OGE - Earnings call transcript Q2 2020

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Operator

Good morning. My name is Lisa and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 2020 OGE Energy Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Jason Bailey. sir. ahead, go Please

Jason Bailey

I and Merrill, second everyone, I'm quarter Investor Energy me Director operator, and Chairman, OGE of of CEO Jason welcome OGE Energy of OGE today, with And Corp.'s XXXX and Relations. Sean good you, Trauschke, and President Steve morning, Corp.; to Bailey, have CFO Thank earnings Corp. call. Energy

finally, by we as an your like the and of is on hear first site along terms quarter answer will results. we our being follow call second always, at today, ogeenergy.com. And from will questions. explanation to Sean, that In Steve, remind webcast the followed this Web may from I'd you you conference

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

now begin and to an we This states statements. attention presentation, direct regarding Harbor to estimate statements we is cannot Safe is forward-looking the results, like financial your simply statement for I'd but the to this financial our forward-looking best to guarantee also gross that SEC requirement opening Before date. for is the Sean? Reg the there a remind earnings ongoing I that over his to you reconciliation in appendix. will to reconciliation call GAAP and G earnings Sean a margin for like of turn comments. I'd

Sean Trauschke

Thank morning, you It's everyone. and today. you, good Jason, great to with be

year's a just two Before end. who'll take retiring I moment to recognize we at to want begin, key members be

discussing been for a Steve company's an months. foundation. He's his member solid Steve. played the been important team many I is first strengthening has have retirement and our in The valuable of leadership role and financial

to a end. before year a external We and are interviewing successor process in internal name candidates with the plan of

Todd. want I Next, recognize to

into and and Todd leading a Todd range Steve to If miss to a I is the for know, doing all broad I a developed he been going Oklahoma us in not he'll miss with probably Relations. years to retiring of us use with are want going responded and the Investor Jason excelling these road. innovate Jason example. XX on experience the I many I, as all which do call of And welcome the with his calls. IR time, going to of would the since I'm job. out that be of always, the during Football. anywhere already going they'll pleased moved us. to are around has invaluable we're XX many describe that And to of The like has And through quarter lead miss company, the and to has on simple role. great facts And have you, who They're I'm the outstanding last pandemic XXXX. stay with performance. going second remainder of Todd Bailey, As after around you statement, by employees, could requires challenging times. our year. be

COVID second projects to mitigate slated this business safety a X% affirming impacts our highlights QX and two are almost delivering quarter customers online year, since quarter-over-quarter reduction larger adjusting of last time which quarter, and and achieving in in utility fuel adding earnings be Some this residential our of returned nearly farms new achieving XX,XXX of to growth, incidents XXX included through XXXX the rates, the of adding X second solar megawatts year; the guidance, the all $X.XX of At the per consolidated $X.XX share share quarter team. of earnings of per to of $X.XX in detail we all $X.XX our I XXXX. second of a compared we for But will go this earnings the reported I could to want second these some into to morning, of proud not quarter work additional ongoing June. Earlier employees compared share do in in XXXX. that the I second reported to entire quarter in moment. safely of reiterate be per utility, completing

have effects workplace. As on reopening at In to the of in health team our rigors working he on the markets to the spend now an the customers our I fuel We've But remain state, the previously have customers during mechanisms the to do more January who future credit commissions That our results of And follow. to going like to like helped customer their of programs utility, and or are have plans monthly talking suspension of about Oklahoma from change. the from of had the XX,XXX costs both as the our a one have resulting few and assisted the importance done us The customers financing our Commissions' and history. second and mechanisms. mitigate pandemic. costs than for recovery of access Arkansas discuss bill. our recognition difficult reduction disconnects Commission of all most capital with approval. marketplace help and do in with to for and incremental our the to employees portion off-cycle and this these provide tremendous of well details over back sheet the date, become fuel worked next. we discussed we with that in COVID a for Oklahoma for save their the customers no bills. It's connect We times withstand normal that's our efforts further To Commissions our the business. with the and the others The this Steve customers been appreciate we of strong on timely credit balance average cycle make to practices we wait assistance. have quarter announced moment. other of and residential and a to May, from of LIHEAP each will and highlights resulting year approved month savings were would provide is agencies the best this conjunction metrics. minutes both the payment financial $X customers I'd installment May, is will an their year, allow prepared in before to safety The about home X% until and million processes proactively with with Earlier plans. In work worked Oklahoma Arkansas debt does, our accelerated

