D - Earnings call transcript Q4 2017

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Operator

Good morning and welcome to the Dominion Energy and Dominion Energy Midstream Partners Fourth Quarter Earnings Conference Call. At this time, each of your lines is in a listen-only mode. At the conclusion of today's presentation, we will open the floor for questions. Instructions will be given as to the procedure to follow, if you would like to ask a question. I would now like to turn the call over to Tom Hamlin, Vice President of Investor Relations and Financial Planning for the Safe Harbor Statement.

Tom Hamlin

to Energy quarter Partners. and welcome call earnings and Dominion for Dominion morning the XXXX fourth conference Good Energy Midstream

any this the answer and and will refer of this will the operating earnings clarification release call, statistics schedules are in call detailed During in intended be questions kit included to to kit. to Schedules Relations morning's more schedules. from available accounting. pages certain releases for Investor release after our the earnings these earnings we pertaining

have not the and full-year you for our done If and you so, alerts, to Investor websites, I visit view email on quarter documents. encourage our fourth Relations page earnings register

dominionenergymidstream.com. dominionenergy.com website are Our addresses and

website the In directly report kit measures, forward-looking release. morning's comparable recognized by are earnings financial for usual to may for that Reports differ Also And forecasts, most release Midstream refer from the that estimates this release GAAP. those calculate Reconciliation on the of SEC Reports addition Form of management's performance in now call on company's on earnings discussions. Energy be and and we Partners’ GAAP the a measures matters language; non-GAAP and most to of recent our Quarterly are XX-K this other cause that our a results releases may will on from Please factors will to contained uncertainties. call, estimates, XX-Q differ able that our statements the we Dominion that measures press to will and and on Annual to earnings expectations. Form subject discussion cautionary projections, and have contain discuss some and follow are to we included including risks our our discussed kit, slide today filings the our presentation various

earnings results are Mark our Joining will the and members and review review other operating made will activities our McGettrick. our Tom guidance. now progress earnings management will of Mark team. our growth us Energy's over the to this the Farrell; we’ve CEO, Tom call I turn McGettrick; discuss on call our our regulatory plans. morning CFO, and and Dominion Mark on

Mark McGettrick

adjusted increase and Energy an fourth difference EBITDA liability. of The reconciliation per Virginia cash our XXXX. to for which found can earnings our $XXX results. on tax a in in $X.XX principal expenses. reported from is had Partners our and factors more kit. Adjusting weather, morning. The middle impact are rider operating for release XXXX, million Distributable level of December was a operating operating $XXX we which of share the a range. produced of XXXX the was of year generation of tax the growth of declared Overall, our per represents in increase. primarily full The deferred earnings operating business. in our earnings the half our Energy the reported Questar to January five. per due EBITDA on rate expenses, projects year. returns allowed negative slides were common which year last payable Mild produced This weather than double in Midstream segments plan. in over XXth. and acquisition with was earnings are On of Directors X performance per guidance distribution XXXX The segments includes be $X.XX winter Board Energy interest lower of $XX.X impacting schedule of principal the Other a Pipeline the of capacity very February negative distribution with on lower our reform, electric expenses earnings for Dominion operating the in on the margins relative a unit than driver distribution territory for Midstream's and than shown and Good of the $X.XX XXXX. adjustment $XXX quarter’s gain on the summer XXXX. quarter was were earnings share of and range. XX% GAAP Dominion of year XXth, results to four pleased the Dominion by conditions earnings rate expected million positive higher merchant consistent our to XX% both upper million, merchant between GAAP general payment for a earnings our XXXX and flow X% per for guidance our was factors share were operating is summaries driven our lower service

weeks. at times. remains of credit the X.XX will advanced This next parent we revolving $XXX a Dominion Our coverage the few Midstream existing securing for Also stages in place that its facility in are in be strong company. ratio credit with replace line should million

was activities cash billion for activities from Energy, flow $X.X treasury at to Dominion operating Moving XXXX.

