CenterPoint Energy: Poised For Steady Long-Term Growth

Core Viewpoint - CenterPoint Energy reported a strong first quarter with adjusted EPS of $0.55, exceeding consensus estimates, despite a 5% revenue decline due to lower commodity prices [1][9] Financial Performance - Revenue decreased by 5% to $2.62 billion, a drop of $159 million, primarily driven by lower natural gas prices, which reduced energy costs by $291 million [1] - Earnings increased by 10% year-over-year, supported by higher rates and a weather benefit, while interest expenses posed a slight headwind [1] - Excluding energy costs, revenue rose by over $130 million, consistent with upper single-digit rate base growth [1] Regulatory Environment - CenterPoint achieved a $5 million revenue increase from its Texas Gas rate case, earning a 9.8% return on equity, above its average of 9.64% [1] - The company has maintained a flat average monthly bill in Houston for 10 years at $49, with the recent rate increase expected to raise bills by less than 0.1% [1] Customer Base and Market Dynamics - CenterPoint serves 2.8 million customers in the Greater Houston area, benefiting from positive population dynamics and net migration to Texas [1][2] - The growing customer base allows for spreading capital spending across more customers, mitigating per-customer impacts [1] Capital Expenditure and Growth Strategy - The company has a $44.5 billion 10-year capital expenditure plan, with $3.7 billion targeted for this year [7] - Approximately 80% of capital spending leads to interim recovery, enhancing shareholder benefits from investments [2] - Management reaffirmed guidance of 8% EPS growth for the year and 6-8% growth through 2030, supported by a targeted 8-10% annual increase in the rate base [1][7] Debt Management - CenterPoint has an $18.1 billion debt load, with a current 14.6% FFO/Debt ratio aligning with its 14-15% target [1] - About 90% of existing debt is fixed-rate or hedged, reducing sensitivity to interest rate fluctuations [1] Equity Issuance and Future Plans - The company plans to issue $250 million in equity this year, having completed over 75% of this total, which reduces near-term market risk [11] - CenterPoint is repositioning its equity base favorably, including the planned sale of its Louisiana and Mississippi operations for $1.2 billion, which will fund growth in Houston [12][13]