Virginia
(State or other jurisdiction of incorporation) |
001-08489
(Commission File Number) |
54-1229715
(IRS Employer Identification No.) |
120 Tredegar Street
Richmond, Virginia (Address of Principal Executive Offices) |
23219 (Zip Code) |
Exhibit
|
|
99
|
DOMINION ENERGY, INC.
Registrant |
/s/ Carter M. Reid
|
Carter M. Reid
Executive Vice President, Chief Administrative & Compliance Officer and Corporate Secretary
|
·
|
Fourth-quarter 2018 reported earnings of $0.97 per share; operating earnings of $0.89 per share
|
·
|
Full-year 2018 reported earnings of $3.74 per share; operating earnings of $4.05 per share
|
·
|
Company initiates 2019 operating earnings guidance of $4.05 to $4.40 per share
|
·
|
Atlantic Coast Pipeline and Supply Header cost, schedule modifications
|
Dominion Energy, Inc.
Consolidated Statements of Income *
Unaudited (GAAP Based)
(millions, except per share amounts)
|
|||||
Three Months Ended
|
Year Ended
|
||||
December 31,
|
December 31,
|
||||
2018
|
2017
|
2018
|
2017
|
||
Operating Revenue
|
$ 3,361
|
$ 3,210
|
$ 13,366
|
$ 12,586
|
|
Operating Expenses
|
|||||
Electric fuel and other energy-related purchases
|
686
|
590
|
2,814
|
2,301
|
|
Purchased electric capacity
|
35
|
14
|
122
|
6
|
|
Purchased gas
|
236
|
260
|
645
|
701
|
|
Other operations and maintenance 1
|
896
|
760
|
3,481
|
3,068
|
|
Depreciation, depletion and amortization
|
513
|
484
|
2,000
|
1,905
|
|
Other taxes
|
161
|
149
|
703
|
668
|
|
Total operating expenses
|
2,527
|
2,257
|
9,765
|
8,649
|
|
Income from operations
|
834
|
953
|
3,601
|
3,937
|
|
Other income (loss)
|
363
|
(33)
|
1,021
|
358
|
|
Interest and related charges
|
440
|
300
|
1,493
|
1,205
|
|
Income from continuing operations including noncontrolling
|
|||||
interests before income tax expense (benefit)
|
757
|
620
|
3,129
|
3,090
|
|
Income tax expense (benefit)
|
95
|
(713)
|
580
|
(30)
|
|
Income from continuing operations including
|
|||||
noncontrolling interests
|
662
|
1,333
|
2,549
|
3,120
|
|
Noncontrolling interests
|
21
|
21
|
102
|
121
|
|
Net Income attributable to Dominion
|
$ 641
|
$ 1,312
|
$ 2,447
|
$ 2,999
|
|
Reported earnings per common share - diluted
|
$ 0.97
|
$ 2.04
|
$ 3.74
|
$ 4.72
|
|
Average shares outstanding, diluted
|
660.9
|
643.9
|
654.9
|
636.0
|
|
1) Includes impairment of assets and related charges and gains on sales of assets.
|
|||||
* The notes contained in Dominion Energy's most recent quarterly report on Form 10-Q or annual report on Form 10-K are an integral part of the
Consolidated Financial Statements.
