Dominion Energy Announces Third-Quarter Earnings

November 5, 2020

By Dominion Energy

Caption FF

Description FF

RICHMOND, Va., Nov. 5, 2020 /PRNewswire/ — Dominion Energy (NYSE: D) today announced unaudited reported earnings determined in accordance with Generally Accepted Accounting Principles (reported earnings) for the three months ended Sept. 30, 2020, of $356 million ($0.41 per share) compared with a net income of $975 million ($1.17 per share) for the same period in 2019.

Operating earnings for the three months ended Sept. 30, 2020, were $916 million ($1.08 per share), compared to operating earnings of $946 million ($1.15 per share) for the same period in 2019. The company estimates that its third-quarter 2020 operating earnings were positively impacted by $0.04 per share due to better-than-normal weather in its utility service areas.

The difference between GAAP and operating earnings for the three months ended Sept. 30, 2020, was primarily attributable to the recognition of a customer credit reinvestment offset for the benefit of customers in Virginia, charges associated with long-term contracted renewable portfolio outside the company’s core service areas and net gains on nuclear decommissioning trust funds.

Operating earnings are defined as reported earnings adjusted for certain items. Details of operating earnings as compared to prior periods, business segment results and detailed descriptions of items included in reported earnings but excluded from operating earnings can be found on Schedules 1, 2, 3 and 4 of this release.

Guidance

Dominion Energy expects fourth-quarter operating earnings in the range of $0.73 to $0.87 per share.

The company affirms its full-year 2020 operating earnings guidance range of $3.37 to $3.63 per share and expects weather-normal operating EPS for 2020 to be above the guidance range midpoint.

The company also affirms its long-term earnings and dividend growth guidance.

Webcast today

The company will host its third-quarter earnings conference call at 11 a.m. ET on Thursday, Nov. 5, 2020. Management will discuss third-quarter financial results and other matters of interest to the financial community.

A live webcast of the conference call, including accompanying slides and other financial information, will be available at investors.dominionenergy.com. A replay of the webcast will be available on the investor relations website by the end of the day Nov. 5.

To join telephonically, domestic callers should dial 1-800-341-6228. International callers should dial 1-334-777-6993. The passcode for the conference call is 63771662#. Participants should dial in 10 to 15 minutes prior to the scheduled start time. A replay of the conference call will be available beginning at about 3 p.m. ET Nov. 5 and lasting until 11 p.m. ET Nov. 12. Domestic callers may access the recording by dialing 1-877-919-4059. International callers should dial 1-334-323-0140. The PIN for the replay is 65141144.

Important note to investors regarding operating, reported earnings

Dominion Energy uses operating earnings as the primary performance measurement of its earnings guidance and results for public communications with analysts and investors. Dominion Energy also uses operating earnings internally for budgeting, for reporting to the Board of Directors, for the company’s incentive compensation plans and for its targeted dividend payouts and other purposes. Dominion Energy management believes operating earnings provide a more meaningful representation of the company’s fundamental earnings power.

In providing its operating earnings guidance, the company notes that there could be differences between expected reported earnings and estimated operating earnings for matters such as, but not limited to, acquisitions, divestitures or extreme weather events and other natural disasters. At this time, Dominion Energy management is not able to estimate the aggregate impact of these items on future period reported earnings.

About Dominion Energy

More than 7 million customers in 16 states energize their homes and businesses with electricity or natural gas from Dominion Energy (NYSE: D), headquartered in Richmond, Va. The company is committed to sustainable, reliable, affordable and safe energy and to achieving net zero carbon dioxide and methane emissions from its power generation and gas infrastructure operations by 2050. Please visit DominionEnergy.com to learn more.

