Portland General Electric Announces Third Quarter 2020 Results

·15 min read

Strong core business performance, increasing capital plan by $100 million

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

%



Cision
Cision

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SOURCE Portland General Company