OGE - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2019 OGE Energy earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. Instructions]. [Operator

like Sir, conference please now host, to hand Tidwell. Todd go to will over the your I ahead.

Todd Tidwell

OGE am XXXX Thank and you me Steve and call. today quarter Chairman, Sean And Corp and CEO welcome everyone Director of I earnings President to OGE I Merrill, Investor Lateef. Energy Energy Corp's with Good Relations. Todd Tidwell, morning of Corp. Trauschke, Energy of have fourth CFO OGE

Sean, we quarter to In an your followed along as terms from call is first our the by fourth would today, at remind from and will always, this follow conference of on website results being of Steve like answer that questions. I explanation hear and the webcast may ogeenergy.com. you finally, we year-end will and you

call conference website. same accompanying and on be slides call the archived the addition, In following that will

the is forward-looking Harbor financial also the financial we would forward-looking financial presentation, our estimate for is best results attention Before the G there begin This to margin SEC would this like your states a but I reconciliation statement gross that regarding and direct simply in guarantee you an to Reg to requirement Safe I statements. statements to-date. is remind like cannot that appendix. we for

the I Trauschke for to turn over will his now Sean call opening comments. Sean?

Sean Trauschke

year fourth I in discuss of focus Steve the our earnings includes a of us Good Thank above moment, earnings midpoint consolidated areas thank to per call. details $X.XX and utility today's on XXXX. of joining last our earnings a would accomplishments of this minutes compared everyone spend year. like share. XXXX Earlier first per you $X.XX, we to few initial for at share This morning talking XXXX XXXX full of Todd. you quarter for our a share but morning, per reported the and and well about will the $X.XX $X.XX

company everyone around on another to safety. at successful by want the begin do I congratulating year

consistently incident demonstrate the commitment years, four a safest their the history. our efforts culture done. achieving as last to injury an of workplace. and continued members Their in excellence company's towards Well our of being XXXX Our free trend four they work years in

history, celebrating of anniversary we XXXth our Speaking are today.

of this begin Emerging decade, before of on us who we completion new company's year of priorities, our As honor from the growing our environmental capabilities we business, of a and growth those through the history. investments, new communities three our our journey the employees. of look we we chapter and as growing compliance to now in lens our future the came new decade-long our company embark growing

they continues we The where lower Valley emissions and at an located our communities plants power economic saving These River money. impact operations, customers plants. efficiency positive continue on integration these plants at the They to enhance are pace. Frontier are a having of excellent and improve our are and

the premium Now, is experience. of competitive most functionality we variety by a which do with customer in this our of important business grow The to We enhancing ways. rates. combined customer

years for organization. expand improving being the customer the enhance demand country and and deploy leverage driven been to among while customer We leader throughout technology to technology technology a in have programs. smart efficiencies this experience first our We in the response

period company declined. are X% in is Over growth over of There annual during expense. the to enhancements past invested system. factors managing this and customer nine many in One our grew years, actually in our at average environmental rate $X O&M technological compound Oklahoma bills. base we a more total retail example than have billion while The rate rate

two XXXX after be new will for adjusting actually customer Our O&M expense plants. in these for lower

for more resilient, the will to benefit enhance it more efficient further Oklahoma grid our customers. more secure we system, This making our begin plan in of reliable, year, and our investment more

for Our a by promote like of self-healing create on grid. efficiencies System and reducing installation value our reducing equipment plan improvements service that these new technology, systems communication business preventing rolls, improving our costs. focuses and customers, for truck the interruptions

will associated filed substations XX week on costs In for work Oklahoma. XX system with these critical this begin application Oklahoma circuits we our recovery Commission with XXXX, associated in We Corporation of the in improvements.

the recovery minimizing time these investments million customers. seeks of filing enhancing Our $XXX impacts same to on grid revenue and at

benefit for X%. DOE's than period while $X calculation the billion more interruption over words, ICE $X.X made using customers investment towards than $X.XX a average in these be tool, cost will will program will have the benefits. grid the other five-year year-over-year to estimate enhancements, In less retail on Based or every rates of customers calculator investments XX-year by these increase for

reached in rate unanimous we formula and anticipating filing mid-March. a settlement are order Arkansas, our In final the second by

and We quarter this conclude also expect second phase to begin grid of our quickly enhancements that. next year the

