- Recorded GAAP earnings were $0.06 per share for the first
quarter of 2021, compared to earnings of $0.57 per share for the
same period in 2020.
- Non-GAAP core earnings were $0.23 per share for the first
quarter of 2021, compared to $0.89 per share for the same period in
2020.
- 2021 EPS guidance adjusted for GAAP earnings in the range of
$0.07 to $0.21 and reaffirmed non-GAAP core earnings of $0.95 to
$1.05 per share.
PG&E Corporation (NYSE: PCG) recorded first-quarter 2021
income available for common shareholders of $120 million, or $0.06
per share, as reported in accordance with generally accepted
accounting principles (GAAP). This compares with income available
for common shareholders of $371 million, or $0.57 per share, for
the first quarter of 2020.
GAAP results include non-core items that management does not
consider representative of ongoing earnings, which totaled $367
million after-tax, or $0.17 per share, for the quarter. These
results were primarily driven by costs related to 2019-2020
wildfire-related costs, prior period net regulatory recoveries, the
amortization of wildfire insurance fund contributions under
Assembly Bill (AB) 1054, PG&E Corporation’s and Pacific Gas and
Electric Company’s (Utility) reorganization cases under Chapter 11
of the U.S. Bankruptcy Code (Chapter 11), and investigation
remedies.
“This is an exciting time for PG&E,” said Patti Poppe, CEO
of PG&E Corporation. “With our full leadership team now in
place, we are pursuing the important work that we have all
committed to – delivering clean, reliable energy for the benefit of
our customers and hometowns, and doing so safely. We will meet that
objective through our triple-bottom-line focus on people, the
planet, and California’s prosperity, underpinned by
performance.”
Non-GAAP Core Earnings
PG&E Corporation’s non-GAAP core earnings, which exclude
non-core items, were $487 million, or $0.23 per share, in the first
quarter of 2021, compared with $576 million, or $0.89 per share,
during the same period in 2020.
The decrease in quarter-over-quarter non-GAAP core earnings per
share was primarily driven by the increase in shares outstanding,
unrecoverable interest expense, the timing of nuclear refueling
outages, the timing of taxes, and wildfire mitigation costs above
authorized, partially offset by the growth in rate base
earnings.
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.
2021 Guidance
PG&E Corporation is adjusting 2021 GAAP earnings guidance in
the range of $0.07 to $0.21 per share, which includes non-core
items. PG&E is adjusting 2021 non-core items guidance to
approximately $1.8 billion to $1.9 billion after tax, reflecting
bankruptcy and legal costs, the amortization of wildfire insurance
fund contributions, investigation remedies, and 2019-2020
wildfire-related costs, partially offset by the rate neutral
securitization inception impact and prior period net regulatory
recoveries.
On a non-GAAP basis, the guidance range for projected 2021 core
earnings is reaffirmed at $0.95 to $1.05 per share. Factors driving
non-GAAP core earnings include net below the line and spend above
authorized of up to $100 million after tax and unrecoverable
interest expense of $300 million to $325 million after tax.
Guidance is based on various assumptions and forecasts,
including those relating to authorized revenues, future expenses,
capital expenditures, rate base, equity issuances, the potential
Net Operating Loss (NOL) securitization, 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 April
29, 2021, at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) to
discuss its first quarter 2021 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: First Quarter 2021 Earnings
Call
When: Thursday, April 29, 2021 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 through June 6,
2021 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 June 6, 2021, by
dialing (800) 585-8367. International callers may dial (416)
621-4642. For both domestic and international callers, the
confirmation code 2090038 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 CPUC and
the Federal Energy Regulatory Commission (FERC) at
http://investor.pgecorp.com, under the “Regulatory Filings” tab, so
that such filings are available to investors upon filing with the
relevant agency. PG&E Corporation and the Utility also
routinely post, or provide direct links to, presentations,
documents, and other information that may be of interest to
investors at http://investor.pgecorp.com, under the “Chapter 11,”
“Wildfire and Safety Updates” and “News & Events: Events &
Presentations” tabs, respectively, in order to publicly disseminate
such information. It is possible that any of these filings or
information included therein could be deemed to be material
information.
About PG&E Corporation
PG&E Corporation (NYSE: PCG) is a holding company
headquartered in San Francisco. It is the parent company of Pacific
Gas and Electric Company, an energy company that serves 16 million
Californians across a 70,000-square-mile service area in Northern
and Central California. For more information, visit
http://www.pgecorp.com. In this press release, they are together
referred to as “PG&E.”
