10-QPeriod: Q1 FY2016

DOMINION ENERGY, INC Quarterly Report for Q1 Ended Mar 31, 2016

Filed May 5, 2016For Securities:D

Summary

Dominion Energy, Inc. (D) reported lower net income and earnings per share for the first quarter of 2016 compared to the same period in 2015. This decrease was primarily driven by a reduction in sales due to milder weather, costs associated with an organizational design initiative, and lower gains from conveying shale development rights. These factors were partially offset by the absence of a significant deferred fuel cost write-off in the prior year and an increase in renewable energy investment tax credits. Financially, the company saw a decrease in operating revenue, driven by lower sales volumes and revenue adjustments across its regulated gas distribution, transmission, and merchant generation operations. However, its electric utility operations saw an increase due to the absence of prior-year charges and positive contributions from rate adjustment clauses, despite a decrease in retail sales from reduced heating degree days. The company continues to manage its market risk through derivative instruments and maintains significant liquidity with substantial unused capacity under its credit facilities.

Financial Highlights

49 data points
Beta

Revenue

$2.92B

Net Income

$524.00M

17.9% Net Margin

EPS (Diluted)

$0.88

Total Assets

$59.51B

Cash & Equivalents

$218.00M

Free Cash Flow

-$305.00M

Financial Statements
Beta
Revenue$2.92B
Operating Expenses$2.04B
Operating Income$882.00M
Net Income$524.00M
EPS (Basic)$0.88
EPS (Diluted)$0.88
Shares Outstanding (Basic)596.60M
Shares Outstanding (Diluted)598.20M

Key Highlights

  • 1Net income attributable to Dominion decreased by 2% to $524 million in Q1 2016 compared to $536 million in Q1 2015.
  • 2Diluted Earnings Per Share (EPS) declined to $0.88 in Q1 2016 from $0.91 in Q1 2015.
  • 3Operating revenue for Dominion decreased by 14% to $2.92 billion in Q1 2016, down from $3.41 billion in Q1 2015.
  • 4DVP (Dominion Virginia Power) segment net income decreased by $20 million year-over-year.
  • 5Dominion Generation segment's net income decreased by $17 million year-over-year.
  • 6Dominion Energy segment's net income decreased by $41 million year-over-year, significantly impacted by lower gains from shale development rights.
  • 7The company reported $2.4 billion in unused capacity under its credit facilities as of March 31, 2016, indicating strong liquidity.

Frequently Asked Questions

The decrease in net income was primarily driven by a reduction in sales due to a decrease in heating degree days, costs associated with an organizational design initiative, and a decrease in gains from agreements to convey shale development rights. These were partially offset by the absence of a write-off of deferred fuel costs in the prior year and an increase in renewable energy investment tax credits.

The DVP segment's net income decreased by $20 million, Dominion Generation's net income decreased by $17 million, and Dominion Energy's net income decreased by $41 million year-over-year. The Dominion Energy segment was particularly impacted by lower gains from shale development rights.

Dominion Energy maintains a strong liquidity position, with $2.4 billion in unused capacity available under its credit facilities as of March 31, 2016. This provides the company with flexibility to meet its working capital needs and fund its capital expenditures.

The report mentions the proposed acquisition of Questar, announced in February 2016, which is targeted to close by the end of 2016, subject to shareholder and regulatory approvals. Dominion also completed the sale of a noncontrolling interest in its merchant solar projects in late 2015 and early 2016.