- Recorded GAAP losses were $0.55 per share for the third quarter
of 2021, compared to earnings of $0.04 per share for the same
period in 2020.
- Non-GAAP core earnings were $0.24 per share for the third
quarter of 2021, compared to $0.22 per share for the same period in
2020.
- 2021 EPS guidance adjusted for GAAP earnings to a range of
$(0.12) to $0.07 and reaffirmed non-GAAP core earnings of $0.95 to
$1.05 per share.
PG&E Corporation (NYSE: PCG) recorded third-quarter 2021
losses attributable to common shareholders of $1,091 million, or
$0.55 per share, as reported in accordance with generally accepted
accounting principles (GAAP). This compares with income available
for common shareholders of $83 million, or $0.04 per share, for the
third quarter of 2020.
GAAP results include non-core items that management does not
consider representative of ongoing earnings, which totaled $1,570
million after tax, or $0.79 per share, for the quarter. These
results were primarily driven by costs related to the PG&E
Corporation’s and Pacific Gas and Electric Company’s (Utility)
reorganization cases under Chapter 11 of the U.S. Bankruptcy Code
(Chapter 11), amortization of wildfire insurance fund contributions
under Assembly Bill (AB) 1054, prior period net regulatory
recoveries, investigation remedies, and 2019-2020 wildfire-related
costs.
“Our leadership team is implementing the necessary systems and
processes to run a high-performing utility – over both the short
and long term – that will produce triple bottom-line results for
people, the planet, and California’s prosperity,” said Patti Poppe,
CEO of PG&E Corporation. “As part of this, we continue to
deliver on our wildfire mitigation commitments while initiating
bold new actions to reduce risk across our electric system,
including: undergrounding power lines, calibrating the sensitivity
of our automatic shutoff equipment, and executing more vegetation
management.”
Non-GAAP Core Earnings
PG&E Corporation’s non-GAAP core earnings, which exclude
non-core items, were $479 million, or $0.24 per share, in the third
quarter of 2021, compared with $461 million, or $0.22 per share,
during the same period in 2020.
The increase in quarter-over-quarter non-GAAP core earnings per
share was primarily driven by the growth in rate base earnings, the
change in shares, and wildfire mitigation costs above authorized,
partially offset by the timing of taxes.
PG&E Corporation uses “non-GAAP core earnings,” which is a
non-GAAP financial measure, in order to provide a measure that
allows investors to compare the underlying financial performance of
the business from one period to another, exclusive of non-core
items. See the accompanying tables for a reconciliation of non-GAAP
core earnings to consolidated earnings (loss) attributable to
common shareholders.
2021 Guidance
PG&E Corporation is adjusting 2021 GAAP earnings guidance to
a range of $(0.12) to $0.07 per share, which includes non-core
items. PG&E Corporation is adjusting 2021 non-core items
guidance to a range of $2.1 billion to $2.3 billion after tax,
reflecting costs related to PG&E Corporation and Utility’s
reorganization cases under Chapter 11, the amortization of wildfire
insurance fund contributions under AB1054, investigation remedies,
2019-2020 wildfire-related costs, and prior period net regulatory
recoveries, partially offset by the rate neutral securitization
inception impact.
On a non-GAAP basis, the guidance range for projected 2021 core
earnings is reaffirmed at $0.95 to $1.05 per share. Factors driving
non-GAAP core earnings include net below the line and spend above
authorized of up to $100 million after tax and unrecoverable
interest expense of $300 million to $325 million after tax.
Guidance is based on various assumptions and forecasts,
including those relating to authorized revenues, future expenses,
capital expenditures, rate base, equity issuances, rate neutral
securitization, and certain other factors.
Supplemental Financial Information
In addition to the financial information accompanying this
release, presentation slides have been furnished to the Securities
and Exchange Commission (SEC) and are available on PG&E
Corporation’s website at:
http://investor.pgecorp.com/financials/quarterly-earnings-reports/default.aspx.
Earnings Conference Call
PG&E Corporation will also hold a conference call on
November 1, 2021, at 11:00 a.m. Eastern Time (8:00 a.m. Pacific
Time) to discuss its third quarter 2021 results. The public can
access the conference call through a simultaneous webcast. The link
is provided below and will also be available from the PG&E
Corporation website.