Forward-Looking Statements
This news release contains forward-looking statements that are
not historical facts, including statements about the beliefs,
expectations, estimates, future plans and strategies of PG&E
Corporation and the Utility, including but not limited to earnings
guidance for 2021. 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, 2020,
their most recent quarterly report on Form 10-Q for the quarter
ended March 31, 2021, and other reports filed with the SEC, which
are available on PG&E Corporation's website at www.pgecorp.com
and on the SEC website at www.sec.gov. PG&E Corporation and
PG&E undertake no obligation to publicly update or revise any
forward-looking statements, whether due to new information, future
events or otherwise, except to the extent required by law.
PG&E CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
Three Months Ended March
31,
(in millions, except per share
amounts)
2021
2020
Operating Revenues
Electric
$
3,395
$
3,040
Natural gas
1,321
1,266
Total operating revenues
4,716
4,306
Operating Expenses
Cost of electricity
590
545
Cost of natural gas
307
284
Operating and maintenance
2,336
1,967
Wildfire-related claims, net of insurance
recoveries
172
—
Wildfire Fund expense
119
—
Depreciation, amortization, and
decommissioning
888
855
Total operating expenses
4,412
3,651
Operating Income
304
655
Interest income
2
16
Interest expense
(408)
(254)
Other income, net
127
97
Reorganization items, net
—
(176)
Income Before Income Taxes
25
338
Income tax benefit
(98)
(36)
Net Income
123
374
Preferred stock dividend requirement of
subsidiary
3
3
Income Available for Common
Shareholders
$
120
$
371
Weighted Average Common Shares
Outstanding, Basic
1,985
529
Weighted Average Common Shares
Outstanding, Diluted
2,131
648
Net Earnings Per Common Share,
Basic
$
0.06
$
0.70
Net Earnings Per Common Share,
Diluted
$
0.06
$
0.57
Reconciliation of PG&E Corporation’s
Consolidated Earnings Available for Common Shareholders in
Accordance
with Generally Accepted Accounting
Principles (“GAAP”) to Non-GAAP Core Earnings
First Quarter, 2021 vs. 2020
(in millions, except per share
amounts)
Three Months Ended March
31,
Earnings
Earnings per Common Share
(Diluted)
(in millions, except per share
amounts)
2021
2020
2021
2020
PG&E Corporation's Earnings on a
GAAP basis
$
120
$
371
$
0.06
$
0.57
Non-core items: (1)
2019-2020 wildfire-related costs, net of
insurance (2)
133
—
0.06
—
Prior period net regulatory recoveries
(3)
88
—
0.04
—
Amortization of Wildfire Fund contribution
(4)
86
—
0.04
—
Bankruptcy and legal costs (5)
32
177
0.02
0.27
Investigation remedies (6)
28
28
0.01
0.04
PG&E Corporation’s Non-GAAP Core
Earnings (7)
$
487
$
576
$
0.23
$
0.89
All amounts presented in the table above and footnotes below are
tax adjusted at PG&E Corporation’s statutory tax rate of 27.98%
for 2021 and 2020, except for certain costs that are not tax
deductible, as identified in the following footnotes. Amounts may
not sum due to rounding.
(1)
“Non-core items” include items that
management does not consider representative of ongoing earnings and
affect comparability of financial results between periods,
consisting of the items listed in the table above. See Exhibit H:
Use of Non-GAAP Financial Measures.
(2)
The Utility incurred costs, net of
probable insurance recoveries, of $184 million (before the tax
impact of $52 million) during the three months ended March 31,
2021, associated with the 2019-2020 wildfires. This includes
accrued charges for third-party claims of $175 million (before the
tax impact of $49 million) during the three months ended March 31,
2021, related to the 2019 Kincade fire, and $25 million (before the
tax impact of $7 million) during the three months ended March 31,
2021, related to the 2020 Zogg fire. The Utility also incurred
costs of $3 million (before the tax impact of $1 million) during
the three months ended March 31, 2021, for legal and other costs
related to the 2019 Kincade fire, as well as $4 million (before the
tax impact of $1 million) during the three months ended March 31,
2021 related to the 2020 Zogg fire. In addition, the Utility also
incurred costs of $6 million (before the tax impact of $2 million)
during the three months ended March 31, 2021 for clean-up and
repair costs related to the 2020 Zogg fire. These costs were
partially offset by probable insurance recoveries of $28 million
(before the tax impact of $8 million) during the three months ended
March 31, 2021, related to the 2020 Zogg fire.
