10-QPeriod: Q3 FY2021

CENTERPOINT ENERGY INC Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 4, 2021For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) reported its third-quarter 2021 financial results, showing a solid performance driven by its utility operations, particularly in the Electric segment. For the nine months ended September 30, 2021, CenterPoint Energy reported income available to common shareholders of $750 million, a significant improvement compared to a loss of $1,100 million in the same period of 2020. This turnaround is largely attributable to the resolution of the February 2021 Winter Storm Event impacts and the divestiture of certain non-core assets. The company's strategic focus on its core utility businesses, Houston Electric and its natural gas distribution operations, continues to be a key driver of financial performance. Management remains committed to executing its capital expenditure plan aimed at modernizing infrastructure and enhancing reliability, while also managing its portfolio through strategic divestitures and potential acquisitions. Investors should note the ongoing strategic shift, including the planned exit from the Midstream Investment segment and the sale of natural gas businesses in Arkansas and Oklahoma, which are expected to streamline operations and improve financial flexibility. The company's balance sheet remains robust, with effective management of debt and a focus on rate base growth to support future earnings. The company's commitment to environmental, social, and governance (ESG) initiatives, including new net-zero emission goals, is also a key aspect of its long-term strategy.

Financial Highlights

47 data points
Beta

Revenue

$1.75B

96.5% Gross Margin

Net Income

$218.00M

12.5% Net Margin

EPS (Diluted)

$0.32

Total Assets

$37.16B

Cash & Equivalents

$133.00M

Free Cash Flow

$559.00M

Financial Statements
Beta
Revenue$1.75B
Cost of Revenue$61.00M
Gross Profit$1.69B
Operating Expenses$1.47B
Operating Income$278.00M
Net Income$218.00M
EPS (Basic)$0.32
EPS (Diluted)$0.32
Shares Outstanding (Basic)604.61M
Shares Outstanding (Diluted)609.38M

Key Highlights

  • 1Income available to common shareholders for the first nine months of 2021 was $750 million, a substantial turnaround from a loss of $1,100 million in the same period of 2020.
  • 2The Electric segment showed strong performance with revenues increasing to $2,823 million for the nine months ended September 30, 2021, compared to $2,600 million in the prior year, with operating income rising to $612 million.
  • 3The Natural Gas segment also reported improved results, with revenues of $3,022 million for the nine months ended September 30, 2021, and operating income of $442 million.
  • 4CenterPoint Energy is progressing with its strategic divestitures, including the sale of its Arkansas and Oklahoma Natural Gas businesses, and plans to exit its Midstream Investment reportable segment.
  • 5The company is managing significant capital expenditures to support infrastructure modernization and rate base growth, with over $3 billion planned for clean energy investments.
  • 6The company reaffirmed its commitment to its net-zero emission goals for Scope 1 and 2 by 2035, demonstrating a focus on long-term sustainability.
  • 7The company reported strong liquidity and compliance with all financial debt covenants as of September 30, 2021.

Frequently Asked Questions

The improved financial performance was primarily driven by the positive impact of recovering from the February 2021 Winter Storm Event, a significant increase in earnings from discontinued operations, and the resolution of preferred stock dividend requirements and amortization of beneficial conversion features that impacted the prior year. Additionally, favorable income tax impacts in 2021 contributed to the turnaround.

CenterPoint Energy plans to completely exit its Midstream Investment reportable segment by 2022. This strategic move is part of a broader plan to streamline operations and focus on core utility businesses. The company has classified its equity investment in Enable as held for sale and is awaiting the closing of the Enable Merger, which will result in the exchange of CenterPoint Energy's interest in Enable for Energy Transfer common units and preferred units.

The February 2021 Winter Storm Event led to significant financial impacts, including increased natural gas costs, decreased revenues for Houston Electric due to ERCOT-mandated outages, higher bad debt expenses, and increased interest expense related to financing working capital needs. However, the company anticipates no meaningful long-term financial impacts due to existing regulatory mechanisms for cost recovery.

CenterPoint Energy is prioritizing capital expenditures towards maintaining reliability and safety, increasing system resiliency, and expanding its infrastructure through value-added projects. The company has also announced plans to invest over $3 billion in clean energy initiatives over the next 10 years as part of its commitment to its net-zero emission goals.