CNP - Earnings call transcript Q2 2019 | CenterPoint Energy, Inc.

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Operator

Good morning and welcome to the CenterPoint Energy's Second Quarter 2019 Earnings Conference Call with senior management.

During the company's prepared remarks, all participants will be in a listen-only mode. There will be a question-and-answer session after management's remarks. [Operator Instructions]

I will now turn the call over to David Mordy, Director of Investor Relations. Mr. Mordy?

David Mordy

and call. morning call. to CEO; portion available and our Scott Liu, members Vice who Good XXXX second and management provide Catherine. our of this Executive conference discuss the morning key during of earnings Prochazka, President with highlights you, on everyone. XXXX be areas. our Welcome Q&A quarter Xia second other Thank quarter will Also results us CFO will President several and are

In call under slides Investors centerpointenergy.com. our conjunction can Section which website, using with be will we our be the found on

For as refer reconciliation non-GAAP to has our in posted our used please news guidance earnings been providing and Form release XX-Q. earnings of the our slides. call, website in our today's They've measures on

that the information Investors continue to we post the filings, may using webcasts, conference to website. you In note the to information public information these we to material on review website. SEC future, calls, our our announce communicate releases, news important channels and and encourage use will section of Please

and uncertainties. risk variations, based certain are and territories, our Actual that in factors results conditions upon or Today, currently discuss could assumptions, noted to information forward-looking forward-looking differ weather on management's topics are actions, risks other will will beliefs, and and filings. regulatory changes SEC contain service available materially our economic These factors management. information including subject management to growth, that prices, statements in projections commodity based

the and a the and anticipated to expenses with the the financing dividend range preferred higher -- fund cost costs The higher transaction guidance in integration EPS associated requirements, the result equity common debt the merger; for stock achieve of savings prior excludes interest merger following XXXX. and impacts guidance expense, of discuss merger: and other stock share impacts of the net as including related fees also result and due XXXX higher resulted will securities completion We in to January the count. merger to severance Vectren basis that issuance to merger in and

considers approximately X% assumptions for may growth commodity usage prices; electric to-date recovery The activities invested financing cases in rates; certain X% business. effective and operations XXXX and volume customer impact rates; performance contracted throughput; work rate Services of regulatory significant the natural related interest that for capital including proceedings; such earnings judicial other and gas as our distribution; through and guidance range variables and well Infrastructure tax as weather for normal and and of as operations filings;

The range end range Enable's net income also Enable call the Xth, earnings second cost considers lower The attributable as units of of savings result provided XXXX guidance assumes range merger. Partners August XXXX. quarter common on anticipated Midstream on for a to the

In along providing or losses Energy timing Enable, does guidance CenterPoint business, on impact such that non-GAAP a not excluded of standards the in items reported consider mark-to-market or from effects Services ZENS, the for GAAP uses securities of value accounting of earnings in this the from results company's share as potential the earnings measure change have material with with related associated Energy which could merger, and applicable accounting the impacts certain period. changes guidance, in the per those the adjusted or other including impacts unusual diluted

factors due difficult the resulting management's adjusted changes per variable to related gains because outside business are securities unable reconciliation various to of forward-looking share in of is ZENS Services estimable earnings losses a Energy present control. from diluted the and are highly and they and value of Energy not company's CenterPoint mark-to-market to quantitative and predict as

on to access our like being website. recorded. be found Before Information call this mention replay that would how I is to on Scott can begins, the

to now Scott. call the to turn I'd like over

Scott Prochazka

Thank in quarter us interest solid pleased joining strong operations Energy. from for today you, and strong our consistent your to thank I'm good and driven and by by in you for a morning have businesses. ladies delivered second CenterPoint utility performance our you Thank cash report backed gentlemen. David contributions that we non-utility

XXXX. I'd like reported compared of diluted Slide morning or with to income share the XXXX per X. second $XX we in a available diluted million $X.XX $X.XX shareholders of per quarter loss or This to common second million begin share quarter $XXX of with

will impacts, in a Xia earnings XXXX with per share merger shortly. quarter share adjusted our the of diluted per second second basis On detail quarter compared financials greater guidance in and were $X.XX cover excluding XXXX. $X.XX diluted

It's our been on approximately Vectren. of XXX days closed merger since we successfully

addition the collective expected operations, rate regulated the base energy-delivery we increased we to our value company and is our Indiana created Through XX%. With a have of for that by growing Ohio our merger, to shareholders. drive

to I Turning the like opportunity CenterPoint's to proposition. value would slide take six, post-merger outline long-term to

regulated serve through customers. investment utilities utility to to we the from contribution First, capital our increase intend earnings

approximately through compound expect rate base XXXX, to continue earnings. which X% and growth growth utility drive We will annual overall

be Second, of continue businesses an non-utility to the funding from for source cash our important will our growing utilities.

