10-QPeriod: Q1 FY2016

CENTERPOINT ENERGY INC Quarterly Report for Q1 Ended Mar 31, 2016

Filed May 10, 2016For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) reported net income of $154 million for the first quarter of 2016, an increase of $23 million compared to the same period in 2015. This improvement was driven by a significant gain on marketable securities and increased equity earnings from its investment in Enable Midstream Partners, LP. Revenues, however, saw a decline primarily due to lower natural gas and energy services volumes and prices. The company also successfully refinanced its credit facilities, increasing their aggregate amount to $2.5 billion, enhancing its financial flexibility. Despite the overall increase in net income, investors should note the impact of an $80 million increase in losses from indexed debt securities, which partially offset the positive drivers. The company continues to invest in its infrastructure with capital expenditures totaling $332 million for the quarter. Management expects current liquidity and cash flows to be sufficient to meet anticipated needs for the remainder of 2016, supported by operational cash flows and credit facilities.

Financial Highlights

45 data points
Beta

Revenue

$1.98B

Net Income

$154.00M

7.8% Net Margin

EPS (Diluted)

$0.36

Total Assets

$21.00B

Cash & Equivalents

$218.00M

Free Cash Flow

$637.00M

Financial Statements
Beta
Revenue$1.98B
Operating Expenses$1.73B
Operating Income$250.00M
Net Income$154.00M
EPS (Basic)$0.36
EPS (Diluted)$0.36
Shares Outstanding (Basic)430.41M
Shares Outstanding (Diluted)432.59M

Key Highlights

  • 1Net income increased by $23 million to $154 million in Q1 2016 compared to Q1 2015, driven by investment gains and equity earnings from Enable Midstream.
  • 2Revenues decreased by $449 million to $1,984 million in Q1 2016, primarily due to lower natural gas and energy services volumes and prices.
  • 3The company refinanced its revolving credit facilities, increasing the total aggregate amount to $2.5 billion, providing enhanced financial flexibility.
  • 4Capital expenditures for the quarter were $332 million, reflecting ongoing investment in infrastructure.
  • 5Losses on indexed debt securities increased by $80 million, partially offsetting the net income improvement.
  • 6The company's investment in Enable Midstream Partners, LP contributed $60 million in equity earnings, an increase of $8 million year-over-year.
  • 7CenterPoint Energy's effective tax rate for the quarter was 36%, down from 37% in the prior year period.

Frequently Asked Questions

The increase in net income was primarily driven by a $107 million increase in the gain on marketable securities and an $8 million increase in equity earnings from CenterPoint Energy's investment in Enable Midstream Partners, LP. These positive impacts were partially offset by an $80 million increase in losses on indexed debt securities.

CenterPoint Energy successfully refinanced its existing $2.1 billion revolving credit facilities into new facilities totaling $2.5 billion. This provides increased financial flexibility. As of March 31, 2016, the company was in compliance with its debt to capitalization covenants.

Management expects that current liquidity and cash flows from operations, along with borrowings under its credit facilities, will be sufficient to meet anticipated cash requirements for the remainder of 2016. Key uses of cash include capital expenditures of approximately $1.1 billion, debt maturities, and dividend payments.

CenterPoint Energy holds a significant investment in Enable Midstream Partners, LP, which is accounted for under the equity method. For the first quarter of 2016, this investment contributed $60 million in equity earnings to CenterPoint Energy's net income, representing an $8 million increase from the prior year. The company also made a $363 million investment in Enable's Series A Preferred Units in February 2016.