PG&E Corporation Delivers High End of Guidance for Full-Year 2023 and Increases 2024 Earnings Guidance
- Strong financial performance with increased earnings per share for 2023 and improved guidance for 2024.
- Operational efficiency demonstrated by cost reductions and exceeding reduction targets for two consecutive years.
- Significant capital investment planned to support infrastructure improvements and growth.
- Extended growth guidance for non-GAAP core EPS until 2027 and 2028.
- None.
Insights
The reported increase in both GAAP and non-GAAP earnings per share (EPS) for the year and fourth quarter indicates a positive performance trajectory for the company. The GAAP earnings jump from $0.84 to $1.05 per share annually and the non-GAAP core earnings increase from $1.10 to $1.23 per share year-over-year reflects robust operational efficiency and profitability. Additionally, the upward revision of the 2024 EPS guidance suggests management's confidence in the company's continued growth and stability, which is typically well-received by investors.
The decision to not issue equity in 2023 and the projection of no equity needs in 2024 implies a strong balance sheet and liquidity position, which can be attractive to shareholders as it reduces the risk of share dilution. This financial strategy could also indicate that the company is generating sufficient cash flow from its operations to fund its activities without the need for external financing.
The 5.5% reduction in non-fuel O&M costs, surpassing the annual target for the second consecutive year, demonstrates the company's commitment to cost-efficiency and operational excellence. This kind of performance can have a positive impact on the company's competitive position in the industry. By exceeding cost reduction targets, the company is not only improving its bottom line but also potentially increasing its appeal to cost-conscious investors.
The five-year capital plan expansion by 20% to $62 billion underscores the company's long-term investment in customer infrastructure improvements. Such substantial investment can be a double-edged sword; while it may lead to improved service quality and customer satisfaction, it also requires careful monitoring of the return on these investments over time. Stakeholders will be interested in the company's ability to manage these capital expenditures without negatively impacting profitability.
The extension of the non-GAAP core EPS growth guidance of at least 9% to 2027 and 2028 is a significant indicator of the company's long-term strategic planning. It reflects a strong outlook for the energy sector, particularly regarding the demand for infrastructure improvements. The mention of reducing wildfire ignitions and burying more powerlines than in any prior year indicates the company's proactive approach to addressing environmental and safety concerns, which is increasingly important to consumers and regulators in the energy sector.
Such initiatives may also lead to regulatory advantages and can enhance the company's reputation, potentially leading to an increased market share. Investors and industry stakeholders will likely monitor how these environmental and safety measures translate into financial performance and whether they align with broader industry trends towards sustainable and responsible energy production and distribution.
- GAAP earnings were
$1.05 $0.43 $0.84 $0.24 - Non-GAAP core earnings were
$1.23 $0.47 $1.10 $0.26 - 2024 EPS GAAP guidance increased from
$1.08 $1.12 $1.10 $1.14 - 2024 EPS non-GAAP core guidance increased from
$1.31 $1.35 $1.33 $1.37 - No equity issued in 2023; forecasting no equity needs in 2024.
- 2023 non-fuel O&M costs reduced by
5.5% , as compared to 2022; exceeded annual reduction target of2% for the second year in a row. - Five-year capital plan increased to
$62 billion 20% increase to support critical customer infrastructure improvements. - Non-GAAP core EPS growth guidance of at least
9% extended to 2027 and 2028.
PG&E Corporation (NYSE: PCG) recorded full-year 2023 income available for common shareholders of
The increase in year-over-year GAAP earnings is primarily driven by an increase in customer capital investment, as approved in the 2023 General Rate Case final decision and which earns an equity return as approved in the cost of capital proceeding. Other drivers include non-fuel operating and maintenance savings achieved for the full year including resource management, efficiencies, and planning and execution improvements, net of amounts reinvested back into the business to fund various programs such as standing up new Model Yards utilizing PG&E Corporation's and Pacific Gas and Electric Company's (Utility) Lean operating system, and additional employee training resources. Additional drivers include lower costs related to PG&E Corporation's and the Utility's reorganization cases under Chapter 11 of the
Non-GAAP Core Earnings
PG&E Corporation's non-GAAP core earnings, which exclude non-core items, were
The increase in year-over-year non-GAAP core earnings is primarily driven by an increase in customer capital investment, as approved in the 2023 General Rate Case final decision and which earns an equity return as approved in the cost of capital proceeding. Other drivers include non-fuel operating and maintenance savings achieved for the full year including resource management, efficiencies, and planning and execution improvements, net of amounts reinvested back into the business to fund various programs such as standing up new Model Yards utilizing PG&E Corporation's and Pacific Gas and Electric Company's (Utility) Lean operating system, and additional employee training resources.
Non-core items, which management does not consider representative of ongoing earnings, totaled
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.
