CenterPoint Energy Reports Q3 2020 Earnings of $0.13 Per Diluted Share; $0.34 Diluted EPS on a Guidance Basis, With $0.29 Diluted EPS From Utility Operations and $0.05 Diluted EPS From Midstream Investments

Rhea-AI Summary

CenterPoint Energy reported a net income of $69 million, or $0.13 per diluted share, for Q3 2020, a significant decrease from $241 million, or $0.47 per diluted share, in Q3 2019. The results included $92 million in after-tax impairment charges from Enable Midstream. Despite the downturn, the company raised its 2020 Utility EPS guidance to $1.12 - $1.20, driven by projected 10% annual rate base growth and a commitment to consistent earnings growth. A virtual Investor Day is scheduled for December 7, 2020, to outline future strategies and financial outlooks.

Positive

• Raised 2020 Utility EPS guidance to $1.12 - $1.20.
• Projected annual rate base growth of approximately 10%.
• Confidence in achieving 5% - 7% annual growth target for Utility EPS.

Negative

• Q3 2020 income decreased by 71% compared to Q3 2019.
• Included $92 million in after-tax impairment charges affecting financial performance.

HOUSTON--(BUSINESS WIRE)--CenterPoint Energy, Inc. (NYSE: CNP) today reported income available to common shareholders of $69 million, or $0.13 per diluted share, for the third quarter of 2020, compared to income available to common shareholders of $241 million, or $0.47 per diluted share, for the third quarter of 2019. The third quarter 2020 results included after-tax non-cash impairment charges of $92 million or $0.15 per diluted share for the company’s share of impairment charges recorded by Enable Midstream Partners, LP (“Enable”).

On a guidance basis, third quarter 2020 earnings were $0.34 per diluted share, with $0.29 per diluted share from utility operations, and $0.05 per diluted share from midstream investments, excluding non-cash impairment charges. Third quarter 2019 earnings, on a guidance basis, were $0.47 per diluted share, with $0.39 per diluted share from utility operations and $0.08 per diluted share from midstream investments. See “Reconciliation of Consolidated income (loss) available to common shareholders and diluted earnings (loss) per share (GAAP) to guidance basis income and guidance basis diluted earnings per share (Non-GAAP)” and “Earnings Outlook and Non-GAAP Considerations” below.

“Our strong third quarter results confirm our commitment to delivering value for our customers and shareholders,” said Dave Lesar, President and Chief Executive Officer of CenterPoint Energy. “Given the strength of our results, we are raising our 2020 guidance basis Utility EPS range to $1.12 - $1.20.”

Lesar added, “We also recently concluded the work of the Business Review and Evaluation Committee of the Board. We are eager to share our strategy and invite investors to join management for a virtual Investor Day on December 7, 2020.”

“During our Investor Day, we will highlight our updated long-term annual rate base growth projection of approximately 10%. This rate base growth is central to our strategy to deliver consistent year-over-year earnings growth to investors and improve service to our customers. The projected additional capital expenditures driving this 10% annual rate base growth not only put us in a position to reiterate our 5% - 7% five-year guidance basis Utility EPS annual growth target, but gives us confidence in being able to deliver results at the top end of that range. I remain greatly energized about CenterPoint Energy’s future and will continue to work tirelessly to drive maximum value for all of our stakeholders.”

Earnings Outlook and Non-GAAP Considerations

To provide greater transparency on utility earnings, 2020 guidance will be presented in two components, a guidance basis Utility EPS range and a Midstream Investments EPS expected range.

In addition to presenting its financial results in accordance with GAAP, including presentation of income (loss) available to common shareholders and diluted earnings (loss) per share, CenterPoint Energy provides guidance based on guidance basis income and guidance basis diluted earnings per share, which are non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance that excludes or includes amounts that are not normally excluded or included in the most directly comparable GAAP financial measure.

