10-QPeriod: Q1 FY2020

CENTERPOINT ENERGY INC Quarterly Report for Q1 Ended Mar 31, 2020

Filed May 7, 2020For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) reported a significant net loss of $1.2 billion for the first quarter of 2020, a substantial decline from the $169 million net income reported in the same period of 2019. This loss was largely driven by a $1.54 billion impairment charge on its investment in Enable Midstream Partners, reflecting the severe downturn in commodity prices and Enable's reduced distributions. The company also reported a goodwill impairment of $185 million related to its Indiana Electric Integrated segment. The company is undergoing strategic divestitures, having completed the sale of its Infrastructure Services Disposal Group and expecting to complete the sale of its Energy Services Disposal Group in the second quarter of 2020. These divestitures are part of a broader strategy to streamline operations. Despite the reported net loss, the company's utility operations in Houston Electric and its Natural Gas Distribution segment showed improved net income compared to the prior year's quarter. CenterPoint Energy's liquidity remains a concern, with the company taking steps to strengthen its financial position, including reducing its common stock dividend by 50% and cutting capital spending. The ongoing COVID-19 pandemic adds further uncertainty, impacting operations, customer payments, and the broader economic environment.

Financial Highlights

47 data points
Beta

Revenue

$2.17B

97.0% Gross Margin

Net Income

-$1.20B

-55.3% Net Margin

EPS (Diluted)

$-2.44

Total Assets

$33.40B

Cash & Equivalents

$220.00M

Free Cash Flow

$662.00M

Financial Statements
Beta
Revenue$2.17B
Cost of Revenue$64.00M
Gross Profit$2.10B
Operating Expenses$1.95B
Operating Income$217.00M
Net Income-$1.20B
EPS (Basic)$-2.44
EPS (Diluted)$-2.44
Shares Outstanding (Basic)502.39M
Shares Outstanding (Diluted)502.39M

Key Highlights

  • 1Net Loss of $1.2 billion for Q1 2020, a sharp decrease from $169 million net income in Q1 2019.
  • 2Recognized a $1.54 billion impairment charge on its investment in Enable Midstream Partners.
  • 3Recorded a goodwill impairment of $185 million in the Indiana Electric Integrated reporting unit.
  • 4Completed the sale of the Infrastructure Services Disposal Group and expects to close the Energy Services Disposal Group sale in Q2 2020.
  • 5Reduced quarterly common stock dividend by 50% to $0.15 per share.
  • 6Suspended customer disconnections for non-payment in certain service territories due to COVID-19.
  • 7Utility operations in Houston and Natural Gas Distribution segment showed improved net income year-over-year.

Frequently Asked Questions

The primary driver of the significant net loss was a $1.54 billion impairment charge on CenterPoint Energy's investment in Enable Midstream Partners. This impairment reflects the severe downturn in commodity prices and Enable's reduced cash distributions, compounded by the broader economic impact of the COVID-19 pandemic.

CenterPoint Energy is undertaking strategic divestitures, selling off its Infrastructure Services and Energy Services Disposal Groups. Additionally, to strengthen its financial position and manage cash flow, the company has reduced its quarterly common stock dividend by 50% and is cutting capital spending.

The COVID-19 pandemic has led to operational disruptions, including restrictions on access to offices and adjustments to field operations. It has also impacted customer payment behavior, potentially increasing bad debt expense. The company is suspending customer disconnections in some areas and expects the pandemic to adversely impact future quarters due to the considerable uncertainty surrounding its duration and economic effects.

CenterPoint Energy's investment in Enable Midstream Partners was severely impacted by falling commodity prices and Enable's decision to reduce its quarterly distributions by 50%. This led CenterPoint Energy to recognize a $1.54 billion impairment charge on this investment, significantly contributing to the overall net loss for the quarter.