- Recorded GAAP earnings were $0.17 per diluted share for the
second quarter of 2022, compared to earnings of $0.18 per diluted
share for the same period in 2021.
- Non-GAAP core earnings were $0.25 per diluted share for the
second quarter of 2022, compared to earnings of $0.27 per diluted
share for the same period in 2021.
- Recorded GAAP earnings were $0.39 per diluted share for the
first half of 2022, compared to earnings of $0.24 per diluted share
for the same period in 2021.
- Non-GAAP core earnings were $0.55 per diluted share for the
first half of 2022, compared to earnings of $0.50 per diluted share
for the same period in 2021.
- 2022 EPS guidance for GAAP earnings was adjusted to a range of
$0.74 to $1.02 per diluted share and non-GAAP core earnings was
reaffirmed in the range of $1.07 to $1.13 per diluted share.
- Forecasted equity needs were narrowed and lowered for 2022 to a
range of $0 to $250 million.
PG&E Corporation (NYSE: PCG) recorded second-quarter 2022
income available for common shareholders of $356 million, or $0.17
per diluted share, as reported in accordance with generally
accepted accounting principles (GAAP). This compares with income
available for common shareholders of $397 million, or $0.18 per
diluted share, for the second quarter of 2021.
GAAP results include non-core items that management does not
consider representative of ongoing earnings, which totaled $180
million after tax, or $0.08 per diluted share, for the quarter.
These results were primarily driven by costs related to PG&E
Corporation’s and Pacific Gas and Electric Company’s (Utility)
reorganization cases under Chapter 11 of the U.S. Bankruptcy Code
(Chapter 11), wildfire-related costs, the amortization of Wildfire
Fund contributions under Assembly Bill (AB) 1054, strategic
repositioning costs, and investigation remedies, partially offset
by rate neutral (Senate Bill (SB) 901) securitization and Fire
Victim Trust tax benefits.
“We are on track to deliver on our 2022 commitments,” said Patti
Poppe, CEO of PG&E Corporation. “We are reducing risk and
making the right investments for the future. Our daily focus on
delivering predictable results and keeping costs down reflects our
Triple Bottom Line of serving people, the planet, and California’s
prosperity.”
Non-GAAP Core Earnings
PG&E Corporation’s non-GAAP core earnings, which exclude
non-core items, were $536 million, or $0.25 per diluted share, in
the second quarter of 2022, compared with $575 million, or $0.27
per diluted share, during the same period in 2021.
The decrease in quarter-over-quarter non-GAAP core earnings per
diluted share was primarily driven by regulatory items, taxes and
other miscellaneous items, partially offset by the growth in rate
base earnings and cost reductions.
PG&E Corporation uses “non-GAAP core earnings,” which is a
non-GAAP financial measure, in order to provide a measure that
allows investors to compare the underlying financial performance of
the business from one period to another, exclusive of non-core
items. See the accompanying tables for a reconciliation of non-GAAP
core earnings to consolidated earnings available for common
shareholders.
2022 Guidance
PG&E Corporation is adjusting 2022 GAAP earnings guidance in
the range of $0.74 to $1.02 per diluted share, which includes
non-core items. PG&E Corporation is adjusting 2022 non-core
items guidance in the range of $230 million to $720 million after
tax, reflecting costs related to the amortization of Wildfire Fund
contributions under AB 1054, PG&E Corporation’s and the
Utility’s reorganization cases under Chapter 11, wildfire-related
costs, investigation remedies, and strategic repositioning costs,
partially offset by rate neutral (SB 901) securitization and Fire
Victim Trust tax benefits and prior period net regulatory
impact.
On a non-GAAP basis, the guidance range for projected 2022
non-GAAP core earnings is reaffirmed at $1.07 to $1.13 per diluted
share. Factors driving non-GAAP core earnings include unrecoverable
interest expense of $330 million to $370 million after tax and
other earnings factors, including allowance for funds used during
construction equity, incentive revenues, tax benefits, and cost
savings, net of below-the-line costs.
