Earnings call transcript: CenterPoint Energy Q2 2025 results miss forecasts

CenterPoint Energy (market cap: $24.23B) reported its Q2 2025 earnings, revealing an EPS of $0.29, which fell short of the forecasted $0.34. This represents a 14.71% miss. Revenue also came in below expectations at 1.94 billion dollars, compared to the anticipated 2.02 billion dollars, marking a 3.96% shortfall. Following the earnings release, CenterPoint Energy’s stock declined by 1.69% in after-hours trading, with shares priced at $36.79. According to InvestingPro analysis, the stock appears slightly overvalued at current levels, with 6 analysts recently revising their earnings expectations downward.

Key Takeaways

• CenterPoint Energy’s Q2 EPS of $0.29 missed the forecast by 14.71%.
• Revenue fell short of expectations by 3.96%, totaling 1.94 billion dollars.
• Stock price dropped 1.69% in premarket trading following the earnings announcement.
• The company remains on track for its full-year EPS guidance of $1.74 to $1.76.
• Significant growth anticipated in the Houston Electric service territory.

Company Performance

CenterPoint Energy’s performance in Q2 2025 highlighted challenges in meeting earnings expectations, with a notable decline in EPS from $0.36 in Q2 2024. Despite this, the company maintains its full-year EPS guidance of $1.74 to $1.76, indicating confidence in a stronger performance in the latter half of the year. Trading at a P/E ratio of 24.89, InvestingPro data shows the stock is trading at a premium relative to its near-term earnings growth potential. The company’s focus on high-growth Texas markets, particularly in the Houston Electric service territory, underscores its strategic direction.

Financial Highlights

• Revenue: 1.94 billion dollars, down from the forecasted 2.02 billion dollars.
• Earnings per share: $0.29, a decrease from $0.36 in Q2 2024.
• Capital investment plan increased to 53 billion dollars through 2030.

Earnings vs. Forecast

CenterPoint Energy’s Q2 2025 EPS of $0.29 fell short of the forecasted $0.34, resulting in a 14.71% miss. Revenue also missed expectations, coming in at 1.94 billion dollars against a forecast of 2.02 billion dollars, marking a 3.96% shortfall. This performance contrasts with the company’s historical trend of meeting or exceeding earnings expectations.

Market Reaction

Following the earnings announcement, CenterPoint Energy’s stock price declined by 1.69% in premarket trading, with shares priced at $36.79. This movement reflects investor disappointment in the earnings miss, despite the company’s positive long-term growth outlook. With a beta of 0.56 and historically low price volatility according to InvestingPro, the stock tends to be less reactive to market swings. The stock’s YTD return of 18.46% remains impressive, and its performance is within its 52-week range, which has seen a high of $39.31 and a low of $25.41.

Outlook & Guidance

CenterPoint Energy remains optimistic about its future prospects, maintaining its full-year EPS guidance of $1.74 to $1.76. The company expects an 8% earnings growth at the midpoint of its guidance and aims for long-term EPS growth in the mid to high end of 6-8% annually through 2030. A notable achievement highlighted in InvestingPro’s comprehensive analysis is the company’s 55-year streak of consecutive dividend payments, demonstrating strong financial stability. Significant load growth in the Houston Electric service territory and a robust capital investment plan are central to its future strategy. Discover more detailed insights and 12+ additional ProTips about CenterPoint Energy in the full InvestingPro Research Report.

Executive Commentary

CEO Jason Wells highlighted, "We continue to see more tailwinds than headwinds," emphasizing the company’s strategic focus on high-growth markets in Texas. He also noted the ability to expand the capital investment plan from 47.5 billion to 53 billion dollars without issuing additional equity, showcasing financial agility.

Risks and Challenges

• Potential for continued earnings misses if market conditions worsen.
• Regulatory challenges related to infrastructure investments.
• Economic fluctuations impacting energy demand.
• Competition in high-growth markets like Texas.
• Execution risks associated with large-scale capital projects.

Q&A

During the earnings call, analysts focused on the potential for additional capital investments and sought clarity on the timing of the Ohio LDC sale. Discussions also covered financing strategies without additional equity issuance and the company’s plans for data center developments.

