Portland General Electric announces second quarter 2020 results

Rhea-AI Summary

Portland General Electric Company (NYSE: POR) reported a net income of $39 million, or 43 cents per diluted share, for Q2 2020, up from $25 million, or 28 cents, in Q2 2019. This growth was driven by favorable hydro and wind conditions alongside reduced operating expenses. Total revenues rose due to increased demand across residential, industrial, and wholesale sectors, notwithstanding a decline in commercial demand. PGE reaffirms its 2020 earnings guidance of $2.20 to $2.50 per diluted share, citing stronger residential and industrial demand.

Positive

• Net income increased to $39 million in Q2 2020 from $25 million in Q2 2019.
• Total revenues rose due to higher residential, industrial, and wholesale demand.
• Operating expenses declined, driven by cost reduction efforts.
• PGE reaffirmed 2020 earnings guidance of $2.20 to $2.50 per diluted share.

Negative

• Commercial demand decreased, partially offsetting revenue gains.
• Net variable power costs expected to be below the established baseline.

PORTLAND, Ore., July 31, 2020 /PRNewswire/ -- Portland General Electric Company (NYSE: POR) today reported net income of $39 million, or 43 cents per diluted share, for the second quarter of 2020. This compares with net income of $25 million, or 28 cents per diluted share, for the second quarter of 2019.

"We achieved solid second quarter financial results, driven by a combination of favorable hydro and wind conditions and lower operating expenses," said Maria Pope, PGE president and CEO. "As an essential service provider, we will continue working to keep costs low to support economic recovery and the communities we serve in this unprecedented time."

Second quarter 2020 earnings compared to second quarter 2019 earnings

Total revenues increased as a result of higher residential, industrial and wholesale demand, which was partially offset by lower commercial demand. Power costs increased due to higher overall system deliveries, which more than offset a decline in the average cost per MWh due to lower gas prices and surplus hydro in the region. Operating expense declined due to continuous efforts to reduce the company's overall cost structure as well as lower plant maintenance expense. Tax expense was favorable due to higher Production Tax Credit generation at PGE's wind facilities.

Company Update

Major Capital Projects

PGE's Integrated Operations Center and the Wheatridge Renewable Energy Facility remain on schedule and on budget. There have been no significant supply chain or operational disruptions as a result of COVID-19.

Integrated Resource Plan (IRP)

The Public Utility Commission of Oregon acknowledged the Action Plan in PGE's 2019 IRP in a written Order on May 6, 2020. PGE plans to begin procurement activities for renewables and capacity later this year and will  consider the potential impacts of economic conditions on resource needs.

2020 Earnings Guidance

PGE is reaffirming its 2020 earnings guidance of $2.20 to $2.50 per diluted share. This guidance is based on the following assumptions:

• Revised annual retail deliveries from a decrease of 1% to 2%, weather adjusted, to flat energy deliveries, weather adjusted, year over year. This upward revision reflects stronger residential and industrial demand offset by a decline in commercial deliveries;
• Net variable power costs for the year ending December 31, 2020 to be below the power cost adjustment mechanism baseline, but within the established deadband range;
• Average hydro conditions for the year;
• Wind generation based on five years of historical levels or forecast studies when historical data is not available;
• Normal thermal plant operations;
• Operating and maintenance expense between $570 million and $590 million, which includes a full-year forecasted bad debt expense of $15 million due to moratoriums on collection activities and customer disconnects; and
• Depreciation and amortization expense between $410 million and $430 million.

Second Quarter 2020 earnings call and webcast — July 31, 2020

PGE will host a conference call with financial analysts and investors on Friday, July 31, 2020, at 11 a.m. ET. The conference call will be webcast live on the PGE website at investors.portlandgeneral.com. A replay of the call will be available beginning at 2 p.m. ET on Friday, July 31, 2020, through 1 p.m. ET on Friday, August 7, 2020.

Maria Pope, president and CEO; Jim Lobdell, senior vice president of Finance, CFO, and treasurer; and Jardon Jaramillo, senior director, Investor Relations, Treasury, and Finance Operations, will participate in the call. Management will respond to questions following formal comments.

