Dominion Announces First-Quarter 2015 Earnings

- First-quarter 2015 operating earnings of 99 cents per share compared to guidance of 85 cents to $1.00 per share

- First-quarter 2015 GAAP earnings of 91 cents per share

- Company affirms 2015 operating earnings guidance of $3.50 to $3.85 per share

May 4, 2015
7:30am

RICHMOND, Va., May 4, 2015 /PRNewswire/ -- Dominion (NYSE: D) today announced operating earnings for the three months ended March 31, 2015, of $584 million ($0.99 per share), compared to operating earnings of $607 million ($1.04 per share) for the same period in 2014.  Operating earnings are defined as reported earnings, determined in accordance with Generally Accepted Accounting Principles (GAAP), adjusted for certain items. 

Unaudited reported GAAP earnings for the three months ended March 31, 2015, of $536 million ($0.91 per share), compared with earnings of $379 million ($0.65 per share) for the same period in 2014. 

Dominion uses operating earnings as the primary performance measurement of its earnings guidance and results for public communications with analysts and investors.  Dominion also uses operating earnings internally for budgeting, for reporting to the Board of Directors, for the company's incentive compensation plans and for its targeted dividend payouts and other purposes. Dominion management believes operating earnings provide a more meaningful representation of the company's fundamental earnings power.  

The principal differences between GAAP earnings and operating earnings for the quarter were charges associated with Virginia legislation enacted in February that required the write-off of Virginia Power prior-period deferred fuel costs during the first quarter of 2015.

Business segment results and detailed descriptions of items included in 2015 and 2014 reported earnings but excluded from operating earnings can be found on Schedules 1, 2 and 3 of this release.

Thomas F. Farrell II, chairman, president and chief executive officer, said:

"Our first-quarter operating earnings were at the top of our guidance range of $0.85 to $1.00 per share.  We were pleased with the performance of our operating companies which met peak demands on our electric, pipeline and storage systems safely and without interruption. 

"Our infrastructure growth plan continues to move forward on time and on budget.  Construction on Brunswick County, the 1,358-megawatt natural gas combined cycle facility is near 60 percent completion and scheduled to begin commercial operation in the middle of 2016.  We announced plans to construct a 1,600-megawatt gas-fired combined cycle facility in Greensville County, Va.  If approved by the Virginia State Corporation Commission, the plant would begin operation in late 2018.   We also plan to develop 400 megawatts of utility-scale solar in Virginia. 

"Progress toward commencement of construction of the Atlantic Coast Pipeline project continues, and we expect to file with the Federal Energy Regulatory Commission later this year.  The Cove Point Liquefaction project is well underway with nearly 80 percent of engineering complete and construction at the site is on time and on budget."

FIRST-QUARTER 2015 OPERATING EARNINGS COMPARED TO 2014

The decrease in first-quarter 2015 operating earnings per share as compared to first-quarter 2014 operating earnings per share is primarily attributable to the absence of a gain on sale of assets to Blue Racer, lower merchant generation margins, and a higher effective tax rate partially offset by additional earnings from our Marcellus farmout transactions and higher revenues from growth projects.    

Details of first-quarter 2015 operating earnings as compared to 2014 can be found on Schedule 4 of this release.

SECOND-QUARTER 2015 OPERATING EARNINGS GUIDANCE

Dominion expects second-quarter 2015 operating earnings in the range of 65 cents to 75 cents per share, compared to second-quarter 2014 operating earnings of 62 cents per share.  Positive factors for the second-quarter of 2015 compared to the same period of the prior year include an expected return to normal weather in our electric service territory, higher revenues from growth projects, and the absence of a planned refueling outage at Millstone Power Station. Negative factors for the quarter include higher operating expense. GAAP earnings for the second quarter of 2014 were 27 cents per share.  A reconciliation between operating and GAAP earnings for the second quarter of 2014 can be found on Schedule 3 of this release.

In providing its second-quarter and full-year 2015 operating earnings guidance, the company notes that there could be differences between expected reported earnings and estimated operating earnings for matters such as, but not limited to, divestitures or changes in accounting principles. At this time, Dominion management is not able to estimate the aggregate impact of these items on reported earnings.

CONFERENCE CALL TODAY

Dominion will host its first-quarter earnings conference call at 10 a.m. ET on Monday, May 4.  Dominion management will discuss its first-quarter financial results and other matters of interest to the financial community.

Domestic callers should dial (877) 410-5657.   International callers should dial (334) 323-9872.  The passcode for the conference call is "Dominion."  Participants should dial in 10 to 15 minutes prior to the scheduled start time.  Members of the media also are invited to listen.

A live webcast of the conference call, including accompanying slides, and the Earnings Release Kit will be available on the company's investor information page at www.dom.com/investors.

A replay of the conference call will be available beginning about 1 p.m. ET May 4 and lasting until 11 p.m. ET May 11.  Domestic callers may access the recording by dialing (877) 919-4059.  International callers should dial (334) 323-0140.  The PIN for the replay is 55497470.  Additionally, a replay of the webcast will be available on the investor information pages by the end of the day May 4.