Guidance is based on various assumptions and forecasts,
including those relating to authorized revenues, future expenses,
capital expenditures, rate base, equity issuances, and certain
other factors.
Supplemental Financial Information
In addition to the financial information accompanying this
release, presentation slides have been furnished to the Securities
and Exchange Commission (SEC) and are available on PG&E
Corporation’s website at:
http://investor.pgecorp.com/financials/quarterly-earnings-reports/default.aspx.
Earnings Conference Call
PG&E Corporation will also hold a conference call on July
28, 2022, at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) to
discuss its second quarter 2022 results. The public can access the
conference call through a simultaneous webcast. The link is
provided below and will also be available from the PG&E
Corporation website.
What: Second Quarter 2022 Earnings
Call
When: Thursday, July 28, 2022 at
11:00 a.m. Eastern Time
Where:
http://investor.pgecorp.com/news-events/events-and-presentations/default.aspx
A replay of the conference call will be archived at
http://investor.pgecorp.com/news-events/events-and-presentations/default.aspx.
Alternatively, a toll-free replay of the conference call may be
accessed shortly after the live call through August 5, 2022, by
dialing (800) 770-2030. International callers may dial (647)
362-9199. For both domestic and international callers, the
confirmation code 64421 will be required to access the replay.
Public Dissemination of Certain Information
PG&E Corporation and the Utility routinely provide links to
the Utility’s principal regulatory proceedings with the California
Public Utilities Commission and the Federal Energy Regulatory
Commission at http://investor.pgecorp.com, under the “Regulatory
Filings” tab, so that such filings are available to investors upon
filing with the relevant agency. PG&E Corporation and the
Utility also routinely post, or provide direct links to,
presentations, documents, and other information that may be of
interest to investors at http://investor.pgecorp.com, under the
“Chapter 11,” “Wildfire and Safety Updates” and “News & Events:
Events & Presentations” tabs, respectively, in order to
publicly disseminate such information. It is possible that any of
these filings or information included therein could be deemed to be
material information.
About PG&E Corporation
PG&E Corporation (NYSE: PCG) is a holding company
headquartered in Oakland, California. It is the parent company of
Pacific Gas and Electric Company, an energy company that serves 16
million Californians across a 70,000-square-mile service area in
Northern and Central California. For more information, visit
http://www.pgecorp.com.
Forward-Looking Statements
This news release contains forward-looking statements that are
not historical facts, including statements about the beliefs,
expectations, estimates, future plans and strategies of PG&E
Corporation and the Utility, including but not limited to earnings
guidance for 2022. These statements are based on current
expectations and assumptions, which management believes are
reasonable, and on information currently available to management,
but are necessarily subject to various risks and uncertainties. In
addition to the risk that these assumptions prove to be inaccurate,
factors that could cause actual results to differ materially from
those contemplated by the forward-looking statements include
factors disclosed in PG&E Corporation and the Utility’s joint
annual report on Form 10-K for the year ended December 31, 2021,
their most recent quarterly report on Form 10-Q for the quarter
ended June 30, 2022, and other reports filed with the SEC, which
are available on PG&E Corporation's website at www.pgecorp.com
and on the SEC website at www.sec.gov. PG&E Corporation and the
Utility undertake no obligation to publicly update or revise any
forward-looking statements, whether due to new information, future
events or otherwise, except to the extent required by law.