Arkansas, improved are We recurring. our of open which opened in are and began pleased X.X% June an service compared rate the in our on unemployment are June for Both X%. was national are the rate below economies of average the territories the April we that states, June rates was showing by territory. May a unemployment Oklahoma, X, economic in In unemployment to encouraged service is across to fully peak in XX.X%. recovery signs well of and

our the future. equates volumes the and customers X.X% our well we of service; volumes nearly it about our and to This rates year. Here's a This despite added notable have over to about a speaks speaks our for the certainly virus, fact XX,XXX efforts system last impacts economic growth rate. speaks development

customers of back to We schedules. pre-COVID our large see move several manufacturing production beginning to continue to

production. increased automotive and have processing, steel seen food the example, industries manufacturing For

have of While continue all are full large prices, to seeing forward an to we business remained are gas industry refineries strong seen commodity at in currently we oil the improving midstream due projects and move points economy. on have operating the our schedules. production some side and to and reduction the This

X%. XXXX. period this Looking compared in back crisis, saw to at we for the same down XX% of customers down load the improved April, and has weather-normalized That beginning in month-over-month for was commercial June number

and seeing results was with XXXX. in also margin who coming are June grew field, but down with down April down was June each X% load now were than is Oil our which Residential in down XX% X% in customer, the actually X%. usage higher in industrial similar We customer XX%, customers, our lowest is April, June. month

year-to-date, on overall, to a load X.X% compared basis, So XXXX. load is down weather-normalized

So numbers $X.XX $X.XX, of is and offset together, summarize. have of all adjustments you year-to-date, the is this all impacts us just I've down that let provided a we me plan process, put execute and continue When made our It that another to of the note weather year. are And by done, we've so want we load to COVID-related down by continued. has our balance to our assure to work throughout this you the will important not business. for on lot is I and

enhanced Our tropical personnel on results East restoring tremendous outages safety not This our in observing been fact, health during and due storm And Coast to sent the and the humidity deliver operations to heat crews storm. have power continuing assist in protocols. impacted. to we factors, support morning, teams while all to seasonal and other restoration, are

Arkansas and in Our XX% during XX% better storms. performing are grid between projects enhancement

Plan. Oklahoma and results to customers these results about We similar our are certainly Enhancement Oklahoma with excited forward delivering look to Grid

two Rate be customers the in began producing in the X-megawatt July. this is In to by facility. in already beginning as our is and second to Davis customers. there plan. Oklahoma and and We Arkansas completed and solar Oklahoma the Arkansas an from megawatts placed filed farms have customers. included subscribed a place what service we solar of is what for in similar believe recently half been Arkansas, in new approval Facility our Both will fully in of Our have we our we build to X-megawatt for scheduled XXXX to in offer solar Durant recovery opportunity in in Formula were program be see for demand our

the and and focused front, we've results. industry-leading stayed On achieving environmental executing are

talked COX the we XXXX have about XX% we levels. to previously, out laid XXXX, be As below in expectation

the are maintaining And a the emissions on that in to think are XXXX XX% set But and goal. have exceeded the also with important reductions goal lowest that equally is have of I below agreement. rates of These what's way consistent achieving goal. we've We nation. all while levels this some of we done Paris also our the recommendations XXXX

XXXX. rates fact, were lower in retail In than in XXXX they were our

new both On development a attract our the Oklahoma to act business incentive economic as powerful Arkansas. and to low front, rates

to both projects work on actively in We states. continue

for anticipate by growth is and far mentioned utility megawatts of our these critical all I load component the a and strategy. more executed new As customers new thus be XXX year earlier, online we Adding complete this projects of we've agreements than will of year-end.

we front, On the the schedule regulatory Plan. received for Enhancement a Oklahoma in Grid new Oklahoma, procedural

focused all includes reliable, of the new $XXX plan of The by X should we're of end system million time for for secure, order a the year. hearing an the recall, benefit If our resilient which and years, investments ensuring efficient the schedule over October, costs on you customers. in more give of

OGE stand-alone a my Enable. improved in commodity a to it When regarding Enable Enable investment to and off which from I take we cash. credit cash business provider user of pleased may you that result a of has of our to our Enable, results downturn. very were midstream did investment remarks, transform adjusted conclude moment to goal of questions I some report a let well. From created a see. worked discuss as entity perspective, was their know Enable. me Before we to on call our yesterday, has the of have their

going is not as damaging are relationships holders. employees to alternatives Enable speculate and this Enable to We on business strategic for Enable Enable unit to