What: Third Quarter 2021 Earnings
Call
When: Monday, November 1, 2021 at
11:00 a.m. Eastern Time
Where:
http://investor.pgecorp.com/news-events/events-and-presentations/default.aspx
A replay of the conference call will be archived through
November 8, 2021 at
http://investor.pgecorp.com/news-events/events-and-presentations/default.aspx.
Alternatively, a toll-free replay of the conference call may be
accessed shortly after the live call through November 8, 2021, by
dialing (800) 585-8367. International callers may dial (416)
621-4642. For both domestic and international callers, the
confirmation code 9548628 will be required to access the
replay.
Public Dissemination of Certain Information
PG&E Corporation and the Utility routinely provide links to
the Utility’s principal regulatory proceedings with the CPUC and
the Federal Energy Regulatory Commission (FERC) at
http://investor.pgecorp.com, under the “Regulatory Filings” tab, so
that such filings are available to investors upon filing with the
relevant agency. PG&E Corporation and the Utility also
routinely post, or provide direct links to, presentations,
documents, and other information that may be of interest to
investors at http://investor.pgecorp.com, under the “Chapter 11,”
“Wildfire and Safety Updates” and “News & Events: Events &
Presentations” tabs, respectively, in order to publicly disseminate
such information. It is possible that any of these filings or
information included therein could be deemed to be material
information.
About PG&E Corporation
PG&E Corporation (NYSE: PCG) is a holding company
headquartered in San Francisco. It is the parent company of Pacific
Gas and Electric Company, an energy company that serves 16 million
Californians across a 70,000-square-mile service area in Northern
and Central California. For more information, visit
http://www.pgecorp.com. In this press release, they are together
referred to as “PG&E.”
Forward-Looking Statements
This news release contains forward-looking statements that are
not historical facts, including statements about the beliefs,
expectations, estimates, future plans and strategies of PG&E
Corporation and the Utility, including but not limited to earnings
guidance for 2021. These statements are based on current
expectations and assumptions, which management believes are
reasonable, and on information currently available to management,
but are necessarily subject to various risks and uncertainties. In
addition to the risk that these assumptions prove to be inaccurate,
factors that could cause actual results to differ materially from
those contemplated by the forward-looking statements include
factors disclosed in PG&E Corporation and the Utility’s joint
annual report on Form 10-K for the year ended December 31, 2020,
their most recent quarterly report on Form 10-Q for the quarter
ended September 30, 2021, and other reports filed with the SEC,
which are available on PG&E Corporation's website at
www.pgecorp.com and on the SEC website at www.sec.gov. PG&E
Corporation and PG&E undertake no obligation to publicly update
or revise any forward-looking statements, whether due to new
information, future events or otherwise, except to the extent
required by law.
