PSEG Announces Second Quarter 2007 Results
01 August 2007 - 10:45PM
PR Newswire (US)
$1.15 per Share From Continuing Operations NEWARK, N.J., Aug. 1
/PRNewswire-FirstCall/ -- Public Service Enterprise Group (PSEG)
reported today (August 1, 2007) income from continuing operations
for the second quarter of 2007 of $293 million or $1.15 per share
compared to a loss of $8 million or $0.03 per share for the
comparable period in 2006. Excluding merger-related costs of $3
million or $0.01 per share, and a loss from the sale of RGE of $177
million or $0.70 per share, PSEG reported operating earnings of
$172 million or $0.68 per share for the 2006 second quarter. Losses
from discontinued operations of $18 million or $0.07 per share
reduced net income for the second quarter of 2007 to $275 million
or $1.08 per share. Income (losses) from discontinued operations,
including a gain on the sale of discontinued operations raised net
income for the second quarter of 2006 by $217 million or $0.86 per
share to $209 million or $0.83 per share. Ralph Izzo, chairman,
president and chief executive officer of PSEG, said that he was
extremely pleased with the financial results reported for the
quarter, as well as a number of other accomplishments that allowed
the company to meet its commitments as it begins to address
opportunities for growth. "Earnings at PSEG Power during the
quarter are the result of an improvement in realized prices and
lower costs," Izzo said. "Public Service Electric and Gas Company's
(PSE&G) earnings benefited from the impact of the gas and
electric rate settlements effective in the fourth quarter of 2006
and more normal weather conditions." Operating earnings exclude the
impact of the sale of certain non-core domestic and international
assets and costs stemming from the merger agreement with Exelon
Corporation that was terminated in September 2006. The table below
provides a reconciliation of PSEG's net income to operating
earnings (a non-GAAP measure) for the second quarter. PSEG
CONSOLIDATED EARNINGS Second Quarter Comparative Results 2007 and
2006 Income Diluted Earnings ($M) Per Share 2007 2006 2007 2006 Net
Income $ 275 $ 209 $ 1.08 $ 0.83 Discontinued Operations 18 (217)
0.07 (0.86) Income From Continuing Operations 293 (8) 1.15 (0.03)
Add: Merger Costs, net of tax -- 3 -- 0.01 Loss from Sale of RGE,
net of tax -- 177 -- 0.70 Operating Earnings (Non- GAAP) $ 293 $
172 1.15 $ 0.68 Avg. Shares 254M 252M PSEG believes that the
non-GAAP financial measure of "Operating Earnings" provides a
consistent and comparable measure of performance of its businesses
to help shareholders understand financial trends. Izzo said that
PSEG Energy Holdings moved its investment in Electroandes (Peru) to
discontinued operations during the second quarter. "We are getting
strong interest in PSEG Energy Holdings' $166 million investment in
Electroandes," he said. "We expect a sale to be consummated around
year-end." Izzo also said "our distribution businesses (primarily
in Chile and Peru) are performing well and showed growth in the
quarter". He added that "the markets in Latin America are strong,
and PSEG is more actively exploring its strategic options for these
investments." Izzo noted several key highlights during the second
quarter: -- The Pennsylvania-New Jersey-Maryland (PJM) regional
transmission organization approved construction of a 500 kilovolt
transmission line from Susquehanna, PA to Roseland, NJ. -- PSEG
Power announced that it was proceeding with installation of
advanced emissions controls at its Hudson Generating Station
coal-fired unit 2 in Jersey City under terms of an amended
environmental agreement reached last fall with state and federal
regulators. -- Standard & Poor's revised its outlook to stable
for PSEG, PSE&G and Power, and upgraded credit ratings for
commercial paper. These developments, Izzo said, are clear signs
that PSEG can make disciplined investments that ensure reliability
and protect the environment. Izzo said PSEG's strong year-to-date
operating performance supports 2007's operating guidance of
$4.90-$5.30 per share. The mid-point of the guidance represents a
37% increase over 2006's operating earnings of $3.71 per share.
