Portland General Electric Announces Third Quarter 2020 Results

Rhea-AI Summary

Portland General Electric (NYSE: POR) reported a third quarter net loss of $17 million, or 19 cents per diluted share. Adjusted non-GAAP net income was $80 million, marking a significant increase from last year's net income of $55 million. Revenue rose by 9%, bolstered by high-tech and industrial demand, despite losses from energy trading of $127 million. The company announced a $100 million capital investment plan aimed at enhancing grid resiliency. PGE reaffirms its 2020 earnings guidance of $1.40 to $1.60 per diluted share, aiming for the upper range.

Positive

• Adjusted non-GAAP net income of $80 million, or 90 cents per diluted share, up from $55 million year-over-year.
• Total revenues increased by 9% due to growth in residential and industrial demand.
• Announced a $100 million increase to capital investments for grid resiliency and modernization.
• Reaffirmed 2020 earnings guidance of $1.40 to $1.60 per diluted share, targeting the upper half.

Negative

• Reported a GAAP net loss of $17 million due to $127 million in trading losses.
• Impact of lower commercial demand partially offset revenue growth.
• Uncertainty regarding recovery of costs related to wildfires and damage restoration.

PORTLAND, Ore., Oct. 30, 2020 /PRNewswire/ -- Portland General Electric Company (NYSE: POR) today reported a net loss based on generally accepted accounting principles (GAAP) of  $17 million, or 19 cents per diluted share, for the third quarter of 2020, which reflects the $1.09 loss per diluted share from previously disclosed trading losses. After adjusting for the impact of third quarter trading losses, non-GAAP net income was $80 million, or 90 cents per diluted share. This compares with GAAP net income of $55 million, or 61 cents per diluted share, for the third quarter of 2019.

"We continue to deliver strong operating performance, notwithstanding the financial impact of the isolated trading losses and wildfires this quarter," said Maria Pope, PGE president and CEO. "I'm proud that our team acted decisively and demonstrated resilience and unwavering dedication to our customers. Looking ahead, we remain committed to making the right investments to meet the needs of Oregonians and drive value for shareholders."

Third Quarter 2020 Earnings Compared to Third Quarter 2019 Earnings

Total revenues increased as a result of higher residential and industrial demand, which increased 9% on the strength of growth in the high-tech and digital service sectors. These increases were partially offset by lower commercial demand and the effects of the decoupling mechanism.

The cost of purchased power increased and was primarily driven by losses from the Company's energy portfolio.  Other operating expenses declined due to lower outside service expense, reduced plant maintenance expense and lower distribution expense. Administrative expenses declined due to lower employee benefits expense.

Company Updates

Capital investment plan

The Company announced a $100 million increase to its capital plan through 2021. These investments in grid resiliency, system modernization and infrastructure to serve new large customers will enhance the Company's ability to deliver safe, clean, reliable and affordable energy.

Wildfires

In 2020, Oregon experienced one of the most destructive wildfire seasons on record, with over one million acres of land burned. The Company is not aware of any wildfires caused by PGE equipment. On October 20, 2020, the Oregon Public Utilities Commission approved PGE's application to defer costs associated with damage restoration from these wildfires. PGE continues to assess the damage to its infrastructure and expects regulatory recovery of prudently incurred restoration costs.

Energy trading activities

The Company's energy portfolio experienced realized losses of $127 million in the third quarter. The PGE Board of Directors Special Committee review of the energy trading losses and the Company's procedures and controls related to the trading is ongoing.

2020 Earnings Guidance

PGE is reaffirming its 2020 earnings guidance of $1.40 to $1.60 per diluted share and expects to be in the upper half of this range. This guidance reflects the following assumptions:

• Revised increase in annual retail deliveries of 1%, weather adjusted, year over year;
• 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 $550 million and $570 million, which assumes deferral of the incremental full-year forecasted bad debt expense in excess of $6 million due to moratoriums on collection activities and customer disconnects; and
• Depreciation and amortization expense between $410 million and $430 million.

Third Quarter 2020 Earnings Call and Webcast — October 30, 2020

PGE will host a conference call with financial analysts and investors on Friday, October 30, 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, October 30, 2020, through 1 p.m. ET on Friday, November 6, 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 Risk Management, will participate in the call. Management will respond to questions following formal comments.

Non-GAAP Financial Measures

Management believes that excluding the effects of the energy trading losses provides a meaningful representation of the Company's comparative earnings per share. The Company has adjusted this amount to maintain comparability between periods. The effect of the energy trading losses was $1.09 per diluted share. PGE's reconciliations of non-GAAP earnings for the three and nine months ended September 30, 2020 are below.