Full transcript - Centerpoint Energy (CNP) Q2 2025:

Conference Operator: Good morning, and welcome to CenterPoint Energy’s second quarter two thousand twenty five earnings conference call with senior management. During the company’s prepared remarks, all participants are in listen only mode. There will be a question and answer session after management’s remarks. To ask a question, please press star one 1 on your touch tone keypad. I will now turn the call over to Ben Vallejo, Director of Investor Relations.

Mr. Vallejo?

Ben Vallejo, Director of Investor Relations, CenterPoint Energy: Good morning, and welcome to CenterPoint’s Q2 twenty twenty five earnings conference call. Jason Wells, our CEO and Chris Foster, our CFO, will discuss the company’s second quarter results. Management will discuss certain topics that will contain projections and other forward looking information and statements that are currently 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 on various factors, as noted in our Form 10 Q and other SEC filings, as well as our earnings materials.

We undertake no obligation to revise or update publicly any forward looking statement. We reported diluted earnings per share of $0.30 for the 2025 on a GAAP basis. Management will be discussing certain non GAAP measures on today’s call. When providing guidance, we use the non GAAP EPS measure of diluted adjusted earnings per share on a consolidated basis referred to as non GAAP EPS. For information on our guidance methodology and reconciliation of the non GAAP measures used in providing guidance, please refer to our earnings news release and presentation on our website.

We use our 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 call over to Jason.

Jason Wells, CEO, CenterPoint Energy: Thank you, Ben, and good morning, everyone. On today’s call, I’d like to address four key areas of focus. First, I will touch on our second quarter financial results. Second, I’ll provide an update on the strong growth that our Houston Electric Service territory continues to experience, fueled by a diverse set of economic drivers. Third, I’ll touch on our recent announcement to efficiently recycle proceeds through the proposed sale of our Ohio gas LDC.

And lastly, I’ll discuss today’s announced $500,000,000 increase to our capital investment plan, which will be deployed this year. Today’s added customer driven investments represent our third capital increase this year, now totaling $5,500,000,000 Importantly, these increases to our capital investment plans will be funded without the issuance of incremental common equity. Now starting with our second quarter financial results. This morning, we announced non GAAP EPS of $0.29 for the second quarter. Combined with our reported first quarter non GAAP EPS, we are approximately 46% of the way to the midpoint of our full year earnings guidance range of $1.74 to 1.76 This quarter’s earnings are in line with our expectations for the first half of twenty twenty five.

As we discussed on our first quarter call, we anticipated earning 40% to 50% of the full year 2025 non GAAP EPS guidance in the first half of this year. In short, we are right on track. As such, we are reaffirming our 2025 non GAAP EPS guidance range of $1.74 to 1.76 which equates to 8% earnings growth at the midpoint from our delivered 2024 non GAAP EPS of $1.62 Over the long term, we continue to expect to grow non GAAP EPS at the mid to high end of our 6% to 8% range annually through 02/1930. We also expect to grow dividends per share in line with the earnings growth over this same period. Now I want to provide an update on our strong load growth outlook for the Houston Electric Service territory, which continues to be catalyzed by a discrete and diverse set of economic drivers.

Over the previous two quarters, we have shared the drivers of the substantial growth opportunities ahead. By 2031 alone, we expect a forecasted peak load increase of 10 gigawatts, which represents a nearly 50% increase in peak demand on our system over the next six years. We have strong conviction in this forecast as we’ve made conservative assumptions related to the projects in our load interconnection queue. Notably, since our first quarter call, our load interconnection queue has grown by six gigawatts, or more than 12%. What differentiates this potential increase is that it continues to be propelled by a diverse set of drivers, including data centers, advanced manufacturing, energy development and energy exports.

Together with the seven gigawatt increase we discussed on our first quarter call, this additional six gigawatts of growth results in a cumulative increase of over 30% to what we included in our ERCOT load filing we made earlier this year. At this time, we are not formally increasing our load forecast above the nearly 50% growth target by the end of the decade. However, these positive trends in customer demand only serve to reinforce our confidence in our load growth forecasts. Most importantly, this growth is already beginning to materialize when observing year over year sales trends. Through the first half of this year, weather normalized commercial and industrial sales were up 8% when compared to the first half of twenty twenty four.

