CenterPoint Energy, Inc (Holding Co)

Good morning and welcome to CenterPoint Energy's fourth quarter and full year 2021 earnings conference call with senior management. During the company's prepared remarks, all participants will be in a listen-only mode. There will be a question and answer session after management's remarks. To ask a question, press star one on your touchtone keypad. To withdraw your question, press pound. I will now turn the call over to Jackie Rickert, Vice President of Investor Relations and Treasurer. Ms. Rickert?

Good morning, everyone. Welcome to CenterPoint's earnings conference call. Dave Lassar, our CEO, and Jason Wells, our CFO, will discuss the company's fourth quarter and full year 2021 results. Management will discuss certain topics that will contain projections and other forward-looking information and statements that are based on management's beliefs, assumptions, and information currently available to management. These forward-looking statements are subject to risks and uncertainties. Actual results could differ materially based upon various factors as noted in our Form 10-K, other SEC filings, and our earnings materials. We undertake no obligation to revise or update publicly any forward-looking statement. We will be discussing non-GAAP measures on today's call. This will be the last quarter in which we will discuss utility EPS, which is a non-GAAP adjusted diluted earnings per share guidance measure. Utility EPS excludes earnings from midstream, among other exclusions. When providing guidance for 2022, we will use the non-GAAP EPS measure of adjusted diluted earnings per share on a consolidated basis, referred to as non-GAAP EPS. Jason Wells will provide further details. For information on our guidance methodology and a reconciliation of the non-GAAP measures used in providing guidance, please refer to our earnings news release and presentation. both of which can be found under the investor section on our website. As a reminder, we may use the website to announce material information. This call is being recorded. Information on how to access the replay can be found on our website. Now, I'd like to turn the discussion over to Dave.

