01—Abstract
Summary
Summary of the 10-K filed February 28, 2017. Cited figures are marked; the original filing is the authoritative source.
CenterPoint Energy, Inc. (CNP) filed its 2016 10-K, reporting a net income of $432 milliona, a significant turnaround from a net loss of $692 million in 2015.
This recovery was largely driven by a substantial $1.84 billionb increase in equity earnings from its investment in Enable Midstream Partners, LP, which had been negatively impacted by a large impairment charge in the prior year. The company's core utility operations, particularly Houston Electric (electric transmission and distribution) and CERC Corp. (natural gas distribution), demonstrated resilience, with operating income increasing year-over-year, supported by customer growth and rate adjustments. The company's financial position remains robust, with total assets of $21.8 billion and a manageable debt-to-capitalization ratio.
CNP's capital expenditure plan for 2017 is projected at $1.5 billionc, primarily focused on infrastructure upgrades and expansions within its electric and natural gas segments. Liquidity is supported by its credit facilities and commercial paper programs. Investors should note the significant non-cash impairment charge related to Enable in 2015 and the ongoing regulatory environment for its utility businesses as key factors influencing future performance.
02—Key points
Key Highlights
- Net income rebounded to $432 million in 2016 from a net loss of $692 million in 2015, primarily due to a significant recovery in equity earnings from Enable Midstream Partners, LP.
- Houston Electric (Electric T&D) and CERC Corp. (Gas Distribution) showed improved operating income, driven by customer growth and regulatory rate increases.
- Total assets stood at $21.8 billion at the end of 2016, with a debt-to-capitalization ratio of 71% (excluding securitization bonds).
- Capital expenditures for 2017 are projected at $1.5 billion, focusing on infrastructure improvements in regulated utility segments.
- The company repurchased no equity securities during the fourth quarter of 2016.
- CenterPoint Energy's Energy Services segment experienced a decrease in operating income, partly due to mark-to-market accounting for derivatives, but also saw growth from acquisitions.
- The company successfully negotiated new collective bargaining agreements, mitigating potential labor disruptions.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, CenterPoint Energy kept $0.06.
- Revenue$7.53B100.0%
- Cost of revenue−$1.98B26.3%
- Gross profit$5.54B73.7%
- Operating costs−$4.52B60.1%
- Operating income$1.02B13.6%
- Interest, other & tax−$591.0M7.9%
- Net income$432.0M5.7%
Where FY2016 revenue went
$7.53B- Operating costs: $4.52B, 60% of revenue
- Cost of revenue: $1.98B, 26% of revenue
- Net income: $432.0M, 5.7% of revenue
- Interest, other & tax: $591.0M, 7.9% of revenue
Kept 5.7% as net incomeNet income $432.0M · 5.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 28, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $7.53B$7.39B | +1.9% |
| Cost of Revenue | $1.98B— | — |
| Gross Profit | $5.54B— | — |
| Operating Expenses | $6.50B$6.45B | +0.8% |
| Operating Income | $1.02B$933.00M | +9.6% |
| Net Income | $432.00M-$692.00M | +162.4% |
| EPS (Basic) | $1.00$-1.61 | +162.1% |
| EPS (Diluted) | $1.00$-1.61 | +162.1% |
| Shares Outstanding (Basic) | 430.61M430.18M | +0.1% |
| Shares Outstanding (Diluted) | 433.60M430.18M | +0.8% |
05—Questions
Frequently Asked Questions
What was CenterPoint Energy's financial performance in 2016 compared to 2015?
CenterPoint Energy reported a net income of $432 million in 2016, a significant improvement from a net loss of $692 million in 2015. This turnaround was primarily driven by a substantial increase in equity earnings from its investment in Enable Midstream Partners, LP, which had experienced a significant impairment charge in 2015.
How did the company's regulated utility segments perform?
The Electric Transmission & Distribution segment (Houston Electric) and the Natural Gas Distribution segment (CERC Corp.) both saw an increase in operating income. This growth was supported by customer growth and the positive impact of rate increases implemented to recover capital investments and operational costs.
What is the company's outlook regarding capital expenditures and liquidity?
CenterPoint Energy anticipates capital expenditures of approximately $1.5 billion for 2017, primarily directed towards maintaining and expanding its electric and natural gas infrastructure. The company expects to fund these expenditures through a combination of internally generated cash flows, borrowings under its credit facilities, commercial paper programs, and potential debt issuances.
What are the key risks identified by CenterPoint Energy in its 2016 10-K?
Key risks include the potential for rate regulation to delay or deny cost recovery, disruptions at third-party power generation facilities impacting electric services, seasonality affecting revenues, potential issues with the Advanced Metering System, credit risk concentration from Retail Electric Providers (REPs), fluctuations in natural gas prices, environmental regulations, and the performance of its investment in Enable Midstream Partners, LP.
06—Continue