PG&E CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
(in millions, except per share
amounts)
2021
2020
2021
2020
Operating Revenues
Electric
$
4,181
$
3,810
$
11,527
$
10,285
Natural gas
1,284
1,072
3,869
3,436
Total operating revenues
5,465
4,882
15,396
13,721
Operating Expenses
Cost of electricity
1,133
1,114
2,570
2,418
Cost of natural gas
176
90
670
508
Operating and maintenance
2,795
2,290
7,714
6,398
Wildfire-related claims, net of
recoveries
94
25
261
195
Wildfire Fund expense
162
120
399
293
Depreciation, amortization, and
decommissioning
801
845
2,540
2,574
Total operating expenses
5,161
4,484
14,154
12,386
Operating Income
304
398
1,242
1,335
Interest income
—
5
17
33
Interest expense
(399
)
(391
)
(1,205
)
(844
)
Other income, net
132
102
387
299
Reorganization items, net
—
(137
)
(11
)
(1,937
)
Income (Loss) Before Income
Taxes
37
(23
)
430
(1,114
)
Income tax provision (benefit)
1,125
(109
)
994
394
Net Income (Loss)
(1,088
)
86
(564
)
(1,508
)
Preferred stock dividend requirement of
subsidiary
3
3
10
10
Income (Loss) Attributable to Common
Shareholders
$
(1,091
)
$
83
$
(574
)
$
(1,518
)
Weighted Average Common Shares
Outstanding, Basic
1,985
1,967
1,985
1,012
Weighted Average Common Shares
Outstanding, Diluted
1,985
2,140
1,985
1,012
Net Income (Loss) Per Common Share,
Basic
$
(0.55
)
$
0.04
$
(0.29
)
$
(1.50
)
Net Income (Loss) Per Common Share,
Diluted
$
(0.55
)
$
0.04
$
(0.29
)
$
(1.50
)
Reconciliation of PG&E Corporation’s
Consolidated Earnings (Loss) Attributable to Common Shareholders in
Accordance with Generally Accepted Accounting Principles (“GAAP”)
to Non-GAAP Core Earnings
Third Quarter, 2021 vs. 2020
(in millions, except per share
amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
Earnings
Earnings per Common Share
(Diluted)
Earnings
Earnings per Common Share
(Diluted)
(in millions, except per share
amounts)
2021
2020
2021
2020
2021
2020
2021
2020
PG&E Corporation's Earnings (Loss)
on a GAAP basis
$
(1,091
)
$
83
$
(0.55
)
$
0.04
$
(574
)
$
(1,518
)
$
(0.29
)
$
(1.50
)
Non-core items: (1)
Bankruptcy and legal costs (2)
1,307
139
0.66
0.06
1,379
2,592
0.69
2.56
Amortization of Wildfire Fund contribution
(3)
116
86
0.06
0.04
287
211
0.14
0.21
Prior period net regulatory recoveries
(4)
74
53
0.04
0.02
162
(25
)
0.08
(0.02
)
Investigation remedies (5)
68
80
0.03
0.04
147
151
0.07
0.15
2019-2020 wildfire-related costs, net of
insurance (6)
5
20
—
0.01
141
168
0.07
0.17
PG&E Corporation’s Non-GAAP Core
Earnings (7)
$
479
$
461
$
0.24
$
0.22
$
1,542
$
1,579
$
0.78
$
1.56
All amounts presented in the table above
and footnotes below are tax adjusted at PG&E Corporation’s
statutory tax rate of 27.98% for 2021 and 2020, except for certain
costs that are not tax deductible. Amounts may not sum due to
rounding.
(1)
“Non-core items” include items that
management does not consider representative of ongoing earnings and
affect comparability of financial results between periods,
consisting of the items listed in the table above. See Use of
Non-GAAP Financial Measures.
(2)
PG&E Corporation and the Utility
recorded costs of $1.3 billion (before the tax impact of $13
million) and $1.4 billion (before the tax impact of $39 million)
during the three and nine months ended September 30, 2021,
respectively, for bankruptcy and legal costs associated with
PG&E Corporation and the Utility's Chapter 11 filing. The
Utility recorded a $1.3 billion adjustment for the "grantor trust"
election related to the Fire Victim Trust during the three and nine
months ended September 30, 2021. The Utility also incurred $32
million (before the tax impact of $9 million) and $103 million
(before the tax impact of $29 million) during the three and nine
months ended September 30, 2021, respectively, related to exit
financing costs. PG&E Corporation and the Utility also incurred
legal and other costs of $18 million (before the tax impact of $4
million) and $45 million (before the tax impact of $10 million)
during the three and nine months ended September 30, 2021,
respectively.
(in millions, pre-tax)
Three Months Ended September
30, 2021
Nine Months Ended September
30, 2021
Fire Victim Trust grantor trust
benefit
$
1,270
$
1,270
Exit financing
32
103
Legal and other costs
18
45
Bankruptcy and legal costs
$
1,320
$
1,418
(3)
The Utility recorded costs of $162 million
(before the tax impact of $46 million) and $399 million (before the
tax impact of $112 million) during the three and nine months ended
September 30, 2021, respectively, associated with the amortization
of Wildfire Fund contributions related to Assembly Bill ("AB")
1054.