PG&E CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(in millions, except per share
amounts)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Operating Revenues
Electric
$
3,690
$
3,951
$
7,848
$
7,346
Natural gas
1,428
1,264
$
3,068
$
2,585
Total operating revenues
5,118
5,215
10,916
9,931
Operating Expenses
Cost of electricity
780
847
1,282
1,437
Cost of natural gas
359
187
920
494
Operating and maintenance
2,291
2,583
5,401
4,919
SB 901 securitization charges, net
40
—
40
—
Wildfire-related claims, net of
recoveries
145
(5
)
144
167
Wildfire Fund expense
117
118
235
237
Depreciation, amortization, and
decommissioning
941
851
1,913
1,739
Total operating expenses
4,673
4,581
9,935
8,993
Operating Income
445
634
981
938
Interest income
19
15
27
17
Interest expense
(411
)
(398
)
(830
)
(806
)
Other income (expense), net
(21
)
128
128
255
Reorganization items, net
—
(11
)
—
(11
)
Income Before Income Taxes
32
368
306
393
Income tax benefit
(328
)
(33
)
(532
)
(131
)
Net Income
360
401
838
524
Preferred stock dividend requirement of
subsidiary
4
4
7
7
Income Available for Common
Shareholders
$
356
$
397
$
831
$
517
Weighted Average Common Shares
Outstanding, Basic
1,987
1,985
1,987
1,985
Weighted Average Common Shares
Outstanding, Diluted
2,141
2,146
2,141
2,146
Net Income Per Common Share,
Basic
$
0.18
$
0.20
$
0.42
$
0.26
Net Income Per Common Share,
Diluted
$
0.17
$
0.18
$
0.39
$
0.24
Reconciliation of PG&E Corporation’s
Consolidated Earnings Available for Common Shareholders in
Accordance with Generally Accepted Accounting Principles (“GAAP”)
to Non-GAAP Core Earnings
Second Quarter, 2022 vs. 2021
(in millions, except per share
amounts)
Three Months Ended
June 30,
Six Months Ended
June 30,
Earnings
Earnings per
Common
Share
(Diluted)
Earnings
Earnings per
Common
Share
(Diluted)
(in millions, except per share
amounts)
2022
2021
2022
2021
2022
2021
2022
2021
PG&E Corporation's Earnings on a
GAAP basis
$
356
$
397
$
0.17
$
0.18
$
831
$
517
$
0.39
$
0.24
Non-core items: (1)
Bankruptcy and legal costs (2)
151
40
0.07
0.02
186
72
0.09
0.03
Wildfire-related costs, net of insurance
(3)
112
3
0.05
—
178
136
0.08
0.06
Amortization of Wildfire Fund contribution
(4)
84
85
0.04
0.04
169
171
0.08
0.08
Strategic repositioning costs (5)
3
—
—
—
3
—
—
—
Investigation remedies (6)
2
50
—
0.02
72
78
0.03
0.04
Prior period net regulatory impact (7)
—
—
—
—
45
88
0.02
0.04
Fire Victim Trust tax benefit net of
securitization (8)
(173
)
—
(0.08
)
—
(308
)
—
(0.14
)
—
PG&E Corporation’s Non-GAAP Core
Earnings (9)
$
536
$
575
$
0.25
$
0.27
$
1,175
$
1,062
$
0.55
$
0.50
All amounts presented in the table above and footnotes below are
tax adjusted at PG&E Corporation’s statutory tax rate of 27.98%
for 2022 and 2021, except for certain costs that are not tax
deductible. Amounts may not sum due to rounding.
(1)
“Non-core items” include items that
management does not consider representative of ongoing earnings and
affect comparability of financial results between periods,
consisting of the items listed in the table above. See Use of
Non-GAAP Financial Measures below.
(2)
Includes bankruptcy and legal costs
associated with PG&E Corporation's and the Utility's Chapter 11
filing, including securities litigation costs, legal and other
costs, and exit financing costs, as shown below.
(in millions)
Three Months Ended
June 30, 2022
Six Months Ended
June 30, 2022
Securities litigation costs
$
145
$
145
Legal and other costs
34
55
Exit financing
31
58
Bankruptcy and legal costs
(pre-tax)
$
210
$
258
Tax impacts
(59
)
(72
)
Bankruptcy and legal costs
(post-tax)
$
151
$
186
(3)
Includes costs associated with the 2019
Kincade fire, 2020 Zogg fire, and 2021 Dixie fire, net of
insurance, as shown below.