|
|||||
Schedule 1 - Segment Reported and Operating Earnings
|
||||||||
Unaudited
|
||||||||
(millions, except earnings per share)
|
Three months ended December 31,
|
|||||||
2018
|
2017
|
Change
|
||||||
REPORTED EARNINGS 1
|
$ 641
|
$ 1,312
|
$ (671)
|
|||||
Pre-tax loss (income) 2
|
(50)
|
207
|
(257)
|
|||||
Income tax 2
|
1
|
(934)
|
935
|
|||||
Adjustments to reported earnings
|
(49)
|
(727)
|
678
|
|||||
OPERATING EARNINGS
|
$ 592
|
$ 585
|
$ 7
|
|||||
By segment:
|
||||||||
Power Delivery
|
123
|
141
|
(18)
|
|||||
Power Generation
|
216
|
311
|
(95)
|
|||||
Gas Infrastructure
|
374
|
285
|
89
|
|||||
Corporate and Other
|
(121)
|
(152)
|
31
|
|||||
$ 592
|
$ 585
|
$ 7
|
||||||
Earnings Per Share (EPS):
|
||||||||
REPORTED EARNINGS 1
|
$ 0.97
|
$ 2.04
|
$ (1.07)
|
|||||
Adjustments to reported earnings (after tax)
|
(0.08)
|
(1.13)
|
1.05
|
|||||
OPERATING EARNINGS
|
$ 0.89
|
$ 0.91
|
$ (0.02)
|
|||||
By segment:
|
||||||||
Power Delivery
|
0.19
|
0.22
|
(0.03)
|
|||||
Power Generation
|
0.32
|
0.48
|
(0.16)
|
|||||
Gas Infrastructure
|
0.57
|
0.44
|
0.13
|
|||||
Corporate and Other
|
(0.19)
|
(0.23)
|
0.04
|
|||||
$ 0.89
|
$ 0.91
|
$ (0.02)
|
||||||
Common Shares Outstanding (average, diluted)
|
660.9
|
643.9
|
||||||
(millions, except earnings per share) | Twelve months ended December 31, |
|||||||
2018
|
2017
|
Change
|
||||||
REPORTED EARNINGS 1
|
$ 2,447
|
$ 2,999
|
$ (552)
|
|||||
Pre-tax loss (income) 2
|
201
|
235
|
(34)
|
|||||
Income tax 2
|
3
|
(945)
|
948
|
|||||
Adjustments to reported earnings
|
204
|
(710)
|
914
|
|||||
OPERATING EARNINGS
|
$ 2,651
|
$ 2,289
|
$ 362
|
|||||
By segment:
|
||||||||
Power Delivery
|
587
|
531
|
56
|
|||||
Power Generation
|
1,254
|
1,181
|
73
|
|||||
Gas Infrastructure
|
1,214
|
898
|
316
|
|||||
Corporate and Other
|
(404)
|
(321)
|
(83)
|
|||||
$ 2,651
|
$ 2,289
|
$ 362
|
||||||
Earnings Per Share (EPS):
|
||||||||
REPORTED EARNINGS 1
|
$ 3.74
|
$ 4.72
|
$ (0.98)
|
|||||
Adjustments to reported earnings (after tax)
|
0.31
|
(1.12)
|
1.43
|
|||||
OPERATING EARNINGS
|
$ 4.05
|
$ 3.60
|
$ 0.45
|
|||||
By segment:
|
||||||||
Power Delivery
|
0.90
|
0.83
|
0.07
|
|||||
Power Generation
|
1.92
|
1.86
|
0.06
|
|||||
Gas Infrastructure
|
1.85
|
1.41
|
0.44
|
|||||
Corporate and Other
|
(0.62)
|
(0.50)
|
(0.12)
|
|||||
$ 4.05
|
$ 3.60
|
$ 0.45
|
||||||
Common Shares Outstanding (average, diluted)
|
654.9
|
636.0
|
||||||
1)
|
Determined in accordance with Generally Accepted Accounting Principles (GAAP).
|
|||||||
2)
|
Adjustments to reported earnings are included in Corporate and Other segment reported GAAP earnings. Refer to Schedules 2 and 3 for details, or
find "GAAP Reconciliation" in the Earnings Release Kit on Dominion Energy's website at www.dominionenergy.com/investors.
|
|||||||
2018 Earnings (Twelve months ended December 31, 2018)
The $201 million pre-tax net effect of the adjustments included in 2018 reported earnings, but excluded from operating earnings, is primarily related to the following items:
·
|
$759 million net benefit associated with the sales of our non-core assets, primarily
reflecting the gains on sales of certain merchant generation assets and our investment in Blue Racer.
|
·
|
$219 million impairment charge associated with gathering and processing assets.