Higher prices for contracted power and the implementation of
pricing on capacity under the PJM's Reliability Pricing Model
provide support for projected growth in 2008 of 15% to $5.60-$6.10
per share. Operating earnings guidance by subsidiary for 2007 has
been modestly adjusted as follows: 2007 Operating Earnings
($millions) Current Prior PSEG Power $840 - $920 $825 - $905
PSE&G 340 - 360 340 - 360 PSEG Energy Holdings 120 - 135 130 -
145 PSEG Parent (55)- (45) (50)- (40) Operating Earnings $1,245 -
$1,370 $1,245 - $1,370 Earnings Per Share $4.90 - $5.30 $4.90 -
$5.30 Operating Earnings Review and Outlook by Operating Subsidiary
See Attachment 8 for detail regarding the quarter over quarter
reconciliations for each of PSEG's businesses. PSEG Power PSEG
Power reported operating earnings of $187 million ($0.73 per share)
for the second quarter compared with operating earnings of $86
million ($0.34 per share) reported during the second quarter of
2006. PSEG Power's margins benefited from higher pricing in all
markets (particularly PJM), an increase in output and lower
operating costs. Higher realized power prices and stronger
operations added $0.37 per share to earnings. A quarter over
quarter improvement in output of 2.6% was derived from stronger
performance from the combined cycle fleet. The nuclear fleet
operated at a level comparable to the 90.0% capacity factor
recorded in the second quarter of 2006. Lower operating costs added
$0.04 per share to earnings. Power's earnings also benefited from
favorable market conditions which aided margins on the BGSS
contract by $0.03 per share largely offsetting the recognition of a
mark-to-market loss during the quarter of $0.04 per share. PSEG
Power announced in July that it will proceed with the installation
of advanced emissions controls at its Hudson Generating Station
coal-fired Unit 2 in Jersey City. Completion of the retrofits by
2010 will allow long-term, continued operation of the unit. William
Levis, president and chief operating officer of PSEG Power, said.
"This decision is consistent with the company's commitment to
provide New Jersey and the region with reliable and environmentally
responsible energy supplies." PSEG Power's expenditures associated
with retrofitting Hudson as well as meeting other environmental
commitments will increase its capital commitments for the 2007-2011
period by $100 million as part of a total capital program of $2.7
billion during this timeframe. PSEG Power's operating earnings for
2007 are expected to continue to reflect higher electric power
prices and the successful auction of capacity in PJM. Power raised
its full year 2007 operating earnings guidance range by $15 million
to $840-$920 million based on the strength of year-to-date
earnings. "We expect continued strong operating performance in the
remainder of the year" Levis said. PSE&G PSE&G reported
operating earnings in the second quarter of 2007 of $62 million
($0.24 per share) versus $34 million ($0.13 per share) for the
second quarter of 2006. PSE&G's quarterly operating earnings
benefited from a number of factors. Higher revenue from electric
and gas rate adjustments implemented in November 2006 represented
an increase in earnings of $0.07 per share. Earnings comparisons
also benefited from more normal weather in 2007 compared to mild
conditions experienced a year ago. This added $0.03 per share to
earnings. An increase in electric and gas demand by residential and
commercial customers added $0.03 per share to earnings. Several
other items including an increase in depreciation expense resulted
in a $0.02 per share reduction to earnings in the quarter.