$X.X the of with have cash, liquidity we facilities taking We billion. short year paper available credit ended $X.X investments for term billion commercial outstanding, into and account and

increasing also facilities improve are total liquidity. would up Dominion’s a which We $X of in $XXX our million to further the credit by billion, process of

Slide pages XXXX On statements planned release of number earnings liquidity of we and support For kit. balance for and of a flow XX in XX cash see are of X, credit and profile. our we've outline sheet which initiatives please the

planned issuance our we First, not equity in through to $XXX This program common our million was related January. financing. issued at-the-market new SCANA of

two reductions disclosed previously Second, our capital $X our no estimate. have the These anticipate spending on impact capital by expenditures plan growth we've reviewed reducing and will next over our billion years.

credit million And ratings process plan securing This million we $XXX credit elements to billion. debt in Energy investment facilities excluding on the are up Slide Dominion on parent of or planned total an and by shown new we're $X assure company Third, grade These just upsize I X. company our initiating a that everyone mentioned, to in more to of I are credit we'll de-levering we're of and holding at extension SCANA transactions addition financing Midstream planned reduce this the finally, as strive is our metrics. associated Partners. meet the will and want facility committed a Dominion's $XXX to other XXXX year. basis net to of a

on reform recently Slide tax tax to most to enacted utilities. changes significant Moving on XX, a impact the were federal code

reform, In Assessing will the multifaceted regulated from that lower all in for our seven assumed a be process benefits customers of operating the we've impact different tax a in of impact like state ongoing is estimating businesses. rates difficult tax company to the passed-through Dominion, states.

improve non-regulated of our rate Also taxes businesses. On the long-term incremental and our the to regulated of growth plus amortization the side, normalization, lower tax contracted in deferred will income excess profitability provide businesses. base rates will

by not-cash the of the rating tax to of tax taxpayers. share. highlighted from reform as estimate side negative positive Dominion agencies, federal the per who recent strong We will credit creates are like the $X.XX companies some comments XXXX for currently $X.XX headwinds On reform particularly a impact be

earnings and above year's Energy, expected and $X.XX operating guidance XXXX to XX% are of of Dominion The range middle at Now earnings per is last be our midpoint the for to share. between $X.XX normal are range. return Cove tax guidance weather, Millstone, rate a year and to from outage lower factors last at reforms. earnings compared one effective due to tax Positive fewer refueling to Point

promotional and on Farrell tax costs, for credits, the lower few tax delay last operational financing timing the large Point benefit higher factors Cove a for in a year Negative offset will expand share will operation reform by minutes. compared investment of to in Point. be However, Cove Tom of the XXXX include dilution. portion

compound Our rate earnings combine for X% growth rate This the plus could X% period. our improve to growth if are X% in we efforts through to remains XXXX successful SCANA Corporation. to with XXXX

a are higher Cove and include Point to from last is cost, tax to normal $X.XX capacity guidance $X.XX for federal higher financing of per of this first credits, and factors year's first weather, first for export, last year the earnings year. operating the higher quarter margins share to solar generation Negative $X.XX the compared factors higher Our tax merchant quarter investment returned Positive quarter quarter for reform. expenses compared to lower DD&A. contribution

You guidance per is though businesses. net to are compared our share earnings of state that prior due flow-through were period, the a impact for will and to total regulated projected operating company This documents the notice income benefits reform of and EBITDA the even segments in and higher. our showed our decline tax

be So summarize our per of review. were me $X.XX guidance range positive earnings to Changes Dominion's net to let financial for weather. a the my in code Operating expected share, are middle mild federal tax earnings. despite remaining

with previous of to call operating are expected strengthen reform to I'll to earnings XX% over turn taking above earnings now our midpoint offset XXXX Tom be the least at Farrell. the impact aggressive We XXXX balance consistent are operating to tax range, steps guidance our of and sheet the guidance. credit

