10-QPeriod: Q3 FY2014

CENTERPOINT ENERGY INC Quarterly Report for Q3 Ended Sep 30, 2014

Filed November 5, 2014For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) reported net income of $143 million ($0.33 per diluted share) for the third quarter of 2014, a slight decrease from $151 million ($0.35 per diluted share) in the same period last year. The nine-month period showed a significant increase in net income to $435 million ($1.01 per diluted share) from $198 million ($0.46 per diluted share) in the prior year, primarily driven by a substantial decrease in income tax expense related to the formation of Enable Midstream Partners, LP (Enable) and improved equity earnings from this investment. Operational performance varied by segment. Electric Transmission & Distribution showed a slight decrease in operating income for the quarter, while Natural Gas Distribution experienced a small operating loss compared to a profit in the prior year, though it improved year-to-date. The Energy Services segment saw a notable increase in operating income for both the quarter and year-to-date, bolstered by derivative accounting benefits and improved margins. The company's investment in Enable Midstream Partners continues to be a significant contributor to overall financial results. Liquidity remains stable, with adequate cash flows to meet near-term obligations, supported by revolving credit facilities. The company is actively managing its capital expenditures, with a focus on infrastructure improvements for its electric and natural gas operations.

Financial Highlights

44 data points
Beta

Revenue

$1.81B

Net Income

$143.00M

7.9% Net Margin

EPS (Diluted)

$0.33

Total Assets

$22.05B

Cash & Equivalents

$230.00M

Free Cash Flow

$412.00M

Financial Statements
Beta
Revenue$1.81B
Operating Expenses$1.57B
Operating Income$233.00M
Net Income$143.00M
EPS (Basic)$0.33
EPS (Diluted)$0.33
Shares Outstanding (Basic)429.80M
Shares Outstanding (Diluted)431.57M

Key Highlights

  • 1Net income for the third quarter of 2014 was $143 million, down from $151 million in Q3 2013, but year-to-date net income significantly increased to $435 million from $198 million in the comparable 2013 period.
  • 2The significant year-to-date net income increase was largely due to a $167 million decrease in income tax expense, primarily related to the formation of Enable Midstream Partners, LP (Enable).
  • 3Equity in earnings from unconsolidated affiliates, predominantly Enable Midstream Partners, increased significantly for the nine-month period, contributing positively to the overall results.
  • 4The Electric Transmission & Distribution segment's operating income slightly decreased in the third quarter but remained strong year-to-date.
  • 5The Natural Gas Distribution segment reported an operating loss of $8 million for the third quarter, a decline from a profit in the prior year, though year-to-date operating income increased.
  • 6The Energy Services segment showed strong performance, with operating income increasing in both the third quarter and the nine-month period, driven by derivative accounting and margin improvements.
  • 7CenterPoint Energy amended its revolving credit facilities in September 2014 to extend maturity dates to September 2019, maintaining total commitments.

Frequently Asked Questions

For the third quarter of 2014, CenterPoint Energy reported a net income of $143 million ($0.33 per diluted share), a slight decrease from $151 million ($0.35 per diluted share) in the third quarter of 2013. However, for the nine months ended September 30, 2014, net income significantly increased to $435 million ($1.01 per diluted share) from $198 million ($0.46 per diluted share) in the same period of 2013. This substantial year-to-date increase was primarily due to a significant reduction in income tax expense and increased equity earnings from unconsolidated affiliates, notably Enable Midstream Partners, LP.

CenterPoint Energy's investment in Enable Midstream Partners, LP is a significant contributor to its financial results. For the nine months ended September 30, 2014, equity in earnings from unconsolidated affiliates (primarily Enable) increased to $241 million, up from $122 million in the prior year. This segment is reported under 'Midstream Investments' and its performance positively impacts the company's overall profitability and asset base.

Performance varied across segments. The Electric Transmission & Distribution segment saw a slight decrease in operating income for the quarter but remained stable year-to-date. The Natural Gas Distribution segment experienced an operating loss in the third quarter, a decline from a profit in the prior year, though its year-to-date operating income grew. The Energy Services segment demonstrated strong growth, with operating income increasing significantly in both the third quarter and the nine-month period, driven by mark-to-market accounting on derivatives and improved margins. The former Interstate Pipelines and Field Services segments are now consolidated under the Midstream Investments segment due to the formation of Enable.

CenterPoint Energy reported stable liquidity, with cash flows from operations sufficient to meet near-term obligations. In September 2014, the company amended its revolving credit facilities to extend maturity dates to September 2019, maintaining total commitment amounts. The company continues to invest in infrastructure for its electric and natural gas operations.