Management evaluates CenterPoint Energy’s financial performance in part based on guidance basis earnings per share. Management believes that presenting these non-GAAP financial measures enhances an investor’s understanding of CenterPoint Energy’s overall financial performance, including the impact of its Enable investment, by providing them with an additional meaningful and relevant comparison of current and anticipated future results across periods. The adjustments made in these non-GAAP financial measures exclude items that Management believes do not most accurately reflect the company’s fundamental business performance. These excluded items are reflected in the reconciliation tables of this news release, where applicable. CenterPoint Energy’s guidance basis income and guidance basis diluted earnings per share non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, income available to common shareholders and diluted earnings per share, which respectively are the most directly comparable GAAP financial measures. These non-GAAP financial measures also may be different than non-GAAP financial measures used by other companies.

(1) Utility EPS Guidance Range

• The Utility EPS guidance range includes net income from Houston Electric, Indiana Electric and Natural Gas Distribution segments, as well as after tax Corporate and Other operating income.
• The 2020 Utility EPS guidance range reflects dilution and earnings as if the Series C preferred stock were issued as common stock.
• The Utility EPS guidance excludes:
  • Earnings or losses from the change in value of ZENS and related securities
  • Certain expenses associated with merger integration and Business Review and Evaluation Committee activities
  • Severance costs
  • Results related to Infrastructure Services and Energy Services, including costs and impairment resulting from the sale of those businesses
  • Midstream Investments and allocation of associated corporate overhead

In providing this guidance, CenterPoint Energy does not consider the items noted above and other potential impacts such as changes in accounting standards, impairments or other unusual items, which could have a material impact on GAAP reported results for the applicable guidance period. The 2020 Utility EPS guidance range also considers operations performance to date and assumptions for certain significant variables that may impact earnings, such as customer growth (above 2% for electric operations and 1% for natural gas distribution) and usage including normal weather, throughput, recovery of capital invested, effective tax rates, financing activities and related interest rates, regulatory and judicial proceedings, and anticipated cost savings as a result of the merger. In addition, the Utility EPS guidance range incorporates a full-year COVID-19 scenario range of $0.10 - $0.15 which assumes reduced demand levels and miscellaneous revenues with the second quarter as the peak and reflects anticipated deferral and recovery of certain incremental expenses, including bad debt. The COVID-19 scenario range also assumes a gradual re-opening of the economy in CenterPoint Energy's service territories, with anticipated reduced demand and lower miscellaneous revenues over the remainder of 2020. The 2020 Utility EPS guidance range also assumes an allocation of corporate overhead based upon its relative earnings contribution. Corporate overhead consists of interest expense, preferred stock dividend requirements, income on Enable preferred units and other items directly attributable to the parent along with the associated income taxes. CenterPoint Energy is unable to present a quantitative reconciliation of forward-looking guidance basis diluted earnings per share because changes in the value of ZENS and related securities, future impairments, and other unusual items are not estimable and are difficult to predict due to various factors outside of management’s control.

(2) Midstream Investments EPS Expected Range

The 2020 Midstream Investments EPS expected range is $0.15 - $0.18. In providing this EPS expected range for Midstream Investments, CenterPoint Energy assumes a 53.7 percent ownership of Enable's common units and includes the amortization of its basis differential in Enable and assumes an allocation of its corporate overhead based upon Midstream Investments relative earnings contribution. The Midstream Investments EPS expected range reflects dilution and earnings as if CenterPoint Energy's Series C preferred stock were issued as common stock. The Midstream Investments EPS expected range takes into account such factors as Enable’s most recent public outlook for 2020 dated November 4, 2020, and effective tax rates. In providing this 2020 guidance, CenterPoint Energy uses a non-GAAP measure of guidance basis diluted earnings per share that does not consider other potential impacts such as changes in accounting standards, impairments or Enable’s unusual items, which could have a material impact on GAAP reported results for the applicable guidance period. CenterPoint Energy is unable to present a quantitative reconciliation of forward looking guidance basis diluted earnings per share because changes in Enable’s outlook, future impairments related to Midstream Investments or Enable’s unusual items are not estimable and are difficult to predict due to various factors outside of CenterPoint Energy management’s control.