The growth we’re currently experiencing, in addition to the significant growth we are forecasting, requires the construction and regional build out of our electric transmission system that we will begin executing on in the near term. To fund this exponential growth in our Houston Electric Service territory, we have continued to evaluate the most efficient forms of financing. This, along with the timing needs for growth driven capital, ultimately led to our announcement of our Ohio gas LDC sales process kickoff during the quarter. I’d like to share some additional color around our decision to efficiently recycle capital through the proposed sale of our Ohio gas LDC. I want to begin by saying that these decisions are never easy.

We value this constructive jurisdiction and our great employees that execute and deliver for our Ohio gas customers every day. However, as our Houston Electric and Texas gas jurisdictions continue to experience increased and accelerated growth, we have decided to shift our strategic focus even more towards Texas. In connection with this shift, we believe the proposed sale of our Ohio gas business makes sense at this time, principally for three reasons. First, the sale will allow us to efficiently recycle cash proceeds to support our continually increasing investment programs. We have previously demonstrated our ability to monetize assets above book value and efficiently reinvest those funds back into our regulated business.

This transaction is yet another opportunity that we believe we can execute to finance our increasing capital needs efficiently. Second, we anticipate that the sale of the Ohio gas business will allow us to reprioritize nearly $1,000,000,000 of capital expenditures through 2030 to support our Texas jurisdictions. This reprioritization of $1,000,000,000 will help support the ongoing set of customer and community needs in Texas. In addition, we anticipate that the investing of these proceeds will result in a higher consolidated cash return in the future. We believe this improved cash flow profile will allow us to more efficiently self fund our future investments and potentially allow us to rely less on common equity issuances.

Third, as we look to optimize our portfolio, it makes sense for us to focus our time and resources in jurisdictions where we have both gas and electric service or where we have a larger customer presence. We anticipate that the recycling of cash proceeds from the sale of our Ohio gas business, in addition to this reallocation of capital, will result in Texas constituting over 70% of our portfolio after the close of the sale. The proposed sale of our Ohio gas business and our de risk equity needs through 2027, which Chris will touch on in his section, has allowed us to increase our capital investment plan by $5,500,000,000 since the beginning of this year. All of these increases are anticipated to be funding without incremental common equity. In addition, we believe any further increases to our capital plan this year can be achieved without the need for additional common equity.

I now want to discuss the $500,000,000 increase to our 2025 capital investment plan, which, as I mentioned, is on top of the $5,000,000,000 of increases already announced this year. The $500,000,000 increase announced today will be invested in 2025 as we continue to make targeted system enhancements for the benefit of our customers. This increased capital investment will also help partially offset the loss of Ohio Investments upon the closing of the sale. As I discussed earlier, our forecasted load growth will necessitate significant investments in our transmission system in both the near and longer term. To address these forecasted needs, we are taking a leading role with peer utilities in ERCOT to advance the key planning studies and proposed projects that will help us enable the tremendous economic development in the Eastern Part Of Texas.

Through our own work with ERCOT’s Regional Planning Group, in addition to our own internal work, we have identified approximately 200 projects that we will look to execute over the next ten years. We believe we are well positioned to execute these projects over this relatively short period of time. Unlike many other transmission systems, we have a significant number of brownfield opportunities where existing transmission structures are already in place, reducing construction costs and increasing speed to energization. Although we’ve already significantly increased our capital investment plan this year, with our plan now at 53,000,000,000 through 02/1930, we have three significant investment drivers outside of electric transmission that continue to reinforce an upward bias to our capital investment plan. The first of these opportunities is related to furthering our resiliency based work as we aspire to be the most resilient coastal grid in the country.