2024 Guidance
PG&E Corporation is increasing 2024 GAAP earnings guidance in the range of
The guidance range for projected 2024 non-GAAP core earnings is increased to
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 February 22, 2024, at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) to discuss its fourth quarter and full year 2023 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: Fourth Quarter and Full Year 2023 Earnings Call
When: Thursday, February 22, 2024 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 February 29, 2024, by dialing (800) 770-2030. International callers may dial (647) 362-9199. For both domestic and international callers, the confirmation code 92587 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 "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
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 earnings guidance and equity financing requirements for 2024, as well as operating cost savings and capital investments. 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, 2023 and other reports filed with the SEC, which are available on PG&E Corporation's website at www.pgecorp.com and on the SEC's 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 | |||||
CONSOLIDATED STATEMENTS OF INCOME | |||||
(in millions, except per share amounts) | |||||
Year ended December 31, | |||||
2023 | 2022 | 2021 | |||
Operating Revenues | |||||
Electric | $ 17,424 | $ 15,060 | $ 15,131 | ||
Natural gas | 7,004 | 6,620 | 5,511 | ||
Total operating revenues | 24,428 | 21,680 | 20,642 | ||
Operating Expenses | |||||
Cost of electricity | 2,443 | 2,756 | 3,232 | ||
Cost of natural gas | 1,754 | 2,100 | 1,149 | ||
Operating and maintenance | 11,924 | 9,809 | 10,200 | ||
SB 901 securitization charges, net | 1,267 | 608 | — | ||
Wildfire-related claims, net of recoveries | 64 | 237 | 258 | ||
Wildfire Fund expense | 567 | 477 | 517 | ||
Depreciation, amortization, and decommissioning | 3,738 | 3,856 | 3,403 | ||
Total operating expenses | 21,757 | 19,843 | 18,759 | ||
Operating Income | 2,671 | 1,837 | 1,883 | ||
Interest income | 606 | 162 | 20 | ||
Interest expense | (2,850) | (1,917) | (1,601) | ||
Other income, net | 272 | 394 | 457 | ||
Reorganization items, net | — | — | (11) | ||
Income Before Income Taxes | 699 | 476 | 748 | ||
Income tax provision (benefit) | (1,557) | (1,338) | 836 | ||
Net Income (Loss) | 2,256 | 1,814 | (88) | ||
Preferred stock dividend requirement of subsidiary | 14 | 14 | 14 | ||
Income (Loss) Attributable to Common Shareholders | $ 2,242 | $ 1,800 | $ (102) | ||
Weighted Average Common Shares Outstanding, Basic | 2,064 | 1,987 | 1,985 | ||
Weighted Average Common Shares Outstanding, Diluted | 2,138 | 2,132 | 1,985 | ||
Net Income (Loss) Per Common Share, Basic | $ 1.09 | $ 0.91 | $ (0.05) | ||
Net Income (Loss) Per Common Share, Diluted | $ 1.05 | $ 0.84 | $ (0.05) | ||
Reconciliation of PG&E Corporation's Consolidated Earnings Available for Common Shareholders in Accordance with | |||||||||||||||
Fourth Quarter and Full Year, 2023 vs. 2022 | |||||||||||||||
(in millions, except per share amounts) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
Earnings | Earnings per | Earnings | Earnings per | ||||||||||||
(in millions, except per share amounts) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||
PG&E Corporation's Earnings/EPS on a GAAP basis | $ 919 | $ 513 | $ 2,242 | $ 1,800 | |||||||||||
Non-core items: (1) | |||||||||||||||
Amortization of Wildfire Fund contribution (2) | 83 | 90 | 0.04 | 0.04 | 408 | 344 | 0.19 | 0.16 | |||||||
Bankruptcy and legal costs (3) | 8 | 14 | — | 0.01 | 89 | 216 | 0.04 | 0.10 | |||||||
Fire Victim Trust tax benefit net of securitization (4) | (77) | (139) | (0.04) | (0.07) | (262) | (418) | (0.12) | (0.20) | |||||||
Investigation remedies (5) | 3 | 17 | — | 0.01 | 24 | 93 | 0.01 | 0.04 | |||||||
Prior period net regulatory impact (6) | (6) | — | — | — | (24) | (11) | (0.01) | (0.01) | |||||||
Strategic repositioning costs (7) | — | — | — | — | 3 | 65 | — | 0.03 | |||||||
Wildfire-related costs, net of insurance (8) | 76 | 64 | 0.04 | 0.03 | 150 | 254 | 0.07 | 0.12 | |||||||
PG&E Corporation's Non-GAAP core earnings/EPS (9) | $ 1,006 | $ 560 | $ 2,630 | $ 2,343 | |||||||||||
All amounts presented in the table above and footnotes below are tax adjusted at PG&E Corporation's statutory tax rate of | |
