8-K: PSEG Announces First Quarter 2024 Results, Reaffirms Full-Year Guidance

Public Service Enterprise Group (PSEG) reported a net income of $1.06 per share and non-GAAP operating earnings of $1.31 per share for the first quarter of 2024, while reaffirming its full-year non-GAAP operating earnings guidance.

Summary

• PSEG reported a net income of $532 million, or $1.06 per share, for the first quarter of 2024, compared to $1.287 billion, or $2.58 per share, in the same period last year.
• Non-GAAP operating earnings were $657 million, or $1.31 per share, down from $695 million, or $1.39 per share, in the first quarter of 2023.
• The company reaffirmed its 2024 non-GAAP operating earnings guidance of $3.60 to $3.70 per share.
• PSE&G's first quarter results were impacted by higher depreciation and interest expenses related to electric and gas distribution investments, as well as increased operation and maintenance costs.
• PSEG Power & Other's results were affected by a scheduled refueling outage at the Hope Creek nuclear plant, though the federal nuclear production tax credit provided a positive impact.
• PSEG invested approximately $0.8 billion during the first quarter and is on track with its planned 2024 regulated capital investment program of approximately $3.4 billion.
• The company's nuclear fleet operated with a capacity factor of 96.8% during the quarter, supplying 8.2 TWh of carbon-free energy.
• PSEG declared a first quarter dividend of $0.60 per share, representing an indicative annualized increase of $0.12 per share for 2024.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company's earnings are down compared to last year, they reaffirmed their full-year guidance and are making progress on key initiatives. The company is also focused on long-term growth and sustainability.

Positives

• PSEG's first quarter results were consistent with expectations to deliver full-year 2024 non-GAAP Operating Earnings guidance.
• The nuclear production tax credit went into effect on January 1, 2024, providing downside price protection for the nuclear fleet through 2032.
• PSEG's nuclear fleet operated well, posting a capacity factor of 96.8% and supplying 8.2 TWh of reliable, carbon-free baseload energy.
• PSEG is on track with its planned 2024 regulated capital investment program of approximately $3.4 billion.
• The company is pursuing multiple growth paths such as thermal uprates, license extension, hydrogen pilots, and data center power sales.
• PSEG will continue to prioritize a solid balance sheet, which enables them to fund their five-year regulated capital investment plan without the need to issue new equity or sell assets.
• PSEG recently declared its first quarter dividend of $0.60 per share, representing an indicative annualized increase of $0.12 per share for 2024.
• PSE&G met the challenge of quickly restoring service to tens of thousands of customers following a severe rain and windstorm early in the year.

Negatives

• PSEG's net income decreased significantly compared to the first quarter of 2023, from $1.287 billion to $532 million.
• Non-GAAP operating earnings also decreased, from $695 million to $657 million.
• PSE&G's first quarter results were negatively impacted by higher depreciation and interest expenses, as well as increased operation and maintenance costs.
• PSEG Power & Other's results were negatively affected by a scheduled refueling outage at the Hope Creek nuclear plant.
• The company anticipates higher investment-related expenses over the balance of 2024.
• PSEG Power & Other's net income decreased significantly from $800 million to $44 million.

Risks

• The company faces risks related to the development and approval of transmission and distribution projects.
• Climate change poses physical, financial, and transition risks, including increased regulatory burdens and changing customer preferences.
• Equipment failures, accidents, natural disasters, and cyberattacks could impact the company's ability to provide reliable service.
• There are risks associated with maintaining sufficient liquidity and access to capital.
• Changes in technology, customer usage patterns, and energy industry regulations could affect the business.
• The company faces risks related to its ownership and operation of nuclear facilities, including increased fuel storage costs and regulatory compliance.
• Delays in receiving necessary licenses and permits could impact project timelines.
• The company's ability to recover costs and earn returns on authorized investments is subject to regulatory approval.

Future Outlook

PSEG reaffirmed its full-year 2024 non-GAAP operating earnings guidance of $3.60 to $3.70 per share and expects to grow non-GAAP operating earnings in the range of 5% to 7% annually through 2028.

Management Comments

• Ralph LaRossa, PSEG's chair, president and CEO, stated that the first-quarter results were consistent with expectations to deliver full-year 2024 non-GAAP Operating Earnings guidance.
• LaRossa also noted that the nuclear production tax credit is expected to provide the nuclear fleet with downside price protection through 2032.
• LaRossa added that PSEG anticipates realizing most of the increase in PSEG Power's gross margin for 2024 during the second half of the year.

Industry Context

This announcement reflects the ongoing challenges and opportunities in the utility sector, including the need for infrastructure modernization, the transition to clean energy, and the impact of regulatory changes. The company's focus on regulated investments and nuclear energy aligns with broader industry trends towards decarbonization and grid reliability.

Comparison to Industry Standards

• PSEG's nuclear capacity factor of 96.8% is strong compared to industry averages, indicating efficient operation of its nuclear fleet.
• The company's planned capital investment of $3.4 billion for 2024 is significant, reflecting a commitment to infrastructure modernization and decarbonization, similar to other large utility companies.
• PSEG's reaffirmed non-GAAP operating earnings guidance of $3.60 to $3.70 per share is in line with expectations for a large, regulated utility.
• The company's focus on a solid balance sheet and funding its capital plan without new equity or asset sales is a common strategy among well-managed utilities.
• PSEG's dividend yield of 3.6% is comparable to other dividend-paying utility stocks.

Stakeholder Impact

• Shareholders will be impacted by the decrease in net income and non-GAAP operating earnings, but may be reassured by the reaffirmed full-year guidance and dividend increase.
• Employees will be impacted by the company's focus on infrastructure modernization and decarbonization initiatives.
• Customers will benefit from the company's investments in energy efficiency programs and reliable service.
• Suppliers will be impacted by the company's capital investment program and focus on infrastructure modernization.
• Creditors will be impacted by the company's focus on maintaining a solid balance sheet.

Next Steps

• PSEG will continue to execute on its long-term strategy to grow non-GAAP Operating Earnings in the range of 5% to 7% annually through 2028.
• The company will continue to invest in energy infrastructure to support greater electrification of transportation, homes and workplaces.
• PSEG will continue to pursue competitive transmission opportunities in the PJM region.
• The company will continue to prioritize a solid balance sheet to fund its five-year regulated capital investment plan.
• PSEG will continue to monitor the pending PSE&G base electric and gas distribution rate case, which is expected to be resolved later in 2024.

Key Dates

Keywords

PSEG, Operating Earnings, Net Income, Nuclear, Capital Investment, Dividend, PSE&G, Energy, Regulation, Infrastructure