Our goal for OGE value to maximize Enable been has benefit always will of long-term you, the and be the of the shareholders.

outstanding and seen COVID, XXX single safely. Steve. to by in went I projects, the members large incidents reminding here fuel could you affirmed business of adjusted solar person now agreements here the everyone where prouder over call farms, we've mitigate work our most year-over-year safely megawatts is to not over I'll impacts expedited two of achieved. to conclude the customer Steve? me doing. importantly, job work, for zero home return of completed be Thank growth, We've had executed And I reduction, began you. Every we guidance of the quarter. rate second turn Let X%

Steve Merrill

you, And Sean. Thank morning, good everyone.

net reported per net income quarter, per $XXX income basis, listed per the the is we of ongoing The or comparative $XXX compared OGE $X.XX $X.XX business net or a share. $X.XX of million for Corp. On $XX or in million For basis or unit on of contribution as GAAP XXXX. income million $X.XX At OG&E, the reported by to second Slide. $XX share. was quarter on income a share net share Energy per million

gross will the Second Slide. margin I next which million utility $XX quarter increased the discuss on at

income the assets compared Valley million for interest at previously expense of that expense due regulatory but expense expense deferred net along with was service additional key depreciation Looking to was wasn't increased Sooner fleet reduction additional $X second Interest the to story. deferred $X asset. million drivers, increased incremental O&M $XX be million, a for the the previously outstanding, other Scrubbers, long-term placed in Scrubbers the regulatory million, our O&M The the Overall, tax $X credit a down quarter late into to that impacts. asset. full results. we're of doesn't the and pretax tell year primarily which Depreciation of which to year, as debt business and tax higher and XXXX, is utility plant added Income prior the generation. to expense the primarily increased quarter on in any plant impact due X.X%. were deal last was with to in COVID-XX the reduced managing We O&M the quarter-over-quarter second plan expense really River would

second of increased $XX Utility second environmental of quarter assets compared margin. gross added XXXX, XXXX million $XX the the the quarter placed service to to Compared in quarter million margin. second recovery to margins into of Turning XXXX. to approximately

$XX as above year, the We were compared cooling $X last days by degree also reduced quarter added for million. margin normal, million weather XX% to

growth combined to reduction industrial of contributed and to oilfield million margin by demand customer was that the offsetting new with along reduce increase margin non-residential $X $X revenues a partially sales million. Finally,

investment-grade our briefly to and touch I'd flow stable and maintaining stable Next, We're The like has credit outlook. company cash S&P sheet. strong our on affirmed metrics. recently Moody's Both ratings. balance solid

of As XXXX. the the increase moving took pandemic, onset plan liquidity debt to by issuance for quick you know, of at ahead we action

in horizon. needs the We planning have equity no continue to

$XX XXXX investment in our of Gas to Enable. for Corp. to second Midstream contributed quarter period in XXXX. the $XX of earnings in OGE operations Natural million to Energy the Turning compared million same

plans. capital to over a midstream affirmed coverage $XX issued earlier XXXX. distributions of of million the also addition, execute OGE announced with year. reductions flexibility Enable guidance. their ratio and to the approximately achieve track quarter of this cost They They In which further ended to distribution on increased their and Enable the is second in cash provides just Xx liquidity have quarter

will earlier, please the and occur earnings said will we over our third quarter. remarks Sean This we As now prepared our are and half in answer concludes questions. guidance remember our affirming your

Operator

comes question Partners. Pourreza first line the Guggenheim Your of Instructions] [Operator from Shar with

Shar Pourreza

a So question I'll And I'm your why it guess, place, of is options have I'm a new a you at review differently obviously counterpart, I'll to Board on Enable. is, but be I the reason on And place right? CenterPoint, try asking strategic strategic may you bit what ask there's going now aligned here. a I kind questions, the ask other CEO one, in ask to co-owner couple have do Members. side a do have of, So new to in of little

in more to prior at you place think without Enable? on differently it Let details now me about was are into the slightly the you Is ask as that it versus maybe least actual at fair getting strategy. the GP regime aligned that assume other with CenterPoint

Sean Trauschke

tell. Well, I time think will

and getting still briefly look I early. as talk forward times. things sure Dave to have few And And for we'll more. talked think a him, down I know I'm I settle it's him. to

Shar Pourreza

it. on It Oklahoma sounds you're then highlighting Got XXXX. investment that just the in start mod. And you like can Grid

real what's us what's what's that? and plan, on the remind placeholder Just incremental the quick, in

Steve Merrill

but dollars through million investments of it's year later of are year, go this bore as we really CapEx. it on year of back the couple incrementally schedule We've full primarily this regulatory year, really it's this hundred investments and end started with I substantial year. get making actually we'll are the those incremental especially mean The a of next the year.

