10-QPeriod: Q1 FY2018

DOMINION ENERGY, INC Quarterly Report for Q1 Ended Mar 31, 2018

Filed May 4, 2018For Securities:D

Summary

Dominion Energy, Inc.'s (D) first quarter 2018 results show a decrease in net income attributable to the company, primarily driven by a significant charge related to Virginia legislation and lower investment earnings on nuclear decommissioning trust funds. Despite these headwinds, favorable pricing in merchant generation and increased heating degree days provided some offset. The company continues to navigate regulatory changes, including the impact of the 2017 Tax Reform Act, which has led to provisions for customer refunds and rate adjustments. The company's financial position remains robust, with substantial liquidity available through its credit facilities. Dominion Energy is actively managing its capital structure, including debt financings and potential asset divestitures. The proposed acquisition of SCANA is progressing through regulatory approvals, with a targeted closing by the end of 2018, which is expected to be a significant development for the company's future operations and scale.

Financial Highlights

47 data points
Beta

Revenue

$3.47B

Net Income

$503.00M

14.5% Net Margin

EPS (Diluted)

$0.77

Total Assets

$77.35B

Cash & Equivalents

$189.00M

Free Cash Flow

$129.00M

Financial Statements
Beta
Revenue$3.47B
Operating Expenses$2.59B
Operating Income$875.00M
Net Income$503.00M
EPS (Basic)$0.77
EPS (Diluted)$0.77
Shares Outstanding (Basic)650.50M
Shares Outstanding (Diluted)650.50M

Key Highlights

  • 1Net income attributable to Dominion Energy decreased by 20% in Q1 2018 compared to Q1 2017, primarily due to a $215 million charge related to Virginia legislation and lower nuclear decommissioning trust fund earnings.
  • 2Operating revenue increased slightly by 2.4% to $3.47 billion, driven by favorable merchant generation pricing and increased heating degree days, partially offset by lower net revenue from electric capacity and Cove Point contracts.
  • 3The company reported diluted Earnings Per Share (EPS) of $0.77 for Q1 2018, a decrease from $1.01 in Q1 2017.
  • 4Dominion Energy's total assets grew to $77.35 billion at March 31, 2018, from $76.59 billion at December 31, 2017, with property, plant, and equipment being the largest asset category.
  • 5Long-term debt increased slightly to $31.12 billion from $30.95 billion, while total liabilities remained relatively stable.
  • 6The company has a $6.0 billion revolving credit facility, with $3.2 billion in available capacity at the end of Q1 2018, indicating strong liquidity.
  • 7The proposed acquisition of SCANA is progressing with regulatory filings and approvals, targeting a year-end 2018 closing.

Frequently Asked Questions

The primary driver for the decrease in net income was a $215 million charge related to Virginia legislation requiring one-time rate credits to utility customers. Lower investment earnings on nuclear decommissioning trust funds also contributed to the decline.

Dominion Energy maintains strong liquidity through a $6.0 billion revolving credit facility, with substantial capacity available. The company actively manages its capital structure through debt and equity issuances and has intentions to pursue debt financing for the Cove Point LNG facility and potentially divest certain assets.

The acquisition of SCANA is progressing through the necessary regulatory approvals from entities such as FERC and state commissions. Dominion Energy targets closing the transaction by the end of 2018, pending shareholder and regulatory approvals.

The 2017 Tax Reform Act led to a decrease in income tax expense due to the lower federal corporate income tax rate. It also resulted in provisions for refunds and rate reductions for customers, impacting net revenue as the benefits are passed through.