(in millions)
Three Months Ended
June 30, 2022
Six Months Ended
June 30, 2022
2019 Kincade third-party claims
$
150
$
150
2019 Kincade fire-related costs
6
15
2019 Kincade fire-related legal
settlements
—
20
2020 Zogg fire-related costs
8
17
2020 Zogg fire-related insurance
recoveries
(8
)
(8
)
2021 Dixie fire-related legal
settlements
—
35
Wildfire-related costs, net of
insurance (pre-tax)
$
156
$
229
Tax impacts
(44
)
(51
)
Wildfire-related costs, net of
insurance (post-tax)
$
112
$
178
(4)
The Utility recorded costs of $117 million
(before the tax impact of $33 million) and $235 million (before the
tax impact of $66 million) during the three and six months ended
June 30, 2022, respectively, associated with the amortization of
Wildfire Fund contributions related to AB 1054.
(5)
The Utility recorded costs of $5 million
(before the tax impact of $2 million) during the three and six
months ended June 30, 2022, for one-time costs related to
repositioning PG&E Corporation's and the Utility's operating
model, including their workforce and capital efficiency
optimization.
(6)
Includes costs associated with the CPUC's
OII into the 2017 Northern California Wildfires and 2018 Camp Fire,
the system enhancements related to the locate and mark OII,
restoration and rebuild costs associated with the town of Paradise,
and the settlement agreement with the Safety and Enforcement
Division's investigation into the 2019 Kincade fire, as shown
below.
(in millions)
Three Months Ended
June 30, 2022
Six Months Ended
June 30, 2022
Wildfire OII disallowance and system
enhancements
$
5
$
12
Locate and mark OII system
enhancements
1
2
Paradise restoration and rebuild
(4
)
(3
)
2019 Kincade fire settlement
—
85
Investigation remedies
(pre-tax)
$
2
$
96
Tax impacts
—
(24
)
Investigation remedies
(post-tax)
$
2
$
72
(7)
Includes a $63 million adjustment (before
the tax impact of $18 million) during the six months ended June 30,
2022, for the TO18 and TO19 ROE impact as a result of the FERC
order dated March 17, 2022, which established a base ROE of 9.26%
for the TO18 period, plus the approved CAISO incentive adder of
0.5%, for a total ROE of 9.76%.
(8)
The Utility recognized net benefits of
$173 million and $308 million during the three and six months ended
June 30, 2022, respectively, as a result of recognizing $202
million and $338 million of tax benefits during the three and six
months ended June 30, 2022, respectively, associated with the sale
of shares of PG&E Corporation common stock sold by the Fire
Victim Trust, which was partially offset by a $40 million net
charge (before the tax impact of $11 million) during the three and
six months ended June 30, 2022, related to the establishment of the
SB 901 securitization regulatory asset and the SB 901
securitization regulatory liability associated with revenue credits
funded by Net Operating Loss monetization.
(9)
"Non-GAAP core earnings" is a non-GAAP
financial measure. See Use of Non-GAAP Financial Measures
below.
Undefined, capitalized terms have the meanings set forth in the
PG&E Corporation and the Utility’s joint quarterly report on
Form 10-Q for the quarter ended June 30, 2022.
PG&E Corporation's 2022 Earnings
Guidance
2022
EPS Guidance
Low
High
Estimated Earnings on a GAAP
basis
~
$
0.74
~
$
1.02
Estimated Non-Core Items: (1)
Amortization of Wildfire Fund contribution
(2)
~
0.16
~
0.16
Bankruptcy and legal costs (3)
~
0.14
~
0.09
Wildfire-related costs, net of insurance
(4)
~
0.10
~
0.09
Investigation remedies (5)
~
0.05
~
0.05
Strategic repositioning costs (6)
~
0.03
~
0.03
Fire Victim Trust tax benefit net of
securitization (7)
~
(0.14
)
~
(0.31
)
Prior period net regulatory impact (8)
~
(0.01
)
~
(0.01
)
Estimated EPS on a non-GAAP Core
Earnings basis
~
$
1.07
~
$
1.13
All amounts presented in the table above and footnotes below are
tax adjusted at PG&E Corporation’s statutory tax rate of 27.98%
for 2022, except for certain costs that are not tax deductible.