Over the last twelve months, we’ve made targeted system improvements through our Greater Houston Resiliency Initiative, which have already yielded improved outcomes for our customers. Notably, through May, the average duration of outages our Houston Electric customers experience has gone down by nearly half as compared to the comparable period in 2024. This is a significant improvement, and we are proud of our teams and our field crews’ focus in executing on our system automation strategy and pole replacement program at such an accelerated pace. However, we know there’s still more work to be done. With this in mind, we still see incremental resiliency capital investment opportunities through the end of the decade that go well beyond our current system resiliency plan, which will likely run through 2028.

Chris will discuss the progress we’ve made on our current related regulatory filings in this section. The second driver of incremental capital investments I want to highlight is related to the revitalization of Downtown Houston, which our plan does not currently include. This work will require substantial investments to support both growth and modernization of our underground electric system and our substations that support the downtown area as the city is in the process of undertaking a very exciting set of infrastructure plans to dramatically change the downtown landscape. The third driver of potential incremental investments is in our Texas gas service territory that we have previously mentioned on our first quarter call. This relates to the opportunity to build a high pressure distribution system in our Texas gas business, which currently relies on a series of contracts that are more costly for customers to move our owned gas throughout the greater Houston region.

We’re excited to share more about these capital investment opportunities later in the third quarter when we plan to provide a new comprehensive ten year plan. We continue to believe that we have one of the most tangible long term growth plans in the industry. The growth our businesses have continued to experience has resulted in $5,500,000,000 of increased capital investment so far this year, including the $500,000,000 increase we announced this quarter. Even with these announced increases, we believe there is still further upside to our capital investment plan that runs through 02/1930. Our ability to efficiently fund our plan has allowed us to take our capital investment plan from $47,500,000,000 at the 2024 to $53,000,000,000 without introducing additional common equity.

In addition, we have de risked our modest common equity needs through 2027 through executing a forward sale of our common equity earlier in the second quarter. We believe we are well positioned with tailwinds exceeding headwinds, and we are excited to share a refreshed comprehensive ten year plan by the end of the third quarter of this year. And with that, I’ll hand it over to Chris.

Chris Foster, CFO, CenterPoint Energy: Thanks, Jason. This morning, I plan to cover four areas of focus. First, the details of our second quarter results. Second, I’ll touch on our regulatory progress through the first half of this year, including our recently announced proposed settlement in our Ohio gas rate case. Third, I’ll discuss our progress on the execution of our 2025 capital investment plan, including our $500,000,000 increase, bringing our ten year plan to $53,000,000,000 which we will fund without issuing incremental common equity.

And finally, I’ll provide an update on where we ended the second quarter with respect to the balance sheet and how we’re thinking about the future financing of our capital investments in light of the proposed sale of our Ohio Gas LDC. Let’s now move to the financial results shown on slide eight. On a GAAP EPS basis, we reported $0.30 for the second quarter of twenty twenty five. On a non GAAP basis, we reported $0.29 for the 2025 compared to $0.36 in the second quarter of twenty twenty four. Our non GAAP EPS results for the second quarter removed the impacts from the sale of the Louisiana and Mississippi gas LDCs.

As Jason alluded to, and as we discussed on our first quarter earnings call, we anticipated a more back weighted shape to our 2025 earnings profile this year. As a reminder, this earnings profile is primarily driven by the different cadence of capital recovery as we were unable to access certain interim capital recovery mechanisms during our various rate case proceedings in the first half of the year. Slide nine depicts our expectations for the remainder of the year. Now, taking a closer look at the quarter. Growth in rate recovery, when netted with depreciation and other taxes, was an unfavorable variance of $01 when compared to the same quarter last year.

Again, this is largely driven by the off cadence filings of our interim capital tracker mechanisms. Weather and usage were a favorable $01 when compared to the comparable quarter of twenty twenty four. The largest impact here was from our Houston Electric service territory, which has experienced a warmer start to 2025 as compared to slightly milder weather in the second quarter of twenty twenty four. O and M was $03 unfavorable when compared to the second quarter of twenty twenty four. Like the first quarter, this unfavorable variance was largely driven by timing of vegetation management and other activities, which we accelerated to be ready ahead of the official start of the twenty twenty five hurricane season.

