8-K: Dominion Energy Reports Mixed Q4 and Full-Year 2023 Results, Announces Offshore Wind Partnership

Dominion Energy announced its fourth-quarter and full-year 2023 earnings, highlighted by a new partnership for its Coastal Virginia Offshore Wind project and a scheduled investor meeting.

Summary

• Dominion Energy reported a GAAP net income of $0.30 per share for the fourth quarter of 2023, down from $0.39 per share in the same period of 2022.
• Operating earnings for the fourth quarter were $0.29 per share, significantly lower than the $0.76 per share in the fourth quarter of 2022.
• For the full year 2023, GAAP net income was $2.29 per share, compared to $1.49 per share in 2022.
• Full-year operating earnings were $1.99 per share, a decrease from $3.06 per share in the previous year.
• The company has agreed to sell a 50% noncontrolling interest in the Coastal Virginia Offshore Wind (CVOW) project to Stonepeak.
• The CVOW project is affirmed to be on time and on budget, with completion expected in late 2026.
• The CVOW project is expected to generate enough clean energy to power 660,000 homes.
• Dominion Energy will host an investor meeting on March 1, 2024, to discuss its strategy and financial outlook.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative due to the decrease in operating earnings, offset by the positive news of the CVOW partnership and the project's on-time status. The mixed results and the need for a business review temper any strong positive outlook.

Positives

• The sale of a 50% noncontrolling interest in CVOW is considered a credit positive transaction with robust cost and risk-sharing.
• The CVOW project is confirmed to be on time and on budget.
• The company is committed to achieving Net Zero emissions by 2050.
• Full year GAAP earnings increased from $1.49 to $2.29 per share.

Negatives

• Fourth-quarter operating earnings decreased significantly from $0.76 per share in 2022 to $0.29 per share in 2023.
• Full-year operating earnings decreased from $3.06 per share in 2022 to $1.99 per share in 2023.
• GAAP net income for the fourth quarter decreased from $344 million to $273 million year over year.

Risks

• The company faces risks related to the implementation of recommendations from the business review announced in November 2022.
• Unusual weather conditions and extreme weather events could impact energy sales and commodity prices.
• There are risks associated with the development and construction of the CVOW project, including potential cost overruns and delays.
• Changes in environmental laws and regulations, including those related to climate change, could impact the company.
• Fluctuations in interest rates and capital market conditions could affect the company's ability to obtain financing.

Future Outlook

Dominion Energy will provide comprehensive financial and capital investment guidance at the investor meeting on March 1, 2024. The company is focused on completing the CVOW project on time and on budget and achieving Net Zero emissions by 2050.

Management Comments

• Dominion Energy management believes operating earnings provide a more meaningful representation of the company's fundamental earnings power.
• Senior executive representatives of key suppliers and partners shared their commitment to a successful, on time, and on budget project completion for CVOW.

Industry Context

The announcement of the CVOW partnership aligns with the broader industry trend of increasing investment in renewable energy projects, particularly offshore wind. Dominion Energy's move to share the cost and risk of the project with a financial partner is a common strategy in large-scale infrastructure development.

Comparison to Industry Standards

• Dominion Energy's operating earnings per share for the full year 2023 at $1.99 are lower than some of its peers in the utility sector, such as NextEra Energy which reported adjusted EPS of $3.15 for 2023.
• The sale of a 50% stake in the CVOW project to Stonepeak is similar to other large-scale renewable energy projects where developers seek financial partners to share the capital burden and risk, such as Ørsted's farm-downs of offshore wind projects.
• The CVOW project's 2.6 GW capacity is significant, placing it among the largest offshore wind projects in the US, comparable to projects like Vineyard Wind 1.
• The project's on-time and on-budget status is a positive sign, as many large infrastructure projects often face delays and cost overruns, such as the Vogtle nuclear plant expansion.

Stakeholder Impact

• Shareholders may be concerned about the decrease in operating earnings but encouraged by the CVOW partnership.
• Customers will benefit from the clean energy generated by the CVOW project.
• Employees will be involved in the ongoing construction and operation of the CVOW project.
• Suppliers and partners are committed to the success of the CVOW project.

Next Steps

• Dominion Energy will host an investor meeting on March 1, 2024.
• The transaction to sell a 50% noncontrolling interest in CVOW is expected to close by the end of 2024.
• The CVOW project is scheduled for completion in late 2026.

Key Dates

Keywords

Dominion Energy, Offshore Wind, CVOW, Earnings, Renewable Energy, Stonepeak, Partnership, Net Zero, Financial Results, Investor Meeting