|
·
|
$215 million charge associated with Virginia legislation enacted in March that requires
one-time rate credits of certain amounts to utility customers.
|
·
|
$170 million net loss related to our investments in nuclear decommissioning trust funds.
|
·
|
$124 million charge associated with disallowance of FERC-regulated plant.
|
·
|
$81 million charge associated with the asset retirement obligations for ash ponds and
landfills at certain utility generation facilities in connection with the enactment of Virginia legislation in April.
|
·
|
$74 million of restoration costs associated with major storms, primarily affecting our
Virginia service territory.
|
·
|
$37 million of transaction and transition costs associated with the
Dominion Energy Questar combination and the acquisition of SCANA Corporation.
|
(millions, except per share amounts)
|
1Q18
|
2Q18
|
3Q18
|
4Q18
|
YTD 2018
|
2
|
|
Reported earnings
|
$503
|
$449
|
$854
|
$641
|
$2,447
|
||
Adjustments to reported earnings 1:
|
|||||||
Pre-tax loss (income)
|
305
|
145
|
(199)
|
(50)
|
201
|
||
Income tax expense (benefit)
|
(67)
|
(34)
|
103
|
1
|
3
|
||
238
|
111
|
(96)
|
(49)
|
204
|
|||
Operating earnings
|
$741
|
$560
|
$758
|
$592
|
$2,651
|
||
Common shares outstanding (average, diluted)
|
650.5
|
653.1
|
654.9
|
660.9
|
654.9
|
||
Reported earnings per share
|
$0.77
|
$0.69
|
$1.30
|
$0.97
|
$3.74
|
||
Adjustments to reported earnings (after-tax)
|
0.37
|
0.17
|
(0.15)
|
(0.08)
|
0.31
|
||
Operating earnings per share
|
$1.14
|
$0.86
|
$1.15
|
$0.89
|
$4.05
|
||
1) Adjustments to reported earnings are reflected in the following table:
|
|||||||
1Q18
|
2Q18
|
3Q18
|
4Q18
|
YTD 2018
|
|||
Pre-tax loss (income):
|
|||||||
Sale of non-core assets
|
(70)
|
(689)
|
(759)
|
||||
Impairment of gathering & processing assets
|
219
|
219
|
|||||
Impact of Virginia rate legislation
|
215
|
215
|
|||||
Net (gain) loss on NDT funds
|
43
|
(50)
|
(149)
|
326
|
170
|
||
FERC-regulated plant disallowance
|
122
|
2
|
124
|
||||
Future ash pond and landfill closure costs
|
81
|
81
|
|||||
Storm costs
|
31
|
43
|
74
|
||||
Merger-related transaction and transition costs
|
16
|
9
|
3
|
9
|
37
|
||
Other
|
(17)
|
15
|
42
|
40
|
|||
$305
|
$145
|
($199)
|
($50)
|
$201
|
|||
Income tax expense (benefit):
|
|||||||
Tax effect of above adjustments to reported earnings *
|
(67)
|
(34)
|
38
|
11
|
(52)
|
||
Re-measurement of Deferred Tax balances **
|
47
|
(1)
|
46
|
||||
Valuation Allowance ***
|
18
|
(9)
|
9
|
||||
($67)
|
($34)
|
$103
|
$1
|
$3
|
|||
* Income taxes for individual pre-tax items include current and deferred taxes using a transactional effective tax rate. For interim reporting
purposes, such amounts may be adjusted in connection with the calculation of the Company’s year-to-date income tax provision based on its estimated annual effective tax rate.
|
|||||||
** During 2018, the Companies recorded further adjustments to deferred taxes in accordance with recently released tax reform guidance and to
revise estimates made at year-end 2017.
|
|||||||
*** In 3Q18, a valuation allowance was established against the portion of a deferred tax asset associated with the non-core assets that was no
longer projected of being utilized to offset future taxable income. In 4Q18, the amount was adjusted based on management's assessment that it is more-likely-than-not that a portion of the deferred tax asset would be realized in 2018, to
reduce tax expense associated with the sale.