Non-GAAP Earnings Reconciliation for the three and nine months ended September 30, 2020

(Dollars in millions, except EPS)	Net Income (Loss)			Diluted EPS
GAAP-based as reported for the three months ended September 30, 2020	$	(17)		$	(0.19)
Exclusion of certain trading losses	127			1.42
Tax effect (1)	(30)			(0.33)
Non-GAAP-based as reported for the three months ended September 30, 2020	$	80		$	0.90
GAAP-based as reported for the nine months ended September 30, 2020	$	103		$	1.15
Exclusion of certain trading losses	127			1.42
Tax effect (1)	(30)			(0.33)
Non-GAAP-based as reported for the nine months ended September 30, 2020	$	200		$	2.24

(1) Tax effects are determined based on the Company's forecasted annual effective tax rate applied to year-to-date ordinary income or loss

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 approximately 900,000 customers with a service area population of  2 million Oregonians in 51 cities. PGE has 16 generation plants in five Oregon counties, and maintains and operates 14 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 press 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 the Company's full-year earnings guidance (including expectations regarding annual retail deliveries, average hydro conditions, wind generation, normal thermal plant operations, operating and maintenance expense and depreciation and amortization expense) 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, without limitation: the outcome of the review being conducted by the Special Committee relating to energy trading losses; the impact of the recommendations of the Special Committee on the Company and its operations; the time and expense incurred in implementing the recommendations of the Special Committee; any reputational damage to the Company relating to the matters underlying the Special Committee's review; 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; 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 press 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 the Company files 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

Media Contact:		Investor Contact:
Brianne Hyder		Jardon Jaramillo
Corporate Communications		Investor Relations
Phone: 503-464-8596		Phone: 503-464-7051

 

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 September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
Revenues:
Revenues, net	$	556			$	538			$	1,589			$	1,570
Alternative revenue programs, net of amortization	(9)				4				—				5
Total revenues	547				542				1,589				1,575
Operating expenses:
Purchased power and fuel	292				165				554				449
Generation, transmission and distribution	65				78				215				241
Administrative and other	63				74				208				223
Depreciation and amortization	108				103				320				305
Taxes other than income taxes	35				34				104				101
Total operating expenses	563				454				1,401				1,319
Income (loss) from operations	(16)				88				188				256
Interest expense, net	35				32				102				95
Other income:
Allowance for equity funds used during construction	4				2				11				7
Miscellaneous income, net	3				3				2				5
Other income, net	7				5				13				12
Income (loss) before income tax expense	(44)				61				99				173
Income tax expense (benefit)	(27)				6				(4)				20
Net income (loss)	(17)				55				103				153
Other comprehensive income (loss)	—				—				1				2
Comprehensive income (loss)	$	(17)			$	55			$	104			$	155
Weighted-average common shares outstanding (in thousands):
Basic	89,509				89,372				89,476				89,346
Diluted	89,509				89,594				89,629				89,555
Earnings per share:
Basic	$	(0.19)			$	0.61			$	1.16			$	1.71
Diluted	$	(0.19)			$	0.61			$	1.15			$	1.70

 

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in millions) (Unaudited)
	September 30, 2020				December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	253			$	30
Accounts receivable, net	250				253
Inventories	86				96
Regulatory assets—current	8				17
Other current assets	123				104
Total current assets	720				500
Electric utility plant, net	7,371				7,161
Regulatory assets—noncurrent	527				483
Nuclear decommissioning trust	47				46
Non-qualified benefit plan trust	39				38
Other noncurrent assets	165				166
Total assets	$	8,869			$	8,394
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS, continued (Dollars in millions) (Unaudited)
	September 30, 2020				December 31, 2019
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	139			$	165
Liabilities from price risk management activities—current	16				23
Short-term debt	225				—
Current portion of long-term debt	160				—
Current portion of finance lease obligation	16				16
Accrued expenses and other current liabilities	368				315
Total current liabilities	924				519
Long-term debt, net of current portion	2,657				2,597
Regulatory liabilities—noncurrent	1,375				1,377
Deferred income taxes	378				378
Unfunded status of pension and postretirement plans	250				247
Liabilities from price risk management activities—noncurrent	138				108
Asset retirement obligations	251				263
Non-qualified benefit plan liabilities	99				103
Finance lease obligations, net of current portion	131				135
Other noncurrent liabilities	71				76
Total liabilities	6,274				5,803
Shareholders' Equity:
Preferred stock, no par value, 30,000,000 shares authorized; none issued and outstanding as of September 30, 2020 and December 31, 2019	—				—
Common stock, no par value, 160,000,000 shares authorized; 89,509,783 and 89,387,124 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively	1,226				1,220
Accumulated other comprehensive loss	(9)				(10)
Retained earnings	1,378				1,381
Total shareholders' equity	2,595				2,591
Total liabilities and shareholders' equity	$	8,869			$	8,394

 

