Dominion Energy Announces Fourth-Quarter and Full-Year 2017 Earnings

RICHMOND, Va., Jan. 29, 2018 /PRNewswire/ -- Dominion Energy (NYSE: D) today announced unaudited reported earnings determined in accordance with Generally Accepted Accounting Principles (reported earnings) for the three months ended Dec. 31, 2017, of $1.4 billion ($2.25 per share) compared with earnings of $457 million ($0.73 per share) for the same period in 2016. 

Operating earnings for the three months ended Dec. 31, 2017, were $585 million ($0.91 per share), compared to operating earnings of $618 million ($0.99 per share) for the same period in 2016.  Operating earnings are defined as reported earnings adjusted for certain items.      

The principal difference between reported earnings and operating earnings for the quarter was a tax benefit associated with the Tax Cuts and Jobs Act enacted in December 2017. 

Dominion Energy uses operating earnings as the primary performance measurement of its earnings guidance and results for public communications with analysts and investors.  Dominion Energy also uses operating earnings internally for budgeting, for reporting to the Board of Directors, for the company's incentive compensation plans and for its targeted dividend payouts and other purposes. Dominion Energy management believes operating earnings provide a more meaningful representation of the company's fundamental earnings power.  

Thomas F. Farrell II, chairman, president and chief executive officer, said:

"We are very pleased with our record operational and safety performance for the year.  In addition, we achieved strong financial results for 2017 and reported operating earnings of $3.60 per share in the middle of our guidance range, despite weather that was significantly below normal.

"Construction of the 1,588-megawatt Greensville County combined cycle power station continues on time and on budget.   The project is approximately 73 percent complete and is expected to begin commercial operations in late 2018.

"We recently received a Limited Notice to Proceed from FERC for the Atlantic Coast Pipeline and the Supply Header Project which allows us to remain on schedule for completion of the projects in the second half of 2019.

"Cove Point Liquefaction construction is complete and we are in the final stages of commissioning.

"And finally, in December the Dominion Energy Board of Directors established a 2018 dividend of $3.34 per share, subject to quarterly determination and declaration, that represented a 10 percent year-over-year increase."   

Full-year 2017 Reported and Operating Earnings Compared to 2016
Reported earnings in 2017 were $1.0 billion higher than full-year reported earnings in 2016.  Business segment results and detailed descriptions of items included in 2017 and 2016 reported earnings but excluded from operating earnings can be found on schedules 1, 2, and 3 of this release. 

Operating earnings, in 2017, decreased $58 million as compared to full-year 2016 operating earnings.   The decrease is primarily attributable to milder weather in our regulated service territory, a step down in solar investment tax credits, a second Millstone refueling outage and a reduction of Cove Point import contract revenues.  Factors offsetting the decrease include growth in our regulated gas and electric businesses, the addition of Dominion Energy Questar and lower operating expenses.

Details of fourth-quarter and full-year 2017 operating earnings as compared to 2016 may be found on Schedule 4 of this release.

Operating Earnings Guidance
Dominion Energy expects 2018 operating earnings in the range of $3.80-$4.25 per share, compared to full-year 2017 operating earnings of $3.60 per share.  Positive factors include a return to normal weather in our regulated service territories, one fewer Millstone refueling outage, revenues from Cove Point export contracts, and the benefit of a lower tax rate due to tax reform.  The company expects negative factors for the year to include a step down in solar investment tax credits as well as higher financing costs and share dilution.

First-quarter 2018 operating earnings are expected to be in the range of $0.95-$1.15 per share. 

In providing its operating earnings guidance, the company notes that there could be differences between expected reported earnings and estimated operating earnings for matters such as, but not limited to, acquisitions, divestitures or changes in accounting principles. At this time, Dominion Energy management is not able to estimate the aggregate impact of these items on future period reported earnings.

Conference Call Today
The company will host its fourth-quarter earnings conference call at 10 a.m. ET on Monday, Jan. 29, 2018.  Management will discuss fourth-quarter and full-year 2017 financial results and other matters of interest to the financial community. 

Domestic callers should dial (877) 410-5657.   International callers should dial (334) 323-9872.  The passcode for the conference call is "Dominion."  Participants should dial in 10 to 15 minutes prior to the scheduled start time.  Members of the media also are invited to listen.

