8-KRegulation FDOther EventsExhibits & Filings

CENTERPOINT ENERGY INC 8-K Report, Regulation FD Disclosure (Apr 2, 2020)

Filed April 2, 2020For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) announced significant actions on April 1-2, 2020, to address a challenging business environment and a substantial reduction in cash flow from its investment in Enable Midstream Partners, LP (Enable). Enable, in which CNP holds a 53.7% stake, cut its quarterly distributions by 50%, from $0.3305 to $0.16525 per common unit. This reduction is projected to decrease CNP's annual cash flow from Enable by approximately $155 million, falling below CNP's previously expected minimum of $0.2875 per common unit. In response, CNP is implementing several cost-saving and cash preservation measures. These include a 48% reduction in its own quarterly common stock dividend, from $0.2900 to $0.1500 per share. Additionally, the company plans to cut its 2020 capital spending by roughly $300 million, while reaffirming its five-year capital investment target of $13 billion. Operation and maintenance expenses for 2020 are also targeted for a reduction of about $40 million. These measures are designed to strengthen CNP's financial position in the current economic climate.

Key Highlights

  • 1Enable Midstream Partners, LP (Enable) reduced its quarterly distributions by 50% (from $0.3305 to $0.16525 per common unit).
  • 2CenterPoint Energy's (CNP) annual cash flow from Enable is expected to decrease by approximately $155 million due to this reduction.
  • 3CNP is cutting its quarterly common stock dividend by 48% (from $0.2900 to $0.1500 per share).
  • 4Anticipated 2020 capital spending will be reduced by approximately $300 million.
  • 5CNP is targeting a reduction of approximately $40 million in 2020 operation and maintenance expenses.
  • 6The company is reaffirming its five-year total capital investment target of approximately $13 billion.
  • 7These actions are presented as responses to the current business environment and to strengthen the company's financial position.

Frequently Asked Questions

CenterPoint Energy is reducing its dividend and capital spending primarily in response to a significant 50% cut in distributions from Enable Midstream Partners, LP (Enable), in which CNP has a majority stake. This reduction in cash flow from Enable, estimated at $155 million annually, necessitates proactive measures by CNP to preserve its financial strength and flexibility in the current economic climate.

The 50% reduction in Enable's quarterly distributions will directly reduce CenterPoint Energy's annual cash flow by approximately $155 million. This is a substantial amount that falls below CNP's previously projected minimum quarterly distribution from Enable, prompting the company to adjust its own financial and operational plans.

While CenterPoint Energy is reducing its 2020 capital spending by approximately $300 million, it is reaffirming its overall five-year total capital investment target of $13 billion. This suggests that the current reductions are more of a short-term adjustment to navigate immediate financial pressures rather than a fundamental shift in its long-term growth strategy.

The reduction in Enable's distribution was announced for the fourth quarter of 2019, impacting subsequent distributions. CenterPoint Energy's announced measures, including the dividend cut and spending reductions, are being implemented in response and are expected to be reflected in the company's financial performance starting in 2020. Further details are expected to be discussed on the company's first quarter 2020 earnings conference call scheduled for May 7, 2020.