Shar Pourreza

the just the guidance? have higher-margin talk up impacts in O&M follow-up and like COVID earnings? the have load reiterated offset savings a had results It achieved impacts. looks on as on lastly, industrial you and XXXX that quarter resi second large just then can you about made portion And plan of embedded a And you Does COVID it. and residential activity. Got oilfield

Steve Merrill

Yes.

and other gave all residential on a a basically basically in think does I categories. offsets, commercial X% rate And last offset increase residential industrial. time, we a So sensitivity X%

fortunate very we're up. shoot residential So that did

half similar We'll As far see we as adjust continue impacts, shut decreases $XX million a through first end time. probably year the probably as for of period with something the of savings. load we've the on business the the in to seen about to COVID back of as were businesses deal down

Shar Pourreza

bye. Got every And I it. And you, Thanks good now. it's guys. congrats Todd, And tell going not Steve to life. miss can I you on Sean a two of phase quarter is your and know

Operator

with Your next Smith [Operator Bank Julien from line the America. of question of Instructions] comes

Richie Ciciarelli

for here Richie actually is Julien. This

curious is by year. little of a end it thinking at look the of to Just have distance strategy about with guys you Is are like Board shows from that or some kind the there. Enable? keep here of there? CenterPoint Board appointed It your Halliburton the to on you that appointing members How him Steve someone in-house would announcement the seems OGE to and the retiring replacing keep

Sean Trauschke

Yes. That's is of business. out a made there. a stay through on haven't And of good question, to Steve final really Richie. came decision the that the year. going Steve balance I

well. So knows it very he

know that So I like have business. people to that

We continue role. But put company best going to person to fill on I Board people can the maximize could have that value some to I'm the the of that in that Enable.

Richie Ciciarelli

just lot. with Thanks service a And sales separately, helpful. mentioned the you your improving are economies in Got territory reopening. then like That's it. month-to-month

as well trends, to quarter-to-date? the guess pursue in Is upward about you're been to how some of the management the bias given of thinking O&M there guys range you have curious I weather any guidance your able Just as the back year. that half

Sean Trauschke

earnings is that. weather and more I Steve would say to quarter in the I third is, mentioned and half of Richie the think, as weather than way variable. point the The normal I big We're assuming come Yes. would that,

Operator

to questions. call [Operator this over Peters time, apologize. to do Sean no Wolfe Research. Trauschke. a question have do I like further We the David Instructions] At from with would turn there are I

David Peters

ownership you guys all on have trends know on bit it in and has of I of could the color more in wondering approached maybe developments at your know been you could you just I'm latest the utility And I thoughts and space move the prepared your CenterPoint Enable business simplified process? appreciate discussions across stake. historically, a changed and Sean, your have if it in from give if comment just question the light Q&A. their little I you remarks really the these I bit ask recent just at to of throughout engaged addressed But for in like But kind little that has. differently. types across we've midstream by sector mix? towards more a all regulated seen CenterPoint first

Sean Trauschke

Yes.

familiar with or So other I'm than announced been what's about not involved the process. CenterPoint publicly

comment an leave that over have. to a increased recent we beginning and entity that. doesn't of looking right is of the about our you valuation time. transactions I'll that now. wholly-owned at I since there it It in is control. do to we is Enable. them play not not -- as that we that, would So you We pure But an or is prevalent things That the that subsidiary. interest will Enable, The I the point always and we decreased tell current Enable market changed thing is very we that not the and recognize think sentiment, on has It make at are like that the look one

our We have business. aside from intentionally utility that set

interest recent an own just of in wholly-owned, the entity. is were that some transactions that it we So an versus embedded

is our current our So including my not value about evaluating transactions. strategic because of Enable. that always does incorporate value. talk increase don't really, all We we're to of David, assets, But alternatives help we're going not publicly to answer this,

Operator

Trauschke. now over the There questions. I'll Mr. further are Sean no to call turn

Sean Trauschke

and for your and Well, interest have you, great morning. that a you thank look, Lisa. your We all appreciate time Thank day. this

Operator

conference. concludes today's This

You disconnect. may now

OGE Energy (OGE) 9 Aug 202020 Q2 Earnings call transcript