The attached unaudited condensed consolidated statements of income and comprehensive income, condensed consolidated balance sheets and condensed consolidated statements of cash flows, as well as the supplemental operating statistics, are an integral part of this earnings release.

About Portland General Electric Company

Portland General Electric (NYSE: POR) is a fully integrated energy company based in Portland, Oregon, with operations across the state. The company serves 901,000 customers with a service area population of 1.9 million Oregonians in 51 cities. PGE has 16 generation plants in five Oregon counties, and maintains and operates 13 public parks and recreation areas. For over 130 years, PGE has delivered safe, affordable and reliable energy to Oregonians. Together with its customers, PGE has the No. 1 voluntary renewable energy program in the U.S. PGE and its 3,000 employees are working with customers to build a clean energy future. In 2019, PGE, employees, retirees and the PGE Foundation donated $4.7 million and volunteered 32,900 hours with more than 700 nonprofits  across Oregon. For more information visit portlandgeneral.com/news.

Safe Harbor Statement

Statements in this news release that relate to future plans, objectives, expectations, performance, events and the like may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding earnings guidance; statements regarding future load, hydro conditions and operating and maintenance costs; statements concerning implementation of the company's integrated resource plan; statements concerning future compliance with regulations limiting emissions from generation facilities and the costs to achieve such compliance; as well as other statements containing words such as "anticipates," "believes," "intends," "estimates," "promises," "expects," "should," "conditioned upon," and similar expressions. Investors are cautioned that any such forward-looking statements are subject to risks and uncertainties, including reductions in demand for electricity; the sale of excess energy during periods of low demand or low wholesale market prices; operational risks relating to the company's generation facilities, including hydro conditions, wind conditions, disruption of fuel supply, and unscheduled plant outages, which may result in unanticipated operating, maintenance and repair costs, as well as replacement power costs; failure to complete capital projects on schedule or within budget, or the abandonment of capital projects, which could result in the company's inability to recover project costs; the costs of compliance with environmental laws and regulations, including those that govern emissions from thermal power plants; changes in weather, hydroelectric and energy markets conditions, which could affect the availability and cost of purchased power and fuel; changes in capital market conditions, which could affect the availability and cost of capital and result in delay or cancellation of capital projects; the outcome of various legal and regulatory proceedings; general economic and financial market conditions; severe weather conditions, wildfires, and other natural phenomena and natural disasters that could result in operational disruptions, unanticipated restoration costs, or liability for third party property damage; and cyber security breaches of the company's customer information system or operating systems, which may affect customer bills or other aspects of our operations; and widespread health emergencies or outbreaks of infectious diseases such as the novel coronavirus disease (COVID-19), which may affect our financial position, results of operations and cash flows. As a result, actual results may differ materially from those projected in the forward-looking statements. All forward-looking statements included in this news release are based on information available to the company on the date hereof and such statements speak only as of the date hereof. The company expressly disclaims any current intention to update publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise. Prospective investors should also review the risks, assumptions and uncertainties listed in the company's most recent annual report on form 10-K and in other documents that we file with the United States Securities and Exchange Commission, including management's discussion and analysis of financial condition and results of operations and the risks described therein from time to time.

POR

Source: Portland General Company

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(Dollars in millions, except per share amounts)
(Unaudited)
	Three Months Ended June 30,								Six Months Ended June 30,
	2020				2019				2020				2019
Revenues:
Revenues, net	$	469			$	462			$	1,033			$	1,032
Alternative revenue programs, net of amortization	—				(2)				9				1
Total revenues	469				460				1,042				1,033
Operating expenses:
Purchased power and fuel	109				105				262				284
Generation, transmission and distribution	77				86				150				163
Administrative and other	74				78				145				149
Depreciation and amortization	104				101				212				202
Taxes other than income taxes	34				33				69				67
Total operating expenses	398				403				838				865
Income from operations	71				57				204				168
Interest expense, net	34				31				67				63
Other income:
Allowance for equity funds used during construction	4				2				7				5
Miscellaneous income (loss), net	3				—				(1)				2
Other income, net	7				2				6				7
Income before income tax expense	44				28				143				112
Income tax expense	5				3				23				14
Net income	39				25				120				98
Other comprehensive income	—				1				1				2
Comprehensive income	$	39			$	26			$	121			$	100
Weighted-average common shares outstanding (in thousands):
Basic	89,489				89,357				89,459				89,333
Diluted	89,625				89,561				89,602				89,537
Earnings per share:
Basic	$	0.44			$	0.28			$	1.34			$	1.10
Diluted	$	0.43			$	0.28			$	1.34			$	1.09

