Dominion Energy, Inc.

Good morning and welcome to the Dominion Energy Second Quarter Earnings Conference Call. At this time, each of your lines is in a listen-only mode. At the conclusion of today's presentation, we will open the floor for questions. Instructions will be given for the procedure to follow if you would like to ask a question. I would now like to turn the call over to Stephen Ridge, Vice President, Investor Relations.

Good morning and thank you for joining our call. Earnings materials, including today's prepared remarks, may contain forward-looking statements and estimates that are subject to various risks and uncertainties. Please refer to our SEC filings, including our most recent annual reports on Form 10-K and our quarterly reports on Form 10-Q, for a discussion of factors that may cause results to differ from management's estimates and expectations. This morning, we will discuss some measures of our company's performance that differ from those recognized by GAAP. reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measures which we can calculate are contained in the earnings release kit. I encourage you to visit our investor relations website to review webcast slides as well as the earnings release kit. Joining today's call are Tom Farrell, Chairman, President, and Chief Executive Officer, Jim Chapman, Executive Vice President, Chief Financial Officer and Treasurer, as well as other members of the Executive Management Team. I will now turn the call over to Jim.

Thank you, Stephen, and good morning. Our second quarter 2020 operating earnings were 82 cents per share, which included a 3 cent hurt from worse than normal weather in our utility service territories. Weather normalized results of 85 cents per share were at the top of our guidance range, and for the 18th consecutive quarter, we're at or above the quarterly guidance midpoint. We expect the full year financial impact of weather to be more balanced than during the first two quarters of the year. Preliminary data indicate that July was around 4 cents better than normal, and early predictions for August suggest potential for additional weather health. Note that our second quarter gaps in operating earnings are not adjusted to account for discontinued operations, given the timing of our recent announcement, but will be reflected beginning with our third quarter disclosures. Gap earnings for the quarter were negative $1.41 per share. This result is driven primarily by impairment-related charges associated with the Atlantic Coast pipeline and supply header project. We also had a positive impact attributable to net gains on our nuclear decommissioning trust funds. As a reminder, we report such gains and losses on these funds as non-operating. A summary of adjustments between operating and reporting results is included in Schedule 2 of the Earnings Release Kit. On Flight 4, we're initiating third quarter 2020 operating earnings guidance with a range of 85 cents to $1.05 per share. As mentioned, this range reflects the impact of recasting operating earnings to exclude discontinued operations. We're also affirming the 2020 annual guidance range provided on our July 6th investor call. As usual, these ranges assume normal weather, variations from which could cause results to be towards the top or the bottom of these ranges. Typically, we provide year-ago actual results alongside our guidance. Given the need to adjust historic results for discontinued operations to provide a useful point of comparison, We plan to provide these figures when we report third quarter and full year results, respectively. I would also note that our 2020 10-K will include three full years of historic results that have been adjusted to reflect the impact of discontinued operations. Finally, we are also affirming the long-term annual growth guidance we gave earlier this month for earnings and dividends per share. I'll now turn to discuss our observation on the financial impact of COVID-19. The graph on slide five represents daily and seven-day average weather normalized load in the PGM Dom Zone as compared to the two-year historic weather normal average. Strong residential and data center demand continues to support overall load levels that modestly exceed the historic average. This is a continuation of the theme we've seen since the pandemic began, and looking forward, we expect this trend to continue. We provide corresponding data for Dominion Energy South Carolina on the next slide. Recall the story here diverged from DEV and that we did experience weather normal load degradation earlier this year. On the first quarter call, we suggested that April could represent a bottoming out with gradual improvements through the summer. Fortunately, at least so far, that has been the case, with July demand only 1% off weather normal historic averages. I would also point out that the higher volumes sold in the summer months, like July, tend to have a larger impact on our annual sales revenues than the lower volume shoulder months. We currently expect this general recovery trend to continue in South Carolina through the remainder of the year. We estimate that to the end of June, lower than budgeted sales associated with the impacts of COVID-19 across our electric utility operation have impacted operating income by approximately $0.04 per share, which thus far has been largely offset with corporate initiatives. The future remains difficult to predict, so we are reiterating the demand-related earnings sensitivity that we provided on the first quarter call and which can be found in the appendix of today's presentation. Consistent with our expectations, customer arrears have increased modestly to date. We continue to work carefully with our customers to provide options and tools to assist them in returning their accounts to current. Our gap results for the quarter reflect the recognition of a COVID-related reserve of around $20 million representing our current expectation for incremental expense associated with future uncollectible accounts. Turning on to a financing update as shown on slide seven, we provide detailed guidance on our equity capital raising plan. First, we are ceasing the issuance of new shares under the DRIP program with immediate effect, resulting in a total of about $160 million of new share issuance under the program in 2020 roughly half of our prior estimate. In 2021 and beyond, we'll return to our historic norm of around $300 million of new share issuance per year. Second, starting in 2022, we expect to see our at-the-market program begin to ramp up such that by 2024, our first big year of offshore wind investment, we're back to the $300 million to $500 million per year range that we previously articulated at Investor Day. And third, we continue to target year-end completion of the share repurchase we announced earlier this month. Recall that the Board's authorization for the announced $3 billion buyback was with immediate effect. We currently expect that there may be some modest upward bias to this figure based on additional refinement of our overall tax analysis. We'll provide additional details around share repurchases next quarter, but would note that we have not yet repurchased any shares. We have exciting opportunities to deploy significant amounts of capital directed at sustainable energy and related projects. These projected modest equity financing activities will support these EPS accretive capital investments. Turning to fixed income, We've included a slide in the appendix detailing our very modest remaining issuance for the year. Overall, we view the debt capital markets as healthy and liquid across the spectrum of term, and we currently have nearly $7 billion in available liquidity. Our credit rating agencies responded positively to the announcements we made earlier this month. S&P revised their outlook to positive, while Moody's and Fitch affirmed credit ratings. In all cases, the agencies remarked on the credit positive aspects of our strategic repositioning. We expect that successful execution of our financial plan will further demonstrate the clear and positive reduction of our overall business risk profile. Finally, before I summarize my remarks, let me give some insight into our investor relations strategy over the next several months as shown on slide eight. We are increasing our proactive outreach using virtual tools to interact with both existing and prospective shareholders throughout the world, including geographies where ESG-related factors are playing an increasingly prominent role in investment decisions. We are ramping up our investor targeting efforts to identify prospective shareholders for which our compelling clean energy operating and financial profile will resonate. We plan to use our fourth quarter earnings call to provide something of an investor-day-style refresh with supplementary appendix disclosures aimed at providing projected capex, rate base, and other inputs, which we hope will assist investors in their financial evaluation of our company. It's our responsibility to get our reposition story into the market. We therefore look forward to connecting with many of you for discussions on these topics during the next several months. So, to summarize my remarks, we remain focused on extending our track record of delivering financial results that meet or exceed our public commitments. We feel that our businesses are well positioned with regard to COVID-related demand impacts, but we are monitoring that situation carefully. We are affirming our updated 2020 operating earnings guidance, as well as the long-term operating earnings and dividend growth outlooks provided earlier this month. And finally, we look forward to increasing engagement with existing and prospective investors in the months to come. I'll now turn the call over to Tom.