGS                                                                                                                                                                                         $931                 $873                              $58



                                                                        
     
                By segment:


                                                                        
     Dominion Energy Virginia                                                                                                                                       429                                 361                     68


                                                                        
     Gas Transmission & Storage                                                                                                                                     221                                 222                    (1)


                                                                        
     Gas Distribution                                                                                                                                               225                                 205                     20


                                                                        
     Dominion Energy South Carolina                                                                                                                                  94                                  71                     23


                                                                        
     Contracted Generation                                                                                                                                           59                                 102                   (43)


                                                                        
     Corporate and Other                                                                                                                                           (97)                               (88)                   (9)



                                                                                                                                                                                                                              $931                 $873                              $58






     
                Earnings Per Share (EPS):(3)



     
                REPORTED EARNINGS (1)                                                                                                                                                                                   $(0.34)             $(0.86)                           $0.52



     Adjustments to reported earnings (after tax)                                                                                                                                                                                    1.43                                1.96                 (0.53)




     
                OPERATING EARNINGS                                                                                                                                                                                        $1.09                $1.10                          $(0.01)



                                                                        
     
                By segment:


                                                                        
     Dominion Energy Virginia                                                                                                                                      0.51                                0.45                   0.06


                                                                        
     Gas Transmission & Storage                                                                                                                                    0.26                                0.28                 (0.02)


                                                                        
     Gas Distribution                                                                                                                                              0.27                                0.26                   0.01


                                                                        
     Dominion Energy South Carolina                                                                                                                                0.11                                0.09                   0.02


                                                                        
     Contracted Generation                                                                                                                                         0.07                                0.13                 (0.06)


                                                                        
     Corporate and Other                                                                                                                                         (0.13)                             (0.11)                (0.02)



                                                                                                                                                                                                                             $1.09                $1.10                          $(0.01)






     
                Common Shares Outstanding (average, diluted)                                                                                                                                                                      838.2                               793.1






                                                                     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 March 31.  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 (Three months ended March 31, 2020)





       The $1.4 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:





       
                ·  $768 million of charges primarily relating to the planned early retirement of electric generation facilities in Virginia.



       
                ·  $538 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)             $0              $0              $0                ($270)

    ---


       Adjustments to reported earnings(1):



           Pre-tax loss (income)                                                                                                                                    1,422               0               0               0                 1,422



           Income tax                                                                                                                                               (221)              0               0               0                 (221)

    ---

                                                                                                                                                                     1,201               0               0               0                 1,201



       Operating earnings                                                                                                                                            $931              $0              $0              $0                  $931

    ---


       
                Common shares outstanding (average, diluted)                                                                                                    838.2             0.0             0.0             0.0                 838.2

    ---


       
                Reported earnings (loss) per share(2)                                                                                                         ($0.34)          $0.00           $0.00           $0.00               ($0.34)



       Adjustments to reported earnings per share(2)                                                                                                                 1.43            0.00            0.00            0.00                  1.43



       
                Operating earnings per share(2)                                                                                                                 $1.09           $0.00           $0.00           $0.00                 $1.09

    ---




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


                                                                                                                                    
              
                1Q20           
     
     2Q20        
     
     3Q20        
     
     4Q20        
     
     YTD 2020




       
                Pre-tax loss (income):

    ---


           Regulated asset retirements                                                                                                                                768               0               0               0                   768



           Net loss on NDT funds                                                                                                                                      538               0               0               0                   538



           Merger and integration-related costs                                                                                                                        51               0               0               0                    51



           Mark-to-market impact of economic hedging activities                                                                                                        33               0               0               0                    33



           Liability management                                                                                                                                        31               0               0               0                    31



           Other                                                                                                                                                        1               0               0               0                     1




                                                                                                                                                                    $1,422              $0              $0              $0                $1,422




       
                Income tax expense (benefit):

    ---


          Tax effect of above adjustments to reported earnings *                                                                                                    (238)              0               0               0                 (238)