X% are investment consistent balance growth. and a X%, quality committed credit solid sheet; to and strong along to returns fourth, with EPS growth expect strong through Third, grade shareholder to deliver dividend of we we

seven. slide to Turning

Midstream Enable we our sell As of of common amended no intend longer XXD sale you has considered Much our on common first to in units. read filing, changed the many of Partners. Enable units Monday we since

and recent now close needs merger, smaller the have of a Investments capital we represents Following increased utility our percentage earnings. of our Midstream

and consistent more and including coverage ratios. sizable strengthening transportation its five moving cash balance sheet taken agreements and its a fee-based has a Enable new strong has maintained Enable several provided the successfully over steps de-risk securing past to gathering processing contracts, flows business, years. to

strong investments. to $X per billion billion units, over CenterPoint XXXX. distributions approximately Enable $X.X performance quarterly utility approximately by expect total increase to first unit, $X.XXXX through amount solid distributions continued to The formation, unit our to efficient source distributions XXXX. an of to common ownership support common Since Enable's the its Enable by provide ratio has infrastructure increase in provided cash to and from it X% grow allowed cash our common coverage since we of and its

eight steady and utility Slide non-utility generate adjusted support EBITDA businesses cash our shows growth. our to the

to they investments cash in can that, Enable, distribution adjusted You the Energy than these from EBITDA. Infrastructure more steady addition required of businesses. consistent also EBITDA generators see Services the are offsets The and adjusted Services by capital generate

regulatory have provide great and areas. identified In strengthen with the making utility continue progress We're manage O&M on nine. near shown execute our customer integration we We value. to merger focus This is execute slide four merger strategy, spending, integration, to long-term activities. infrastructure must term,

footprint. CenterPoint remain months a Vectren environment committed executing This reflects focused planning and after the effort. the to less of closed merger regulatory our integration than entire constructive of very XX We announcement.

achieving took In over remain XXXX, one immediate savings begin actions targets. target track and $XX savings. our on and We million intention improvements to on towards been process synergy on of of implementing has day XXXX our

to to for $XXX estimate merger XXXX. savings million $XX We million in continue

company accounting, a be The Beyond finance, expect these XXXX, single still experience. we is This be the important includes operations systems creating and and activities and systems. work developed will supply-chain year. activities being our customer integrating later for of set this across finalized will design primary of implementation merger-related technology

September recommendation to anticipate in Houston a receiving XX Electric the rate in from the the case, Slide from details of we With developments. a Commission quarter law Utility respect Public recent decision judge and XXXX. of administrative regulatory Texas fourth the

and our help operational We customers, our growth, a believe and have fair the relationships in which investments all case. continued for of will and provide our our constructive commitment and performance, support regulators outcome with this to appropriate make, other we stakeholders Houston's

Infrastructure and and system For a have improvement natural gas rate relief Program Texas, in adjustment received in compliance distribution, the Gas we through Reliability Indiana.

receive second in of case final to Ohio our the expect in rate We half XXXX. order the

other for We in rate have filed and also jurisdictions. relief additional Ohio

creating In resource are new integrated process Indiana electric a Indiana, show in we timeline of XX. slide IRP for the and or on we plan a

currently Southern for working determine to generation with solution appropriate stakeholders We the in Indiana. are

anticipate the to year. IRP continue the We of filing quarter second during new next

appropriate solutions the construction process. to following new completion begin look the We on will IRP generation of

On environmental like commitment I'd efforts, highlight slide our our ESG XX, particularly to to stewardship.

efforts and the capital in pipeline communities reducing most gas of our largest distribution $X.X greenhouse progress environments the which make we our gas date, our is of distribution five-year gas business proud contribution replacement further plan. the We The significant continue is billion to of improve are our serve. natural natural we we'll program, to through component

iron also other pipeline These across only pipe to beneficial XXXX. replacement better XXX per as emissions our well we territory. of safely unit our XX% have iron specific replacements, our the customers. service serve They're by investments annual natural have These our environment. replaced gas XXXX, us helped reduce of enable modernization not gas miles delivered Since as programs to since over cast over cast

We're this proud we of the area. in made progress have

of owned you approximately maybe greenhouse our XXXX. approximately the aware Indiana automation reducing across greenhouse to X% of emissions avoiding electric comprises since as Electric were tons emissions implement significant reduce System fixed We by footprint, Between gas has more Indiana and XXXX Additionally, of made our also XXXX, gas XX,XXX assets. Generation one Metering XX%. to utilities Electric first electric Houston progress than truck Advanced and by rolls

years. gas gas Services renewable known XX Additionally, than green been Energy as natural also more purchasing has for

green to While the grow. the gas for amount purchased each small, year is relatively demand continues

with pleased performance and in to our on forth. I progress, challenging Let updates second areas our have the financial continuing me to proposition, first the objectives. that, forward our financial by and value provide confident I continued I'm And achieve set achieve we to goals the focus a our on look we despite steps delivering long-term to near-term goals. merger taken in close CenterPoint's saying quarter. quarter, remain,

let Xia Xia? Now, the to for me financial turn update.

