Portland General Electric Announces Third Quarter 2020 Results
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.
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.
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:
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.
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.
Source: Portland General Company
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:
SOURCE Portland General Company
Company Codes: NYSE:POR
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