This release contains certain forward-looking statements, including forecasted operating earnings fourth-quarter and full-year 2020 and beyond which are subject to various risks and uncertainties. Factors that could cause actual results to differ include, but are not limited to: unusual weather conditions and their effect on energy sales to customers and energy commodity prices; extreme weather events and other natural disasters; extraordinary external events, such as the current pandemic health event resulting from COVID-19; federal, state and local legislative and regulatory developments; changes to federal, state and local environmental laws and regulations, including proposed carbon regulations; cost of environmental compliance; changes in enforcement practices of regulators relating to environmental standards and litigation exposure for remedial activities; capital market conditions, including the availability of credit and the ability to obtain financing on reasonable terms; fluctuations in interest rates; changes in rating agency requirements or credit ratings and their effect on availability and cost of capital; impacts of acquisitions, divestitures, transfers of assets by Dominion Energy to joint ventures, and retirements of assets based on asset portfolio reviews; receipt of approvals for, and timing of, closing dates for acquisitions and divestitures; the expected timing and likelihood of completion of the proposed transaction with Berkshire Hathaway Energy, including the ability to obtain the requisite regulatory approvals and the terms and conditions of such regulatory approvals; changes in demand for Dominion Energy’s services; additional competition in Dominion Energy’s industries; changes to regulated rates collected by Dominion Energy; changes in operating, maintenance and construction costs; timing and receipt of regulatory approvals necessary for planned construction or expansion projects and compliance with conditions associated with such regulatory approvals; adverse outcomes in litigation matters or regulatory proceedings; and the inability to complete planned construction projects within time frames initially anticipated. Other risk factors are detailed from time to time in Dominion Energy’s quarterly reports on Form 10-Q and most recent annual report on Form 10-K filed with the Securities and Exchange Commission.

Dominion Energy, Inc.
Consolidated Statements of Income*
Unaudited (GAAP Based)
(millions, except per share amounts)

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2020	2019	2020	2019

Operating Revenue	$ 3,607	$ 3,782	$ 10,651	$ 10,506

Operating Expenses
Electric fuel and other energy-related purchases	594	769	1,758	2,250
Purchased electric capacity	23	11	36	74
Purchased gas	37	158	561	1,120
Other operations and maintenance¹	2,128	952	4,683	4,043
Depreciation, depletion and amortization	595	586	1,751	1,713
Other taxes	203	202	663	698
Total operating expenses	3,580	2,678	9,452	9,898

Income from operations	27	1,104	1,199	608

Other income	281	129	327	526
Interest and related charges	306	370	1,136	1,133
Income from continuing operations including noncontrolling
interests before income tax expense (benefit)	2	863	390	1

Income tax expense (benefit)	(110)	(84)	(123)	161

Net Income (loss) from continuing operations including noncontrolling interests	112	947	513	(160)

Net Income (loss) from discontinued operations including noncontrolling interests	19	38	(1,753)	526

Net Income (loss) including noncontrolling interests	$ 131	$ 985	$ (1,240)	$ 366
Noncontrolling interests	(225)	10	(157)	17

Net Income (loss) attributable to Dominion Energy	$ 356	$ 975	$ (1,083)	$ 349

Reported Income (loss) per common share from continuing operations – diluted	$ 0.42	$ 1.12	$ 0.83	$ (0.22)
Reported Income (loss) per common share from discontinued operations – diluted	(0.01)	0.05	(2.21)	0.64
Reported Income (loss) per common share – diluted	$ 0.41	$ 1.17	$ (1.38)	$ 0.42
Average shares outstanding, diluted	833.8	813.0	837.1	802.9

¹⁾ Includes impairment of assets and other charges.
¹⁾ Includes impairment of assets and other charges.
* The notes contained in Dominion Energy’s most recent quarterly report on Form 10-Q or annual report on Form 10-K are
an integral part of the Consolidated Financial Statements.