Dominion is one of the nation's largest producers and transporters of energy, with a portfolio of approximately 24,600 megawatts of generation, 12,200 miles of natural gas transmission, gathering and storage pipeline, and 6,455 miles of electric transmission lines.  Dominion operates one of the nation's largest natural gas storage systems with 928 billion cubic feet of storage capacity and serves utility and retail energy customers in 13 states. For more information about Dominion, visit the company's website at www.dom.com/.

This release contains certain forward-looking statements, including forecasted operating earnings for second-quarter and full-year 2015 which is subject to various risks and uncertainties.  Factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations may include factors that are beyond the company's ability to control or estimate precisely, including fluctuations in energy-related commodity prices, estimates of future market conditions, additional competition in our industries, changes in the demand for Dominion's services, access to and costs of capital, fluctuations in the value of our pension assets and assets held in our decommissioning trusts, impacts of acquisitions, divestitures, transfers of assets to joint ventures or Dominion Midstream and retirements of assets based on asset portfolio reviews, the receipt of regulatory approvals for, and timing of, planned projects, acquisitions and divestitures, the timing and execution of Dominion Midstream's growth strategy, and the ability to complete planned construction or expansion projects at all or within the terms and timeframes initially anticipated.  Other factors include, but are not limited to, weather conditions and other events, including the effects of hurricanes, earthquakes, high winds, major storms and changes in water temperatures on operations, the risk associated with the operation of nuclear facilities, unplanned outages at facilities in which Dominion has an ownership interest, the impact of operational hazards and catastrophic events, state and federal legislative and regulatory developments, including changes in federal and state tax laws and changes to environmental and other laws and regulations, including those related to climate change, greenhouse gases and other emissions to which we are subject, changes in enforcement practices of regulators relating environmental standards and litigation exposure for remedial activities, political and economic conditions, industrial, commercial and residential growth or decline in Dominion's service area, risks of operating businesses in regulated industries that are subject to changing regulatory structures, changes to regulated gas and electric rates collected by Dominion, changes to rating agency requirements and ratings, changing financial accounting standards, fluctuations in interest rates, employee workforce factors, including collective bargaining, counter-party credit and performance risks, adverse outcomes in litigation matters or regulatory proceedings, the risk of hostile cyber intrusions and other uncertainties.  Other risk factors are detailed from time to time in Dominion's quarterly reports on Form 10-Q or most recent annual report on Form 10-K filed with the Securities and Exchange Commission.

 

Schedule 1 - Segment Operating Earnings














Preliminary, Unaudited






(millions, except earnings per share)

Three months ended March 31, 





2015


2014


Change

Earnings:








Dominion Virginia Power

$             140


$             131


$                   9


Dominion Energy

207


208


(1)


Dominion Generation

282


309


(27)


Corporate and Other

(45)


(41)


(4)


OPERATING EARNINGS

$             584


$             607


$               (23)


Items excluded from operating earnings2, 3

(48)


(228)


180


REPORTED EARNINGS 1

$             536


$             379


$               157










Common Shares Outstanding (average, diluted)

589.9


582.9












Earnings Per Share (EPS):







Dominion Virginia Power

$            0.24


$            0.22


$              0.02


Dominion Energy

0.35


0.36


(0.01)


Dominion Generation

0.48


0.53


(0.05)


Corporate and Other

(0.08)


(0.07)


(0.01)


OPERATING EARNINGS

$           0.99


$           1.04


$            (0.05)


Items excluded from operating earnings2

(0.08)


(0.39)


0.31


REPORTED EARNINGS 1

$           0.91


$           0.65


$              0.26














1)

Determined in accordance with Generally Accepted Accounting Principles (GAAP).


2)

Items excluded from operating earnings are reported in Corporate and Other segment.  Refer to Schedules 2 and 3 for details, or find "GAAP Reconciliation" in the Earnings Release Kit on Dominion's website at www.dom.com/investors.


3)

Pre-tax amounts for the current period and the prior period are ($76) million and ($352) million, respectively.








Schedule 2 - Reconciliation of 2015 Operating Earnings to Reported Earnings

2015 Earnings (Three months ended March 31, 2015)  

The net effects of the following items, all shown on an after-tax basis, are included in 2015 reported earnings, but are excluded from operating earnings:

  • $52 million charge associated with Virginia legislation enacted in February that required the write-off of Virginia Power prior-period deferred fuel costs during the first quarter of 2015.
  • $4 million net benefit related to other items.