 

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
(Unaudited)
	June 30, 2020				December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	303			$	30
Accounts receivable, net	204				253
Inventories	109				96
Regulatory assets—current	12				17
Other current assets	108				104
Total current assets	736				500
Electric utility plant, net	7,301				7,161
Regulatory assets—noncurrent	526				483
Nuclear decommissioning trust	47				46
Non-qualified benefit plan trust	37				38
Other noncurrent assets	158				166
Total assets	$	8,805			$	8,394

 

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, continued
(Dollars in millions)
(Unaudited)
	June 30, 2020				December 31, 2019
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	134			$	165
Liabilities from price risk management activities—current	40				23
Short-term debt	150				—
Current portion of long-term debt	140				—
Current portion of finance lease obligation	16				16
Accrued expenses and other current liabilities	289				315
Total current liabilities	769				519
Long-term debt, net of current portion	2,676				2,597
Regulatory liabilities—noncurrent	1,362				1,377
Deferred income taxes	385				378
Unfunded status of pension and postretirement plans	249				247
Liabilities from price risk management activities—noncurrent	145				108
Asset retirement obligations	265				263
Non-qualified benefit plan liabilities	101				103
Finance lease obligations, net of current portion	132				135
Other noncurrent liabilities	75				76
Total liabilities	6,159				5,803
Shareholders' Equity:
Preferred stock, no par value, 30,000,000 shares authorized; none issued and outstanding as of June 30, 2020 and December 31, 2019	—				—
Common stock, no par value, 160,000,000 shares authorized; 89,506,951 and 89,387,124 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively	1,224				1,220
Accumulated other comprehensive loss	(9)				(10)
Retained earnings	1,431				1,381
Total shareholders' equity	2,646				2,591
Total liabilities and shareholders' equity	$	8,805			$	8,394

 

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
	Six Months Ended June 30,
	2020				2019
Cash flows from operating activities:
Net income	$	120			$	98
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	212				202
Deferred income taxes	4				6
Pension and other postretirement benefits	12				12
Allowance for equity funds used during construction	(7)				(5)
Decoupling mechanism deferrals, net of amortization	(8)				(1)
(Amortization) of net benefits due to Tax Reform	(11)				(11)
Other non-cash income and expenses, net	46				21
Changes in working capital:
Decrease in accounts receivable, net	40				63
(Increase) in inventories	(13)				(17)
(Increase)/decrease in margin deposits	(9)				11
(Decrease) in accounts payable and accrued liabilities	(27)				(65)
Other working capital items, net	18				16
Other, net	(21)				(16)
Net cash provided by operating activities	356				314
Cash flows from investing activities:
Capital expenditures	(370)				(271)
Sales of Nuclear decommissioning trust securities	4				7
Purchases of Nuclear decommissioning trust securities	(3)				(5)
Other, net	(1)				(2)
Net cash used in investing activities	(370)				(271)
Cash flows from financing activities:
Proceeds from issuance of long-term debt	319				200
Payments on long-term debt	(98)				(300)
Borrowings on short-term debt	200				—
Repayments of short-term debt	(50)				—
Issuance of commercial paper, net	—				17
Dividends paid	(69)				(65)
Other	(15)				(3)
Net cash provided by (used in) financing activities	287				(151)
Increase (Decrease) in cash and cash equivalents	273				(108)
Cash and cash equivalents, beginning of period	30				119
Cash and cash equivalents, end of period	$	303			$	11
Supplemental cash flow information is as follows:
Cash paid for interest, net of amounts capitalized	$	56			$	60
Cash paid for income taxes	5				20