Schedule 1 – Segment Reported and Operating Earnings

Unaudited
(millions, except per share amounts)		Three months ended September 30,
		2020	2019	Change

REPORTED EARNINGS¹		$ 356	$ 975	$ (619)

	Pre-tax loss (income)²	859	(21)	880
	Income tax²	(299)	(8)	(291)
Adjustments to reported earnings		560	(29)	589

OPERATING EARNINGS		$ 916	$ 946	$ (30)
	By segment:
	Dominion Energy Virginia	613	629	(16)
	Gas Distribution	64	43	21
	Dominion Energy South Carolina	157	166	(9)
	Contracted Assets	112	86	26
	Corporate and Other	(30)	22	(52)
		$ 916	$ 946	$ (30)

Earnings Per Share (EPS):³
REPORTED EARNINGS ¹		$ 0.41	$ 1.17	$ (0.76)
Adjustments to reported earnings (after tax)		0.67	(0.02)	0.69
OPERATING EARNINGS		$ 1.08	$ 1.15	$ (0.07)
	By segment:
	Dominion Energy Virginia	0.74	0.77	(0.03)
	Gas Distribution	0.08	0.05	0.03
	Dominion Energy South Carolina	0.19	0.20	(0.01)
	Contracted Assets	0.13	0.11	0.02
	Corporate and Other	(0.06)	0.02	(0.08)
		$ 1.08	$ 1.15	$ (0.07)

Common Shares Outstanding (average, diluted)		833.8	813.0

(millions, except earnings per share)		Nine months ended September 30,
		2020	2019	Change

REPORTED EARNINGS¹		$ (1,083)	$ 349	$ (1,432)

	Pre-tax loss (income)²	4,572	1,967	2,605
	Income tax²	(1,155)	(293)	(862)
Adjustments to reported earnings		3,417	1,674	1,743

OPERATING EARNINGS		$ 2,334	$ 2,023	$ 311
	By segment:
	Dominion Energy Virginia	1,479	1,383	96
	Gas Distribution	375	314	61
	Dominion Energy South Carolina	326	332	(6)
	Contracted Assets	295	296	(1)
	Corporate and Other	(141)	(302)	161
		$ 2,334	$ 2,023	$ 311

Earnings Per Share (EPS):³
REPORTED EARNINGS¹		$ (1.38)	$ 0.42	$ (1.80)
Adjustments to reported earnings (after tax)		4.11	2.09	2.02
OPERATING EARNINGS		$ 2.73	$ 2.51	$ 0.22
	By segment:
	Dominion Energy Virginia	1.77	1.72	0.05
	Gas Distribution	0.45	0.39	0.06
	Dominion Energy South Carolina	0.39	0.41	(0.02)
	Contracted Assets	0.35	0.37	(0.02)
	Corporate and Other	(0.23)	(0.38)	0.15
		$ 2.73	$ 2.51	$ 0.22

Common Shares Outstanding (average, diluted)		837.1	802.9


¹⁾	Determined in accordance with Generally Accepted Accounting Principles (GAAP).
²⁾	Adjustments to reported earnings are included in Corporate and Other segment reported GAAP earnings. Refer to Schedules 2 and 3 for details, or find “GAAP Reconciliation” in the Earnings Release Kit on Dominion Energy’s website at www.dominionenergy.com/investors.
³⁾	The calculation of operating earnings per share excludes the impact, if any, of fair value adjustments related to the Company’s convertible preferred securities entered in June 2019. Such fair value adjustments, if any, are required for the calculation of diluted reported earnings per share. No adjustments were necessary for the three months ended September 30, 2020. For the nine months ended September 30, 2020, the fair value adjustment required for diluted reported earnings per share calculation was $28 million. For the three months ended September 30, 2019, the fair value adjustment required for diluted reported earnings per share calculation was $13 million. No adjustments were necessary for the nine months ended September 30, 2019. In each quarter of 2020, the calculation of reported and operating earnings per share includes the impact of preferred dividends of $7 million per quarter associated with the Series A preferred stock equity units entered in June 2019 and $9 million associated with the Series B preferred stock equity units entered in December 2019. See Forms 10-Q and 10-K for additional information.