Tom Farrell

and operational performance safety Strong Energy in continued Dominion XXXX. morning. at Good

safety exceeded All of year. our their goals or business for units either met the

employees OSHA additional in Our X.XX. an new exceeded In by Recordable to set all-time Rate low of an low XXXX, XX% record they of record that XXXX. a X.XX

our proud very are companywide improve to of commitment We performance. safety

in by were connects led Weather-normalized and our well. both fleet commercial and Total expectations data XX.X% were previous X.X% in sales factor record new in customers. record electric and centers the XX.X%, capacity six net nuclear of exceeding Our XXXX. above residential operate sectors. customer continues growths year for XXXX, strong growth The our over units set XXXX up to with to a residential of sales the was

XXXX. we the to connected year, XX new centers compared XX For data in

state-sponsored Station, forward Millstone's path-forward and December to the X,XXX other issued non-emitting to economy. energy the reports a benefits in to Now DEEP carbon the of state's provides compete Millstone PURA power solicitation well-paying generating It for economic and are a markets jobs we Power few to electricity. importance substantial resources for highlighted Millstone zero Preliminary and in in environmental on region's with looking January opportunity Connecticut. and comments by the retain

units to agencies with of sharing January concluded of worked convey cost should in financial have market. that An issued the We report can't operating confidential participate. the labor solicitation the dissimilar actual XX, high information, that take Millstone on updated including two regional in regulatory a place the

New from future and report continue supports this and final is regarding recent The for DEEP the and PURA process also expected look Connecticut to forward security through Millstone. week ISO need the we fuel report this region’s work reliability with risks the Our regulators. England from

the of Station our Power update X,XXX-megawatt construction on budget. plans; Greensville for Now on Cycle on continues an Combined time County and growth

$XXX All set. XX, The electric this final to Point invest business transmission operations to continues achieve of is placed and invested commercial project and $XXX and achieve growth awaiting line in decade. of well. assets every on stages the at and the for plan buyer year. into was $XXX for is upgrade late year $X.X service. plan In on As commissioning. year of our million commissioning. completed Liquefaction gas and are station electrical in least our and our equipment of to expected Cove million we complete transmission of gas December M&R is final we are Construction natural is first XX% billion infrastructure network the schedule XXXX, on complete. continues. primary the major second project million quarter We next as Greensville Progress The this

are commissioning and the we are This toward that process, thoroughly has safely, planned, While done work we correctly. complicated early and our taken and March. in in-service an all originally an is state longer is we enormously than contractors ensuring progressing

at The in actual cooling our and expected the phase. will become make to and temperatures LNG facility down effective previously production met earnings final tuning currently have discussed. Once LNG and are process the to of we is project imminent. the of produce commercial, contracts testing liquefying the We

January of guidance. the West of absence for issued for year XXth, these expect mentioned, Coast Notice in Project, trees. However, and allows January at and to earnings January us the expected XX% a months On XXth. Tree-felling Header proceed related we still to Atlantic the be benefits Pipeline earnings will income for least on year’s some from the Virginia the the of above Virginia on midpoint of Limited ACP to first lower Header for started which the the Supply offset Nevertheless, XXth as Mark XXXX earnings few Supply felling and taxes. FERC last begin

Virginia. received our We particularly we final well E&S from as Carolina West excellent water quality are permits North mountain week, making in progress the our permit final XXX Last areas. as

authorization need provide. expect in Carolina North permits regional earlier average We permits and These including Army full of Supply urgent underscoring XX% Coast substantially, the the request construction. XXX and E&S daily schedule transportation increased Virginia completion remaining month, FERC the projects that weather half will Virginia necessary on next power increased Project remain in in day. major cold are any for our Corps gas crisis England the that final the It major the during noteworthy power second permits commence this year. all of to is to Atlantic the surpassing and New for and the price Header by Pipeline We highest