(in millions, pre-tax)
Three Months Ended March 31,
2021
2019 Kincade fire-related costs
Third-party claims
$
175
Legal and other costs
3
2020 Zogg fire-related costs, net of
insurance
Third-party claims
25
Utility clean-up and repairs
6
Legal and other costs
4
Insurance recoveries
(28)
2019-2020 wildfire-related costs, net
of insurance
$
184
(3)
The Utility incurred $122 million (before
the tax impact of $34 million) during the three months ended March
31, 2021, associated with prior period net regulatory recoveries,
reflecting the impact of the April 15, 2021 FERC order denying the
Utility's request for rehearing on the Transmission Owner ("TO")
18, which rejected the Utility's direct assignment of common plant
to FERC, and impacted TO revenues recorded through December 31,
2020.
(4)
The Utility recorded costs of $119 million
(before the tax impact of $33 million) during the three months
ended March 31, 2021 associated with the amortization of Wildfire
Fund contributions related to Assembly Bill ("AB") 1054.
(5)
PG&E Corporation and the Utility
recorded costs of $44 million (before the tax impact of $12
million) during the three months ended March 31, 2021, associated
with bankruptcy and legal costs. This includes $37 million (before
the tax impact of $10 million) during the three months ended March
31, 2021 related to exit financing costs. PG&E Corporation and
the Utility also incurred legal and other costs of $7 million
(before the tax impact of $2 million) during the three months ended
March 31, 2021 ($1 million of legal and other costs during the
three months ended March 31, 2021 are not tax deductible).
(in millions, pre-tax)
Three Months Ended March 31,
2021
Exit financing
$
37
Legal and other costs
7
Bankruptcy and legal costs
$
44
(6)
The Utility recorded costs of $37 million
(before the tax impact of $9 million) during the three months ended
March 31, 2021, associated with investigation remedies. This
includes $25 million (before the tax impact of $7 million) during
the three months ended March 31, 2021, related to the Order
Instituting Investigation (“OII”) into the 2017 Northern California
Wildfires and the 2018 Camp Fire (the “Wildfires OII”) settlement,
as modified by the Decision Different dated April 20, 2020. The
Utility also incurred restoration and rebuild costs of $5 million
(before the tax impact of $1 million) during the three months ended
March 31, 2021, associated with the town of Paradise (2018 Camp
fire). The Utility also recorded costs of $7 million (before the
tax impact of $1 million) during the three months ended March 31,
2021, for system enhancements related to the Locate and Mark OII
($2 million of Locate and Mark OII system enhancement costs during
the three months ended March 31, 2021 are not tax deductible).
(in millions, pre-tax)
Three Months Ended March 31,
2021
Wildfire OII disallowance and system
enhancements
$
25
Paradise restoration and rebuild
5
Locate and Mark OII system
enhancements
7
Investigation remedies
$
37
(7)
"Non-GAAP core earnings" is a non-GAAP
financial measure. See Exhibit H: Use of Non-GAAP Financial
Measures.
PG&E Corporation's 2021 Earnings
Guidance
2021
EPS Guidance
Low
High
Estimated Earnings on a GAAP
basis
$
0.07
$
0.21
Estimated Non-Core Items: (1)
Bankruptcy and legal costs (2)
~
0.69
~
0.66
Investigation remedies (3)
~
0.05
~
0.05
Amortization of Wildfire Fund contribution
(4)
~
0.16
~
0.16
2019-2020 wildfire-related costs (5)
~
0.07
~
0.07
Net securitization inception impact
(6)
~
(0.07)
~
(0.07)
Prior period net regulatory recoveries
(7)
~
(0.03)
~
(0.03)
Estimated EPS on a non-GAAP Core
Earnings basis
~
$
0.95
~
$
1.05
All amounts presented in the table above and footnotes below are
tax adjusted at PG&E Corporation’s statutory tax rate of 27.98%
for 2021, except for certain costs that are not tax deductible, as
identified in the following footnotes. Amounts may not sum due to
rounding.
(1)
“Non-core items” include items that
management does not consider representative of ongoing earnings and
affect comparability of financial results between periods. See
Exhibit H: Use of Non-GAAP Financial Measures.