Schedule 2 – Reconciliation of 2020 Reported Earnings to Operating Earnings

2020 Earnings (Nine months ended September 30, 2020)

The $4.6 billion pre-tax net effect of the adjustments included in 2020 reported earnings, but excluded from operating earnings, is primarily related to the following items:

$2.6 billion net loss from discontinued operations associated with the sale of the Gas Transmission & Storage segment as well as the cancellation of the Atlantic Coast Pipeline project.
$812 million of charges primarily relating to the planned early retirement of electric generation facilities in Virginia and $200 million of charges for expected customer credit reinvestment offset for Virginia utility customers.
$626 million for an impairment charge attributable to Dominion Energy’s interests in certain merchant solar generation facilities and a contract termination charge in connection with the sale of Fowler Ridge.


*(millions, except per share amounts)*	1Q20	2Q20	3Q20	4Q20	YTD 2020	³
Reported earnings (loss)	($270)	($1,169)	$356	$0	($1,083)
Adjustments to reported earnings ¹:
Pre-tax loss (income)	1,265	2,448	859	0	4,572
Income tax	(207)	(649)	(299)	0	(1,155)
	1,058	1,799	560	0	3,417
Operating earnings	$788	$630	$916	$0	$2,334
Common shares outstanding (average, diluted)	838.2	839.4	833.8	0.0	837.1
Reported earnings (loss) per share ²	($0.34)	($1.52)	$0.41	$0.00	($1.38)
Adjustments to reported earnings per share ²	1.26	2.25	0.67	0.00	4.11
Operating earnings per share ²	$0.92	$0.73	$1.08	$0.00	$2.73

1) Adjustments to reported earnings are reflected in the following table:
	1Q20	2Q20	3Q20	4Q20	YTD 2020
Pre-tax loss (income):
Discontinued operations – Gas Transmission & Storage segment *	(161)	2,691	90	0	2,620
Regulated asset retirements and other charges	768	44	200	0	1,012
Charges associated with interests in merchant renewable generation facilities	0	0	626	0	626
Merger and integration-related costs	51	22	77	0	150
Net (gain) loss on NDT funds	538	(393)	(190)	0	(45)
Liability management and financing	31	18	13	0	62
Mark-to-market impact of economic hedging activities	37	32	(46)	0	23
Other **	1	34	89	0	124

	$1,265	$2,448	$859	$0	$4,572
Income tax expense (benefit):
Tax effect of above adjustments to reported earnings ***	(224)	(649)	(230)	0	(1,103)
Other	17	0	(69)	0	(52)

	($207)	($649)	($299)	$0	($1,155)
* Amount excludes the 50% interest in Cove Point retained by the Company.
** Includes social justice commitments, allowance for credit risk on customer accounts and Tropical Storm Isaias.
*** Income taxes for individual pre-tax items include current and deferred taxes using a transactional effective tax rate. For interim reporting purposes, such amounts
may be adjusted in connection with the calculation of the Company’s year-to-date income tax provision based on its estimated annual effective tax rate.
²⁾The calculation of operating earnings per share excludes the impact, if any, of fair value adjustments related to the Company’s convertible preferred securities
entered in June 2019. Such fair value adjustments, if any, are required for the calculation of diluted reported earnings per share. No adjustments were necessary
for the three months ended March 31 or for the three months ended September 30. For the three months ended June 30, the fair value adjustment required for
diluted reported earnings per share calculation was $92 million. For the nine months ended September 30, the fair value adjustment required for diluted reported
earnings per share calculation was $28 million. In each quarter of 2020, the calculation of reported and operating earnings per share includes the impact of
preferred dividends of $7 million associated with the Series A preferred stock equity units entered in June 2019 and $9 million associated with the
Series B preferred stock equity units entered in December 2019. See Forms 10-Q and 10-K for additional information.
³⁾YTD EPS may not equal sum of quarters due to share count difference and fair value adjustment associated with the convertible preferred securities.

