UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported) May 5, 2016
ONCOR ELECTRIC DELIVERY
COMPANY LLC
(Exact name of registrant as specified in its charter)
DELAWARE | 333-100240 | 75-2967830 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
1616 Woodall Rodgers Fwy., Dallas, Texas 75202
(Address of principal executive offices, including zip code)
Registrants telephone number, including Area Code (214) 486-2000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On May 5, 2016, Oncor Electric Delivery Company LLC (the Company) distributed a slide presentation entitled First Quarter 2016 Investor Call relating to the conference call discussing its financial results for the quarter ended March 31, 2016. The slide presentation is furnished herewith as Exhibit 99.1.
Within the slide presentation furnished herewith, the Company makes reference to certain financial measures that are not prepared in accordance with accounting principles generally accepted in the United States (GAAP). Specifically, the Company makes reference to EBITDA, a non-GAAP financial measure. EBITDA is defined as income from continuing operations before interest expense and related charges and provision in lieu of income tax plus depreciation and amortization and special items. The Company is providing such non-GAAP financial measure with the belief that it will assist the investment community in properly assessing the underlying performance of the Company on a year-over-year basis. The Company does not intend for EBITDA to be an alternative to net income as a measure of operating performance or an alternative to cash flows from operating activities as a measure of liquidity or an alternative to any other measure of financial performance presented in accordance with GAAP. Because not all companies use identical calculations, the Companys presentation of EBITDA may not be comparable to similarly titled measures of other companies. In addition, the Company makes reference to EBITDA, net income, operating revenues, operating cash flow, total debt and interest expense, in each case excluding the effects of Oncor Electric Delivery Transition Bond Company LLC (BondCo) and purchase accounting resulting from the merger transaction of Energy Future Holdings Corp., the indirect majority owner of the Company. The Company believes that excluding the effects of BondCo and purchase accounting provides investors an important ability to assess the performance of the Company because BondCo was organized for the limited purpose of issuing securitization (transition) bonds to recover generation-related regulatory asset stranded costs and other qualified costs and the effects of purchase accounting result in non-cash impacts that do not relate to operational performance.
With respect to the non-GAAP financial measures presented in the slide presentation, the Company has complied with the provisions of the rules of Regulation G and Item 2.02 of Form 8-K under the Securities Exchange Act of 1934, including providing a reconciliation of each non-GAAP financial measure discussed above to the most directly comparable GAAP measure. Such reconciliations are included in the slide presentation.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
Exhibit |
Description | |
99.1 | Slide presentation distributed by the Company on May 5, 2016. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ONCOR ELECTRIC DELIVERY COMPANY LLC | ||
By: | /s/ Richard C. Hays | |
Name: | Richard C. Hays | |
Title: | Controller |
Dated: May 5, 2016
EXHIBIT INDEX
Exhibit |
Description | |
99.1 | Slide presentation distributed by the Company on May 5, 2016. |
Exhibit 99.1
ONCOR®
First Quarter
2016
Investor Call
May 5, 2016
Oncor Electric Delivery
Forward Looking
Statements
This presentation contains forward-looking statements, which are subject to various risks and uncertainties. Discussion of risks and uncertainties that
could cause actual results to differ materially from managements current projections, forecasts, estimates and expectations is contained in filings made by Oncor Electric Delivery Company LLC (Oncor) with the Securities and Exchange Commission
(SEC). Specifically, Oncor makes reference to the section entitled Risk Factors in its annual and quarterly reports. In addition to the risks and uncertainties set forth in Oncors SEC filings, the forward-looking statements in this
presentation could be affected by, among other things: prevailing governmental policies and regulatory actions; legal and administrative proceedings and settlements, including the exercise of equitable powers by courts; any impacts on Oncor as a
result of the bankruptcy proceedings involving Energy Future Holdings Corp. (EFH) and certain of its subsidiaries and the change in indirect ownership of Oncor proposed in such proceedings; weather conditions and other natural phenomena; acts of
sabotage, wars or terrorist or cyber security threats or activities; economic conditions, including the impact of a recessionary environment; unanticipated population growth or decline, or changes in market demand and demographic patterns; changes
in business strategy, development plans or vendor relationships; unanticipated changes in interest rates or rates of inflation; unanticipated changes in operating expenses, liquidity needs and capital expenditures; inability of various
counterparties to meet their financial obligations to Oncor, including failure of counterparties to perform under agreements; general industry trends; hazards customary to the industry and the possibility that Oncor may not have adequate insurance
to cover losses resulting from such hazards; changes in technology used by and services offered by Oncor; significant changes in Oncors relationship with its employees; changes in assumptions used to estimate costs of providing employee
benefits, including pension and other post-retirement employee benefits, and future funding requirements related thereto; significant changes in critical accounting policies material to Oncor; commercial bank and financial market conditions, access
to capital, the cost of such capital, and the results of financing and refinancing efforts, including availability of funds in the capital markets and the potential impact of disruptions in US credit markets; circumstances which may contribute to
future impairment of goodwill, intangible or other long-lived assets; financial restrictions under Oncors revolving credit facility and indentures governing its debt instruments; Oncors ability to generate sufficient cash flow to make
interest payments on its debt instruments; actions by credit rating agencies; and Oncors ability to effectively execute its operational strategy. Any forward-looking statement speaks only as of the date on which it is made, and Oncor
undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events.