Southeast two in Nation We centers The be farm's solar output. energy completed in August. renewable portfolio megawatt each centers who solar the new needs are Both energy Chickasaw five also meet Nation universal Choctaw the purchase solar energy will expected will of our of help adding XX% and expanding XXXX company-owned projects to in Oklahoma. by are the solar energy approximately

in our make to in the the lowest remain to will we ensure as important for of An rates that point customers, system the among is benefit invest want our here our country. work always I we

rates and below businesses as significant are to advantage national new seek which Our attract a territory. competitive region today the our we XX% more to service than is average,

We territory economic on which was impact on low combined grow service put the has customers new and sales to XXXX, our what in continue XXXX. above added we emphasis efforts, added which X,XXX a we when We growth. our positive development to and well, load see well rates in higher continue growth with as

recruit million continue an population Long metro approximately Oklahoma quarter of X.X a just a people. by rate unemployment growth With average to communities. priority grown Population new which nearly The another over growing be Metro efforts overstated. trends area with companies over grow is the positive million, economic for and existing help City to be XXXX us, X.X%. ended development of term year this And growth. the follow has cannot our for job and businesses importance gains area to of leads of

We only are areas that of in the the within X,XXX communities new capital partnering in economic we and new investment we invest as development. and of leaders $X.X always our XXXX, We future more of as with strong these said jobs, megawatts the to service by billion communities XXX load serve. In led area. have community in than community this partnership our

needs and strengthen leaders. community We our with our together, help support we and towns. of cities will the to Working will partnerships to continue find

million the that Last results and inception. This supported the year price is and solid pressure. total Enable. reported is distributions to they over dividend continues our $X to were fourth for commodity despite support to us Turning ongoing week, investments. growth OGE distributions and since quarter for full $XXX to putting billion cash year in Enable's Enable cash utility

However, the valuation on belief to is other OGE similar we with there don't shareholders. continue that in ultimately disappointed upside the benefiting midstream is Enable our sheet ratios. have that that and to be valuation We quality businesses lumped and balance maintain Enable coverage assets,

through by of employees, XX% X%. deliver By consecutive the investing we in our of to follows years we growth value shareholders. our communities annual This five of our company XXXX, increase. increased and future our dividend our business, In the our

to our our the line remain term expect at to forward, ensuring remain X% dividend in Looking we utility with across the earnings credit and rate of board. growth metrics long X% growth while financial strong

how to call I Before reiterate Steve, pleased to over businesses. want the with turning I the the performance of am

am confident to growth now Our approach company investing will I has fuel continue that future. and to and the our stronger new never opportunities in in been balanced our

Steve review fourth the our quarter full financial will you. over for year. call now Steve? Thank and results the to And to the I turn for

Steve Merrill

Thanks Sean everyone. morning good and

$X.XX reported For a $XX income income basis share compared slide. $XX the net in on listed contribution per net unit The $X.XX to or by for is share on quarter, business of fourth comparative million the as per of we XXXX. million

income full compared $XXX $XXX to net year share share million earnings For we the as $X.XX XXXX, XXXX. or or per million of in reported $X.XX of per

At million income as to million OG&E, share XXXX. in quarter for compared or $X.XX net $XX per net $XX $X.XX the was income of or per share

million quarter, the the per to customers. with was and the the Depreciation our $XX the quarter to and of and Valley environmental gross for income tax million expense completion service plant million O&M the assets. River down increased to assets the primarily projects. to the associated due generation savings gross Frontier primarily quarter environmental other to Net the addition decreased additional up on For due margin in AFUDC increased related of lower by $X and due considerable customer $XX flat resulting plants basis. actually for

taxes million net expense credits. deferred tax due amortization in the income Finally, decreased an and higher $X to primarily of tax increase refundable

year for $X.XX share or the Now increased turning which million on $XX full the share income as next in was income or will to OG&E. million, $XXX slide. I year million Gross $X.XX discuss $XXX XXXX. at the to for per XXXX of net compared margin per Net

Looking into to the year, they related at quarter. the AFUDC primarily very new result margin are placed O&M key drivers offset. expenses has depreciation assets for a a of similar the Increased River $XX lower which power to being due plant, new are Valley million and increased to the service.

higher $XX margin. to XXXX. in million margin compared gross $XX following. due of XXXX. assets, The increased Turning was the by environmental and compared to River XXXX XXXX Utility as addition Margin million margins increased Frontier Valley to to

power power under you two recall, we As purchase legacy plants were purchased that contracts.