PSE&G announced that it will take part in the construction of a
new 500 kilovolt transmission line from Susquehanna, PA to
Roseland, NJ approved by PJM in June. This line will coexist with a
230 kilovolt transmission line along this route. Permitting
activity with construction to follow is expected to begin in 2008
with the new line in-service during 2012. It is one of three 500
kilovolt lines that PSE&G has endorsed to improve long-term
electric reliability in N.J. If all three lines are constructed,
PSE&G would increase its investment in transmission by
approximately $1 billion over 5-8 years. PSE&G's earnings
during the second half of 2007 will continue to reflect the impact
of a full year of the electric and gas rate agreements implemented
in November 2006 and more "normal weather" for the balance of the
year. The anticipated contribution from these sources of revenue,
coupled with the strength of earnings year-to-date, continues to
support 2007 operating earnings guidance for PSE&G of $340
million to $360 million. PSEG Energy Holdings PSEG Energy Holdings
reported operating earnings in the second quarter of 2007 of $59
million ($0.24 per share) versus $70 million ($0.28 per share)
recorded in the second quarter of 2006. Holdings' subsidiary, PSEG
Global, reported a modest decline in operating earnings due to
softness in the Texas market and an extended outage at its Italian
bio-mass generation facility. The operating earnings for Holdings'
2000-Mw of combined cycle generating capacity in Texas were reduced
by a decline in spark spreads ($0.03 per share) as a result of very
mild weather conditions. This decline in operating earnings was
partially offset by an increase in mark-to-market of $0.01 per
share. Global's international generation results were hurt by a
lengthy outage at the San Marco bio-mass generation facility which
reduced earnings by $0.06 per share. The cost of the outage more
than offset improved earnings from SAESA and modest income from
other small investments. Global's results during the quarter were
supported by a reduction in administrative costs and lower interest
expense which added $0.04 per share to earnings. Holdings' other
subsidiary, PSEG Resources, experienced a $0.01 per share decline
in operating earnings for the second quarter of 2007. The results
for the quarter were influenced by a decline in lease income,
resulting from the impact of new accounting standards. PSEG Energy
Holdings moved its investment in Electroandes, a hydro- electric
generation and transmission company located in Peru, to
discontinued operations. Initial bids for this $166 million
investment have been strong, and Holdings expects to complete the
sale of the asset around year-end. PSEG is lowering full year 2007
operating earnings guidance range for PSEG Energy Holdings to $120
million to $135 million from $130 million to $145 million, as a
result of reclassifying Electroandes as discontinued operations.
The full year earnings contribution from PSEG Energy Holdings will
be influenced by the sale of assets, Texas power markets, the
implementation of new accounting standards and lower operating
expenses. For a list of attachments please visit:
http://www.pseg.com/ FORWARD-LOOKING STATEMENT Readers are
cautioned that statements contained in this press release about our
and our subsidiaries' future performance, including future
revenues, earnings, strategies, prospects and all other statements
that are not purely historical, are forward-looking statements for
purposes of the safe harbor provisions under The Private Securities
Litigation Reform Act of 1995. Although we believe that our
expectations are based on reasonable assumptions, we can give no
assurance they will be achieved. The results or events predicted in
these statements may differ materially from actual results or
events. Factors which could cause results or events to differ from
current expectations include, among other things: the effects of
weather; the performance of generating units and transmission
systems; the availability and prices for oil, gas, coal, nuclear
fuel, capacity and electricity; changes in the markets for
electricity and other energy-related commodities; changes in the
number of participants and the risk profile of such participants in
the energy marketing and trading business; the effectiveness of our
risk management and internal controls systems; the effects of
regulatory decisions and changes in law; changes in competition in
the markets we serve; the ability to recover regulatory assets and
other potential stranded costs; the outcomes of litigation and
regulatory proceedings or inquiries; the timing and success of
efforts to develop generation, transmission and distribution
projects; continued market based rate authority, including any
necessary mitigation; environmental regulations and responses to
global climate change; ability to realize tax benefits and
favorably resolve tax audit claims; conditions of the capital
markets and equity markets; advances in technology; changes in
accounting standards; changes in interest rates and in financial
and foreign currency markets generally; the economic and political
climate and growth in the areas in which we conduct our activities;
and changes in corporate strategies. For further information,
please refer to our Annual Report on Form 10-K and subsequent
reports on Form 10-Q and Form 8-K filed with the Securities and
Exchange Commission. These documents address in further detail our
business, industry issues and other factors that could cause actual
results to differ materially from those indicated in this release.
In addition, any forward-looking statements included herein
represent our estimates only as of today and should not be relied
upon as representing our estimates as of any subsequent date. While
we may elect to update forward-looking statements from time to
time, we specifically disclaim any obligation to do so, even if our
estimates change, unless otherwise required by applicable
securities laws DATASOURCE: Public Service Enterprise Group
CONTACT: Karen Johnson of Public Service Enterprise Group,
+1-973-430-7734 Web site: http://www.pseg.com/
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