10-KPeriod: FY2015

CENTERPOINT ENERGY INC Annual Report, Year Ended Dec 31, 2015

Filed February 26, 2016For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) reported a net loss of $692 million for the year ended December 31, 2015, a significant decrease from a net income of $611 million in 2014. This downturn was primarily driven by a substantial $1.846 billion impairment charge related to its investment in Enable Midstream Partners, LP, exacerbated by a $256 million increase in the loss on marketable securities. The company's core utility operations, Electric Transmission & Distribution and Natural Gas Distribution, showed stable performance with slight operating income increases, benefiting from customer growth and regulatory rate adjustments. However, the Energy Services segment saw a decline in operating income. Despite the overall net loss, CenterPoint Energy's liquidity remained adequate, supported by its credit facilities and operating cash flows, although future capital expenditures for infrastructure are significant. Investors should note the substantial impact of Enable's performance on CenterPoint Energy's financial results and the ongoing regulatory environment governing its utility businesses.

Financial Highlights

46 data points
Beta

Revenue

$7.39B

Net Income

-$692.00M

-9.4% Net Margin

EPS (Diluted)

$-1.61

Total Assets

$21.29B

Cash & Equivalents

$264.00M

Free Cash Flow

$1.86B

Financial Statements
Beta
Revenue$7.39B
Operating Expenses$6.45B
Operating Income$933.00M
Net Income-$692.00M
EPS (Basic)$-1.61
EPS (Diluted)$-1.61
Shares Outstanding (Basic)430.18M
Shares Outstanding (Diluted)430.18M

Key Highlights

  • 1Significant net loss of $692 million in 2015, down from a $611 million net income in 2014, largely due to an $1.846 billion impairment charge on its investment in Enable Midstream Partners, LP.
  • 2Utility segments (Electric Transmission & Distribution and Natural Gas Distribution) demonstrated resilience, with operating income slightly increasing due to customer growth and favorable regulatory outcomes.
  • 3Energy Services segment operating income decreased, impacted by mark-to-market accounting for derivatives.
  • 4Company maintained adequate liquidity through credit facilities and operating cash flows, despite significant capital expenditure plans for infrastructure improvements.
  • 5CenterPoint Energy's future financial performance is heavily influenced by the performance of its investment in Enable Midstream Partners, LP.
  • 6Regulatory environments in Texas and other states are critical for cost recovery and revenue generation in the utility segments.
  • 7The company is exploring strategic alternatives for its investment in Enable, including a sale or spin-off.

Frequently Asked Questions

The primary driver of the net loss was a substantial $1.846 billion impairment charge related to CenterPoint Energy's investment in Enable Midstream Partners, LP. This impairment was recognized due to sustained low Enable common unit prices and the market outlook for the midstream oil and gas industry.

The Electric Transmission & Distribution and Natural Gas Distribution segments showed stable to slightly improved operating income. This was supported by customer growth and the benefits of regulatory rate adjustments, demonstrating resilience despite the overall company net loss.

CenterPoint Energy is actively evaluating strategic alternatives for its investment in Enable, which could include a sale or spin-off. The performance of Enable significantly impacts CenterPoint Energy's financial results, as evidenced by the large impairment charge recorded in 2015.

The company's Electric Transmission & Distribution and Natural Gas Distribution businesses are subject to rate regulation by various state and local authorities. These regulations significantly influence cost recovery, revenue generation, and the ability to earn a reasonable return on invested capital, making regulatory actions a critical factor for investors to monitor.