offer we for Xrd, comments offer merge to with shares Including SCANA share. exchange stock would for our each Dominion with announced on a proposal Finally, filed payments reductions that agreement to the a on the the for Commission development Public nuclear SCANA our was common few Carolina XXthj. a January its Corporation, of projects. build upfront Service January South ongoing customers reduce would regulatory and from We proposal substantially cost on abandoned X.XXX

the for and Hart-Scott-Rodino All been regulatory made. have clearance of other the application state filings

changes proposals May. who possible the South Review in to our in We’ve receive Carolina caring expect explain Base Act. We shareholders SCANA's to to considering participated lawmakers legislative to are approval Load from

that proposal be complete by transaction can year. We makers will viewed regulators, favorably and and our optimistic later are we this the law

Point Supply So continuing, any setting project to in Notice record tree-felling are Limited and of budget, Pipeline day. in businesses our in begun the on-time Greensville Coast Cove and commissioning We expected Proceed permits is the to on to the expect Atlanta Other have route. operating we Construction summarize, for the early XXXX. received County of Project be service delivered in along performance and and March. Header safety

XXXX our also percent. Cove to completion least and our in plus expect all rate Point growth the earnings programmatic questions. allow at into happy to we’ve XXXX with our increase provide finally, XX% We dividend MLP could flows from to merge that, rate will at well SCANA across cash of business units X of in And of the Success highlighted of X% decade. growth X% growth of at to next fall, our investment least of driven earnings foundation plans your XXXX. project be superior Liquefaction XXXX. we would XX% our the efforts a Dominion unique by Because the X% per growth Energy of take last year With least for to through structure,

Operator

The first go come with Greg Evercore ahead. Gordon Please ISI. will [Operator quarter from Instructions]

Greg Gordon

you billion about long in got the terms months few the a Notwithstanding really being of is very you’ve run. of the Is about track when CapEx at in the budget tax of -- were the the so jumpstart utilizing parent targets are early? goals? sort all taking that get Like of of a use articulated looking about the deleveraging way to because So about that and a are you’re those right deleveraging on just the $XXX short taken starting Cove benefits $X.XX think Point it because take to XXX you’re get obviously steps reform, delayed the you’ve benefits on Point, targeted thinking earning Cove achieve. issuing in reduction tax to a $X.XX, benefit think I reform think the that to delay able like fair bringing structural the that am million earnings the million not other Or $X you’ve debt the matter your reducing things few and the correctly? words of on them equity and it about doesn’t and Is of I jump just by on to this? reform to to months of tax

Mark McGettrick

Greg, this is Mark.

a there. in what go equity think One in the delay we A ahead aggressively right our and piece with went you’re large at going we’re credit. using position track slight be that even Cove. January, I and support ahead knowing on to to market was reason, of issued

the we’re have. committed we to did So, that ratings of advantage take that and we

of to the to get that We and a will jump advantage we steps necessary support take took taxes start.

Greg Gordon

were Great, I that wanted a that, other have I the any Other just understood congratulations don't sort was to you make that sure year. what than on questions, I of good actually doing.

Operator

Bank Please of from Lynch. come Dumoulin-Smith next go Julien Merrill ahead. Thank will question you. with The America

Julien Dumoulin-Smith

a point? you've given this get us of Does in progressing? obviously of late, present. profile a that debt other way to to some lows question the So, this with shared this your of could I which just agencies conversations you of you timing you track that remove position back and And these how a added think ratings? updated current execution you maybe a to consistent Is the and with the Is the at even share put clarification see bit place morning. some here to you've Moody's and of on you've conversations about off a up in that metrics more get extent at the your actually, probably agencies little is this on, mean plan put to FFO the quick just debt at for and right just outlooks? with the

Mark McGettrick

Julien, this Mark. Hi, is

and are grade, them that the very take they outlined for is investment all with plans remain can that committed are our to and shared commitment. start this to industry-wide with for think is work to issue and our going probably regulated utilities going terms and to done the FFO agencies of to reform. in do commitment metrics I us support that's the by the all the execute strong is get very they We make have that's gives We are this a agencies of the there's and we for because to in agency metrics what sure tax FFO for pressure our be impacted investors believe think where our we're our more but FFO future. strong plans, FFO agency obviously companies approach The will forward, an comfortable

