8-K: PSEG Announces 2023 Results, Reaffirms 2024 Earnings Guidance

Public Service Enterprise Group (PSEG) reported full-year 2023 net income of $5.13 per share and reaffirmed its 2024 non-GAAP operating earnings guidance of $3.60 to $3.70 per share.

Summary

• PSEG reported a net income of $5.13 per share for the full year 2023, compared to $2.06 per share in 2022.
• Non-GAAP operating earnings for 2023 were $3.48 per share, slightly up from $3.47 per share in 2022.
• The company's full-year non-GAAP results were at the high end of their 2023 guidance range.
• PSEG has achieved 19 consecutive years of meeting or exceeding its earnings guidance.
• PSE&G completed a $3.7 billion capital investment plan in 2023, focused on infrastructure modernization and energy efficiency.
• PSEG is streamlining its business by retaining its nuclear fleet and exiting offshore wind generation.
• The company reached a $900 million settlement to extend its Gas System Modernization Program through 2025.
• A $280 million settlement was reached to extend the Clean Energy Future-Energy Efficiency program into mid-2024.
• PSE&G lowered its gas commodity charge from $0.47 to $0.40 per therm for winter 2024.
• Over 1.5 million PSE&G smart meters have been placed into service.
• PSEG Nuclear achieved a 93% capacity factor, producing approximately 32 TWh of carbon-free power.
• The company reduced pension variability through a regulatory accounting order and a billion-dollar lift-out.
• PSEG was named to the Dow Jones Sustainability North America Index for the 16th consecutive year.
• PSEG was recognized as #1 in Customer Satisfaction with Residential and Business Electric Service in the East among Large Utilities by J.D. Power in 2023.
• PSEG updated its five-year regulated capital spending plan to $18 billion to $21 billion.
• This supports a compound annual growth in rate base of 6% to 7.5% and non-GAAP operating earnings of 5% to 7% over the 2024 to 2028 period.
• PSE&G filed a comprehensive electric and gas base rate case to recover over $3 billion in capital investments since 2018.
• PSE&G also submitted its Clean Energy Future-Energy Efficiency II filing, a $3.1 billion proposal for 2025-2027.
• PSEG reaffirmed its 2024 non-GAAP operating earnings guidance range of $3.60 to $3.70 per share.
• The company increased its 2024 indicative annual common dividend rate to $2.40 per share.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with solid financial results, reaffirmed guidance, and strategic initiatives. However, there are some negative aspects such as decreased Q4 earnings and risks associated with the business.

Positives

• PSEG achieved solid operating and financial performance in 2023.
• The company's non-GAAP results for the full year came in at the high-end of its 2023 guidance range.
• PSEG has a track record of 19 consecutive years of meeting or exceeding its earnings guidance.
• PSE&G efficiently completed its largest ever capital investment plan in a single year.
• PSEG is streamlining its business mix by retaining its nuclear fleet and exiting offshore wind generation.
• The company reached settlements to extend key programs like the Gas System Modernization Program and Clean Energy Future-Energy Efficiency program.
• PSE&G lowered its gas commodity charge for winter 2024.
• PSEG Nuclear achieved a high capacity factor and produced a significant amount of carbon-free power.
• The company successfully reduced pension variability.
• PSEG was recognized for its sustainability efforts and customer satisfaction.
• The company has a strong outlook for growth in rate base and non-GAAP operating earnings.
• PSEG increased its annual common dividend for 2024.

Negatives

• PSEG's fourth-quarter 2023 net income was $1.10 per share, down from $1.58 per share in the same period of 2022.
• Non-GAAP operating earnings for the fourth quarter of 2023 were $0.54 per share, down from $0.64 per share in the fourth quarter of 2022.
• PSE&G's fourth-quarter net income decreased to $291 million from $352 million in the same period of 2022.
• PSEG Power & Other reported a net loss of $534 million for the full year 2022.
• PSEG Power & Other's fourth-quarter non-GAAP operating earnings were negative at -$25 million.

Risks

• The company faces risks related to developing and obtaining regulatory approval for transmission and distribution projects.
• Climate change poses physical, financial, and transition risks.
• Equipment failures, accidents, and cyberattacks could impact service reliability.
• There are risks associated with supply chain disruptions and labor shortages.
• PSEG may face challenges in maintaining sufficient liquidity and accessing capital.
• A shift away from natural gas could impact the business.
• The company faces risks related to changes in technology and customer usage patterns.
• There are risks associated with the ownership and operation of nuclear facilities.
• Changes in environmental laws and regulations could impact the business.
• Delays in receiving necessary licenses and permits could affect projects.
• Changes in tax laws and regulations could impact the company's financial performance.

Future Outlook

PSEG reaffirms its full-year 2024 non-GAAP Operating Earnings guidance of $3.60 to $3.70 per share and anticipates growth in rate base and earnings through 2028, supported by a $18 billion to $21 billion capital investment program.

Management Comments

• Ralph LaRossa, PSEGs chair, president and CEO, stated that PSEG achieved solid operating and financial performance in 2023.
• LaRossa noted that PSE&G efficiently completed its largest ever capital investment plan in a single year.
• LaRossa added that PSEG is executing on its strategy to increase the predictability of the business and the visibility of growth.
• LaRossa mentioned that PSE&G's rate case is among the lowest proposed rate increases filed by a NJ public utility over the last six years.
• LaRossa stated that PSEG is reaffirming its non-GAAP Operating Earnings guidance range of $3.60 to $3.70 per share for 2024.

Industry Context

This announcement reflects the ongoing trend in the utility sector towards infrastructure modernization, renewable energy integration, and energy efficiency programs. PSEG's focus on regulated investments and nuclear power aligns with the industry's move towards cleaner energy sources and grid reliability. The company's efforts to streamline its business and reduce costs are also consistent with industry best practices.

Comparison to Industry Standards

• PSEG's 2023 non-GAAP operating earnings of $3.48 per share is comparable to other large utility companies in the US, such as Exelon (EXC) and Duke Energy (DUK), which also focus on regulated operations and infrastructure investments.
• The company's 93% nuclear capacity factor is above the industry average, which typically ranges from 85% to 90%, demonstrating strong operational performance.
• PSEG's $3.7 billion capital investment in 2023 is a significant amount, but is in line with other large utilities that are investing heavily in grid modernization and renewable energy projects.
• The proposed $3.1 billion Clean Energy Future-Energy Efficiency II program is a substantial investment in energy efficiency, which is a key focus for many utilities as they work to meet state and federal decarbonization goals.
• PSEG's dividend increase to $2.40 per share is a positive sign for investors and is competitive with other dividend-paying utility stocks.

Stakeholder Impact

• Shareholders will benefit from the increased dividend and potential for future earnings growth.
• Customers will benefit from improved infrastructure, energy efficiency programs, and lower gas commodity charges.
• Employees will benefit from the new multi-year labor agreements.
• The community will benefit from PSEG's commitment to sustainability and clean energy.

Next Steps

• PSEG will continue to execute its $18 billion to $21 billion capital investment plan over the next five years.
• PSE&G will work to obtain regulatory approval for its proposed rate case and Clean Energy Future-Energy Efficiency II program.
• PSEG will focus on maintaining its strong operational performance and customer satisfaction.
• The company will continue to monitor and manage risks related to climate change, cybersecurity, and regulatory changes.

Key Dates

Keywords

PSEG, PSE&G, Operating Earnings, Net Income, Capital Investment, Rate Base, Nuclear Power, Energy Efficiency, Dividend, Regulation, Utilities, Infrastructure, Sustainability