Schedule 3 – Reconciliation of 2019 Reported Earnings to Operating Earnings

2019 Earnings (Twelve months ended December 31, 2019)

The $2.0 billion pre-tax net effect of the adjustments included in 2019 reported earnings, but excluded from operating earnings, is primarily related to the following items:

$2.4 billion of merger and integration-related costs associated with the SCANA Combination, primarily reflecting $1 billion for refunds of amounts previously collected from retail electric customers of Dominion Energy South Carolina (DESC) for the NND Project, $383 million associated with a voluntary retirement program (which includes $111 million for employee benefit plan curtailment), and $641 million associated with litigation.
$769 million of charges at our regulated entities, primarily consisting of the retirement of electric generation facilities in cold reserve and certain automated meters and a purchase power contract termination.
$612 million of net income from discontinued operations primarily associated with the sale of the Gas Transmission & Storage segment.
$113 million benefit from the revision of certain asset retirement obligations for ash ponds and landfills at certain utility generation facilities, in connection with the enactment of Virginia legislation in March.
$553 million net gain related to our investments in nuclear decommissioning trust funds.

Dominion Energy also recorded $194 million tax charge for certain income tax-related regulatory assets acquired in the SCANA Combination for which Dominion Energy committed to forgo recovery.


*(millions, except per share amounts)*	1Q19	2Q19	3Q19	4Q19	YTD 2019	³
Reported earnings (loss)	($680)	$54	$975	$1,009	$1,358
Adjustments to reported earnings ¹:
Pre-tax loss (income)	1,484	504	(21)	(24)	1,943
Income tax	(111)	(174)	(8)	(133)	(426)
	1,373	330	(29)	(157)	1,517
Operating earnings	$693	$384	$946	$852	$2,875
Common shares outstanding (average, diluted)	793.1	802.5	813.0	826.3	808.9
Reported earnings (loss) per share ²	($0.86)	$0.07	$1.17	$1.21	$1.62
Adjustments to reported earnings per share ²	1.73	0.41	(0.02)	(0.19)	1.91
Operating earnings per share ²	$0.87	$0.48	$1.15	$1.02	$3.53

¹⁾Adjustments to reported earnings are reflected in the following table:
	1Q19	2Q19	3Q19	4Q19	YTD 2019
Pre-tax loss (income):
Merger and integration-related costs	1,428	497	59	376	2,360
Regulated asset and contract retirements/terminations	547	197	47	(22)	769
Discontinued operations – Gas Transmission & Storage segment *	(154)	(117)	(125)	(216)	(612)
Revision to ash pond and landfill closure costs	(113)	0	0	0	(113)
Net gain on NDT funds	(253)	(83)	(28)	(189)	(553)
Other	29	10	26	27	92

	$1,484	$504	($21)	($24)	$1,943
Income tax expense (benefit):
Tax effect of above adjustments to reported earnings **	(279)	(174)	(8)	(145)	(606)
Write-off EDIT regulatory assets (SCANA)	198	0	0	(4)	194
Other	(30)	0	0	16	(14)

	($111)	($174)	($8)	($133)	($426)

* Amount excludes the 50% interest in Cove Point retained by the Company.
** Income taxes for individual pre-tax items include current and deferred taxes using a transactional effective tax rate. For interim reporting purposes, such
amounts may be adjusted in connection with the calculation of the Company’s year-to-date income tax provision based on its estimated annual effective tax rate.
²⁾The calculation of operating earnings per share excludes the impact, if any, of fair value adjustments related to the Company’s convertible preferred securities
entered in June 2019. Such fair value adjustments, if any, are required for the calculation of diluted reported earnings per share. No adjustments were
necessary for the three months ended June 30. For the three months ended September 30, the fair value adjustment required for diluted reported earnings
per share calculation was $13 million. For the three and twelve months ended December 31, the fair value adjustment required for diluted reported earnings
per share calculation was $1 million and $28 million, respectively. The calculation of reported and operating earnings per share includes the impact of
preferred dividends of $7 million per quarter associated with the Series A preferred stock equity units entered in June of 2019 and $2 million associated with
the Series B preferred stock equity units entered in December of 2019. See Forms 10-Q and 10-K for additional information.
³⁾ YTD EPS may not equal sum of quarters due to share count difference and fair value adjustment associated with the convertible preferred securities.