Xia Liu

comments about myself morning Scott good Since my on days. as today to to a lead and time good of a and I'm Scott, regulated I forward. help businesses and CenterPoint's XX my work strategy. compelling the the begin must I everyone. spent future forward valuable CenterPoint quick serving joining into proposition. value you, offers look growing the first have CenterPoint alongside to some to with company excited I like say utility immersing I'd long-term thoughts Thank company, continuing jurisdictions

in Electric added nearly has XX,XXX Turning businesses utility quarter. well Houston second growth. X.X% year-over-year, performed customer's slide approximately to equated to the our which XX,

year-over-year customer's approximately added to natural in XX,XXX growth. than legacy gas more business equates X.X% distribution which jurisdictions, Our

As electric in in more Indiana in customers year, X.X a merger this nearly business. distribution gas natural the million February we our and than added result of closing customers XXX,XXX

distribution is natural count. Our largest gas utility business by customer nation's gas second now the

has discipline of effort and highlighted positive expense steps to took the second in costs business. safely one while management importance the our resulted earlier, merger and control to near-term quarter. is year, this focus operational this achieve operating efficiency. savings, our discussed area This Scott Earlier continued in As a we variance O&M of realize

We O&M will expect of businesses. continue each this discipline and within functions our

savings. remain and We delivering our focused will laser merger-related steadfast in

utility Another to focus customer infrastructure long-term area provide value. to strengthen is

capital expenditures, In for over businesses we and an terms Houston the natural our anticipate of couple years. an replacement of distribution investment system increase work next for of Electric increase gas in pipeline modernization

anticipated the will the at XXXX plan to quarter capital at our comprehensive beyond expect in XXXX delay frame, call. the our electric we on to a Consistent to the past our Indiana last of the provided we fourth with capital overall investment update XXXX continue period levels the maintained of program practice, for Despite we be earnings amount on XX-K. provide some time capital

EPS to turn now basis slide drivers I the consolidated on quarter-over-quarter guidance will XX.

we impact $X.XX quarter diluted for per basis, merger a the quarter, year. to $X.XX last guidance compared the same on share Excluding for delivered

I to would areas highlight contributed utility's performance. strong three like that our to

for operating the newly quarter. income of added acquired $X.XX Vectren First, utility

positive of filings transmission rate Second, Texas gas a $X.XX for distribution. and natural Houston the service of Reliability impact Gas for attributable Infrastructure provided cost Electric relief to filing the mainly Program

we're variance the Overall, positive pleased for very with a provided performance utility's O&M the Lastly, of quarter. $X.XX.

for Next operating slide details XX, CenterPoint to Services. Services the turning will provide Infrastructure Energy of some I income and

has year the than and was second price in first million mark-to-market primary volatility three continued more we experienced any Price driver lack unfavorable Energy of volatility impacts. lower This For into experienced $X years. gas Services, the been we quarter prior limited of for variance quarter-over-quarter, the the the quarter. this prices excluding

income six to our remainder of revised million relative reflect to and for now of estimating gas for the have earned million, of months We're storage the weather-driven XXXX estimated margins those to mark-to-market reflect year sales to operating first with reduced expectations We XXXX. impacts. consistent $XX excluding activity through the total forecast $XX

million, business expenses. income Our performed second Infrastructure well Services achieving the in quarter of operating excluding merger-related $XX

part as quarter Vectren. of income second $XX was business' XXXX the reference, For in operating million

Excluding merger-related $XX January impact, operating the loss is million, Vectren. $XX as part the $XX million full million year expected to of in be income excluding operating to

be a that group of look transmission both from year results work, to full in the will performance we anticipate and We as stable remainder footprint. with to We by core continued customers the strong driven our work for Infrastructure year. forward continue distribution Services of

will the Turning basis diluted remainder you to on XX, for a consolidated see of a slide guidance expectations and performance XXXX. EPS of breakdown

and delivered through $X.XX XX, guidance last impacts, basis lower have year-to-date the the merger excluding share period compared to On per June same diluted we year. $X.XX

compared range. the basis the a potential the deliver other in translates XXXX. year, of represents which of EPS $X.XX to half of slide, year share and a weather the increase to on we per Excluding the $X.XX, our half expect $X.XX as guidance of variability noted full midpoint This guidance second into second diluted

from Infrastructure to year, and higher than acquired by decrease as Energy be well higher operations Services. a Energy last driven than the Services rate Services income driven jurisdiction. Services income by O&M from operating Operating Infrastructure customer utility year, $X.XX for expected $X.XX are $X.XX by growth, the For acquired offset as our be newly primarily $X.XX from expected XXXX, relief, to is management newly

the merger, dilution debt offset We first expect the of earnings by loss post year, end driven last $X.XX in reflecting and the income mainly quarter. $X.XX lower variance from with the the Midstream we Enable's from associated The year Investments of be Xst merger is to financing tax $X.XX partially the acquired remaining expense. lower and for guidance earnings short recorded impacts interest by February performance in