Reconciliation of Consolidated income (loss) available to common shareholders and diluted earnings (loss) per share (GAAP) to guidance basis income and guidance basis diluted earnings per share (Non-GAAP)
Quarter Ended
September 30, 2020
		Utility Operations							Midstream Investments							Corporate and Other (6)							CES(1) & CIS(2) (Disc. Operations)							Consolidated
		Dollars in millions			Diluted EPS (3)				Dollars in millions			Diluted EPS (3)				Dollars in millions			Diluted EPS (3)				Dollars in millions			Diluted EPS (3)				Dollars in millions			Diluted EPS (3)
Consolidated income (loss) available to common shareholders and diluted EPS		$	193		$	0.35			$	(62)		$	(0.11)			$	(56)		$	(0.10)			$	(6)		$	(0.01)			$	69		$	0.13
ZENS-related mark-to-market (gains) losses:
Marketable securities (net of taxes of $18)(4)(5)		—			—				—			—				(65)			(0.12)				—			—				(65)			(0.12)
Indexed debt securities (net of taxes of $18)(4)		—			—				—			—				66			0.12				—			—				66			0.12
Impacts associated with the Vectren merger (net of taxes of $0, $1)(4)		2			—				—			—				2			0.01				—			—				4			0.01
Severance costs (net of taxes of $1)(4)		4			0.01				—			—				—			—				—			—				4			0.01
Impacts associated with the sales of CES (1) and CIS (2) (net of taxes of $0)(4)		—			—				—			—				—			—				7			0.01				7			0.01
Impacts associated with Series C preferred stock
Preferred stock dividend requirement and amortization of beneficial conversion feature		—			—				—			—				23			0.04				—			—				23			0.04
Impact of increased share count on EPS if issued as common stock		—			(0.03)				—			0.01				—			0.01				—			—				—			(0.01)
Total Series C preferred stock impacts		—			(0.03)				—			0.01				23			0.05				—			—				23			0.03
Loss on impairment (net of taxes of $29)(4)		—			—				92			0.15				—			—				—			—				92			0.15
Corporate and Other Allocation		(26)			(0.04)				(3)			—				30			0.04				(1)			—				—			—
Consolidated on a guidance basis		$	173		$	0.29			$	27		$	0.05			$	—		$	—			$	—		$	—			$	200		$	0.34
(1) Energy Services segment
(2) Infrastructure Services segment
(3) Quarterly diluted EPS on both a GAAP and guidance basis are based on the weighted average number of shares of common stock outstanding during the quarter, and the sum of the quarters may not equal year-to-date diluted EPS
(4) Taxes are computed based on the impact removing such item would have on tax expense
(5) Comprised of common stock of AT&T Inc. and Charter Communications, Inc.
(6) Corporate and Other, plus income allocated to preferred shareholders

Quarter Ended
September 30, 2019
		Utility Operations							Midstream Investments							Corporate and Other (6)							CES(1) & CIS(2) (Disc. Operations)							Consolidated
		Dollars in millions			Diluted EPS (3)				Dollars in millions			Diluted EPS (3)				Dollars in millions			Diluted EPS (3)				Dollars in millions			Diluted EPS (3)				Dollars in millions			Diluted EPS (3)
Consolidated income (loss) available to common shareholders and diluted EPS		$	225		$	0.44			$	50		$	0.10			$	(53	)	$	(0.10))			$	19		$	0.03			$	241		$	0.47
Timing effects impacting CES (1):
Mark-to-market (gains) losses (net of taxes of $1)(4)		—			—				—			—				—			—				1			—				1			—
ZENS-related mark-to-market (gains) losses:
Marketable securities (net of taxes of $12)(4)(5)		—			—				—			—				(47		)	(0.09		)		—			—				(47		)	(0.09		)
Indexed debt securities (net of taxes of $12) (4)		—			—				—			—				50			0.10				—			—				50			0.10
Impacts associated with the Vectren merger (net of taxes of $2, $7, $1)(4)		3			0.01				—			—				13			0.03				4			0.01				20			0.05
Corporate and Other Allocation		(34		)	(0.06		)		(8		)	(0.02		)		37			0.06				5			0.02				—			—
Exclusion of Discontinued Operations (7)		—			—				—			—				—			—				(29		)	(0.06		)		(29		)	(0.06		)
Consolidated on a guidance basis		$	194		$	0.39			$	42		$	0.08			$	—		$	—			$	—		$	—			$	236		$	0.47
(1) Energy Services segment
(2) Infrastructure Services segment
(3) Quarterly diluted EPS on both a GAAP and guidance basis are based on the weighted average number of shares of common stock outstanding during the quarter, and the sum of the quarters may not equal year-to-date diluted EPS
(4) Taxes are computed based on the impact removing such item would have on tax expense
(5) Comprised of common stock of AT&T Inc. and Charter Communications, Inc.
(6) Corporate and Other, plus income allocated to preferred shareholders
(7) Results related to discontinued operations are excluded from the company's guidance basis results

Filing of Form 10-Q for CenterPoint Energy, Inc.

