10-QPeriod: Q1 FY2017

CENTERPOINT ENERGY INC Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 5, 2017For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) reported a solid first quarter for 2017, with net income increasing to $192 million ($0.44 per diluted share) from $154 million ($0.36 per diluted share) in the same period of 2016. This increase was driven by improved operating income across its segments, particularly the Energy Services business, and a notable rise in equity earnings from its investment in Enable Midstream Partners. The company also saw benefits from lower interest expenses and a recent acquisition. Financially, the company maintained a strong liquidity position, with significant operating cash flow and available credit facilities. Capital expenditures remain focused on infrastructure development. Management is confident that existing resources, including operational cash flows and distributions from Enable, will be sufficient to meet projected needs for the remainder of 2017. The company also reiterated its quarterly dividend and continues to manage its debt strategically.

Financial Highlights

45 data points
Beta

Revenue

$2.73B

Net Income

$192.00M

7.0% Net Margin

EPS (Diluted)

$0.44

Total Assets

$21.93B

Cash & Equivalents

$254.00M

Free Cash Flow

$317.00M

Financial Statements
Beta
Revenue$2.73B
Operating Expenses$2.44B
Operating Income$291.00M
Net Income$192.00M
EPS (Basic)$0.45
EPS (Diluted)$0.44
Shares Outstanding (Basic)430.79M
Shares Outstanding (Diluted)433.35M

Key Highlights

  • 1Net income increased by $38 million to $192 million for the three months ended March 31, 2017, compared to $154 million in the prior year period.
  • 2Diluted earnings per share rose to $0.44 from $0.36 year-over-year, reflecting improved profitability.
  • 3The Energy Services segment showed significant improvement with operating income rising to $35 million from $6 million, largely due to mark-to-market accounting for derivatives and contributions from recent acquisitions.
  • 4Equity earnings from the investment in Enable Midstream Partners increased by $12 million, indicating positive performance from this key affiliate.
  • 5CenterPoint Energy completed the acquisition of AEM in January 2017 for $147 million, which is expected to contribute to revenue and operating income.
  • 6The company declared a regular quarterly cash dividend of $0.2675 per share, demonstrating a commitment to returning capital to shareholders.
  • 7Total assets grew slightly to $21.9 billion, with property, plant, and equipment forming the largest asset category.

Frequently Asked Questions

The increase in net income was primarily driven by a $24 million increase in operating income across its business segments, a $12 million increase in equity earnings from its investment in Enable Midstream Partners, higher cash distributions on Series A Preferred Units, and a decrease in interest expenses due to lower outstanding balances and interest rates on debt.

The acquisition of AEM in January 2017 contributed approximately $359 million in revenues and $17 million in operating income for the three months ended March 31, 2017. It also resulted in $5 million of goodwill and $25 million in identifiable intangible assets.

CenterPoint Energy expects its current liquidity, including cash from operations, distributions from Enable, and available credit facilities, to be sufficient to meet its anticipated cash needs for the remainder of 2017. Key uses of cash include capital expenditures of approximately $1.2 billion and debt obligations.

The company is involved in routine rate change applications across its service territories, including TCOS and DCRF updates for Houston Electric and various mechanisms for CERC. Significant applications include Houston Electric's DCRF filing in April 2017 and a proposed rate case settlement for Houston and Texas Coast NGD. Management expects these regulatory activities to impact future earnings.