Thank you, Jackie. Good morning, and thanks to all of you for joining us for our fourth quarter 2021 earnings call. As we wrap up a very busy 2021 at CenterPoint, I'll run through our annual highlights and headlines. To say the least, it's been quite a year. First, we continue to build on our consistent track record of earnings delivery with now seven straight quarters of execution by the current management team. We raised our utility EPS guidance three times throughout 2021. and then delivered on that guidance, reporting $1.27 on a full-year basis, an industry-leading 8.5% increase as compared to 2020. And as we discussed, we continued to grow our dividend in line with EPS growth and accelerated the increase in that dividend in Q4 of 2021. This growth is supported by our underlying rate-based growing at 11% year-over-year. In 2021, we also saw continued 2% customer growth for electric and 1% for natural gas. And as we have said before, this organic growth is a luxury many other utilities just do not have. And even after pulling over $25 million of O&M spending opportunities forward from 2022 into 2021, we achieved a 1% decrease in our controllable O&M, and we're sticking with our plan to have annual average reductions of 1 to 2% in O&M over the course of our 10-year plan. We also listened to our shareholders regarding two key action items in 2021 and executed on both of them. First, we enhanced our board governance structure, eliminated the executive chair position, and established an independent board chair. And secondly, made substantial progress toward exiting midstream altogether with the completion of the Enable Energy Transfer merger than the sale of 70% of our interest in energy transfer in 2021. With the exit of our interest in Enable, we became more focused on being a pure-play regulated utility. We then became even more weighted toward electric with the sale of our Arkansas and Oklahoma gas LDC businesses earlier this year. With the sale of these gas LVC businesses, we are now over 60% electric in our rate base. This electric versus gas business mix now puts us within the range of some of our premium utility peers. We also unveiled our new ESG strategy in 2021. Our goal to transition to net zero on direct emissions by 2035 was particularly well received. This effort has already resulted in a significant ratings improvement by Sustainalytics for CenterPoint. I am pleased to say that we are now rated in the top quartile of the utilities industry, nearly 30% better than the average utility, a result that will only improve as we execute on our generation transition plan and other ESG initiatives. As stated, we reported $1.27 for full-year 2021 utility EPS, which is an 8.5% increase over 2020. This was an industry-leading outcome. Today, we are also reaffirming guidance for 2022 at $1.36 to $1.38 for non-GAAP EPS, with the midpoint of this range being 8% growth. And of course, for this year and through 2024, we are still targeting an industry-leading 8% annual non-GAAP EPS growth each and every year. Let me be clear on one thing, though. We don't need the benefit of, nor are we counting on, the remaining energy transfer units to achieve this 8% non-GAAP EPS growth. And to reinforce this, We plan to exclude the midstream activity from our non-GAAP results in 2022, and Jason will cover more on this in a moment. I strongly believe CenterPoint has the right management team in place to execute on our strategy. I and the board continue to have regular dialogue on management succession, how to best develop, cross-train, and retained the top talent that we have here at CenterPoint. I feel that CenterPoint leadership is among the best in the industry. Let's move on to capital investments. Let me summarize our current capital spending plans, and Jason will then provide more details. First, we executed our 2021 capital plan. We said we would catch up on our 2021 capital spend in the fourth quarter And we did. To benefit our customers, we invested $3.6 billion in 2021 to support growth, resiliency, and safety across our system. This included an incremental $100 million above the capital spend we communicated to you on our last Analyst Day. Overall, as detailed in our September Analyst Day, We anticipated capital spending of $18 billion-plus over the next five years and of $40 billion-plus over the next 10 years. The five-year $18 billion-plus plan from Analyst Day included up to a billion dollars for the additional tools we were provided by the Texas legislature coming out of Winter Storm Uri. In addition to the incremental $100 million of capital we spent in 2021, so far to date in 2022, we have also been able to accelerate an additional $200 million of capital spend from the 2023 capital spending plan. This has now increased our 2022 capital plan to $4 billion, up from $3.8 billion. And more importantly, we have already identified the $200 million of additional capital opportunities required to fill the capacity created by this acceleration of spend from 2023. This now increases our total capital spend for the five-year plan from $18 billion plus to $19.2 billion. This ability to identify and spend incremental capital in 2021, identify and accelerate capital spend into 2022 from 2023, and then identify the capital to backfill 2023 capital spend with even more spending opportunities is a really great outcome. Included in the accelerated spend are the capital leases for 500 megawatts of mobile generation capacity. This fleet is deployed across our greater Houston area electric footprint. Mobile generation has become an important part of our overall resiliency strategy, and Texas Governor Abbott has also recently highlighted the importance of these tools as part of his plan to combat severe weather events. In fact, These mobile backup generation assets were strategically deployed across our service territory, and in working with ERCOT, we're ready to be energized in case of a load shed request during the recent winter storm landing. As Jason will explain, we expect to begin recovery of these costs in our DCRF filings in 2022 and 2023. We highlighted the growth of Houston in our recent Analyst Day, and two weeks ago the City of Houston and CenterPoint jointly launched the first of its kind long-term strategic power resilience initiative called Resilient Now. As part of this effort, we are working with the City of Houston to develop a master energy plan, which will identify the future capital opportunities to help the community handle its continued economic growth, help meet the challenges of more frequent and destructive weather events, support the build out of its EV infrastructure, and advance its environmental goals. This will include grid and infrastructure hardening and modernization, residential weatherization, and investments around renewable energy infrastructure. We are now working with other cities within our electric footprint for similar initiatives as well. We will keep you updated on the development of these opportunities in the initiatives in the coming quarters. As you may remember, I recently assigned Jason Wells the additional responsibility of managing our Indiana generation transition efforts. So he will cover that in a few minutes. And while he's at it, I'll also have him provide a regulatory update as well. So in summary, we've had seven consecutive quarters of improved performance and are now executing against the strategy we laid out in our September Analyst Day. In 2021, we achieved industry-leading 8.5% utility EPS growth and grew our rate base at 11%. We have recently executed two large strategic transactions and are continuing to find ways to increase our $40 billion-plus in capital investments over the course of our 10-year plan, all to benefit our customers and our investors. And lastly, we have listened to you, and as you will hear from Jason, we are simplifying our earnings reporting structure going forward. And as you can tell, we moved our earnings call date earlier into the reporting season. 2021 was a great year for CenterPoint with quarter after quarter of meeting or exceeding expectations. I firmly believe we are becoming a premium utility and will consistently extend our track record of delivering on our strategy. Looking ahead, I'll reiterate that we plan to grow our non-GAAP EPS at 8% year-over-year through 2024 with no help from the midstream and the mid to high end of our 6% to 8% annual range thereafter through our 10-year plan. We intend to invest $40 billion plus in capital to support growth, resiliency, and clean enablement for the benefit of our customers. and we'll look to accelerate investments where appropriate. And lastly, we remain focused on achieving our value proposition, which is sustainable earnings growth for our shareholders, sustainable, resilient, and affordable rates for our customers, and a sustainable positive impact on the environment for our communities. With that, I'll turn the call over to Jason.