For full of anticipate utilities. we earnings from year, the XX% roughly to be our

shown the $X.XX basis of to reaffirming XXXX and as guidance range XX. to X% on through $X.XX XXXX CAGR We slide X% to growth EPS EPS target continue are a

growth XXXX, business investment rate let me year capital utility, a strong rate remind Vectren regulatory strategy well execution better be the our are our in growth, as terms and utility. key our fundamentals from our to drivers strong that earnings In from base continue of contribution for you as and growth customer utility full increased of relief,

As later we beginning forecast, case our anticipate on the full system more quarter process guidance will Houston and year XXXX clarity as rate the Electric as factors and for the the cost. year know our We're forecast technology XXXX integration earnings EPS incorporate which on Enable's providing planning this you in well earnings EPS fourth normal these culminate Call.

to I'd conclude, I investment quality. remind to Before like everyone of grade commitment solid CenterPoint's credit

quality value shareholders. is Our focus credit our and long-term on essential to customers to improving providing

to Let me year with consistent a of increases per several of recently increase stock. common relative in over also years. dividend dividends remind is share everyone last approximately X% $X.XXXX of declared a and our X% This the annual ago our

Enable had To our robust utility. basis capital investment help our on to XXXX to plan we and hold $X.XX. quarter We well guidance a summarize, for intend a our achieve combined are EPS strong of our to $X.XX range to way fund

X% target growth value to to growth. company proposition. largely CenterPoint utility a X% based the on strong diverse with EPS continue CAGR geographically a sound anticipated we is Finally,

strategically We and are well-positioned to operationally value. deliver financial to our shareholder provide for and growth enhance customers

I'll now it back to turn David.

David Mordy

Thank Xia. you

We Catherine? and yourself to of time, ask will question you a there I one questions. call now open limit to In to follow-up. interest will the

Operator

we Thank [Operator begin will time, Instructions] this Yes, At you. sir. taking questions.

of Our comes Insoo from Kim Sachs. first line question the with Goldman

Insoo Kim

least need today an you. to starting that and May to But growth embedded as us guidance. the the the drivers midpoint able off go was just is to back on the with XXXX? given regulated Thank for you I'm through intact morning. XXXX $X.XX. provide the had of update. the appreciating At are you in of different all Good with right place with that the confirm guidance that side, regulated that prior be levers just still you'll previously

Scott Prochazka

Insoo good is This morning. Scott.

through of our then updating subsequent in recovery. and As we're continuing are through going pointed whole we growth the their exercise get earlier, planning. the to we and out, utilities of utilities go through But investment our process as guidance invest the said Xia to

potential complete provide what we're So for on the utilities growth clarity that more like but intact as this process. planning exactly is very, much to we going still very looks our

Insoo Kim

other know more any Understood. months there it. or differences Enable to I assumptions? associated just if on understanding made that there But changes a maybe your guess the the with to has developments since non-regulated regulated side that wanted on volatility ago I were few regulatory --

Scott Prochazka

not. No there's

I still as same did haven't that issues we we opportunities facing before. through gone as we and we today, -- the haven't the businesses here We levers sit process. have said, and But

Insoo Kim

slide Understood. coming And from various on cash the thank the contributions non-reg for businesses. all the you

Just is you the may out need next the into when there first meaningful years equity? over an look more the you on few capital thought time updated plan

Xia Liu

Insoo program to we like five-year pointed will our this XXXX utility pointed capital move consistent out what the timing capital within last be we think the like Scott at of with XX-K. Scott before out, The disclosed could for the for window. around XXXX

So equity a expecting at be this time. not five-year of timing in a it different. The slightly issuance, terms are we of change may

Insoo Kim

Understood. very much. Thank you

Scott Prochazka

Insoo. you, Thank

Operator

JPMorgan. comes next from Your Christopher of Turnure line with question the

Christopher Turnure

last question Good not the morning decision reiterate guys. guidance follow-up that. to about on and maybe XXXX One the

that the and is to the growth reiterate the bottom X% off XXXX X% $X.XX. did end You base of

to bottom X% long your So, X% the would that that rate line in least? message with sure end. over that kind I is of be to your at wanted on term just make prior clear growth

Scott Prochazka

very That is still much intact. very clear, Still yes.