|
|||||||
2) YTD EPS may not equal sum of quarters due to share count difference.
|
·
|
$158 million of impairment charges associated with our equity method investments in wind-powered generation facilities.
|
·
|
$72 million of transaction and transition costs, primarily associated with the Dominion Energy Questar combination.
|
·
|
$46 million net gain related to our investments in nuclear decommissioning trust funds.
|
(millions, except per share amounts)
|
1Q17
|
2Q17
|
3Q17
|
4Q17
|
YTD 2017
|
2
|
|
Reported earnings
|
$632
|
$390
|
$665
|
$1,312
|
$2,999
|
||
Adjustments to reported earnings 1:
|
|||||||
Pre-tax loss (income)
|
(31)
|
47
|
12
|
207
|
235
|
||
Income tax
|
10
|
(16)
|
(5)
|
(934)
|
(945)
|
||
(21)
|
31
|
7
|
(727)
|
(710)
|
|||
Operating earnings
|
$611
|
$421
|
$672
|
$585
|
$2,289
|
||
Common shares outstanding (average, diluted)
|
628.1
|
629.2
|
642.5
|
643.9
|
636.0
|
||
Reported earnings per share
|
$1.01
|
$0.62
|
$1.03
|
$2.04
|
$4.72
|
||
Adjustments to reported earnings (after-tax)
|
(0.04)
|
0.05
|
0.01
|
(1.13)
|
(1.12)
|
||
Operating earnings per share
|
$0.97
|
$0.67
|
$1.04
|
$0.91
|
$3.60
|
||
1) Adjustments to reported earnings are reflected in the following table:
|
|||||||
1Q17
|
2Q17
|
3Q17
|
4Q17
|
YTD 2017
|
|||
Pre-tax loss (income):
|
|||||||
Impairments of equity method investments
|
158
|
158
|
|||||
Merger-related transaction & transition costs
|
3
|
20
|
16
|
33
|
72
|
||
Net gain on NDT funds
|
(34)
|
(3)
|
(4)
|
(5)
|
(46)
|
||
Other
|
30
|
21
|
51
|
||||
($31)
|
$47
|
$12
|
$207
|
$235
|
|||
Income tax expense (benefit):
|
|||||||
Tax effect of above adjustments to reported earnings *
|
10
|
(16)
|
(5)
|
(83)
|
(94)
|
||
Re-measurement of Deferred Tax Balances **
|
(851)
|
(851)
|
|||||
$10
|
($16)
|
($5)
|
($934)
|
($945)
|
|||
* Income taxes for individual pre-tax items include current and deferred taxes using a transactional effective tax rate. For interim
reporting purposes, such amounts may be adjusted in connection with the calculation of the Company’s year-to-date income tax provision based on its estimated annual effective tax rate.
|
|||||||
** Federal tax reform, enacted in December 2017, reduced the corporate income tax rate from 35% to 21%, effective 1/1/2018. Deferred
taxes are required to be measured at the enacted rate in effect when they are expected to reverse. As a result, deferred taxes were re-measured to the 21% rate. For regulated entities, where the reduction in deferred taxes is expected
to be recovered or refunded in future rates, the adjustment was recorded to a regulatory asset or liability instead of income tax expense.