Regulation G
This presentation includes certain non-GAAP financial measures. Reconciliations
of these measures to the most directly comparable GAAP measures are included in this presentation, which is available on Oncors website, www.oncor.com, in the Investor section, and also filed with the SEC.
Oncor Electric Delivery
1
1st Quarter 2016 Investor Call Agenda
Financial Overview
David Davis
Chief Financial Officer
Operational Review
Bob Shapard
Chief Executive
Q&A
Oncor Electric Delivery
2
Residential and Large C&I1 Metrics
Residential Points of Delivery
Q12 15 vs. Q1 16; thousands of meters
1.5%
2,844 2,888
At 3/31/15 At 3/31/16
Large C&I Billed MW Demand (Average)
Q1 15 vs. Q1 16
0.5%
16,931 17,012
Q1 15 Q1 16
Residential GWH
Q1 15 vs. Q1 16
10,409
8,649
16.9%
Q1 15 Q1 16
Large C&I GWH3
Q1 15 vs. Q1 16
16,634 16,377
1.5%
Q1 15 Q1 16
1 Commercial and Industrial
2 Unless otherwise noted, Q1 reflects three months ended March 31.
3 Prior period adjusted for
billing day variation
Oncor Electric Delivery
3
Summary of Financial Results1
Adjusted Operating Revenues
Q12 15 vs. Q1 16; $ millions
1.1%
912 922
207 232
705 690
Q1 15 Q1 16
Revenues to pass-through expenses Revenues contributing to earnings
1 See Appendix for Reg G reconciliations and financial definitions.
2 Unless
otherwise noted, Q1 reflects three months ended March 31.
Adjusted Operating Revenue Increase
Q1 15 vs. Q1 16; $ millions
Revenues Contributing to Earnings: $ millions
Distribution base revenue (34)
Transmission base revenue (TCOS):
Billed to 3rd party wholesale customers 12
Billed to Oncor Distribution, collected from REPs
through TCRF 9
Total transmission base revenue (TCOS) 21
AMS surcharge (2)
Total revenues contributing to earnings (15)
Revenues to Pass-Through
Expenses:
3rd party wholesale transmission service billed to Oncor Distribution (i.e. remaining TCRF revenue) 25
Energy efficiency and rate case expense surcharges
Total revenues to pass through
expenses 25
Total operating revenue increase 10
Oncor Electric Delivery
4
Summary of Financial Results1 (cont.)
Adjusted EBITDA
Q12 15 vs. Q1 16 and TME2 15 vs. TME 16; $ millions
1,821 1,790
1.7%
431 414
3.9%
Q1 15 Q1 16 TME 15 TME 16
Adjusted Net Income Q1 15 vs. Q1
16; $ millions
97
81
16.5%
Q1 15 Q1 16
Adjusted Operating Cash Flow
Q1 15 vs. Q1 16; $ millions
167 27.5%
131
Q1 15 Q1 16
1 See Appendix for Reg G reconciliations and definitions of adjusted
financial metrics.
2 Unless otherwise indicated, Q1 reflects three months ended March 31 and TME reflects twelve months ended March 31.
Oncor Electric Delivery
5
Ample Liquidity and Stable Credit Metrics
Secured Revolving Credit Facility1 Balances at March 31, 2016; $ millions
2,000 (1,061) 939 20
959
Revolver Capacity Borrowings and Letters of Credit Effective Remaining Capacity Cash Total Available Liquidity
Adjusted EBITDA2/Cash Interest
TME3 15 vs. TME 16; Ratio
5.4x 5.4x
TME 15 TME 16
Debt4/Adjusted EBITDA
TME 15 vs. TME 16; Ratio
3.5x 3.7x
TME 15 TME 16
1 Oncors revolving credit facility matures in October 2017.
2 See Appendix for Reg G
reconciliations and financial definitions.
3 Unless otherwise indicated, TME reflects twelve months ended March 31.
4 Where applicable, 2015 amounts have been restated to reflect the application of Accounting Standards Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs.