(2)
“Bankruptcy and legal costs" consists of
exit financing costs including interest on temporary Utility debt
and write-off of unamortized fees related to the retirement of
PG&E Corporation debt, reversal of the tax benefit recorded for
shares transferred to the Fire Victim Trust, and legal and other
costs associated with PG&E Corporation and the Utility's
Chapter 11 filing. The total offsetting tax impact for the low and
high non-core guidance range is $72 million and $47 million,
respectively.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
Exit financing
~
$
135
~
$
95
Fire Victim Trust grantor trust
benefit
~
1,300
~
1,300
Legal and other costs
~
120
~
70
Bankruptcy and legal costs
~
$
1,555
~
$
1,465
(3)
“Investigation remedies" includes costs
related to the Wildfire OII Decision Different, Paradise
restoration and rebuild, and Locate and Mark OII system
enhancements. The total offsetting tax impact for the low and high
non-core guidance range is $18 million.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
Wildfire OII disallowance and system
enhancements
~
$
80
~
$
80
Paradise restoration and rebuild
~
25
~
25
Locate and Mark OII system
enhancements
~
25
~
25
Investigation remedies
~
$
130
~
$
130
(4)
"Amortization of Wildfire Fund
contribution” represents the amortization of Wildfire Fund
contributions related to AB 1054. The total offsetting tax impact
for the low and high non-core guidance range is $130 million.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
Amortization of Wildfire Fund
contribution
~
$
465
~
$
465
(5)
“2019-2020 wildfire-related costs"
includes third-party claims and legal and other costs associated
with the 2019 Kincade fire, and utility clean-up and repairs costs
associated with the 2020 Zogg fire. The total offsetting tax impact
for the low and high non-core guidance range is $60 million and $55
million, respectively.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
2019 Kincade fire-related costs
Third-party claims
~
$
175
~
$
175
Legal and other costs
~
30
~
10
2020 Zogg fire-related costs
Utility clean-up and repairs
~
10
~
10
2019-2020 wildfire-related
costs
~
$
215
~
$
195
(6)
“Net securitization inception impact"
represents the impact upon inception of rate neutral securitization
and reflects the difference between the securitization regulatory
asset and the regulatory liability associated with the revenue
credits funded by up-front shareholder contributions and the Net
Operating Loss monetization. This reflects the assumption that the
CPUC will authorize the securitization of $7.5 billion of
wildfire-related claims that is designed to be rate neutral on
average to customers based on the final decision issued April 22,
2021. The total offsetting tax impact for the low and high non-core
guidance range is $59 million.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
Net securitization inception impact
~
$
(210)
~
$
(210)
(7)
“Prior period net regulatory recoveries"
represents the recovery of capital expenditures from 2011 through
2014 above amounts adopted in the 2011 GT&S rate case,
partially offset by the impact of the April 15, 2021 FERC order
denying the Utility's request for rehearing on the TO18, which
rejected the Utility's direct assignment of common plant to FERC,
and impacted TO revenues recorded through December 31, 2020. The
total offsetting tax impact for the low and high non-core guidance
range is $22 million.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
2011 GT&S capital audit
~
$
(200)
~
$
(200)
TO18 FERC ruling impact
~
120
~
120
Prior period net regulatory
recoveries
~
$
(80)
~
$
(80)
Undefined, capitalized terms have the meanings set forth in the
PG&E Corporation and the Utility’s joint quarterly report on
Form 10-Q for the quarter ended March 31, 2021.
Use of Non-GAAP Financial Measures
PG&E Corporation and Pacific Gas and
Electric Company
PG&E Corporation discloses historical financial results and
provides guidance based on “non-GAAP core earnings” and “non-GAAP
core EPS” in order to provide a measure that allows investors to
compare the underlying financial performance of the business from
one period to another, exclusive of non-core items.
“Non-GAAP core earnings” is a non-GAAP financial measure and is
calculated as income available for common shareholders less
non-core items. “Non-core items” include items that management does
not consider representative of ongoing earnings and affect
comparability of financial results between periods, consisting of
the items listed in Exhibit A. “Non-GAAP core EPS,” also referred
to as “non-GAAP core earnings per share,” is a non-GAAP financial
measure and is calculated as non-GAAP core earnings divided by
common shares outstanding (diluted). 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 2022-2025, we are not providing a reconciliation
to the corresponding GAAP measures because we are unable to predict
with reasonable certainty the reconciling items that may affect
GAAP net income without unreasonable effort. The reconciling items
are primarily due to the future impact of wildfire-related costs,
timing of regulatory recoveries, special tax items, and
investigation remedies. These reconciling items are uncertain,
depend on various factors and could significantly impact, either
individually or in the aggregate, the GAAP measures.
Non-GAAP core earnings and non-GAAP core EPS are not substitutes
or alternatives for GAAP measures such as consolidated income
available for common shareholders and may not be comparable to
similarly titled measures used by other companies.
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