(millions, except per share amounts)

1Q15

2Q15

3Q15

4Q15

YTD 2015

Operating earnings 

$584




$584

Items excluded from operating earnings (after-tax): 







Write-off of deferred fuel costs

(52)




(52)


Other items

4




4


Total items excluded from operating earnings (after-tax) 1

(48)




(48)

Reported net income

$536




$536

Common shares outstanding (average, diluted) 

589.9




589.9

Operating earnings per share

$0.99




$0.99

Items excluded from operating earnings (after-tax)

(0.08)




(0.08)

Reported earnings per share

$0.91




$0.91








1)

Pre-tax amounts for items excluded from operating earnings are reflected in the following table:


Items excluded from operating earnings:

1Q15

2Q15

3Q15

4Q15

YTD 2015









Write-off of deferred fuel costs

(85)




(85)


Other items

9




9


Total items excluded from operating earnings 

($76)

$0

$0

$0

($76)








 

Schedule 3 - Reconciliation of 2014 Operating Earnings to Reported Earnings

2014 Earnings (Twelve months ended December 31, 2014)  

The net effects of the following items, all shown on an after-tax basis, are included in 2014 reported earnings, but are excluded from operating earnings:

  • $248 million charge associated with Virginia legislation enacted in April that permits Virginia Power to recover 70% of the costs previously deferred or capitalized through Dec. 31, 2013 relating to the development of a third nuclear unit located at North Anna and offshore wind facilities as part of the 2013 and 2014 base rates.
  • $193 million net charge related to the repositioning of our Producer Services business, reflecting the termination of natural gas trading and certain energy marketing activities.
  • $174 million charge associated with our liability management exercise, mainly reflecting the call premiums on our early debt redemptions in the fourth quarter.
  • $74 million charge related to a settlement offer to incur future ash pond closure costs at certain utility generation facilities.
  • $31 million goodwill write-off associated with the company exiting the unregulated electric retail energy marketing business.
  • $27 million net benefit related to other items.








(millions, except per share amounts)

1Q14

2Q14

3Q14

4Q14

YTD 2014

2

Operating earnings 

$607

$361

$545

$490

$2,003


Items excluded from operating earnings (after-tax): 








North Anna and offshore wind facilities 


(191)

(28)

(29)

(248)



Producer Services repositioning

(193)




(193)



Charges associated with liability management exercise



(2)

(172)

(174)



Future ash pond closure costs




(74)

(74)



Goodwill write-off at unregulated electric retail

(31)




(31)



Other items

(4)

(11)

14

28

27



Total items excluded from operating earnings (after-tax) 1

(228)

(202)

(16)

(247)

(693)


Reported net income

$379

$159

$529

$243

$1,310


Common shares outstanding (average, diluted) 

582.9

583.9

584.6

586.5

584.5


Operating earnings per share 

$1.04

$0.62

$0.93

$0.84

$3.43


Items excluded from operating earnings (after-tax)

(0.39)

(0.35)

(0.03)

(0.42)

(1.19)


Reported earnings per share 

$0.65

$0.27

$0.90

$0.42

$2.24










1)

Pre-tax amounts for items excluded from operating earnings are reflected in the following table:





Items excluded from operating earnings:

1Q14

2Q14

3Q14

4Q14

YTD 2014











North Anna and offshore wind facilities 


(287)

(43)

(44)

(374)



Producer Services repositioning

(319)




(319)



Charges associated with liability management exercise



(3)

(281)

(284)



Future ash pond closure costs




(121)

(121)



Goodwill write-off at unregulated electric retail

(31)




(31)



Other items

(2)

(15)

(8)

(12)

(37)



Total items excluded from operating earnings 

($352)

($302)

($54)

($458)

($1,166)










2)

YTD EPS may not equal sum of quarters due to share count differences.














 

Schedule 4 - Reconciliation of 1Q15 Earnings to 1Q14






Preliminary, unaudited

Three Months Ended

(millions, except EPS)

March 31,



2015 vs. 2014



Increase / (Decrease)

Reconciling Items

Amount

EPS





Dominion Virginia Power




Regulated electric sales:




Weather

$1

$0.00


Other

6

0.01


FERC Transmission equity return

12

0.02


Depreciation and amortization

(2)

0.00


Other

(8)

(0.01)


Change in contribution to operating earnings

$9

$0.02





Dominion Energy 




Gas Distribution margin

$6

$0.01


Marcellus Farmouts

43

0.07


Blue Racer Midstream JV 2

(35)

(0.06)


Depreciation and amortization

(5)

(0.01)


Other

(10)

(0.02)


Change in contribution to operating earnings

($1)

($0.01)





Dominion Generation




Regulated electric sales:




Weather

$2

$0.00


Other

9

0.02


Merchant generation margin

(15)

(0.03)


Rate adjustment clause equity return

11

0.02


PJM ancillary services

(12)

(0.02)


Outage costs

(6)

(0.01)


Depreciation and amortization

(6)

(0.01)


Other

(10)

(0.02)


Change in contribution to operating earnings

($27)

($0.05)





Corporate and Other 




Change in contribution to operating earnings

($4)

($0.01)





Change in consolidated operating earnings

($23)

($0.05)





Change in items excluded from operating earnings1

$180

$0.31





Change in reported earnings (GAAP)

$157

$0.26









1)

Refer to Schedules 2 and 3 for details of items excluded from operating earnings, or find "GAAP Reconciliation"


on Dominion's website at www.dom.com/investors. 



2)

Primarily represents absence of gains from the sale of assets.







 

SOURCE Dominion

For further information: Media: Ryan Frazier, (804) 819-2521 or C.Ryan.Frazier@dom.com; Financial analysts: Kristy Babcock, (804) 819-2492 or Kristy.R.Babcock@dom.com


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