Compared saving are for experienced $XX We for by simultaneously $X as year. dollars. million. nearly customers normal, months Weather the the summer year to these investments weather cooling of territory margin service the degree certain days during earning margin while millions higher now on increased increased million

limited cash or received issuances. Board per XX. per partner of $XXX $XXX from $X Gas earnings contributed to Enable Operations Natural billion crossed million way, $X.XX the $XX Midstream distribution is of or per received Said in $X.XX Enable $X just distributions XXXX. XXXX, approved million Enable compared million a that The of cash unit avoided share distributions share paid from Midstream and February mark. the this another was total billion equity of the In over $X.XX

low setting transportation Enable year valuation cost volumes. team impacted impairment The and of charge the per partnership's year management challenging $XX Enable's industry. and records Despite year the non-cash gathering, and distribution efficiency. for energy the on and X.XX a ended sheet a focus in with Enable capital a for strong was balance continues by full was to annual coverage at goodwill commodity driven inappropriately a was a the or They times. million processing prices. XXXX landscape, performed impairment well discipline share. pullback The fourth XXXX by quarter $X.XX and

Oklahoma valorem in perspective ad the on submit OG&E to service. a The rate recovery Corporation base The covering The Corporation with mentioned a earlier mechanisms grid will taxes. placed Sean subject detailing Investments total placed comments, strategic include includes Only filing this the and service and plan filed we will automation, that Each data-driven for depreciation Oklahoma been that Commission technology week. platforms in are Commission of proposed grid quarter, our will requirement and service million. have systems provide included recovery. be mechanism. $XXX report investments As the revenue in his of the projects requirement recovery projects return in resiliency, enhancement grid revenue project in to applications. five-year and placed communication will

between earnings At per utility normal we project and Turning $X.XX $X.XX to guidance. per XXXX be and the share share. to assuming weather,

at midstream lower of and business, are the $X.XX the per between to be share. the the projecting For earnings contribution guidance end we $X.XX

share. between per $X.XX consolidated are We projecting and earnings $X.XX

detailed typically important It's Looking due the assumptions demand. seasonal the utility second on further significant OG&E air-conditioning nature the that in shows our third see the of has of to slide. quarters earnings outlook, earnings and and seasonality majority the you into its remember in to can

That and we prepared today concludes questions. our now remarks your answer will

Operator

Instructions]. [Operator

of Our from first comes line question Dumoulin-Smith of America. Julien the Bank of

line open. is Your

Sean Trauschke

Hello?

Richie Ciciarelli

you hear me? Hi. This Richie. is Can

Sean Trauschke

today? Sean. it's are you Good morning. Richie, Hi How

Richie Ciciarelli

morning. Good Hi. well. Doing

Sean Trauschke

Good.

Richie Ciciarelli

a had you. quick question Just for

you out came to balance commodity Enable pointing prices impact would are now to guidance. needed rebound debt potential about their recently if flow now? cash in was range. the would low-end Enable feeling to just you FFO was for they how You how saying you impact I guidance a Enable's your any to essentially with get any could or distribution see midpoint to like of curious, the are expand i.e. to in look distribution, cut there And the that absorb the sheet, potential metrics? the management

Steve Merrill

X:X Richie. the Thanks guidance Thanks ratio. Their supports for question. a coverage

cash do cushion $XXX the million a and you in of there. math, back roughly So if that's

we So very in feel good about that regard. distribution the

to cut the would many as move times, not cut, Enable be it we the XX%, As metrics, the far said our That's example. distribution have $XX if as million in needle don't see distribution we credit to that but going us. an

Richie Ciciarelli

That's Okay. very helpful.