Julien Dumoulin-Smith

the $X.XX to a not of I of growth. And the number you've least the reform. pieces to $X.XX plus reaffirmed moving key does in in just all? in but you wanted standalone the at update, you for your got earnings which talk I tax at if earnings the outlook, to the Obviously, can about might this come ex-SCANA takeaways shift it know trajectory, how back X% prospects

Mark McGettrick

percent. think, post clear X% rate is that I the we're X rate. transaction 'XX And think plus If move on I to percent mentioned, we've plus as to Tom annual could been compound SCANA rate our successful growth on from -- in Julien, I without at Well, XXXX XXXX, growth 'XX hope X SCANA that X% XXXX. to a

position the one well, with So terrific and us. the believe be certainly growth we're rates without industry dividend positive best of highest rates in for in or we SCANA, result growth the one would with SCANA but of as a

Operator

you Thank Research. next The question. go question for the Steve Wolfe come Please will Fleishman from ahead. with

Steve Fleishman

way. Same different question a in

to X% that $X.XX Assuming growth? XXXX, $X.XX to over your is net continued $X.XX Or a why you higher to change bit be period? $X.XX that the in through benefit little wouldn’t X%

Mark McGettrick

X% Steve, of I period, cash FERC handle and a we think it's but real X% might to over how impacts it, states moving going tax handle still terms to reforms timing the might the bit I and range it, of again the there's a lot change on how feel think comfortable of with in little that. parts on

bit don't So, move to off SCANA. move we down but all, little a we've move without is think around It's made I I think Could and bit? post us us 'XX. it X% the that right our X% assumptions could little taxes here, best it at will possible. think range

Steve Fleishman

potential you remind on Millstone us including are benefits not in of plan? to any contract just could of you your clarify, the there then if And kind

Mark McGettrick

but growth our We out X% number specific Millstone when at that the Millstone, for X% on came us the did success to in with are we prior not range a legislative within work. depending could range not. our move put to Again, our we range

Steve Fleishman

was bit proposed? just little Dominion's legislation potential about on also that maybe the view you talk And a what's then that and impacts? Could recently Virginia

Tom Farrell

of the Steve, House legislation has in an week of Virginia energy think General lots piece this to moves rapid in issues the Tom. in deals developed There very variety will of this is of through both and that the leaders the is legislation Assembly, of by with have March. been a And comprehensive be exception, in don’t -- the that end Senate policy. a state they normally. moving first pace I It's through by adjourn a the

but with and piece We we for have are working are stakeholders accommodate to variety So, good our think our of very it's we it. some in a some overall legislation on are constructive There will things ourselves things think state customers. a of it. that there to,

Operator

The next Suisse. question come Please from Weinstein with Michael Credit will go ahead.

Michael Weinstein

-- maybe have mod for if you and I we the customers. talked of some from you and grid was opportunities I know benefits. discuss other see past could about in both legislation the riders that investors some and possible wondering the

Tom Farrell

hearing bit goes think I the work when final will next And about we'll I it's coming next -- couple the -- weeks, lots up in we here. on from position later products of done still There it. about think don’t we talk to a is more call. on in how will premature be of to talk I thoroughly it and be committee see a in to maybe see it the be the little

Michael Weinstein

Dominion you reform? $X post past there any to the the billion about Midstream, for to On talk $X from cash billion Is well update that to tax of as XXXX. used XXXX in

Mark McGettrick

since de-lever of one and come back consistent shareholders to in parent. into in one is the going back to Dominion Michael. we that We the expect the That the to and has cash levers execute Point to No Cove are beginning to that of year. day to of that terms been mainly expect we on the on have Dominion drop still benefits update story midstream fully that, and many this the the

