8-KRegulation FD

CENTERPOINT ENERGY INC 8-K Report, Regulation FD Disclosure (May 22, 2023)

Filed May 22, 2023For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) announced through its subsidiary, Vectren Energy Services Corporation, the sale of its wholly-owned subsidiary, Energy Systems Group, LLC (ESG), to ESG Holdings Group, LLC, an affiliate of Oaktree Capital Management. The transaction is valued at approximately $157 million, with CenterPoint expecting net after-tax proceeds of around $110 million, inclusive of a working capital adjustment. This divestiture aligns with CenterPoint's strategic focus on its core utility operations. The sale is anticipated to result in a pre-tax GAAP loss of approximately $12 million in the second quarter of 2023, primarily due to goodwill associated with ESG. Importantly, CenterPoint is reaffirming its previously issued non-GAAP earnings guidance, indicating that this transaction and its associated accounting impact are not expected to alter its forward-looking operational performance outlook.

Key Highlights

  • 1Sale of subsidiary Energy Systems Group, LLC (ESG) for approximately $157 million.
  • 2Net after-tax proceeds expected to be around $110 million, including working capital adjustments.
  • 3Transaction aligns with CenterPoint's strategy to focus on core utility businesses.
  • 4Anticipated GAAP pre-tax loss of approximately $12 million in Q2 2023 due to goodwill write-off.
  • 5CenterPoint reaffirms its existing non-GAAP earnings guidance.
  • 6Transaction expected to close in the third quarter of 2023, subject to customary closing conditions.
  • 7Buyer is obligated to use best efforts to secure releases for certain guarantees provided by CenterPoint to ESG's customers.

Frequently Asked Questions

CenterPoint Energy is selling ESG as part of its strategic initiative to concentrate on its core utility operations. This divestiture allows the company to streamline its business and allocate resources more effectively towards its primary regulated utility segments.

The sale is expected to generate approximately $157 million in gross proceeds, resulting in estimated net after-tax proceeds of around $110 million for CenterPoint. The company anticipates recognizing a GAAP pre-tax loss of approximately $12 million in the second quarter of 2023, primarily due to the write-off of goodwill associated with ESG.

No, CenterPoint Energy is reaffirming its previously announced non-GAAP earnings guidance. The company indicates that the sale and its associated accounting impacts are not expected to alter its operational performance outlook as presented in its non-GAAP guidance.

The transaction is expected to close in the third quarter of 2023. Completion is contingent upon satisfying customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.