A live webcast of the conference call, including accompanying slides, and other financial information will be available on the investor information pages at investors.dominionenergy.com.

A replay of the conference call will be available beginning about 1 p.m. ETJan. 29 and lasting until 11 p.m. ET Feb. 5.  Domestic callers may access the recording by dialing (877) 919-4059.  International callers should dial (334) 323-0140.  The PIN for the replay is 72633771.  Additionally, a replay of the webcast will be available on the investor information pages by the end of the day Jan. 29.

Dominion Energy is one of the nation's largest producers and transporters of energy, with a portfolio of approximately 25,900 megawatts of electric generation, 14,800 miles of natural gas transmission, gathering and storage pipeline, and 6,600 miles of electric transmission lines. Dominion Energy operates one of the nation's largest natural gas storage systems with 1 trillion cubic feet of storage capacity and serves nearly 6 million utility and retail energy customers. For more information about Dominion Energy, visit the company's website at www.dominionenergy.com.

This release contains certain forward-looking statements, including forecasted operating earnings for first-quarter and full-year 2018 and beyond which are subject to various risks and uncertainties.  Factors that could cause actual results to differ include, but are not limited to: unusual weather conditions and their effect on energy sales to customers and energy commodity prices; extreme weather events and other natural disasters; federal, state and local legislative and regulatory developments; changes to federal, state and local environmental laws and regulations, including proposed carbon regulations; cost of environmental compliance; changes in enforcement practices of regulators relating to environmental standards and litigation exposure for remedial activities; capital market conditions, including the availability of credit and the ability to obtain financing on reasonable terms; fluctuations in interest rates; changes in rating agency requirements or credit ratings and their effect on availability and cost of capital; impacts of acquisitions, divestitures, transfers of assets by Dominion Energy to joint ventures or to Dominion Energy Midstream Partners, and retirements of assets based on asset portfolio reviews; the expected timing and likelihood of completion of the proposed acquisition of SCANA Corporation, including the ability to obtain the requisite approvals of SCANA's shareholders and timing, receipt and terms and conditions of  required regulatory approvals; receipt of approvals for, and timing of, closing dates for other acquisitions and divestitures; the execution of Dominion Energy Midstream Partners' growth strategy; changes in demand for Dominion Energy's services; additional competition in Dominion Energy's industries; changes to regulated rates collected by Dominion Energy; changes in operating, maintenance and construction costs; timing and receipt of regulatory approvals necessary for planned construction or expansion projects and compliance with conditions associated with such regulatory approvals; the inability to complete planned construction projects within time frames initially anticipated; and the ability of Dominion Energy Midstream Partners to negotiate, obtain necessary approvals and consummate acquisitions from Dominion Energy and third-parties, and the impacts of such acquisitions.   Other risk factors are detailed from time to time in Dominion Energy's and Dominion Energy Midstream Partners' quarterly reports on Form 10-Q or most recent annual report on Form 10-K filed with the Securities and Exchange Commission.

Schedule 2 - Reconciliation of 2017 Operating Earnings to Reported Earnings

2017 Earnings (Twelve months ended December 31, 2017)  

The  $235 million pre-tax net effect of the adjustments included in 2017 reported earnings, but excluded from operating earnings, is primarily related to the following items:

• $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.

The Tax Cuts and Jobs Act, enacted in December 2017, reduced the corporate income tax rate from 35% to 21%.  Dominion Energy recognized $988 million of tax benefits resulting from the re-measurement of deferred income taxes to the new corporate income tax rate.

Schedule 3 - Reconciliation of 2016 Reported Earnings to Operating Earnings

2016 Earnings (Twelve months ended December 31, 2016)  

The $359 million pre-tax net effect of the adjustments included in 2016 reported earnings, but excluded from operating earnings, is primarily related to the following items:

• $197 million additional charge associated with the asset retirement obligations for ash ponds and landfills at certain utility generation facilities to comply with the EPA coal combustion residuals rule.
• $74 million of transaction and transition costs associated with the Dominion Energy Questar combination, which was completed in September 2016.
• $65 million charge associated with an organizational design initiative and primarily comprised of employee severance benefits.
• $23 million of restoration costs associated with Hurricane Matthew affecting our electric utility service territories.

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SOURCE Dominion Energy