Why did PG&E's GAAP earnings guidance decline while core guidance held steady?

The filing states that the GAAP range was updated to $1.11 to $1.17 per share from $1.15 to $1.20, while non-GAAP core EPS guidance of $1.33 to $1.37 was reaffirmed. The GAAP figures include non-core items such as Wildfire Fund amortization, bankruptcy and legal costs, and investigation remedies, and the filing cites unrecoverable interest expense of $285 million to $365 million after tax as a factor.

What drove the year-over-year improvement in second-quarter earnings?

The company attributes the increase in GAAP results primarily to higher customer capital investment, approved in the 2023 General Rate Case and earning an equity return under the Automatic Cost of Capital Adjustment Mechanism. Non-fuel operating and maintenance savings from reinvented inspection processes, net of amounts reinvested in emergency preparedness and risk mitigation, were also cited.

Does PG&E expect to issue new equity in 2024?

No. The filing states that the company is forecasting no equity needs in 2024 and is reaffirming its 2024-2028 financing plan.

What are the non-core items excluded from non-GAAP core earnings?

The company excluded $154 million after tax, or $0.07 per share, in Q2 2024. The items include amortization of the Wildfire Fund contribution ($56 million), bankruptcy and legal costs ($13 million), investigation remedies ($15 million), and a $70 million tax-related adjustment tied to deductibility of San Bruno customer bill credits. Management states these items are not representative of ongoing earnings.

What operational progress did the company report alongside its results?

The company reported installing 46 miles of underground powerlines and 43 miles of stronger poles and covered powerlines in the highest fire-risk areas during the second quarter. It also connected 2,900 new residential and business customers, interconnected the first of four planned renewable natural gas facilities, and installed more than 220 EV charging ports.

PG&E 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed July 25, 2024. Cited figures are marked; the original filing is the authoritative source.

PG&E Corporation and its subsidiary Pacific Gas and Electric Company furnished this Form 8-K on July 25, 2024 to report second-quarter 2024 results for the quarter ended June 30, 2024.

GAAP income available for common shareholders was $520 million^a, or $0.24 per diluted share, versus $406 million, or $0.19 per share, a year earlier. Non-GAAP core earnings were $674 million, or $0.31 per share, compared with $494 million, or $0.23 per share, in the second quarter of 2023. For the first half of 2024, GAAP EPS was $0.58 and non-GAAP core EPS was $0.69, against $0.46 and $0.52 in the prior-year period.

The company said management attributes the increase primarily to customer capital investment approved in the 2023 General Rate Case and to non-fuel operating and maintenance savings, net of amounts reinvested in emergency preparedness and risk mitigation. Guidance was mixed. The 2024 GAAP EPS guidance was lowered to $1.11 to $1.17^b per share from $1.15 to $1.20, while the non-GAAP core EPS guidance of $1.33 to $1.37 was reaffirmed.

The company stated it expects no equity needs in 2024 and is reaffirming its 2024-2028 financing plan. The GAAP range reflects unrecoverable interest expense of $285 million to $365 million^c after tax, along with Wildfire Fund amortization and other items. The presentation also lists a five-year $62 billion capital plan for 2024-2028 and projects non-GAAP core EPS growth of at least 9% for 2025-2028.

Operationally, the company reported 46 miles of undergrounded powerlines and 43 miles of stronger poles and covered powerlines installed in the highest fire-risk areas during the quarter, along with 2,900 new customer connections and the first of four planned renewable natural gas facilities. The company also furnished a slide presentation and a press release, and the filing notes that the information is furnished rather than filed under Section 18 of the Exchange Act.

02—Key points

Key Highlights

GAAP EPS for Q2 2024 was $0.24 (income available for common shareholders of $520 million), up from $0.19 in Q2 2023.
Non-GAAP core EPS for Q2 2024 was $0.31 ($674 million), up from $0.23 ($494 million) a year earlier; first-half non-GAAP core EPS was $0.69 versus $0.52.
2024 GAAP EPS guidance was lowered to $1.11 to $1.17 from $1.15 to $1.20, driven partly by unrecoverable interest expense of $285 million to $365 million after tax.
2024 non-GAAP core EPS guidance of $1.33 to $1.37 was reaffirmed, and the company forecasts no new equity needs in 2024.
The 2024-2028 financing plan was reaffirmed, supporting a five-year $62 billion capital plan according to the accompanying presentation.
Q2 2024 non-core items totaled $154 million after tax ($0.07 per share), including $56 million of Wildfire Fund contribution amortization and a $70 million tax-related adjustment.
Operating income rose to $1,134 million in Q2 2024 from $506 million, while interest expense increased to $812 million from $640 million.

03—Questions

Frequently Asked Questions

Why did PG&E's GAAP earnings guidance decline while core guidance held steady?
The filing states that the GAAP range was updated to $1.11 to $1.17 per share from $1.15 to $1.20, while non-GAAP core EPS guidance of $1.33 to $1.37 was reaffirmed. The GAAP figures include non-core items such as Wildfire Fund amortization, bankruptcy and legal costs, and investigation remedies, and the filing cites unrecoverable interest expense of $285 million to $365 million after tax as a factor.
What drove the year-over-year improvement in second-quarter earnings?
The company attributes the increase in GAAP results primarily to higher customer capital investment, approved in the 2023 General Rate Case and earning an equity return under the Automatic Cost of Capital Adjustment Mechanism. Non-fuel operating and maintenance savings from reinvented inspection processes, net of amounts reinvested in emergency preparedness and risk mitigation, were also cited.
Does PG&E expect to issue new equity in 2024?
No. The filing states that the company is forecasting no equity needs in 2024 and is reaffirming its 2024-2028 financing plan.
What are the non-core items excluded from non-GAAP core earnings?
The company excluded $154 million after tax, or $0.07 per share, in Q2 2024. The items include amortization of the Wildfire Fund contribution ($56 million), bankruptcy and legal costs ($13 million), investigation remedies ($15 million), and a $70 million tax-related adjustment tied to deductibility of San Bruno customer bill credits. Management states these items are not representative of ongoing earnings.
What operational progress did the company report alongside its results?
The company reported installing 46 miles of underground powerlines and 43 miles of stronger poles and covered powerlines in the highest fire-risk areas during the second quarter. It also connected 2,900 new residential and business customers, interconnected the first of four planned renewable natural gas facilities, and installed more than 220 EV charging ports.

04—Continue

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