(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 Non-GAAP Financial Measures below. |
(2) | The Utility recorded costs of |
(3) | Includes bankruptcy and legal costs associated with PG&E Corporation's and the Utility's Chapter 11 filing, including legal and other costs and exit financing costs, as shown below. The three months ended December 31, 2023 also include a reclassification from non-core to core earnings of |
(in millions) | Three Months Ended | Year Ended | |
Legal and other costs | $ 34 | $ 120 | |
Exit financing | (23) | 3 | |
Bankruptcy and legal costs (pre-tax) | $ 11 | $ 123 | |
Tax impacts | (3) | (34) | |
Bankruptcy and legal costs (post-tax) | $ 8 | $ 89 |
(4) | Includes any earnings-impacting investment losses or gains associated with investments related to the contributions to the customer credit trust, the charge 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, and tax benefits related to the Fire Victim Trust's sale of PG&E Corporation common stock. |
(in millions) | Three Months Ended | Year Ended | |
SB 901 securitization charge | $ 359 | $ 1,267 | |
Net gains related to customer credit trust | 1 | (22) | |
Fire Victim Trust tax benefit net of securitization (pre-tax) | $ 360 | $ 1,245 | |
Tax impacts | (101) | (348) | |
Tax benefits from Fire Victim Trust share sales | (337) | (1,158) | |
Fire Victim Trust tax benefit net of securitization (post-tax) | $ (77) | $ (262) |
(5) | Includes costs associated with the decision different for the OII related to the 2017 Northern California Wildfires and 2018 Camp Fire ("Wildfires OII"), the system enhancements related to the locate and mark OII, the restoration and rebuilding costs for the town of Paradise, and the settlement agreement resolving the Safety and Enforcement Division's investigation into the 2020 Zogg fire, as shown below. |
(in millions) | Three Months Ended | Year Ended | |
Wildfires OII disallowance and system enhancements | $ 3 | $ 3 | |
Locate and mark OII system enhancements | 1 | 5 | |
Paradise restoration and rebuild | — | 23 | |
2020 Zogg fire settlement | 1 | 1 | |
Investigation remedies (pre-tax) | $ 4 | $ 32 | |
Tax impacts | (1) | (8) | |
Investigation remedies (post-tax) | $ 3 | $ 24 |
(6) | The Utility recorded |
(7) | The Utility recorded |
(8) | 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 | Year Ended | |
2019 Kincade third-party claims | $ 100 | $ 100 | |
2019 Kincade fire-related costs | 2 | 8 | |
2020 Zogg fire-related costs | 1 | 18 | |
2020 Zogg fire-related insurance recoveries | — | (4) | |
2020 Zogg fire-related legal settlements | — | 50 | |
2021 Dixie fire-related legal settlements | 3 | 20 | |
Wildfire-related costs, net of insurance (pre-tax) | $ 106 | $ 193 | |
Tax impacts | (30) | (43) | |
Wildfire-related costs, net of insurance (post-tax) | $ 76 | $ 150 |
(9) | "Non-GAAP core earnings" is a non-GAAP financial measure. See Non-GAAP Financial Measures below. |
Undefined, capitalized terms have the meanings set forth in PG&E Corporation's and the Utility's joint Annual Report on Form 10-K for the year ended December 31, 2023. | |
PG&E Corporation's 2024 Earnings Guidance | |||||
2024 | |||||
EPS guidance | Low | High | |||
Estimated EPS on a GAAP basis | ~ | $ 1.10 | ~ | $ 1.14 | |
Estimated non-core items: (1) | |||||
Amortization of Wildfire Fund contribution (2) | ~ | 0.16 | ~ | 0.16 | |
Bankruptcy and legal costs (3) | ~ | 0.02 | ~ | 0.02 | |
SB 901 securitization (4) | ~ | 0.01 | ~ | 0.01 | |
Investigation remedies (5) | ~ | 0.04 | ~ | 0.04 | |
Prior period net regulatory impact (6) | ~ | (0.01) | ~ | (0.01) | |
Wildfire-related costs, net of insurance (7) | ~ | 0.01 | ~ | 0.01 | |
Estimated EPS on a non-GAAP core earnings basis | ~ | $ 1.33 | ~ | $ 1.37 | |
All amounts presented in the table above and footnotes below are tax adjusted at PG&E Corporation's statutory tax rate of | |
(1) | "Non-core items" include items that management does not consider representative of ongoing earnings and affect comparability of financial results between periods. See Non-GAAP Financial Measures below. |
(2) | "Amortization of Wildfire Fund contribution" represents the amortization of the Wildfire Fund asset and accretion of the related Wildfire Fund liability. |
2024 | |||||
(in millions, pre-tax) | Low | High | |||