Michael Weinstein

would just -- bid outcome forward in Xst can talk about you Or Millstone? February review? is in question one dependent And on the whether the auction capacity that you the -- last on to of New plan England, you on whether

Paul Koonce

Koonce. is this Paul Michael,

to We sensitive. what are going bid. are discuss not we prepared I competitively mean to obviously that’s

week. the in to structure timeframe, final later are between issued being Tom through the will with to issue submit as report RFP that an as the report a any we we then well DEEP PURA very PURA to so May working They both bid So, and That going lead their this to DEEP kind said will be we and our we May process. bid of get understand will with others. believe working and in are final and

Operator

your question you will go next Group. The with from question. Thank Storozynski ahead. come Angie for Macquarie Please

Angie Storozynski

So CapEx my question is billion gross So, this in -- your okay, what reduction is your $X this? so, impact getting that maintenance doesn’t the CapEx reduced? is CapEx? Is

Mark McGettrick

this things. storage lot to billion and Mark. It's and of next Hey, in into Angie, of on that sight XX coal the have an over generating in portion so months would of The maintenance there is going reductions to that. of of billion maintenance over two based largest units to associated have up be The required will next good those or the very our a market go with be of activities $X will But is the couple non-core on a lowered a line we’ve $X timing the current period. that over years of recently all at put of announcement component come other be made facilities we also the But number with reduction. Virginia year ahead economics. that nine

Angie Storozynski

Okay.

up the equity financing was -- if the the Second correctly, issued outlook, question aware credit of on the negative CapEx more so do credit ‘XX? to i.e. credit account the it that I of I that it in okay you’re and understand 'XX Does and initiative outlook and credit January agencies improvement proposing. step were you the outlook lower for negative some already need come need and equity mean to

Mark McGettrick

that and associated it They agencies years, the the with three our Angie, had was to they over reform decision until that headway plans billion on today that advised the -- sure on when that we adjusted very shared for not quick or metrics are making the -- about we not $X our on and equity to the we’re we’ve transaction make the based metrics here made with focus focused were internally talked SCANA that know tax improve next was recently and impact. the we we the adjustment. a

and we were this a complete go as ahead in we original is they So, and step think their forward, numbers SCANA big transaction.

Operator

you. Thank

will from Byrd final with Our Please question Stanley. Morgan ahead. go come Stephen

Stephen Byrd

check mentioned to in I -- helpful in debt just goals debt terms of leverage the the a past reduce to holdco had around But just overall credit the desire commentary this of in metrics. lot wanted the on target you should from total as down end you morning given terms of still decade, XX%. level total percentage thinking of moving we to leverage? a your I about to how believe think XX% XX% that of in lower by be the the Is holdco

Tom Farrell

debt. is sure. percentage of as you’re by some Yes, for range that today, of That’s get the about quicker the to a although that range. talked total family little we’re holdco the but may We changes same the XX% we targeting at XXXX, XX%

Stephen Byrd

material broader then all of Amazon beaten Have but And the thought path, little territories. I this notice shifting, but your know are terms it of shortlist in that couldn’t off is that can them and took is in terms you through Or broadly more in existing might infrastructure? those utilize be of something three selections this Is required a you could place? great. help Okay, the have? you be the if what of infrastructure likely infrastructure, locations, one

Tom Farrell

be where of mass about upon spin Virginia decade, deal of I all and of they There we’re shortlist. that a is lot a were included hopeful to the Washington referring a see they lot a think and want a of wisdom and you’re lot over in I coming all obviously of of state. XX,XXX over suburbs will it -- is homes I you’re that with referring think. jobs residences sure Marilyn the And talking right Columbia, what there’s of suburban were on that obviously the decade transportation, businesses jobs lot District -- and depending am Well, to means off and a to that Suburban

Operator

you. conclude morning’s does conference This call. Thank this

may enjoy and your lines day. You you disconnect

Dominion Energy (D) 29 Jan 182017 Q4 Earnings call transcript