(4)
The Utility incurred $135 million (before
the tax impact of $61 million) and $257 million (before the tax
impact of $95 million) during the three and nine months ended
September 30, 2021, respectively, associated with prior period net
regulatory recoveries. This includes $135 million (before the tax
impact of $61 million) during the three and nine months ended
September 30, 2021 related to wildfire response and mitigation
regulatory matters, including the 2020 Wildfire Mitigation and
Catastrophic Events ("WMCE") application settlement. The Utility
also recorded a $122 million (before the tax impact of $34 million)
adjustment during the nine months ended September 30, 2021
reflecting the impact of the April 15, 2021 FERC order denying the
Utility's request for rehearing on the Transmission Owner ("TO")
18, which rejected the Utility's direct assignment of common plant
to FERC, and impacted TO revenues recorded through December 31,
2020.
(in millions, pre-tax)
Three Months Ended September
30, 2021
Nine Months Ended September
30, 2021
Wildfire response and mitigation
regulatory matters
$
135
$
135
TO18 FERC ruling impact
—
122
Prior period net regulatory
recoveries
$
135
$
257
(5)
The Utility recorded costs of $74 million
(before the tax impact of $6 million) and $171 million (before the
tax impact of $25 million) during the three and nine months ended
September 30, 2021, respectively, associated with investigation
remedies. This includes a $40 million charge during the three and
nine months ended September 30, 2021 for probable losses in
connection with a pending investigation into the 2019 Kincade fire.
The Utility also recorded $20 million (before the tax impact of $5
million) and $69 million (before the tax impact of $18 million)
during the three and nine months ended September 30, 2021,
respectively, related to the CPUC's Order Instituting Investigation
("OII") into the 2017 Northern California Wildfires and 2018 Camp
Fire (the "Wildfires OII") settlement, as modified by the decision
different dated April 20, 2020. The Utility also recorded costs of
$10 million (before the tax impact of $0.2 million) and $24 million
(before the tax impact of $0.5 million) during the three and nine
months ended September 30, 2021, respectively, for system
enhancements related to the locate and mark OII. The Utility also
recorded restoration and rebuild costs of $4 million (before the
tax impact of $1 million) and $18 million (before the tax impact of
$5 million) during the three and nine months ended September 30,
2021, respectively, associated with the town of Paradise ("2018
Camp Fire"). The Utility also recorded an incremental charge of $20
million (before the tax impact of $1 million) during the nine
months ended September 30, 2021 associated with the May 26, 2021
Presiding Officer's Decision ("POD") for the Public Safety Power
Shutoff ("PSPS") Order to Show Cause for the Fall 2019 PSPS
events.
(in millions, pre-tax)
Three Months Ended September
30, 2021
Nine Months Ended September
30, 2021
2019 Kincade fire investigation
$
40
$
40
Wildfire OII disallowance and system
enhancements
20
69
Locate and mark OII system
enhancements
10
24
Paradise restoration and rebuild
4
18
Incremental PSPS charge
—
20
Investigation remedies
$
74
$
171
(6)
The Utility incurred costs, net of
probable insurance recoveries, of $7 million (before the tax impact
of $2 million) and $196 million (before the tax impact of $55
million) during the three and nine months ended September 30, 2021,
respectively, associated with the 2019-2020 wildfires. This
includes accrued charges for third-party claims of $175 million
(before the tax impact of $49 million) during the nine months ended
September 30, 2021, related to the 2019 Kincade fire, and $100
million (before the tax impact of $28 million) during the nine
months ended September 30, 2021, related to the 2020 Zogg fire. In
addition, the Utility also incurred costs of $1 million (before the
tax impact of $0.3 million) during the three and nine months ended
September 30, 2021 for clean-up and repair costs related to the
2019 Kincade fire, and $5 million (before the tax impact of $2
million) during the nine months ended September 30, 2021 for
clean-up and repair costs related to the 2020 Zogg fire. The
Utility also incurred costs of $4 million (before the tax impact of
$1 million) and $12 million (before the tax impact of $3 million)
during the three and nine months ended September 30, 2021,
respectively, for legal and other costs related to the 2019 Kincade
fire, as well as $7 million (before the tax impact of $2 million)
and $13 million (before the tax impact of $4 million) during the
three and nine months ended September 30, 2021, respectively, for
legal and other costs related to the 2020 Zogg fire. These costs
were partially offset by probable insurance recoveries of $4
million (before the tax impact of $1 million) and $112 million
(before the tax impact of $31 million) during the three and nine
months ended September 30, 2021, respectively, related to the 2020
Zogg fire.