Christopher Turnure

comments. as made the to the But sale us the the on timing detail the I clear that decision the rationale more choice was yesterday? is articulated give you why pretty take Enable could maybe to decision and And table in Okay. think then behind off the you

are portfolio you that idea the many their and of How to the non-utility. about do or the businesses of otherwise? the rest that cash business businesses and risk you one think Enable's have contribution And

Scott Prochazka

the of thinking chose with Board. a simply it of us Monday about just timing culminated that it's evaluation and having those Board So, result following standpoint, with our to from we our discussions our some that following discussions ownership. completed an And disclose

and was environment, thing with So, as and timing really of went into the consistency today sit observing the capital what really the derisk know to sales. the only their earlier, the by unit for constructive Enable requirements we -- post-merger aren't we flows given markets done it driven has I course only the given cash the as our where business said that's of that

So, it this all brings and value needs. the of fell to our that flow together to change make capital for us Enable the communicate cash

your of question if second remind second I -- think your would. me you

Christopher Turnure

May be how other with of think kind to the cash the about non-regulated you just picture business the company, of the flow, and risk, contribution businesses broader them?

Scott Prochazka

So, at cash. of look a we source as them

requirements. As Xia their EBITDA noted capital their earlier, exceeds

look we for value as risks. the can certainly a them to funding. way more the cash. there where mitigate source businesses at being do we operate look in We we risk a than in So, those cash those those see But the There of is utilities.

Christopher Turnure

Okay.

I guess So, no company? businesses in the those being change from of to prior terms core

Scott Prochazka

we units. our the -- earlier, and create is around we realizing exactly our shareholder ourselves keeping as process. each businesses which value -- with our part to a challenge the did comes said example them, of but about Enable can cash And we that decision enjoy think we constantly more what evaluation ways great to those I is of made off of We and have appreciate

Christopher Turnure

And this line questioning. clarification of Okay. of just then within kind one

us Enable or this that Remind if of the part over was funding of shares plan current Your shares of was year -- Or tell you that? I part selling guess me, long-term Enable prior equity your next. kind need discreetly? selling don't guidance

Xia Liu

units in Enable of strategic were out a us. Yeah. we And there – that for definitely part Selling the of was options why mix. the one saying that's was that actively the

and Midstream to a made Investments. the Enable we've now So decision keep

capital XXXX the timing or and XXXX, the the primarily window equity before, different advance today think if we said more the see gas – example the up – natural between utility by need by capital as driven know is more that could projected five-year as because not window. potentially needing equity So to right – for will Electric more I we I for now, Houston be front-ended of issuance, what the but be – we total X-year so the capital

standpoint think the the of but overall the be the equity from an timing should overall be could similar. or different, five-year same I impact

Christopher Turnure

current Okay. there's plans in That's clear. or have no equity that And from that XXXX needs XXXX? the you in

Xia Liu

than yet. realize as will to need we Houston fund Electric of through the process we other I know of in We're process it now. finds details capital that on Unless DRIP before or we the going need said near-term. capital the in unless – we're updating need. we we before might than turning consider right Unless But the sooner the that planning options don't additional

Christopher Turnure

Okay. for you clear. the Thank That's clarifications.

Operator

Your next Agha Ali question comes from with the line SunTrust. of

Ali Agha

Thank morning. you. Good

Scott Prochazka

morning, Good Ali.

Ali Agha

Good morning.

expectations year? just or for remind the your you now being you hit be year-over-year. this it than your $X.XX down Can the in Services about flat that current to looking year changed highlight $X.XX offset at rather it'll question Scott you've that is keeps or out Xia and us you First Energy range as what again point

Xia Liu

Absolutely.

year we period in on XXXX, utility for the XXXX. increase You EPS $X.XX our expect the from compared $X.XX our walk same see to

utilities utilities expect So other in we CES. to offset our the – words, the

also tax items. have income some We expense favorable

decrease maintaining are we the the of $X.XX midpoint So from despite expected CES. $X.XX of

Ali Agha

are that that your I'm the so you perhaps previous Xia, do were utilities to just factored anticipating? saying clarify to into you are reconcile So going than to was trying how benefit what that tax Or not better you... just budget?

