10-QPeriod: Q2 FY2023

DOMINION ENERGY, INC Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 4, 2023For Securities:D

Summary

Dominion Energy, Inc. (D) reported a significant increase in net income for the six months ended June 30, 2023, compared to the same period in 2022, largely driven by the absence of significant one-time charges and improved investment earnings. For the second quarter of 2023, net income attributable to Dominion Energy was $599 million ($0.69 diluted EPS), a substantial improvement from a net loss of $453 million ($0.58 diluted EPS) in the prior year's second quarter. Year-to-date, net income was $1.6 billion ($1.86 diluted EPS), up from $258 million ($0.25 diluted EPS) in the first half of 2022. This strong performance was aided by higher operating revenues, driven by increased fuel-related revenue and favorable market conditions at Millstone, as well as favorable investment performance in nuclear decommissioning trust funds. Management highlighted improved operating revenues and a reduction in significant charges, such as those related to Virginia fuel expenses and RGGI compliance costs, as key drivers for the improved results.

Financial Highlights

46 data points
Beta

Revenue

$3.17B

Net Income

$575.00M

18.2% Net Margin

EPS (Diluted)

$0.66

Total Assets

$106.06B

Cash & Equivalents

$137.00M

Free Cash Flow

$1.10B

Financial Statements
Beta
Revenue$3.17B
Operating Expenses$2.57B
Operating Income$594.00M
Net Income$575.00M
EPS (Basic)$0.66
EPS (Diluted)$0.66
Shares Outstanding (Basic)836.00M
Shares Outstanding (Diluted)836.20M

Key Highlights

  • 1Net income attributable to Dominion Energy increased significantly year-over-year, reaching $1.6 billion for the first six months of 2023, compared to $258 million in the same period of 2022.
  • 2Diluted EPS improved to $1.86 for the first six months of 2023, from $0.25 in the prior year.
  • 3Operating revenue increased by 15% year-to-date, driven by higher fuel-related revenues and improved market conditions, particularly at Millstone.
  • 4The company saw a substantial decrease in 'Impairment of assets and other charges' and 'Losses (gains) on sales of assets' due to the absence of significant charges and losses incurred in the prior year.
  • 5Dominion Energy is progressing with the sale of its 50% noncontrolling interest in Cove Point, expecting to close by the end of 2023, which is anticipated to result in a gain of approximately $650 million.
  • 6A positive development for Virginia Power is the new legislation that resets rate reviews to a biennial period and sets an authorized ROE of 9.70%, potentially impacting future rate decisions.
  • 7Despite the overall strong financial performance, the company's outlook was revised by Standard & Poor's to 'negative' in April 2023, which could impact future borrowing costs and liquidity.

Frequently Asked Questions

The significant improvement in net income and EPS was primarily driven by the absence of substantial charges incurred in the prior year, such as the loss on the sale of Kewaunee, RGGI compliance cost charges, and Virginia fuel expense settlement costs. Additionally, higher operating revenues, increased investment earnings from nuclear decommissioning trust funds, and favorable market conditions contributed to the stronger results.

Dominion Energy entered into an agreement in July 2023 to sell its 50% noncontrolling limited partnership interest in Cove Point to BHE, with an expected closing by the end of 2023. The company anticipates recording a gain of approximately $650 million ($415 million after-tax) upon closing. The sale is subject to regulatory approvals.

The new Virginia legislation introduces biennial base rate reviews instead of triennial ones, sets an authorized ROE of 9.70%, and adjusts parameters for revenue sharing. It also allows Virginia Power to apply for securitization of certain deferred fuel costs and seek a financing partner for the CVOW Commercial Project. While these changes are expected to impact future rate decisions and potentially Dominion Energy's financial performance, the exact impact will depend on future regulatory commission decisions.

In April 2023, Standard & Poor's revised its outlook for Dominion Energy from stable to negative. This revision could potentially affect the company's borrowing costs, liquidity, and the rates at which it can offer debt securities, although the exact impact remains to be seen.