Oncor Electric Delivery
6
1st Quarter 2016 Investor Call Agenda
Financial Overview David Davis
Chief Financial Officer
Operational Review Bob Shapard
Chief Executive
Q&A
Oncor Electric Delivery
7
Appendix -
Regulation G
Reconciliations and Financial
Definitions
Oncor Electric Delivery
8
Financial Definitions
Measure Definition
Adjusted Operating Revenues (non-GAAP) Oncor operating
revenues, less operating revenues of Oncor Electric Delivery Transition Bond Company LLC (BondCo)
Adjusted Net Income (non-GAAP) Oncor net income, less effects of
purchase accounting and net income of BondCo
Adjusted Operating Cash Flow (non-GAAP) Oncor cash provided by operating activities, less BondCo cash provided by
operating activities
Debt (non-GAAP) Oncor total debt, less transition bonds of BondCo
Total Debt (GAAP) Oncor long-term debt (including current portion) plus bank loans
Adjusted
EBITDA (non-GAAP) Income from continuing operations before interest expense and related charges and provisions in lieu of income tax, plus depreciation and amortization and special items, less BondCo results. EBITDA is a measure used by Oncor to
assess performance.
Debt/Adjusted EBITDA (non-GAAP) Total debt less transition bonds divided by Adjusted EBITDA. Transition, or securitization, bonds are serviced
by a regulatory transition charge on wires rates and are therefore excluded from debt in credit reviews. Debt / EBITDA is a measure used by Oncor to assess credit quality.
Adjusted EBITDA/Cash Interest (non-GAAP) Adjusted EBITDA divided by cash interest expense is a measure used by Oncor to assess credit quality.
Oncor Electric Delivery
9
Table 1: Oncor Adjusted Operating Revenues Reconciliation
Three Months Ended March 31, 2015 and 2016 $ millions
Q1 15 Q1 16
Operating revenues Oncor 946 943
Adjustments: Operating revenues BondCo (34)
(21)
Adjusted operating revenues, excluding BondCo 912 922
Oncor Electric
Delivery 10
Table 2: Oncor Adjusted EBITDA Reconciliation
Three and Twelve Months Ended March 31, 2015 and 2016 $ millions
Q1 15 Q1 16 TME
15 TME 16
Net income Oncor 98 81 444 415
Plus:
Depreciation & amortization Oncor 217 211 858 857
Provision in lieu of income taxes Oncor 58 48 271 242
Interest expense Oncor 81 84 346 336
Equals: EBITDA Oncor 454 424 1,919 1,850
Adjustments: Net income BondCo
Depreciation & amortization BondCo (32) (20) (130) (101)
Interest
expense BondCo (2) (1) (12) (5)
Effects of fair value accounting (pre tax) (2) (1) (10) (4)
Regulatory asset amortization in O&M expense 13 12 54 50
Oncor Adjusted EBITDA, excluding
BondCo 431 414 1,821 1,790
Oncor Electric Delivery 11
Table 3: Oncor Adjusted Net Income Reconciliation
Three Months Ended March 31, 2015 and 2016 $ millions
Q1 15 Q1 16
Net income Oncor 98 81
Adjustments: Effects of purchase accounting (after tax) (1)
BondCo net income
Adjusted net income, excluding BondCo
97 81
Oncor Electric Delivery 12
Table 4: Oncor Adjusted Operating Cash Flow Reconciliation
Three Months Ended March 31, 2015 and 2016 $ millions
Q1 15 Q1 16
Operating cash flow Oncor 163 189
Adjustments: Operating cash flow BondCo (32)
(22)
Adjusted operating cash flow, excluding BondCo 131 167
Oncor Electric
Delivery 13
Table 5: Oncor Total Debt Reconciliation
At March 31, 20151 and 2016
$ millions
At 3/31/15 At 3/31/16
Short-term debt- Oncor 800 1,054
Long-term debt due currently Oncor 109 41
Long-term debt, less due currently
Oncor 5,680 5,648
Total debt Oncor, including BondCo 6,589 6,743
Adjustments: Long-term debt due currently BondCo (109) (41)
Long-term
debt, less due currently BondCo (40)
Total Oncor debt, excluding BondCo 6,440 6,702
1 Where applicable, 2015 amounts have been restated to reflect the application of Accounting Standards Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs.
Oncor Electric Delivery 14
Table 6: Oncor Interest and Debt Coverage
Twelve Months Ended March 31, 20151 and 2016 $ millions
TME 15 TME 16 Ref
Source
Interest expense and related charges Oncor 346 336
Amortization
of debt discount Oncor (2) (3)
AFUDC Oncor 4 6
Cash interest
expense Oncor 348 339
Less: Interest expense BondCo (12) (5)
Cash interest expense, excluding BondCo 336 334 A
EBITDA, excluding BondCo
1,821 1,790 B Table 2
Total debt, excluding BondCo 6,440 6,702 C Table 5
EBITDA/cash interest ratio (B / A) 5.4x 5.4x
Debt/EBITDA ratio
(C / B) 3.5x 3.7x
1 Where applicable, 2015 amounts have been restated to reflect the application of Accounting Standards Update No. 2015-03, Simplifying the
Presentation of Debt Issuance Costs.
Oncor Electric Delivery 15
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