Today, CenterPoint Energy, Inc. filed with the Securities and Exchange Commission (SEC) its Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. A copy of that report is available on the company’s website, under the Investors section. Investors and others should note that we may announce material information using SEC filings, press releases, public conference calls, webcasts, and the Investor Relations page of our website. In the future, we will continue to use these channels to distribute material information about the company and to communicate important information about the company, key personnel, corporate initiatives, regulatory updates and other matters. Information that we post on our website could be deemed material; therefore we encourage investors, the media, our customers, business partners and others interested in our company to review the information we post on our website.

Webcast of Earnings Conference Call

CenterPoint Energy’s management will host an earnings conference call on Thursday, November 5, 2020, at 7:00 a.m. Central time/8:00 a.m. Eastern time. Interested parties may listen to a live audio broadcast of the conference call on the company’s website under the Investors section. A replay of the call can be accessed approximately two hours after the completion of the call and will be archived on the website for at least one year.

About CenterPoint Energy, Inc.

As the only investor owned electric and gas utility based in Texas, CenterPoint Energy, Inc. (NYSE: CNP) is an energy delivery company with electric transmission and distribution, power generation and natural gas distribution operations that serve more than 7 million metered customers in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio, Oklahoma and Texas. As of September 30, 2020, the company owned approximately $33 billion in assets and also owned 53.7 percent of the common units representing limited partner interests in Enable Midstream Partners, LP, a publicly traded master limited partnership that owns, operates and develops strategically located natural gas and crude oil infrastructure assets. With approximately 9,600 employees, CenterPoint Energy and its predecessor companies have been in business for more than 150 years. For more information, visit CenterPointEnergy.com.

Forward-looking Statements

This news release includes, and the earnings conference call will include, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this news release, the words "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "goal," "intend," "may," "objective," "plan," "potential," "predict," "projection," "should," "target," "will" or other similar words are intended to identify forward-looking statements. These forward-looking statements are based upon assumptions of management which are believed to be reasonable at the time made and are subject to significant risks and uncertainties. Actual events and results may differ materially from those expressed or implied by these forward-looking statements. Any statements in this news release or on the earnings conference call regarding capital investments, rate base growth and our ability to achieve it, future earnings and guidance, including long-term growth rate, and future financial performance and results of operations, including, but not limited to the impact of COVID-19, including with respect to regulatory actions and the COVID-19 scenario range discussed in this news release, the Business Review and Evaluation Committee’s review process and outcomes, value creation, opportunities and expectations and any other statements that are not historical facts are forward-looking statements. Each forward-looking statement contained in this news release or discussed on the earnings conference call speaks only as of the date of this release or the earnings conference call.