Amounts may not sum due to rounding.
(1)
“Non-core items” include items that
management does not consider representative of ongoing earnings and
affect comparability of financial results between periods. See Use
of Non-GAAP Financial Measures below.
(2)
"Amortization of Wildfire Fund
contribution” represents the amortization of Wildfire Fund
contributions related to AB 1054. The total offsetting tax impact
for the low and high non-core guidance range is $132 million.
2022
(in millions, pre-tax)
Low
guidance
range
High
guidance
range
Amortization of Wildfire Fund
contribution
~
$
470
~
$
470
(3)
“Bankruptcy and legal costs" consists of
exit financing costs, including interest on temporary Utility debt
and write-off of unamortized fees related to the retirement of
PG&E Corporation debt, securities litigation costs, and legal
and other costs associated with PG&E Corporation's and the
Utility's Chapter 11 filing. The total offsetting tax impact for
the low and high non-core guidance range is $119 million and $78
million, respectively.
2022
(in millions, pre-tax)
Low
guidance
range
High
guidance
range
Exit financing
~
$
180
~
$
60
Securities litigation costs
~
145
~
145
Legal and other costs
~
100
~
70
Bankruptcy and legal costs
~
$
425
~
$
275
(4)
“Wildfire-related costs, net of insurance"
includes third-party claims and legal and other costs associated
with the 2019 Kincade fire, 2020 Zogg fire, and 2021 Dixie fire,
net of insurance. The total offsetting tax impact for the low and
high non-core guidance range is $56 million and $50 million,
respectively.
2022
(in millions, pre-tax)
Low
guidance
range
High
guidance
range
2019 Kincade third-party claims
~
$
150
~
$
150
2019 Kincade fire-related costs
~
40
~
20
2019 Kincade fire-related legal
settlements
~
20
~
20
2020 Zogg fire-related costs
~
40
~
20
2020 Zogg fire-related insurance
recoveries
~
(30
)
~
(10
)
2021 Dixie fire-related legal
settlements
~
50
~
50
Wildfire-related costs, net of
insurance
~
$
270
~
$
250
(5)
“Investigation remedies" includes costs
related to the 2019 Kincade fire settlement with the Safety and
Enforcement Division approved by the CPUC on December 2, 2021, the
Wildfires OII decision different, Paradise restoration and rebuild,
and the locate and mark OII system enhancements. The total
offsetting tax impact for the low and high non-core guidance range
is $28 million.
2022
(in millions, pre-tax)
Low
guidance
range
High
guidance
range
2019 Kincade fire settlement
~
$
85
~
$
85
Wildfire OII disallowance and system
enhancements
~
20
~
20
Paradise restoration and rebuild
~
15
~
15
Locate and mark OII system
enhancements
~
5
~
5
Investigation remedies
~
$
125
~
$
125
(6)
"Strategic repositioning costs” includes
one-time costs related to repositioning PG&E Corporation's and
the Utility's operating model, including their workforce and
capital efficiency optimization. The total offsetting tax impact
for the low and high non-core guidance range is $27 million.
2022
(in millions, pre-tax)
Low
guidance
range
High
guidance
range
Strategic repositioning costs
~
$
95
~
$
95
(7)
“Fire Victim Trust tax benefit net of
securitization" includes the impact of rate neutral (SB 901)
securitization and tax benefits related to the Fire Victim Trust.