Xia Liu

both. Yeah. It's

versus bit had favorable higher second that's tax, variance. of tax. positive XXXX utility better of And comprised XXXX If income and little $X.XX performance so you second quarter look the quarter at quarter income we a

did So aware year of you items tax plan not those. that were But some that planned. we was last of that, the recorded we

plan. tax there's So income that some variances we didn't positive

Ali Agha

Xia you the cetera. XXXX of walked a et the case And Electric Houston some that Again, costs clarification. will see. drivers through question my I outlook rate second influence some again

So the in pressure to that just little of benchmark downward to at for just a summery, headwind few that the is months to is – a a put all you us it were looking probably sense XXXX how ago? move of up higher? of it Does is it last Can does it have calibrate not so Or XXXX framework this change slightly we today shaping better that? quarter? a you versus

Xia Liu

not all comment a We're XXXX. the up picture We about to on build planning a the ready incorporates want XXXX. process acquired jurisdictions plan We're to going newly clear that the normal through bottom process. to to a through you disciplined really give go

So we do need that. time to

iterated we utility strong Scott We As management. O&M laser-focused we're do capital have now, expect just do investment program. on --

to fundamentals So fourth need still a XXXX are let do want process. guidance the a to and quarter go call. lead the we same. us We is that need big hear on give take to work the Enable's the to all pause through to and guidance you and really business But process normal its

Ali Agha

guidance clarify Enable that anything that is were to looking when there or for assuming laid what different just at you us XXXX And the is heard Right. today seen originally? again, out you you than

Xia Liu

on develop our commenting is XXXX guidance took walk. the you the range not end We're thing The Enable. know didn't of lower EPS we to one

Ali Agha

Right. you. Thank

Operator

Your from of line America. from Bank Julien next the question comes of Dumoulin-Smith

Julien Dumoulin-Smith

morning, team. good Hey,

Scott Prochazka

Julien. Good morning,

Xia Liu

morning. Good

Julien Dumoulin-Smith

morning. Good

is put five-year a the that once here Maybe Can us items out maybe of you there a from CAGR kind way Can have to two obviously sense this of questions. give just And the last things individual just still guidance? off. little is kicking you another clean-up affirm five-year intact? -- the So the XXXX through each reconcile year more. you lot

Scott Prochazka

you restate I little were breaking a you question? But just your could up there. Julien, bit think

Julien Dumoulin-Smith

think individual to about the from compounding implied with Is still growth five-year individual years respect of intact, CAGR, the factor years? discrete that of you the each each

Scott Prochazka

particular, looking the probably of think plan; is over a What impacts XXXX investment is as process. to getting the year way about is on clear for to longer in this period really and the when to five-year actual Julien, we a the end. we're answer going time, this focus of effects are out complete we become given as at the best Well, planning the

-- XXXX a in looks our on we perspective that up what building got as prior making like, on this was prior while as really we plan planning the do to to number is we plan. So been what in confidence what would say, process the zero opposed build our I combined it needs from adjustments up, way the company to it have and which based we CAGR,

So it's but -- to investments our those you front tell performance don't out business on much answer we it's a know I about we of think in as an driven basis, very get want utilities I in that, and the make very do by -- of can I still XXXX, the my our on heavily annual the recovery of investments.

Julien Dumoulin-Smith

to plan, generation we collage, items that the state spend that the the Vectren And the a generation perhaps put according separately, there CapEx, remaining well. about respect Does either and indeed XXXX. XXXX. relevant factor here timing respect assume would XX-K electric And point? if XX-K that we impact those with be to at XXXX? understand of You executed is I post obviously is suppose the Got RFPs it. caveat up then through from could to as you incremental Excellent. be book And in the might back? the to see with here, talked following collage then, that no

Xia Liu

the very on the assuming But IRP. of related to the process, originally working amounts with ground, We team RFP we're It work the we process, some we to stakeholders XXXX be you. want is for probably are through hard solutions. get ahead the to not spending the to the don't not with shared we would -- that expect -- would

know additional also replacement capital. the we that program But pipeline requires

modernization We at requires that program more the also know CEHE system capital.

you would look an So be very the you have say I at would before. as similar it would from what standpoint, overall that, from five-year

Julien Dumoulin-Smith

then, And for stand at to quickly, case, utility the we Given settlement side, especially on point? the this what turning where the September? are in prospects

Scott Prochazka

the at opportunity in an always overly that would but not there's settlement say moment being these head, active. for Julien, I conversations they're are cases.

meets now one. we'll have but how pursue for time many to the and I it. actually where to decision. commission So say commission the don't state cases also between rate occurred I case in when the settlements before, there is have know going that the still can't to handicap are

this is but handicap settlement off one, don't to want tough the that I say to So table.

Julien Dumoulin-Smith

it. Got Great.

integrating $XX we think is articulated? clarification quick you of I assumptions than last iterated million technology sorry synergy systems assumptions set different a to today initially that's And of the million? the $XXX And

Scott Prochazka

-- of we integration talked is spent. the that to Those achieve in more cost about work dollars be system that Yeah. systems would line

-- I achieve when the million to and that are million dollars savings those it's they're to planned to XXXX. $XX $XXX impact not going for say have we So cost -- of

Julien Dumoulin-Smith

Got ii.