Important factors that could cause actual results to differ materially from those indicated by the provided forward-looking information include, but are not limited to, risks and uncertainties relating to: (1) the performance of Enable, the amount of cash distributions CenterPoint Energy receives from Enable, and the value of CenterPoint Energy’s interest in Enable; (2) CenterPoint Energy's expected benefits of the merger with Vectren Corporation (Vectren) and integration, including the ability to successfully integrate the Vectren businesses and to realize anticipated benefits and commercial opportunities; (3) financial market and general economic conditions, including access to debt and equity capital and the effect on sales, prices and costs; (4) industrial, commercial and residential growth in CenterPoint Energy’s service territories and changes in market demand; (5) actions by credit rating agencies, including any potential downgrades to credit ratings; (6) the timing and impact of future regulatory and legal proceedings; (7) legislative decisions, including tax and developments related to the environment such as global climate change, air emissions, carbon, waste water discharges and the handling of coal combustion residuals, among others, and CenterPoint Energy’s carbon reduction targets; (8) the impact of the COVID-19 pandemic; (9) the recording of impairment charges, including any impairments related to CenterPoint Energy’s investment in Enable; (10) weather variations and CenterPoint Energy’s ability to mitigate weather impacts; (11) changes in business plans; (12) CenterPoint Energy's ability to fund and invest planned capital, including timely and appropriate rate actions that allow recovery of costs and a reasonable return on investment; (13) CenterPoint Energy’s or Enable’s potential business strategies and strategic initiatives, including the recommendations and outcomes of the Business Review and Evaluation Committee, restructurings, joint ventures and acquisitions or dispositions of assets or businesses, which may not be completed or result in the benefits anticipated by CenterPoint Energy or Enable; (14) CenterPoint Energy’s ability to execute operations and maintenance management initiatives; and (15) other factors discussed in CenterPoint Energy’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, CenterPoint Energy’s Quarterly Report on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020, including in the “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Information” sections of such reports, and other reports CenterPoint Energy or its subsidiaries may file from time to time with the Securities and Exchange Commission.

CenterPoint Energy, Inc. and Subsidiaries
Condensed Statements of Consolidated Income
(Millions of Dollars)
(Unaudited)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2020				2019				2020				2019
Revenues:
Utility revenues		$	1,538			$	1,548			$	5,087			$	5,284
Non-utility revenues		84				110				277				261
Total		1,622				1,658				5,364				5,545
Expenses:
Utility natural gas, fuel and purchased power		170				171				981				1,228
Non-utility cost of revenues, including natural gas		63				80				196				188
Operation and maintenance		659				621				1,976				2,042
Depreciation and amortization		306				316				885				938
Taxes other than income taxes		122				113				387				352
Goodwill Impairment		—				—				185				—
Total		1,320				1,301				4,610				4,748
Operating Income		302				357				754				797
Other Income (Expense):
Gain on marketable securities		83				59				14				206
Loss on indexed debt securities		(84		)		(62		)		(25		)		(216		)
Interest expense and other finance charges		(121		)		(134		)		(388		)		(389		)
Interest expense on Securitization Bonds		(7		)		(9		)		(22		)		(31		)
Equity in earnings (loss) of unconsolidated affiliates, net		(67		)		77				(1,499		)		213
Interest income		1				3				2				16
Interest income from Securitization Bonds		—				1				1				4
Other income, net		10				5				44				20
Total		(185		)		(60		)		(1,873		)		(177		)
Income (Loss) from Continuing Operations Before Income Taxes		117				297				(1,119		)		620
Income tax expense (benefit)		(10		)		46				(328		)		75
Income (Loss) from Continuing Operations		127				251				(791		)		545
Income (Loss) from Discontinued Operations (net of tax expense of $-0-, $16, $21 and $38, respectively)		(6		)		19				(182		)		89
Net Income (Loss)		121				270				(973		)		634
Income allocated to preferred shareholders		52				29				127				88
Income (Loss) Available to Common Shareholders		$	69			$	241			$	(1,100	)		$	546

Reference is made to the Combined Notes to Unaudited Condensed Consolidated Financial Statements contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc.

CenterPoint Energy, Inc. and Subsidiaries
Selected Data From Statements of Consolidated Income
(Millions of Dollars, Except Share and Per Share Amounts)
(Unaudited)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2020				2019				2020				2019
Basic earnings (loss) per common share - continuing operations		$	0.14			$	0.44			$	(1.75	)		$	0.91
Basic earnings (loss) per common share - discontinued operations		(0.01		)		0.04				(0.35		)		0.18
Basic Earnings (loss) Per Common Share		$	0.13			$	0.48			$	(2.10	)		$	1.09
Diluted earnings (loss) per common share - continuing operations		$	0.14			$	0.44			$	(1.75	)		$	0.91
Diluted earnings (loss) per common share - discontinued operations		(0.01		)		0.03				(0.35		)		0.17
Diluted Earnings Per Common Share		$	0.13			$	0.47			$	(2.10	)		$	1.08
Dividends Declared per Common Share		$	0.1500			$	0.2875			$	0.5900			$	0.5750
Dividends Paid per Common Share		$	0.1500			$	0.2875			$	0.5900			$	0.8625
Weighted Average Common Shares Outstanding (in millions):
- Basic		545				502				525				502
- Diluted		548				505				525				505
Net Income (Loss) by Segment
Houston Electric T&D		$	157			$	185			$	281			$	315
Indiana Electric Integrated		31				34				(121		)		41
Natural Gas Distribution		5				6				242				149
Total Utility Operations		193				225				402				505
Midstream Investments		(62		)		50				(1,165		)		124
Corporate and Other		(4		)		(24		)		(28		)		(84		)
Income (Loss) from Continuing Operations		127				251				(791		)		545
Income (loss) from Discontinued Operations, net of tax		(6		)		19				(182		)		89
Net Income (Loss)		$	121			$	270			$	(973	)		$	634