Amortization of Wildfire Fund contribution | ~ | $ 460 | ~ | $ 460 | |
Amortization of Wildfire Fund contribution (pre-tax) | ~ | $ 460 | ~ | $ 460 | |
Tax impacts | ~ | (129) | ~ | (129) | |
Amortization of Wildfire Fund contribution (post-tax) | ~ | $ 331 | ~ | $ 331 | |
(3) | "Bankruptcy and legal costs" consists of legal and other costs associated with PG&E Corporation's and the Utility's Chapter 11 filing. |
2024 | |||||
(in millions, pre-tax) | Low | High | |||
Legal and other costs | ~ | $ 50 | ~ | $ 50 | |
Bankruptcy and legal costs (pre-tax) | ~ | $ 50 | ~ | $ 50 | |
Tax impacts | ~ | (14) | ~ | (14) | |
Bankruptcy and legal costs (post-tax) | ~ | $ 36 | ~ | $ 36 | |
(4) | "SB 901 securitization" includes 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. Also included are any earnings-impacting investment losses or gains associated with investments related to the contributions to the customer credit trust. |
2024 | |||||
(in millions, pre-tax) | Low | High | |||
SB 901 securitization charge | ~ | $ 33 | ~ | $ 33 | |
Net gains related to customer credit trust | ~ | — | ~ | — | |
SB 901 Securitization (pre-tax) | ~ | $ 33 | ~ | $ 33 | |
Tax impacts | ~ | (9) | ~ | (9) | |
SB901 Securitization (post-tax) | ~ | $ 24 | ~ | $ 24 | |
(5) | "Investigation remedies" includes costs related to the Paradise restoration and rebuild, the Wildfires OII decision different, the settlement agreement resolving the Safety and Enforcement Division's investigation into the 2020 Zogg fire, and the locate and mark OII system enhancements. |
2024 | |||||
(in millions, pre-tax) | Low | High | |||
Paradise restoration and rebuild | ~ | $ 10 | ~ | $ 10 | |
Wildfires OII disallowance and system enhancements | ~ | 40 | ~ | 40 | |
2020 Zogg fire settlement | ~ | 75 | ~ | 75 | |
Locate and mark OII system enhancements | ~ | 5 | ~ | 5 | |
Investigation remedies (pre-tax) | ~ | $ 130 | ~ | $ 130 | |
Tax impacts | ~ | (35) | ~ | (35) | |
Investigation remedies (post-tax) | ~ | $ 95 | ~ | $ 95 | |
(6) | "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. |
2024 | |||||
(in millions, pre-tax) | Low | High | |||
2011-2014 GT&S capital audit | ~ | $ (35) | ~ | $ (35) | |
Prior period net regulatory impact (pre-tax) | ~ | $ (35) | ~ | $ (35) | |
Tax impacts | ~ | 10 | ~ | 10 | |
Prior period net regulatory impact (post-tax) | ~ | $ (25) | ~ | $ (25) | |
(7) | "Wildfire-related costs, net of insurance" includes legal and other costs associated with the 2019 Kincade fire, 2020 Zogg fire, and 2021 Dixie fire, net of insurance. |
2024 | |||||
(in millions, pre-tax) | Low | High | |||
2019 Kincade fire-related costs | ~ | $ 15 | ~ | $ 15 | |
2020 Zogg fire-related costs | ~ | 5 | ~ | 5 | |
2020 Zogg fire-related insurance recoveries | ~ | (5) | ~ | (5) | |
2021 Dixie fire-related legal settlements | ~ | 15 | ~ | 15 | |
Wildfire-related costs, net of insurance (pre-tax) | ~ | $ 30 | ~ | $ 30 | |
Tax impacts | ~ | (8) | ~ | (8) | |
Wildfire-related costs, net of insurance (post-tax) | ~ | $ 22 | ~ | $ 22 | |
Undefined, capitalized terms have the meanings set forth in PG&E Corporation's and the Utility's joint Annual Report on Form 10-K for the year ended December 31, 2023. |
Non-GAAP Financial Measures PG&E Corporation and Pacific Gas and Electric Company |
Non-GAAP Core Earnings and Non-GAAP Core EPS
"Non-GAAP core earnings" and "Non-GAAP core EPS," also referred to as "non-GAAP core earnings per share," are non-GAAP financial measures. Non-GAAP core earnings 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 Exhibit A. Non-GAAP core EPS is calculated as non-GAAP core earnings divided by common shares outstanding on a diluted basis.
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. 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 2024-2026, PG&E Corporation is 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.
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SOURCE PG&E Corporation
FAQ
What were PCG's GAAP earnings per share for the fourth quarter of 2023?
What is the 2024 EPS GAAP guidance range for PCG?
Did PCG issue any equity in 2023?
By how much were PCG's non-fuel O&M costs reduced in 2023 compared to 2022?
What is the total amount of PCG's five-year capital plan through 2028?
Until which years has PCG extended its non-GAAP core EPS growth guidance?
