01—Abstract
Summary
Summary of the 8-K filed February 20, 2024. Cited figures are marked; the original filing is the authoritative source.
CenterPoint Energy (CNP) reported fourth-quarter and full-year 2023 results on February 20, 2024, and reaffirmed its 2024 non-GAAP EPS guidance of $1.61a-$1.63, which implies about 8% growth over 2023.
Fourth-quarter GAAP EPS was $0.30b (versus $0.19 a year earlier), and non-GAAP EPS was $0.32, up 14%. Full-year GAAP EPS was $1.37 (versus $1.59 in 2022), while non-GAAP EPS was $1.50, up 9% from $1.38 and the company's third straight year of 9% growth. The quarter was helped by growth, rate recovery, and a one-time tax benefit, partly offset by higher interest expense.
Management raised its 10-year capital plan through 2030 by about $600 million to $44.5 billionc, and targets rate base growth of roughly 10% through 2030. It also reiterated non-GAAP EPS growth of 8% in 2024 and the mid-to-high end of 6%-8% annually through 2030, with dividend per share growth tied to EPS growth. Balance sheet metrics were stable, with FFO/Debt at 14.0% in Q4 2023 against a 14%-15% target through 2030.
The main strategic news is the announced sale of the Louisiana and Mississippi natural gas LDCs to Bernhard Capital for a gross price of about $1.2 billiond (about $1.0 billion net of taxes and costs), roughly 32x 2023 standalone earnings. Closing is expected by the end of Q1 2025.
Investors should weigh the attractive capital recycling against the dependence of EPS growth on continued rate base expansion, pending rate cases, and regulatory outcomes. Non-GAAP figures exclude ZENS mark-to-market effects and divestiture impacts, and the company notes that GAAP results can be materially affected by impairments and unusual items.
02—Key points
Key Highlights
- Q4 2023 GAAP EPS of $0.30 vs. $0.19 in Q4 2022; non-GAAP EPS of $0.32, up 14% year over year
- FY 2023 non-GAAP EPS of $1.50, up 9% from $1.38, the third consecutive year of 9% growth; GAAP EPS was $1.37 vs. $1.59 in 2022
- 2024 non-GAAP EPS guidance reiterated at $1.61-$1.63 (about 8% growth), with 8% growth targeted for 2024 and mid-to-high end of 6%-8% annually through 2030
- 10-year capital plan (2021-2030) increased by about $600 million to $44.5 billion; rate base growth target of about 10% through 2030
- Announced sale of Louisiana and Mississippi gas LDCs: ~$1.2B gross / ~$1.0B net proceeds, ~32x 2023 earnings, expected close by end of Q1 2025
- FFO/Debt of 14.0% in Q4 2023 (Moody's methodology) against a 14%-15% target through 2030; floating rate exposure reduced by nearly 58%
- Q4 non-GAAP EPS growth driven by growth and rate recovery (~$0.05), a one-time tax benefit and other drivers (~$0.06), partly offset by ~$0.05 of higher interest expense
03—Questions
Frequently Asked Questions
What is the company's earnings outlook for 2024?
CenterPoint reiterated 2024 non-GAAP EPS guidance of $1.61-$1.63, representing about 8% growth over 2023 non-GAAP EPS of $1.50. Guidance assumes normal weather, customer growth, recovery of invested capital, effective tax rates, financing costs, and favorable regulatory outcomes, and excludes ZENS mark-to-market effects and divestiture impacts.
Why did the company increase its capital plan, and what does it mean for growth?
The 10-year capital plan through 2030 rose to $44.5 billion from $43.9 billion, with about 67% of the increase directed to electric and the remainder to gas (per the presentation's mix). Management targets rate base growth of about 10% through 2030 and says over 80% of the plan is expected to be recoverable through interim mechanisms, which should limit regulatory lag.
What is the Louisiana and Mississippi sale, and why does it matter?
CenterPoint agreed to sell its Louisiana and Mississippi natural gas LDCs to Bernhard Capital for a gross price of about $1.2 billion (roughly $1.0 billion net after taxes and transaction costs), or about 1.55x 2023 rate base and about 32x 2023 earnings. Proceeds are intended to fund the capital plan and support the balance sheet, and the company frames the sale as part of a shift toward dual-fuel and larger jurisdictions. Closing is expected by the end of Q1 2025 and remains subject to approvals.
Are there risks to the earnings and growth targets investors should watch?
Yes. Key risks include the timing and outcome of pending rate cases (such as Texas gas, Minnesota gas and Indiana electric), weather and throughput variability (Q4 2023 gas throughput fell 18% in residential volumes), interest rate and financing conditions, credit rating actions, legal and regulatory proceedings related to the February 2021 winter storm and Houston Electric's mobile generation, and the company's ability to execute its operations and maintenance reduction and net zero goals. GAAP results may also be affected by impairments and ZENS-related mark-to-market swings.
04—Continue