Reference is made to the Combined Notes to Unaudited Condensed Consolidated Financial Statements contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc.

CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars, Except Throughput and Customer Data)
(Unaudited)
		Houston Electric T&D
		Three Months Ended September 30,								% Diff			Nine Months Ended September 30,								% Diff
		2020				2019				Fav/Unfav			2020				2019				Fav/Unfav
Revenues		$	828			$	859			(4	)%		$	2,186			$	2,313			(5	)%
Expenses:
Operation and maintenance		381				359				(6	)%		1,104				1,086				(2	)%
Depreciation and amortization		151				168				10	%		420				519				19	%
Taxes other than income taxes		64				63				(2	)%		192				186				(3	)%
Total expenses		596				590				(1	)%		1,716				1,791				4	%
Operating Income		232				269				(14	)%		470				522				(10	)%
Other Income (Expense)
Interest expense and other finance charges		(50		)		(50		)		—			(149		)		(154		)		3	%
Interest income		1				9				(89	)%		3				22				(86	)%
Other income (expense), net		—				(2		)		—			4				(5		)		180	%
Income From Continuing Operations Before Income Taxes		183				226				(19	)%		328				385				(15	)%
Income tax expense		26				41				37	%		47				70				33	%
Net Income		$	157			$	185			(15	)%		$	281			$	315			(11	)%
Actual GWH Delivered
Residential		11,237				11,224				—			25,028				24,392				3	%
Total		28,031				28,379				(1	)%		71,293				71,417				—
Weather (percentage of 10-year average for service area):
Cooling degree days		106		%		110		%		(4	)%		109		%		106		%		3	%
Heating degree days		—		%		—		%		—	%		68		%		93		%		(25	)%
Number of metered customers - end of period:
Residential		2,291,038				2,232,740				3	%		2,291,038				2,232,740				3	%
Total		2,586,093				2,523,450				2	%		2,586,093				2,523,450				2	%

Reference is made to the Combined Notes to Unaudited Condensed Consolidated Financial Statements contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc.

CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars, Except Throughput and Customer Data)
(Unaudited)
		Indiana Electric Integrated
		Three Months Ended September 30,								% Diff			Nine Months Ended September 30,								% Diff
		2020				2019				Fav / Unfav			2020				2019 (1)				Fav / Unfav
Revenues		$	157			$	165			(5)	%		$	414			$	388			7	%
Utility natural gas, fuel and purchased power		41				46				11	%		108				112				4	%
Revenues less Utility natural gas, fuel and purchased power		116				119				(3)	%		306				276				11	%
Expenses:
Operation and maintenance		46				42				(10)	%		128				136				6	%
Depreciation and amortization		26				25				(4)	%		77				66				(17)	%
Taxes other than income taxes		4				4				—			12				10				(20)	%
Goodwill impairment		—				—				—			185				—				—
Total expenses		76				71				(7)	%		402				212				(90)	%
Operating Income (Loss)		40				48				(17)	%		(96)				64				(250)	%
Other Income (Expense)
Interest expense and other finance charges		(5)				(6)				17	%		(16)				(16)				—
Other income, net		3				1				200	%		6				3				100	%
Income (Loss) From Continuing Operations Before Income Taxes		38				43				(12)	%		(106)				51				(308)	%
Income tax expense		7				9				22	%		15				10				(50)	%
Net Income (Loss)		$	31			$	34			(9)	%		$	(121)			$	41			(395)	%
Actual GWH Delivered
Residential		438				457				(4)	%		1,085				978				11	%
Total		1,421				1,555				(9)	%		3,630				3,568				2	%
Weather (percentage of 10-year average for service area):
Cooling degree days		104		%		113		%		(9)	%		104		%		114		%		(10)	%
Heating degree days		99		%		99		%		—	%		93		%		95		%		(2)	%
Number of metered customers - end of period:
Residential		129,817				128,381				1	%		129,817				128,381				1	%
Total		148,925				147,337				1	%		148,925				147,337				1	%
(1) Represents February 1, 2019 through September 30, 2019 results only due to the Merger.