Fair They're XXXX? at against for rather enough. least net Okay. that

Scott Prochazka

What do net by mean against? you

Julien Dumoulin-Smith

reduction to that were targeted. synergy There you saving

Scott Prochazka

cost come obviously the there's to dollars our financials, in achieve out To would extent that that you're asking. if of that's spent what XXXX

Julien Dumoulin-Smith

Yeah.

that. leave I’ll you, Fair Okay. Thank enough. with guys.

Scott Prochazka

Okay.

Operator

Your Weinstein Suisse. next Michael question comes from with Credit

Michael Weinstein

Hi, guys.

Scott Prochazka

Michael, good morning.

Michael Weinstein

evenly integration -- have spread way weighted that it over would But lot you system XXXX and those more or is of Hi. morning. Good of it in questions any between costs, been two Is years? say answered. are A on the kind XXXX?

Xia Liu

costs. finalizing integration the of We're estimate in process the the on

details roughly $XXX we of think that a in million. year-to-date spend. year-to-date have appendix And deck the I the described spent we earnings slide the have the we

very system disclosed depending slightly integration the timing but of range And prior, cost estimation we should continue The the same the previously you. different process on with expect be relatively to amount be total from similar. could so a we'll it similar

Michael Weinstein

of that's I'm sense And from in the for number to might that that trying XXXX And timing be whether guidance pull caused you of source a the -- changing? to year? that how just uncertainty significant get

Xia Liu

-- It wasn't. wasn't it the

I out build within through to outside visibility about again go integration go rigorous is the plan the described. think we through to about process One XXXX, we to have the variability the our to wanted should the process the achieve -- thinking treat range. cost factors how guidance we are if of beyond goes and the we thing in

Michael Weinstein

right? actually included? guidance currently it's the range, inside Well, It's

Xia Liu

Currently, yes.

Michael Weinstein

Right.

mean are I I be My including exclude So then continue to to guess, they they whether I'm them, more be past if do being appropriate might going XXXX already but included. would consider might factor. But you question them? it

Xia Liu

think I likelihood would very that is going pass do XXXX, guidance said from forward. well. you it they If we it exclude the

Michael Weinstein

Oh, I see.

to the XXXX that might So include well? likely longer as it. the exclude last And would you they need more

Xia Liu

Correct.

Michael Weinstein

I see.

very Thank Okay. much. you

Operator

next comes the Gordon from Greg line of Your Evercore. with question

Greg Gordon

morning Good Thanks. everyone.

Scott Prochazka

Good morning Greg.

Xia Liu

Good morning.

Greg Gordon

I of you guidance full sources financing sure overall though Scott front got you've underlying financing and as and water pertains businesses? company, about incremental of reissuing have think but and pointed your numerator restacking is the you're and earlier of typing fact have regard of has to the of of I one one thinking of do just sort your the of small as range with been part make trying out sort suite of questions asked. sort up unregulated for them things of the little down. higher the volatility hatches of the amongst you're Notwithstanding needs? regard one the that to to to your XXXX it down there's are that tightened Does pieces guidance. a flow denominator to Enable the just level And the bit that uses the moving Is on. you a target not and there a other been batten cash with

Xia Liu

Absolutely. That's the equation. of part definitely

Greg Gordon

great you. Thank a day. Have

Xia Liu

Thank you.

Operator

question Khan next from of Your line Verition. comes Ashar with the

Ashar Khan

wanted remarks good check that to you've Hi, some morning. made. I just

in you build XXXX? second next repeat to in repeatable that's it's reduced income for something not next XX section year? the quarter in of this year saying as one-time year we for other in is in slide that have nature expense. So tax and likely $X.XX the not that's you Are itself So

Xia Liu

Correct.

Ashar Khan

Okay.

that is have I the... if So

Xia Liu

this When law was some I by state driven to change we variance say income tax. experienced state -- positive related the year we correct,

will the So stay. law change state

We law expect the XXXX. same to stay in the

So It up you wouldn't see that positive year. another will go the tax doesn't variance. rate next mean

say want sure not misleading a one-time. I it's that when to So Does sense? you I'm make I make

Ashar Khan

Okay.

makes it's change. sense. so Okay. It a But permanent -- like it's

remains Correct? going it So therefore period. forward

Xia Liu

Yes.

Ashar Khan

Okay.

So into the kind look clarify. then and Enable the the that have is we the that quarter, lower primarily that of to second I guess half, wanted And said Enable you guidance fourth for fourth Okay. third as in write-off fourth then quarter take to they're I just quarter? right? the the going in

Xia Liu

And know quarterly have the you positive don't year for the I too. year-to-date projected to It's $X.XX. breakdown. be they're

same year. downside So for the period have compared the second we half last to of the year $X.XX

down. For the it's full-year, $X.XX

Ashar Khan

Okay. Thank you so much.