 

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS
(Unaudited)
	Six Months Ended June 30,
	2020							2019
Revenues (dollars in millions):
Retail:
Residential	$	502			48	%		$	495			48	%
Commercial	299				29			312				30
Industrial	104				10			94				9
Direct Access	23				2			21				2
Subtotal	928				89			922				89
Alternative revenue programs, net of amortization	9				1			1				—
Other accrued revenues, net	6				1			13				1
Total retail revenues	943				91			936				90
Wholesale revenues	74				7			53				5
Other operating revenues	25				2			44				5
Total revenues	$	1,042			100	%		$	1,033			100	%
Energy deliveries (MWhs in thousands):
Retail:
Residential	3,789				30	%		3,782				34	%
Commercial	3,000				24			3,261				29
Industrial	1,638				13			1,510				14
Subtotal	8,427				67			8,553				77
Direct access:
Commercial	311				3			341				3
Industrial	725				6			720				7
Subtotal	1,036				9			1,061				10
Total retail energy deliveries	9,463				76			9,614				87
Wholesale energy deliveries	2,980				24			1,459				13
Total energy deliveries	12,443				100	%		11,073				100	%
Average number of retail customers:
Residential	788,511				88	%		776,816				88	%
Commercial	110,116				12			109,470				12
Industrial	194				—			195				—
Direct access	631				—			633				—
Total	899,452				100	%		887,114				100	%

 

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS, continued
(Unaudited)
	Six Months Ended June 30,
	2020						2019
Sources of energy (MWhs in thousands):
Generation:
Thermal:
Natural gas	3,477			29	%		3,318			31	%
Coal	1,504			13			1,713			16
Total thermal	4,981			42			5,031			47
Hydro	686			6			837			8
Wind	1,193			10			820			8
Total generation	6,860			58			6,688			63
Purchased power:
Term	4,108			34			3,177			30
Hydro	804			7			566			6
Wind	178			1			123			1
Total purchased power	5,090			42			3,866			37
Total system load	11,950			100	%		10,554			100	%
Less: wholesale sales	(2,980)						(1,459)
Retail load requirement	8,970						9,095

The following table indicates the number of heating and cooling degree-days for the three months ended June 30, 2020 and 2019, along with 15-year averages based on weather data provided by the National Weather Service, as measured at Portland International Airport: 

	Heating Degree-days									Cooling Degree-days
	2020			2019			Avg.			2020			2019			Avg.
First Quarter	1,761			1,992			1,849			—			—			—
April	305			312			375			—			—			3
May	174			109			185			39			28			24
June	75			46			76			60			74			62
Second Quarter	554			467			636			99			102			89
Year-to-date	2,315			2,459			2,485			99			102			89
(Decrease)/increase from the 15-year average	(7)	%		(1)	%					11	%		15	%

 

Media Contact:		Investor Contact:
Andrea Platt		Jardon Jaramillo
Corporate Communications		Investor Relations
Phone: 503-464-7980		Phone: 503-464-7051

 

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SOURCE Portland General Company

FAQ

What was Portland General Electric's net income for Q2 2020?

Portland General Electric reported a net income of $39 million for Q2 2020.

How much did earnings per share increase for POR in Q2 2020 compared to Q2 2019?

Earnings per share increased to 43 cents in Q2 2020 from 28 cents in Q2 2019.

What are Portland General Electric's 2020 earnings guidance projections?

PGE's 2020 earnings guidance is reaffirmed at $2.20 to $2.50 per diluted share.

How did the demand for residential and commercial sectors affect POR's revenue?

Residential and industrial demand increased total revenues, while commercial demand decreased.

What factors contributed to the decline in operating expenses for Portland General Electric?

The decline in operating expenses was due to continuous cost reduction efforts and lower maintenance expenses.