(in millions, pre-tax)
Three Months Ended September
30, 2021
Nine Months Ended September
30, 2021
2019 Kincade fire-related costs
Third-party claims
$
—
$
175
Utility clean-up and repairs
1
1
Legal and other costs
4
12
2020 Zogg fire-related costs, net of
insurance
Third-party claims
—
100
Utility clean-up and repairs
—
5
Legal and other costs
7
13
Insurance recoveries
(4
)
(112
)
2019-2020 wildfire-related costs, net
of insurance
$
7
$
196
(7)
"Non-GAAP core earnings" is a non-GAAP
financial measure. See Use of Non-GAAP Financial Measures.
PG&E Corporation's 2021 Earnings
Guidance
2021
EPS Guidance
Low
High
Estimated Earnings (Loss) on a GAAP
basis
$
(0.12
)
$
0.07
Estimated Non-Core Items: (1)
Bankruptcy and legal costs (2)
~
0.67
~
0.66
Amortization of Wildfire Fund contribution
(3)
~
0.18
~
0.18
Investigation remedies (4)
~
0.08
~
0.08
2019-2020 wildfire-related costs (5)
~
0.07
~
0.07
Prior period net regulatory recoveries
(6)
~
0.07
~
0.07
Net securitization impact (7)
~
—
~
(0.07
)
Estimated EPS on a non-GAAP Core
Earnings basis
~
$
0.95
~
$
1.05
All amounts presented in the table above
and footnotes below are tax adjusted at PG&E Corporation’s
statutory tax rate of 27.98% for 2021, except for certain costs
that are not tax deductible. Amounts may not sum due to
rounding.
(1)
“Non-core items” include items that
management does not consider representative of ongoing earnings and
affect comparability of financial results between periods. See Use
of Non-GAAP Financial Measures.
(2)
“Bankruptcy and legal costs" consists of
reversal of the tax benefit recorded for shares transferred to the
Fire Victim Trust, exit financing costs including interest on
temporary Utility debt and write-off of unamortized fees related to
the retirement of PG&E Corporation debt, and legal and other
costs associated with PG&E Corporation and the Utility's
Chapter 11 filing. The total offsetting tax impact for the low and
high non-core guidance range is $62 million and $56 million,
respectively.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
Fire Victim Trust grantor trust
benefit
~
$
1,270
~
$
1,270
Exit financing
~
135
~
135
Legal and other costs
~
85
~
65
Bankruptcy and legal costs
~
$
1,490
~
$
1,470
(3)
"Amortization of Wildfire Fund
contribution” represents the amortization of Wildfire Fund
contributions related to AB1054. The total offsetting tax impact
for the low and high non-core guidance range is $145 million.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
Amortization of Wildfire Fund
contribution
~
$
520
~
$
520
(4)
“Investigation remedies" includes costs
related to the Wildfire OII decision different, probable losses in
connection with a pending investigation into the 2019 Kincade fire,
Paradise restoration and rebuild, the locate and mark OII system
enhancements, and the incremental PSPS charge associated with the
May 26, 2021 POD for the PSPS Order to Show Cause for the Fall 2019
PSPS events. The total offsetting tax impact for the low and high
non-core guidance range is $18 million.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
Wildfire OII disallowance and system
enhancements
~
$
80
~
$
80
2019 Kincade fire investigation
~
40
~
40
Paradise restoration and rebuild
~
25
~
25
Locate and mark OII system
enhancements
~
25
~
25
Incremental PSPS charge
~
20
~
20
Investigation remedies
~
$
190
~
$
190
(5)
“2019-2020 wildfire-related costs"
includes third-party claims and legal and other costs associated
with the 2019 Kincade fire, and utility clean-up and repairs costs
associated with the 2020 Zogg fire. The total offsetting tax impact
for the low and high non-core guidance range is $60 million and $55
million, respectively.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
2019 Kincade fire-related costs
Third-party claims
~
$
175
~
$
175
Legal and other costs
~
30
~
10
2020 Zogg fire-related costs
Utility clean-up and repairs
~
10
~
10
2019-2020 wildfire-related
costs
~
$
215
~
$
195
(6)
“Prior period net regulatory recoveries"
represents the recovery of capital expenditures from 2011 through
2014 above amounts adopted in the 2011 GT&S rate case, offset
by the impact of adjustments related to wildfire response and