          Other                                                                                                                                                        17               0               0               0                    17




                                                                                                                                                                    ($221)             $0              $0              $0                ($221)






       * 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. 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 3 - Reconciliation of 2019 Reported Earnings to Operating 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 1Q20 Earnings to 1Q19





       
                Preliminary, Unaudited                                                                                                   Three Months Ended



       
                
                  (millions, except EPS)                                                                              
     
           March 31,


                                                                                                                                                2020 vs. 2019


                                                                                                                                            Increase /(Decrease)



       
                
                  Reconciling Items                                                                                                      Amount       EPS

    ---                                                                                                                                                                 ---




       
                Change in reported earnings (GAAP)                                                                                                      $410      $0.52




                           
              Change in Pre-tax loss (income) (1)                                                                                     (218)


                           
              Change in Income tax (1)                                                                                                (134)



       
                Adjustments to reported earnings                                                                                                      ($352)   ($0.53)





       
                Change in consolidated operating earnings                                                                                                $58    ($0.01)

                                                                                                                                                                        ===




       
                
                  Dominion Energy Virginia


                           
              Regulated electric sales:


                           
              Weather                                                                                                                 ($26)   ($0.03)


                           
              Other                                                                                                                       4


                           
              Rate adjustment clause equity return                                                                                       23       0.03


                           
              Electric capacity                                                                                                          24       0.03


                           
              Depreciation & amortization                                                                                                12       0.02


                           
              Renewable energy investment tax credits                                                                                    29       0.04


                           
              Other                                                                                                                       2


                           
              Share dilution                                                                                                                   (0.03)



                           
              
                Change in contribution to operating earnings                                                                 $68      $0.06





       
                
                  Gas Transmission & Storage


                           
              Noncontrolling interest                                                                                                 ($20)    (0.02)


                           
              Atlantic Coast Pipeline equity earnings                                                                                     8       0.01


                           
              Interest expense, net                                                                                                      26       0.03


                           
              Other                                                                                                                    (15)    (0.02)


                           
              Share dilution                                                                                                                   (0.02)



                           
              
                Change in contribution to operating earnings                                                                ($1)   ($0.02)





       
                
                  Gas Distribution


                           
              Regulated gas sales:


                           
              Weather                                                                                                                  ($5)


                           
              Other                                                                                                                      11       0.01


                           
              Rate adjustment clause equity return                                                                                        2


                           
              Interest expense, net                                                                                                       6       0.01


                           
              Other                                                                                                                       6       0.01


                           
              Share dilution                                                                                                                   (0.02)



                           
              
                Change in contribution to operating earnings                                                                 $20      $0.01





       
                
                  Dominion Energy South Carolina


                           
              Regulated electric sales:


                           
              Weather                                                                                                                    $9      $0.01


                           
              Other                                                                                                                       5


                           
              Regulated gas sales                                                                                                         4


                           
              Interest expense, net                                                                                                       8       0.01


                           
              Other                                                                                                                     (3)


                           
              Share dilution



                           
              
                Change in contribution to operating earnings                                                                 $23      $0.02





       
                
                  Contracted Generation


                           
              Margin                                                                                                                  ($44)   ($0.06)


                           
              Interest expense, net                                                                                                       4


                           
              Other                                                                                                                     (3)


                           
              Share dilution



                           
              
                Change in contribution to operating earnings                                                               ($43)   ($0.06)






       
                
                  Corporate and Other


                           
              Share dilution and other                                                                                                  (9)    (0.02)


                           
              
                Change in contribution to operating earnings                                                                ($9)   ($0.02)








       
                
                  Change in consolidated operating earnings                                                                                 $58    ($0.01)





       
                Change in adjustments included in reported earnings(1)                                                                                  $352      $0.53

                                                                                                                                                                        ---




       
                
                  Change in consolidated reported earnings                                                                                 $410      $0.52

                                                                                                                                                                        ===





                     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

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SOURCE Dominion Energy