Reference is made to the Combined Notes to Unaudited Condensed Consolidated Financial Statements contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc.

CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars, Except Throughput and Customer Data)
(Unaudited)
		Natural Gas Distribution
		Three Months Ended September 30,								% Diff			Nine Months Ended September 30,									% Diff
		2020				2019				Fav/Unfav			2020				2019 (1)					Fav/Unfav
Revenues		$	560			$	541			4	%		$	2,519			$	2,629				(4	)%
Cost of revenues (2)		131				136				4	%		888				1,145					22	%
Revenues less Cost of revenues		429				405				6	%		1,631				1,484					10	%
Expenses:
Operation and maintenance		239				226				(6	)%		738				780					5	%
Depreciation and amortization		115				108				(6	)%		339				310					(9	)%
Taxes other than income taxes		52				43				(21	)%		175				149					(17	)%
Total expenses		406				377				(8	)%		1,252				1,239					(1	)%
Operating Income		23				28				(18	)%		379				245					55	%
Other Income (Expense)
Interest expense and other finance charges		(29		)		(24		)		(21	)%		(90		)		(71		)			(27	)%
Interest income		2				5				(60	)%		5				6					(17	)%
Other expense, net		—				(5		)		—			(2		)		(6		)			67	%
Income (Loss) From Continuing Operations Before Income Taxes		(4		)		4				(200	)%		292				174					68	%
Income tax expense (benefit)		(9		)		(2		)		350	%		50				25					(100	)%
Net Income		$	5			$	6			(17	)%		$	242			$	149				62	%
Throughput data in BCF
Residential		18				16				13	%		157				160					(2	)%
Commercial and industrial		84				88				(5	)%		317				326					(3	)%
Total Throughput		102				104				(2	)%		474				486					(2	)%
Weather (percentage of 10-year average for service area):
Heating degree days		100		%		18		%		82	%		90		%		100		%			(10	)%
Number of customers - end of period:
Residential		4,295,169				4,194,232				2	%		4,295,169				4,194,232					2	%
Commercial and industrial		346,641				344,858				1	%		346,641				344,858					1	%
Total		4,641,810				4,539,090				2	%		4,641,810				4,539,090					2	%
(1) Includes acquired natural gas operations February 1, 2019 through September 30, 2019 results only due to the Merger.
(2) Includes Utility natural gas, fuel and purchased power and Non-utility cost of revenues, including natural gas.

Reference is made to the Combined Notes to Unaudited Condensed Consolidated Financial Statements contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc.

CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars, Except Throughput and Customer Data)
(Unaudited)
		Midstream Investments
		Three Months Ended September 30,								% Diff			Nine Months Ended September 30,								% Diff
		2020				2019				Fav/Unfav			2020				2019				Fav/Unfav
Non-utility revenues		$	—			$	—			—			$	—			$	—			—
Taxes other than income taxes		—				—				—			(1		)		—				—
Total expenses		—				—				—			(1		)		—				—
Operating Income		—				—				—			1				—				—
Other Income (Expense)
Interest expense and other finance charges		(14		)		(13		)		(8	)%		(41		)		(39		)		(5	)%
Equity in earnings (loss) from Enable, net		(67		)		77				(187	)%		(1,499		)		213				(804	)%
Interest income		—				2				—			1				7				(86	)%
Income (Loss) From Continuing Operations Before Income Taxes		(81		)		66				(223	)%		(1,538		)		181				(950	)%
Income tax expense (benefit)		(19		)		16				219	%		(373		)		57				754	%
Net Income (Loss)		$	(62	)		$	50			(224	)%		$	(1,165	)		$	124			(1,040	)%

