10-QPeriod: Q1 FY2015

CENTERPOINT ENERGY INC Quarterly Report for Q1 Ended Mar 31, 2015

Filed May 11, 2015For Securities:CNP

Summary

CenterPoint Energy, Inc. reported a decrease in net income for the first quarter of 2015 to $131 million ($0.30 per diluted share) from $185 million ($0.43 per diluted share) in the prior year's comparable period. This decline was primarily driven by lower equity earnings from unconsolidated affiliates, notably its investment in Enable Midstream Partners, LP, and a decrease in operating income across its business segments. The company's financial position remained solid, with total assets at $22.67 billion as of March 31, 2015. Despite the decrease in net income, CenterPoint Energy continues to focus on strategic capital expenditures for infrastructure improvements and expansion. The company also reaffirmed its liquidity position, expecting sufficient cash flows to meet its obligations for the remainder of 2015.

Financial Highlights

45 data points
Beta

Revenue

$2.43B

Net Income

$131.00M

5.4% Net Margin

EPS (Diluted)

$0.30

Total Assets

$22.67B

Cash & Equivalents

$234.00M

Free Cash Flow

$666.00M

Financial Statements
Beta
Revenue$2.43B
Operating Expenses$2.18B
Operating Income$256.00M
Net Income$131.00M
EPS (Basic)$0.30
EPS (Diluted)$0.30
Shares Outstanding (Basic)429.95M
Shares Outstanding (Diluted)431.18M

Key Highlights

  • 1Net income decreased to $131 million in Q1 2015 from $185 million in Q1 2014, impacting diluted EPS to $0.30 from $0.43.
  • 2The primary driver for the net income decline was a significant reduction in equity earnings from unconsolidated affiliates, largely due to the performance of Enable Midstream Partners, LP.
  • 3Operating income for the Electric Transmission & Distribution segment decreased by $9 million, influenced by lower usage and milder weather, though partially offset by customer growth.
  • 4The Natural Gas Distribution segment saw a $16 million decrease in operating income, primarily due to decreased usage from milder winter weather and higher depreciation expenses.
  • 5Energy Services segment operating income fell by $13 million, largely due to unfavorable mark-to-market accounting for derivatives and reduced weather-related optimization opportunities.
  • 6Total capital expenditures for the first three months of 2015 were $337 million, an increase from $316 million in the same period of 2014, reflecting ongoing investment in infrastructure.
  • 7The company maintained its liquidity, with cash provided by operating activities increasing to $666 million from $380 million in the prior year's comparable period.

Frequently Asked Questions

The primary reason for the decline in net income from $185 million in Q1 2014 to $131 million in Q1 2015 was a significant decrease in equity earnings from unconsolidated affiliates, particularly its investment in Enable Midstream Partners, LP. Additionally, a decrease in operating income across its business segments also contributed to the decline.

CenterPoint Energy's equity in earnings from Enable Midstream Partners, LP, decreased from $88 million in Q1 2014 to $52 million in Q1 2015. This reduction was a key factor in the overall decrease in CenterPoint Energy's net income and earnings per share.

The Electric Transmission & Distribution segment saw lower operating income due to reduced usage and milder weather, despite customer growth. The Natural Gas Distribution segment's operating income decreased due to milder winter weather leading to lower usage and higher depreciation. The Energy Services segment experienced a decline in operating income primarily due to unfavorable mark-to-market accounting for derivatives and fewer weather-related optimization opportunities.

As of March 31, 2015, CenterPoint Energy acknowledged that the carrying value of its investment in Enable ($19.24 per unit) was above the market price ($16.40 per unit), resulting in an aggregate unrealized loss of approximately $665 million. However, the company believes this decline is temporary, considering factors like Enable's credit rating and expansion projects, and does not expect it to be other-than-temporarily impaired.