Schedule 4 – Reconciliation of 3Q20 Earnings to 3Q19

Preliminary, Unaudited		Three Months Ended		Nine Months Ended
*(millions, except EPS)*		September 30,		September 30,
		2020 vs. 2019		2020 vs. 2019
		Increase / (Decrease)		Increase / (Decrease)
Reconciling Items		Amount	EPS	Amount	EPS

Change in reported earnings (GAAP)		($619)	($0.76)	($1,432)	($1.80)

	Change in Pre-tax loss (income) ¹	880		2,605
	Change in Income tax ¹	(291)		(862)
Adjustments to reported earnings		$589	$0.69	$1,743	$2.02

Change in consolidated operating earnings		($30)	($0.07)	$311	$0.22

*Dominion Energy Virginia*
	Regulated electric sales:
	Weather	($2)	$0.00	($50)	($0.06)
	Other	(7)	(0.01)	(18)	(0.02)
	Rate adjustment clause equity return	21	0.03	76	0.09
	Electric capacity	(6)	(0.01)	27	0.04
	Select operations and maintenance expense²	(1)	0.00	47	0.06
	Depreciation & amortization	12	0.02	33	0.04
	Renewable energy investment tax credits	(29)	(0.04)	(10)	(0.01)
	Other	(4)	0.00	(9)	(0.01)
	Share dilution		(0.02)		(0.08)
	Change in contribution to operating earnings	($16)	($0.03)	$96	$0.05

*Gas Distribution*
	Regulated gas sales:
	Weather	$0	0.00	($2)	($0.00)
	Other	(2)	(0.00)	10	0.01
	Select operations and maintenance expense²	0	0.00	12	0.02
	Interest expense, net	14	0.02	25	0.03
	Other	9	0.01	16	0.02
	Share dilution		0.00		(0.02)
	Change in contribution to operating earnings	$21	$0.03	$61	$0.06

*Dominion Energy South Carolina*
	Regulated electric sales:
	Weather	($9)	($0.01)	($23)	($0.03)
	Other	15	0.02	16	0.02
	Regulated gas sales	2	0.00	8	0.01
	Interest expense, net	11	0.01	21	0.03
	Other	(28)	(0.03)	(28)	(0.03)
	Share dilution		0.00		(0.02)
	Change in contribution to operating earnings	($9)	($0.01)	($6)	($0.02)

*Contracted Assets*
	Margin	$32	$0.03	($11)	($0.02)
	Select operations and maintenance expense²	(7)	(0.01)	1	0.00
	Renewable energy investment tax credits	0	0.00	7	0.01
	Interest expense, net	3	0.00	10	0.01
	Other	(2)	0.00	(8)	(0.01)
	Share dilution		0.00		(0.01)
	Change in contribution to operating earnings	$26	$0.02	($1)	($0.02)

*Corporate and Other*
	Share dilution and other	($52)	($0.08)	$161	$0.15
	Change in contribution to operating earnings	($52)	($0.08)	$161	$0.15


*Change in consolidated operating earnings*		($30)	($0.07)	$311	$0.22

Change in adjustments included in reported earnings¹		($589)	($0.69)	($1,743)	($2.02)

*Change in consolidated reported earnings*		($619)	($0.76)	($1,432)	($1.80)


¹⁾	Adjustments to reported earnings are included in Corporate and Other segment reported GAAP earnings.
	Refer to Schedules 2 and 3 for details, or find “GAAP Reconciliation” in the Earnings Release Kit on Dominion Energy’s website at www.dominionenergy.com/investors.
²⁾	Includes salaries, wages, and benefits and outage expenses.
Note: Figures may not sum due to rounding