Steve Merrill

that built the long But built really environment is strong and strong look, they we They balance created to the weather that term. cash have, like Okay. be this. Enable, why for to when that's coverage X:X cushion are we sheet

Richie Ciciarelli

That one-time it. for sense. And at the after you lot other weather then new growth I out to just Got base that X%. on XXXX adjust using was makes normalize separately, Should we XXXX be a utility of the still guide the outlook, curious OG&E or items? X% and

Steve Merrill

would base Richie, use as growth that $X.XX. our is Yes. a XXXX number for clean we for

is, guidance XXXX. growth given So from to that's midpoint X% where our XXXX rate of our

Richie Ciciarelli

just or on then enhanced Oklahoma. mechanism the one And me, recovery helpful. last mod very That's excuse grid it. rider the in Got

could how much if were be lag that curious that approved? potentially mitigate regulatory Just to

Steve Merrill

will Yes. XX into place because basically in within with would been each a and after would these it those that days projects go short have It of completed mitigate and go review. all commission rates quarter then term nature projects we are in

lag the of investments. with most, quarter's completed at days associated each XX So

Richie Ciciarelli

Thank very right. All helpful. you. That's

Sean Trauschke

great a Have Richie. Thanks day.

Richie Ciciarelli

You too. Take care.

Operator

[Operator Instructions].

Our the comes Murti of question Avon of line Capital. next Vedula from

Your line open. is

Vedula Murti

Hi. Sean. Good morning

Sean Trauschke

you? Vedula. morning How are Good Hi.

Vedula Murti

Hi. am I okay.

expenditures Just I bit a this initiating applying that Can to any exists need understand has regulatory this already to And to that you more? steps some that of explain me part our you mechanism, statute approved or is whether it so is prior there occur little will these already be this regulatory been to? this?

Sean Trauschke

Yes.

good a question. So,

and framework. we very the customers commission this has with really So of had this have and that out been a constructive the thoughtful staff process and partnership laying

made So this filing. we

we have are talking kind a hearings. filed talk held through about of public we here. could the we these The commission We will where attributes the of go about And normal customer testimony. meeting investments

expect would an us. year So to for we order this mechanism this approve later

approvals other your that. to don't what or would anything And need question, characterize are we course. normal regulatory other as expecting, not we like is just any I This

Vedula Murti

So principally effect? a this XXXX ongoing be will and

Sean Trauschke

Yes. get a get bigger is impact and certainly this this in yes, to want mobilized. We XXXX get has impact. this a XXXX. done starting, This But year

Vedula Murti

schedule procedural terms of there Is in accomodation --

Sean Trauschke

yet. at this Not not Yes. time,

Vedula Murti

you. Thank Okay.

Sean Trauschke

a Thanks Vedula. great day. Have

Operator

you. Thank

Crowdell Anthony Our next question Mizuho. comes from of

open. line is Your

Anthony Crowdell

Good Hi. Good morning Sean. morning Steve.

Sean Trauschke

morning. Hi Anthony. Good

Steve Merrill

Anthony. morning Good

Anthony Crowdell

question. Hopefully, easy

dig including write-down, you that was that if Just you I one is, down reason that number, do rebound, operating chance back believe your commodity you the some deeper the I wanted are then guess, prices to, into it lower are in any you of If I wrote commodity why didn't up? mark exclude and prices.

Steve Merrill

sits work at rules You was This goodwill. the the goodwill there. now, which really don't you accounting Enable, don't. It just way amortize

written on off, now will So being has future it it's impact that no It go-forward gone. have basis. a

that up a rebound. So would commodities not occur there ride is if

Anthony Crowdell

number? like your ongoing an Any that of number, reason out back didn't you guys earnings

Steve Merrill

out when it back on and that's the we considered cracking item items out. non-GAAP a called down but really non-GAAP we Well, that SEC is

So we but least item. it, not to that as special chose highlight a just report at

Anthony Crowdell

Great. for taking Thanks my question.

Sean Trauschke

Thanks Anthony.

Operator

would this turn At I call over closing the you. Trauschke to back Sir? Thank to Sean for time, remarks. like

Sean Trauschke

day. you Lateef. Have Corp great on for all you today. the a being OG interest Thank for Thank your Energy in and call

Operator

Ladies Thank for and call. you conference concludes participating. gentlemen, this today's

disconnect. now may You

OGE Energy (OGE) 27 Feb 202019 Q4 Earnings call transcript