|
|||||||
2) YTD EPS may not equal sum of quarters due to share count differences
|
Schedule 4 - Reconciliation of 4Q18 Earnings to 4Q17
|
||||||
Preliminary, Unaudited
|
Three Months Ended
December 31,
2018 vs. 2017
|
Twelve Months Ended
December 31,
2018 vs. 2017
|
||||
(millions, except EPS)
|
||||||
Increase / (Decrease)
|
Increase / (Decrease)
|
|||||
Reconciling Items
|
Amount
|
EPS
|
Amount
|
EPS
|
||
Change in reported earnings (GAAP)
|
($671)
|
($1.07)
|
($552)
|
($0.98)
|
||
Change in Pre-tax loss (income) 1
|
(257)
|
(34)
|
||||
Change in Income tax 1
|
935
|
948
|
||||
Adjustments to reported earnings
|
$678
|
$1.05
|
$914
|
$1.43
|
||
Change in consolidated operating earnings
|
$7
|
($0.02)
|
$362
|
$0.45
|
||
Power Delivery 2
|
||||||
Regulated electric sales:
|
||||||
Weather
|
$1
|
$0.00
|
$29
|
$0.05
|
||
Other
|
11
|
0.02
|
48
|
0.08
|
||
Rider investment
|
15
|
0.02
|
26
|
0.04
|
||
Tax reform impacts
|
0
|
-
|
0
|
-
|
||
Other
|
(45)
|
(0.07)
|
(47)
|
(0.07)
|
||
Share dilution
|
-
|
-
|
-
|
(0.03)
|
||
Change in contribution to operating earnings
|
($18)
|
($0.03)
|
$56
|
$0.07
|
||
Power Generation 2
|
||||||
Regulated electric sales:
|
||||||
Weather
|
$1
|
$0.00
|
$57
|
$0.09
|
||
Other
|
8
|
0.01
|
(5)
|
(0.01)
|
||
Merchant generation margin
|
1
|
0.00
|
110
|
0.17
|
||
Planned outage costs
|
5
|
0.01
|
46
|
0.07
|
||
Electric capacity
|
(12)
|
(0.02)
|
(66)
|
(0.10)
|
||
Renewable energy investment tax credits
|
(87)
|
(0.13)
|
(138)
|
(0.21)
|
||
Tax reform impacts
|
1
|
0.00
|
45
|
0.07
|
||
Other
|
(12)
|
(0.02)
|
24
|
0.04
|
||
Share dilution
|
-
|
(0.01)
|
-
|
(0.06)
|
||
Change in contribution to operating earnings
|
($95)
|
($0.16)
|
$73
|
$0.06
|
||
Gas Infrastructure 2
|
||||||
Farmout transactions
|
($6)
|
($0.01)
|
$27
|
$0.04
|
||
Transportation and storage growth projects
|
3
|
0.00
|
30
|
0.05
|
||
Cove Point
|
91
|
0.14
|
247
|
0.39
|
||
Tax reform impacts
|
50
|
0.08
|
141
|
0.22
|
||
Interest
|
(27)
|
(0.04)
|
(86)
|
(0.14)
|
||
Other
|
(22)
|
(0.03)
|
(43)
|
(0.07)
|
||
Share dilution
|
-
|
(0.01)
|
-
|
(0.05)
|
||
Change in contribution to operating earnings
|
$89
|
$0.13
|
$316
|
$0.44
|
||
Corporate and Other 2
|
||||||
Renewable energy investment tax credits
|
$68
|
$0.10
|
$0
|
$0.00
|
||
Tax reform impacts
|
(20)
|
(0.03)
|
(80)
|
(0.13)
|
||
Interest expense
|
(18)
|
(0.03)
|
(25)
|
(0.04)
|
||
Share dilution and other
|
1
|
0.00
|
22
|
0.05
|
||
Change in contribution to operating earnings
|
$31
|
$0.04
|
($83)
|
($0.12)
|
||
Change in consolidated operating earnings
|
$7
|
($0.02)
|
$362
|
$0.45
|
||
Change in adjustments included in reported earnings1
|
($678)
|
($1.05)
|
($914)
|
($1.43)
|
||
Change in consolidated reported earnings
|
($671)
|
($1.07)
|
($552)
|
($0.98)
|
||
1)
|
Adjustments to reported earnings are included in Corporate and Other segment reported GAAP earnings. Refer to Schedules 2 and 3 for details,
or find "GAAP Reconciliation" in the Earnings Release Kit on Dominion Energy's website at www.dominionenergy.com/investors.
|
|||||
2)
|
For period over period comparability reconciling items tax effected using a 35% federal tax rate. Segment specific tax reform impacts
outlined as individual reconciling items.
|
|||||
Note: Figures may not add due to rounding
|