mitigation regulatory matters, including the 2020 WMCE application
settlement, and the April 15, 2021 FERC order denying the Utility's
request for rehearing on the TO18, which rejected the Utility's
direct assignment of common plant to FERC, and impacted TO revenues
recorded through December 31, 2020. The total offsetting tax impact
for the low and high non-core guidance range is $59 million.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
2011-2014 GT&S capital audit
~
$
(45
)
~
$
(45
)
Wildfire response and mitigation
regulatory matters
~
135
~
135
TO18 FERC ruling impact
~
120
~
120
Prior period net regulatory
recoveries
~
$
210
~
$
210
(7)
“Net securitization inception impact"
represents the impact upon inception of rate neutral securitization
and reflects the difference between the securitization regulatory
asset and the regulatory liability associated with the revenue
credits funded by up-front shareholder contributions and the Net
Operating Loss monetization. The high case reflects the assumption
that the CPUC's final decision, issued on May 11, 2021, authorizing
the securitization of $7.5 billion of wildfire-related claims that
is designed to be rate neutral on average to customers, will become
final and non-appealable in 2021. The low case reflects the
assumption that a final legal decision is not received before the
year ended December 31, 2021. The total offsetting tax impact for
the high non-core guidance range is $59 million.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
Net securitization inception impact
~
$
—
~
$
(210
)
Undefined, capitalized terms have the
meanings set forth in the PG&E Corporation and the Utility’s
joint quarterly report on Form 10-Q for the quarter ended September
30, 2021.
Use of Non-GAAP Financial Measures
PG&E Corporation and Pacific Gas and
Electric Company
PG&E Corporation discloses historical financial results and
provides guidance based on “non-GAAP core earnings” and “non-GAAP
core EPS” in order to provide a measure that allows investors to
compare the underlying financial performance of the business from
one period to another, exclusive of non-core items.
“Non-GAAP core earnings” is a non-GAAP financial measure and is
calculated as income available for common shareholders less
non-core items. “Non-core items” include items that management does
not consider representative of ongoing earnings and affect
comparability of financial results between periods, consisting of
the items listed in Exhibit A. “Non-GAAP core EPS,” also referred
to as “non-GAAP core earnings per share,” is a non-GAAP financial
measure and is calculated as non-GAAP core earnings divided by
common shares outstanding (diluted). PG&E Corporation and the
Utility use non-GAAP core earnings and non-GAAP core EPS to
understand and compare operating results across reporting periods
for various purposes including internal budgeting and forecasting,
short- and long-term operating planning, and employee incentive
compensation. PG&E Corporation and the Utility believe that
non-GAAP core earnings and non-GAAP core EPS provide additional
insight into the underlying trends of the business, allowing for a
better comparison against historical results and expectations for
future performance. With respect to our projection of non-GAAP core
EPS for the years 2022-2026, we are not providing a reconciliation
to the corresponding GAAP measures because we are unable to predict
with reasonable certainty the reconciling items that may affect
GAAP net income without unreasonable effort. The reconciling items
are primarily due to the future impact of wildfire-related costs,
timing of regulatory recoveries, special tax items, and
investigation remedies. These reconciling items are uncertain,
depend on various factors and could significantly impact, either
individually or in the aggregate, the GAAP measures.
Non-GAAP core earnings and non-GAAP core EPS are not substitutes
or alternatives for GAAP measures such as consolidated income
available for common shareholders and may not be comparable to
similarly titled measures used by other companies.
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