		Capital Expenditures by Segment
		Three Months Ended September 30,								Nine Months Ended September 30,
		2020				2019				2020				2019 (1)
Houston Electric T&D		$	215			$	239			$	729			$	722
Indiana Electric Integrated		77				46				191				135
Natural Gas Distribution		314				324				864				773
Corporate and Other		36				43				84				137
Continuing Operations		$	642			$	652			1,868				1,767
Discontinued Operations		—				14				21				61
Total Capital Expenditures		$	642			$	666			$	1,889			$	1,828
(1) Includes capital expenditures of acquired businesses from February 1, 2019 through September 30, 2019 only due to the Merger.
		Interest Expense Detail
		Three Months Ended September 30,								Nine Months Ended September 30,
		2020				2019				2020				2019
Amortization of Deferred Financing Cost		$	7			$	8			$	22			$	22
Capitalization of Interest Cost		(7		)		(10		)		(20		)		(29		)
Securitization Bonds Interest Expense		7				9				22				31
Other Interest Expense		121				136				386				396
Total Interest Expense		$	128			$	143			$	410			$	420

Reference is made to the Combined Notes to Unaudited Condensed Consolidated Financial Statements contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc.

CenterPoint Energy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Millions of Dollars)
(Unaudited)
		September 30, 2020				December 31, 2019
ASSETS
Current Assets:
Cash and cash equivalents		$	185			$	241
Current assets held for sale		—				1,002
Other current assets		2,600				2,694
Total current assets		2,785				3,937
Property, Plant and Equipment, net		21,735				20,624
Other Assets:
Goodwill		4,697				4,882
Regulatory assets		2,150				2,117
Investment in unconsolidated affiliates		749				2,408
Preferred units – unconsolidated affiliate		363				363
Non-current assets held for sale		—				962
Other non-current assets		226				236
Total other assets		8,185				10,968
Total Assets		$	32,705			$	35,529
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of securitization bonds long-term debt		$	208			$	231
Indexed debt		16				19
Current portion of other long-term debt		1,114				618
Current liabilities held for sale		—				455
Other current liabilities		2,492				2,655
Total current liabilities		3,830				3,978
Other Liabilities:
Deferred income taxes, net		3,575				3,928
Regulatory liabilities		3,480				3,474
Non-current liabilities held for sale		—				43
Other non-current liabilities		1,486				1,503
Total other liabilities		8,541				8,948
Long-term Debt:
Securitization bonds		610				746
Other		11,336				13,498
Total long-term debt		11,946				14,244
Shareholders' Equity		8,388				8,359
Total Liabilities and Shareholders' Equity		$	32,705			$	35,529

Reference is made to the Combined Notes to Unaudited Condensed Consolidated Financial Statements contained in the Quarterly Report on Form 10-Q of CenterPoint Energy, Inc.

CenterPoint Energy, Inc. and Subsidiaries
Condensed Statements of Consolidated Cash Flows
(Millions of Dollars)
(Unaudited)
		Nine Months Ended September 30,
		2020				2019
Net income (loss)		$	(973	)		$	634
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		909				1,028
Deferred income taxes		(429		)		8
Goodwill impairment and loss from classification to held for sale		175				—
Goodwill impairment		185				—
Write-down of natural gas inventory		3				5
Equity in (earnings) losses of unconsolidated affiliates		1,499				(213		)
Distributions from unconsolidated affiliates		109				226
Changes in net regulatory assets and liabilities		(76		)		(101		)
Changes in other assets and liabilities		36				(511		)
Other, net		1				10
Net cash provided by operating activities		1,439				1,086
Net cash used in investing activities		(683		)		(7,775		)
Net cash provided by (used in) financing activities		(819		)		2,708
Net Decrease in Cash, Cash Equivalents and Restricted Cash		(63		)		(3,981		)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period		271				4,278
Cash, Cash Equivalents and Restricted Cash at End of Period		$	208			$	297