10-QPeriod: Q2 FY2016

DOMINION ENERGY, INC Quarterly Report for Q2 Ended Jun 30, 2016

Filed August 3, 2016For Securities:D

Summary

Dominion Energy, Inc. (D) reported solid financial performance for the second quarter and first half of 2016, with net income attributable to Dominion increasing by 9% and 3% respectively, compared to the prior year periods. This growth was driven by a combination of factors including reduced operating expenses, improved regulatory asset recovery, and gains from shale development rights. For the second quarter, net income was $452 million, or $0.73 per diluted share, up from $413 million, or $0.70 per diluted share, in the same period of 2015. Year-to-date, net income was $976 million, or $1.61 per diluted share, compared to $949 million, or $1.60 per diluted share, in the first half of 2015. The company continues to execute its strategic capital expenditure plan, with significant investments in property, plant, and equipment, particularly in regulated electric and gas infrastructure. While operating revenue saw a slight decrease year-over-year, primarily due to weather impacts and lower commodity prices affecting certain segments, the company effectively managed its expenses. Looking ahead, Dominion is progressing with its proposed acquisition of Questar Corporation, targeting closure by the end of 2016, which is expected to enhance its natural gas footprint.

Financial Highlights

49 data points
Beta

Revenue

$2.60B

Net Income

$452.00M

17.4% Net Margin

EPS (Diluted)

$0.73

Total Assets

$61.37B

Cash & Equivalents

$377.00M

Free Cash Flow

-$827.00M

Financial Statements
Beta
Revenue$2.60B
Operating Expenses$1.82B
Operating Income$781.00M
Net Income$452.00M
EPS (Basic)$0.73
EPS (Diluted)$0.73
Shares Outstanding (Basic)615.60M
Shares Outstanding (Diluted)617.00M

Key Highlights

  • 1Net income attributable to Dominion increased by 9% to $452 million ($0.73/share) in Q2 2016, and by 3% to $976 million ($1.61/share) year-to-date.
  • 2Operating revenue for Q2 2016 decreased by $149 million to $2,598 million, while year-to-date revenue decreased by $637 million to $5,519 million, attributed to lower energy sales and commodity prices.
  • 3Total assets grew to $61.37 billion as of June 30, 2016, up from $58.65 billion at December 31, 2015, driven by increases in property, plant, and equipment.
  • 4Total liabilities increased to $45.92 billion as of June 30, 2016, from $45.05 billion at December 31, 2015, with long-term debt seeing a notable increase.
  • 5Net cash provided by operating activities for the first six months of 2016 was $2.018 billion, a decrease from $2.160 billion in the prior year period.
  • 6The company continues to invest heavily in capital expenditures, with $3.16 billion spent on plant construction and property additions in the first six months of 2016.
  • 7Dominion is progressing with the proposed acquisition of Questar Corporation, targeting closure by the end of 2016, with a pending transaction value of approximately $4.4 billion in cash.

Frequently Asked Questions

Dominion's net income attributable to Dominion increased by 9% to $452 million in Q2 2016 compared to Q2 2015. This growth was primarily driven by the absence of charges related to ash pond and landfill closure costs, a decrease in electric utility capacity-related expenses, and higher gains from agreements to convey shale development rights. These positive factors were partially offset by lower electric utility sales to retail customers due to reduced cooling degree days.

Total assets increased to $61.37 billion as of June 30, 2016, up from $58.65 billion at December 31, 2015. This increase was mainly due to higher investments in property, plant, and equipment. Total liabilities rose to $45.92 billion from $45.05 billion, with a notable increase in long-term debt, reflecting ongoing capital investments and financing activities.

Dominion continues to make progress on its proposed acquisition of Questar Corporation, announced in February 2016. The transaction, valued at approximately $4.4 billion in cash plus assumed debt, is subject to Questar shareholder approval and regulatory clearances. The company targeted closing by the end of 2016, having received antitrust approval and filed for review with relevant state commissions.

Net cash provided by operating activities decreased by $142 million to $2.018 billion for the first six months of 2016, compared to $2.160 billion for the same period in 2015. This decrease was primarily attributed to higher net margin collateral requirements and the impact of unfavorable weather conditions in 2016, although this was partially offset by higher deferred fuel cost recoveries in its Virginia jurisdiction.