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited)
	Nine Months Ended September 30,
	2020				2019
Cash flows from operating activities:
Net income	$	103			$	153
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	320				305
Deferred income taxes	(14)				3
Pension and other postretirement benefits	17				16
Allowance for equity funds used during construction	(11)				(7)
Decoupling mechanism deferrals, net of amortization	—				(6)
Amortization of net benefits due to Tax Reform	(17)				(16)
Other non-cash income and expenses, net	38				38
Changes in working capital:
(Increase)/decrease in accounts receivable, net	(3)				50
Decrease/(increase) in inventories	10				(7)
(Increase)/decrease in margin deposits	(6)				4
Increase/(decrease) in accounts payable and accrued liabilities	24				(25)
Other working capital items, net	27				25
Other, net	(46)				(31)
Net cash provided by operating activities	442				502
Cash flows from investing activities:
Capital expenditures	(549)				(407)
Sales of Nuclear decommissioning trust securities	6				11
Purchases of Nuclear decommissioning trust securities	(5)				(8)
Other, net	(3)				(2)
Net cash used in investing activities	(551)				(406)
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	275				—
Repayments of short-term debt	(50)				—
Dividends paid	(103)				(99)
Other	(11)				(5)
Net cash provided by (used in) financing activities	332				(204)
Increase (Decrease) in cash and cash equivalents	223				(108)
Cash and cash equivalents, beginning of period	30				119
Cash and cash equivalents, end of period	$	253			$	11
Supplemental cash flow information is as follows:
Cash paid for interest, net of amounts capitalized	$	70			$	73
Cash paid for income taxes	9				21

 

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES SUPPLEMENTAL OPERATING STATISTICS (Unaudited)
	Nine Months Ended September 30,
	2020							2019
Revenues (dollars in millions):
Retail:
Residential	$	747			47	%		$	713			45	%
Commercial	463				29			479				31
Industrial	162				10			144				9
Direct Access	35				2			34				2
Subtotal	1,407				88			1,370				87
Alternative revenue programs, net of amortization	—				—			5				—
Other accrued revenues, net	13				1			17				1
Total retail revenues	1,420				89			1,392				88
Wholesale revenues	130				8			125				8
Other operating revenues	39				3			58				4
Total revenues	$	1,589			100	%		$	1,575			100	%
Energy deliveries (MWhs in thousands):
Retail:
Residential	5,621				30	%		5,428				31	%
Commercial	4,672				25			4,999				28
Industrial	2,552				13			2,332				13
Subtotal	12,845				68			12,759				72
Direct access:
Commercial	478				3			536				3
Industrial	1,114				6			1,093				6
Subtotal	1,592				9			1,629				9
Total retail energy deliveries	14,437				77			14,388				81
Wholesale energy deliveries	4,593				23			3,474				19
Total energy deliveries	19,030				100	%		17,862				100	%
Average number of retail customers:
Residential	789,726				88	%		778,285				88	%
Commercial	110,185				12			109,509				12
Industrial	194				—			194				—
Direct access	634				—			633				—
Total	900,739				100	%		888,621				100	%

 

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES SUPPLEMENTAL OPERATING STATISTICS, continued (Unaudited)
	Nine Months Ended September 30,
	2020						2019
Sources of energy (MWhs in thousands):
Generation:
Thermal:
Natural gas	5,767			32	%		6,199			36	%
Coal	2,752			15			3,163			19
Total thermal	8,519			47			9,362			55
Hydro	919			5			1,098			7
Wind	1,720			9			1,418			8
Total generation	11,158			61			11,878			70
Purchased power:
Term	5,585			31			4,177			24
Hydro	1,202			7			807			5
Wind	256			1			223			1
Total purchased power	7,043			39			5,207			30
Total system load	18,201			100	%		17,085			100	%
Less: wholesale sales	(4,593)						(3,474)
Retail load requirement	13,608						13,611

The following table indicates the number of heating and cooling degree-days for the three months ended September 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			—			—			—
Second Quarter	554			467			636			99			102			89
July	11			3			7			180			176			182
August	1			—			6			197			216			195
September	35			80			65			115			70			71
Third Quarter	47			83			78			492			462			448
Year-to-date	2,362			2,542			2,563			591			564			537
(Decrease)/increase from the 15-year average	(8)	%		(1)	%					10	%		5	%

 

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SOURCE Portland General Company

FAQ

What were Portland General Electric's Q3 2020 earnings results?

PGE reported a net loss of $17 million for Q3 2020, with adjusted non-GAAP net income of $80 million.

How did PGE's revenues change in Q3 2020?

Revenues increased by 9%, primarily due to higher residential and industrial demand.

What is PGE's capital investment plan for 2021?

PGE announced a $100 million increase in its capital investment plan through 2021 for grid resiliency and modernization.

What is PGE's earnings guidance for 2020?

PGE reaffirmed its earnings guidance of $1.40 to $1.60 per diluted share for 2020.

What were the trading losses reported by PGE?

PGE recorded realized losses of $127 million in its energy trading activities during Q3 2020.