Impacts of the rate neutral (SB 901) securitization include the
establishment of the SB 901 securitization regulatory asset and the
SB 901 regulatory liability associated with revenue credits funded
by Net Operating Loss monetization. Fire Victim Trust tax benefits
include tax benefits recognized upon the sale of shares of PG&E
Corporation common stock by the Fire Victim Trust, which PG&E
Corporation and the Utility have elected to treat as a grantor
trust. The low case includes tax benefits for the 100,000,000
shares of PG&E Corporation common stock sold in the aggregate
by the Fire Victim Trust as of July 21, 2022, and the high case
reflects an assumption that the Fire Victim Trust sells all
477,743,590 shares in 2022. The total offsetting tax benefit for
the low and high non-core guidance range is $355 million and $2.1
billion, respectively.
2022
(in millions, pre-tax)
Low
guidance
range
High
guidance
range
Fire Victim Trust tax benefit net of
securitization
~
$
60
~
$
1,390
)
(8)
“Prior period net regulatory impact"
represents the recovery of capital expenditures from 2011 through
2014 above amounts adopted in the 2011 GT&S rate case, net of
the TO18 and TO19 ROE impact resulting from the FERC order dated
March 17, 2022, which established a base ROE of 9.26% for the TO18
period, plus the approved CAISO incentive adder of 0.5%, for a
total ROE of 9.76%. The total offsetting tax impact for the low and
high non-core guidance range is $4 million.
2022
(in millions, pre-tax)
Low
guidance
range
High
guidance
range
2011-2014 GT&S capital audit
~
$
(80
)
~
$
(80
)
TO18 and TO19 ROE impact
~
65
~
65
Prior period net regulatory
impact
~
$
(15
)
~
$
(15
)
Undefined, capitalized terms have the meanings set forth in the
PG&E Corporation and the Utility’s joint quarterly report on
Form 10-Q for the quarter ended June 30, 2022.
Use of Non-GAAP Financial Measures
PG&E Corporation and Pacific Gas and
Electric Company
PG&E Corporation discloses historical financial results and
provides guidance based on “non-GAAP core earnings” and “non-GAAP
core EPS” in order to provide a measure that allows investors to
compare the underlying financial performance of the business from
one period to another, exclusive of non-core items.
“Non-GAAP core earnings” is a non-GAAP financial measure and is
calculated as income available for common shareholders less
non-core items. “Non-core items” include items that management does
not consider representative of ongoing earnings and affect
comparability of financial results between periods, consisting of
the items listed in the table included in "Reconciliation of
PG&E Corporation’s Consolidated Earnings Available for Common
Shareholders in Accordance with GAAP to Non-GAAP Core Earnings
First Quarter, 2022 vs. 2021". “Non-GAAP core EPS,” also referred
to as “non-GAAP core earnings per share,” is a non-GAAP financial
measure and is calculated as non-GAAP core earnings divided by
common shares outstanding (taken on a basic basis in the event of a
GAAP loss and a diluted basis in the event of a GAAP gain).
PG&E Corporation and the Utility use non-GAAP core earnings and
non-GAAP core EPS to understand and compare operating results
across reporting periods for various purposes including internal
budgeting and forecasting, short- and long-term operating planning,
and employee incentive compensation. PG&E Corporation and the
Utility believe that non-GAAP core earnings and non-GAAP core EPS
provide additional insight into the underlying trends of the
business, allowing for a better comparison against historical
results and expectations for future performance. With respect to
our projection of non-GAAP core EPS for the years 2023-2026, we are
not providing a reconciliation to the corresponding GAAP measures
because we are unable to predict with reasonable certainty the
reconciling items that may affect GAAP net income without
unreasonable effort. The reconciling items are primarily due to the
future impact of wildfire-related costs, timing of regulatory
recoveries, special tax items, and investigation remedies. These
reconciling items are uncertain, depend on various factors and
could significantly impact, either individually or in the
aggregate, the GAAP measures.
Non-GAAP core earnings and non-GAAP core EPS are not substitutes
or alternatives for GAAP measures such as consolidated income
available for common shareholders and may not be comparable to
similarly titled measures used by other companies.
View source
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