10-QPeriod: Q2 FY2018

DOMINION ENERGY, INC Quarterly Report for Q2 Ended Jun 30, 2018

Filed August 2, 2018For Securities:D

Summary

Dominion Energy, Inc. reported its financial results for the quarter and six months ended June 30, 2018. The company experienced an increase in operating revenue for the quarter compared to the prior year, driven by various factors including the commencement of operations at the Liquefaction Project and increased cooling degree days. However, year-to-date net income attributable to Dominion Energy saw a decrease, impacted by charges related to Virginia legislation concerning rate credits and ash pond/landfill closure costs, as well as a FERC-regulated plant disallowance. Key highlights for investors include the operational start of the Liquefaction Project, contributing to revenue, and the company's ongoing capital investments in growth projects. The report also details the impact of the 2017 Tax Reform Act, which generally lowered tax expenses. Investors should note the company's proactive approach to managing commodity and interest rate risks through derivative instruments. The SCANA merger is progressing, with key approvals obtained, targeting a year-end 2018 closing.

Financial Highlights

47 data points
Beta

Revenue

$3.09B

Net Income

$449.00M

14.5% Net Margin

EPS (Diluted)

$0.69

Total Assets

$78.08B

Cash & Equivalents

$190.00M

Free Cash Flow

$250.00M

Financial Statements
Beta
Revenue$3.09B
Operating Expenses$2.35B
Operating Income$742.00M
Net Income$449.00M
EPS (Basic)$0.69
EPS (Diluted)$0.69
Shares Outstanding (Basic)652.80M
Shares Outstanding (Diluted)653.10M

Key Highlights

  • 1Operating revenue increased by 7% for the second quarter of 2018 compared to the same period in 2017, reaching $3.09 billion, primarily driven by the commencement of operations at the Liquefaction Project and higher cooling degree days.
  • 2Year-to-date net income attributable to Dominion Energy decreased by 7% to $1.02 billion, impacted by specific charges related to Virginia legislation and a FERC-regulated plant disallowance.
  • 3The company continues to invest in growth projects, with capital expenditures in investing activities totaling $2.24 billion for the first six months of 2018.
  • 4The 2017 Tax Reform Act significantly reduced Dominion Energy's effective tax rate, impacting income tax expense positively.
  • 5The proposed acquisition of SCANA is progressing, with key regulatory and shareholder approvals obtained, targeting a year-end 2018 closing.
  • 6Dominion Energy effectively manages commodity and interest rate risks through the use of derivative instruments, with detailed information provided on fair value measurements and hedge accounting.
  • 7The company continues to manage its debt through various credit facilities and issuances of debt and equity securities to fund its operations and capital expenditures.

Frequently Asked Questions

The increase in operating revenue for the second quarter of 2018 was primarily driven by the commencement of commercial operations of the Liquefaction Project, growth projects placed in service, an increase in cooling degree days, and favorable pricing at merchant generation facilities. Services performed for the Atlantic Coast Pipeline also contributed to the revenue growth.

The year-to-date net income was impacted by a charge associated with Virginia legislation enacted in March 2018 (requiring one-time rate credits), a charge for disallowance of a FERC-regulated plant, and a charge primarily related to future ash pond and landfill closure costs in connection with Virginia legislation enacted in April 2018.

Dominion Energy relies on capital markets for funding, utilizing both internal and external sources. It has a $6.0 billion joint revolving credit facility with significant unused capacity. The company actively manages its debt through various issuances and plans to pursue debt financing for the Cove Point LNG facility and potentially divest certain assets.

The acquisition of SCANA is progressing, with key approvals from FERC, SCANA's shareholders, and certain state commissions already obtained. Dominion Energy is targeting closing by the end of 2018, subject to remaining regulatory approvals and closing conditions.