Operator

Associates. comes line Glenrock with from next Your Paul question Patterson the of

Paul Patterson

Hey, how are you guys doing?

Scott Prochazka

Good morning, Paul.

Paul Patterson

bit. on Just Enable follow-up to little wanted

sort as out the of here? it You I'm distributions any the actual company sort enhancements more gone to what you of you -- in just it how that? the look has at we of mentioned guys what ability -- a if is which getting in should out little sort you that wondering in everything. could longer But term a on about how down a and Enable how valuation you -- sort terms of of influenced increase the or it's think of see way of know elaborate bit the you actually the bit. And valuation a and is it's derisking and through of have And left sort the its just

Scott Prochazka

of sector ability So seeing units non-value incredible creating transaction issues One in those very thoughts. couple a of valuation the that just a shareholder. tax factor the for sell therefore clearly, a terms leakage to and is the without is

cash feel to around challenging. market us we of idea than investment selling provide the sits perhaps something financial for more to about for the just has its and their made today derisk But their business So years use we issue they where one clearly better did health us was we given continue to that today how and fundamental ability Enable the ago.

cut they've the shifts and their things their that with in their of -- to ratios business and their more contracting without downturn derisk source their knowing value some and the some through So that in a done with coverage change severe being it we years of made as the needs. having distributions, for ago they real Enable capital see to of our cash

Paul Patterson

Okay.

change think Is change I outlook. guys assume. think -- changing point you at of guys that if in correct? should much that change, a your there's really we there's a sell a making of of will is even anything outside about Obviously we much valuation, perhaps but some that that huge correct? you shouldn't significant So in But -- just

Scott Prochazka

team conclusion utilize We as our through valuable now cash that time and it's Board an management is this sell. correct. the arrived certainly with on is went our around we keep spent the more We That at position and to analysis. believe to have it flows than

Paul Patterson

should in integrate your on the just kick businesses? legacy Your them then the far time announced non-reg during what's and change is? you ability How them what when have for and just might so you, here And and your to that it that -- it guys the is? as any what the Okay. have been we about composition going And stuff. the outlook just those same experience has merger? think Vectren had Is that to the you, about how forward tires or have you the how performance of thoughts guys more of outlook what was for

Scott Prochazka

Yeah.

operated as business. business view and We business there knows this the the you've extremely They over on that acquisition. team with came team over increased quality Our got hasn't their well changed. management good really a management The noted have well.

both transmission some year. business their is a of That's last as expanding of year and this anticipated So than result their performance distribution better to business. their business be

a demand market. the type for see continue of strong to that work We of out

its we business sit good as as has today, that fundamentals to that So here we a see performance. keep driving

Paul Patterson

My answered. Thank so much. Okay, other were Thanks questions great. you.

Scott Prochazka

you. Thank Okay.

Operator

for cooperation. you your Thank Instructions] [Operator

line Fishman Morningstar. of Your next question comes Charles with from the

Charles Fishman

morning. Good

Scott Prochazka

Morning, Charles.

Charles Fishman

XX. Slide

-- your three points the bottom. the bullet at So

Electric, subject been I that taking a assume rate traditional CapEx from and would to base. most would've You're of Indiana

You're that of I pipe covered replacement and rate pretty scheduled think a CapEx trackers some it I blown least should natural am at mod through correct more by missing or pushing to or that full gas adjustments on grid at going is type rate Lot piece that clarity. Am Houston regularly something? good Electric. would you without piece rate case. have I distribution,

Scott Prochazka

amount clarity respect to respect to Clarity the investments? with with the recover would how or additional dollar we

Charles Fishman

Recover earnings power. the and investments

Scott Prochazka

on You do right. are We clarity have correct. that. That's

Charles Fishman

Okay.

-- another Electric at year on you distribution. you then natural for Indiana you're slide Houston and a question what it? when growth some So Electric, experiencing kind Do listed customer going XX, of customer growth gas back have stat Vectren customer growth ago on owned for

Xia Liu

a but customers customer portion total Electric. They it's Indiana the our stay very accounts small It pretty for entire for flat, XXX,XXX of count.

Charles Fishman

Okay.

it's got needle just or not it's it. whether really the growing not. So I moving

Xia Liu

not… It's No.

Scott Prochazka

yes. correct That's

Charles Fishman

okay. it, I Thank have. That’s Got all you.

Scott Prochazka

Thank you.

Operator

time. this questions no And there further are at

David Mordy

Thank everyone CenterPoint your interest for in Energy.

day. great XXXX conclude We our earnings will now second quarter Have call. a

Operator

earnings Energy's XXXX second participation. conference Thank for call. quarter concludes you This CenterPoint your

CenterPoint Energy (CNP) 7 Aug 192019 Q2 Earnings call transcript