With much of this work moved into the first half of the year as compared to a more ratable work schedule in prior years, we anticipate this unfavorability to reverse over the second half of the year. In addition, interest expense and financing costs were $03 unfavorable when compared to the second quarter of twenty twenty four. These $03 were primarily driven by the increased debt issuances since the second quarter of last year, some of which were slightly higher coupon junior subordinated notes given our focus on the balance sheet and emphasis on credit supportive instruments. Lastly, as you may recall, last year we issued $500,000,000 of common equity. Dollars $250,000,000 of these issuances were a pull forward from 2025, as we sought to strengthen our balance sheet after our storm restoration.

These equity issuances resulted in an unfavorable variance of $01 quarter over quarter. Next, I’ll briefly touch on our regulatory progress, starting with our Ohio gas rate case settlement. As many of you may have seen, two weeks ago, we reached a proposed settlement in our Ohio gas rate case. The settlement agreement includes a revenue requirement increase of $59,600,000 based on an equity ratio of 52.9% and return on equity of 9.85%. We began hearings earlier this week and anticipate those hearings continuing through the end of next week.

We look forward to continuing to work with stakeholders in this case to reach a reasonable outcome for all parties. Moving now to Houston Electric. I’ll begin with our system resiliency plan filing, where we recently reached an all party settlement. The proposed settlement includes distribution system resiliency investments and spend of approximately $3,200,000,000 over the next three years. There are three key categories of investment included in this figure: an acceleration of our polar placement program undergrounding more vulnerable areas of our system and automation and increased resiliency of distribution circuits and substations.

In addition to those investments, the proposed settlement also includes certain noninvestment activities for which we will receive a deferral related to the spend. Most notably, the proposed settlement provides for $140,000,000 of vegetation management, which will allow us to defer costs associated with our industry leading plan to reduce our trim cycle from five years to three years for the benefit of our customers. The proposed $3,200,000,000 included in the settlement represents a reduction of approximately 2,500,000,000 from the $5,750,000,000 included in our January filing. The primary driver of this reduction is the removal of transmission related investments we included in our filing. We thought it was important to include these investments in our initial filing to present a comprehensive picture of how we’re approaching resiliency investments to improve outcomes for our customers.

However, in settlement discussions, we agreed with stakeholders that these investments are better considered outside of the system resiliency plan process. To be clear, we still intend on executing this important transmission system hardening work. Over the last few years, we’ve made many investments to improve the backbone of the system by investing approximately $1,000,000,000 With much of that work already completed, we anticipate fully achieving our initial hardening targets on our transmission system within the next ten years. We want to thank all stakeholders for engaging in constructive discussions about the resiliency investments that will help improve outcomes for customers in the greater Houston area. We anticipate the PUCT to vote on this proposed settlement agreement by the end of the third quarter.

Next, I’ll move to our two storm cost recovery filings, starting with the hurricane barrel filing. Just this week, we started a set of mediated discussions with all parties to the case, and there are currently hearings scheduled on the cost recovery request at the end of this month. Moving to our process to recover costs associated with last year’s May storms. As a reminder, we have fully settled this request and now have received an approved financing order. Our next step is we will seek to issue these bonds in the third quarter of this year.

We will continue to work with all stakeholders in connection with these storm cost recovery filings in advance of the securitization of these costs, which is beneficial for our customers. Next, I’ll touch on our capital investment plan execution through the second quarter and our positively revised capital plan through 02/1930, as shown here on slide 10. As Jason mentioned, today, we are increasing our twenty twenty five and ten year capital investment plan by $500,000,000 without anticipating any need for additional common equity. This represents our third capital plan increase this year, bringing our total 2025 increases to $5,500,000,000 with our total plan through 2030 now at $53,000,000,000 And, as Jason indicated, cumulatively, the $5,500,000,000 comes without any anticipated increases to our common equity guidance through 02/1930. As a reminder, our equity needs still stand at 2,750,000,000 through the end of the decade, of which over a third has been derisked through our forward equity sales.

Today’s announced investment increase will help further support the accelerated economic growth investments that we continue to execute in our Texas gas and electric service territories to move at pace for our customers. I want to be clear that even with the increases already announced this year, we continue to see strong tailwinds to support further enhancements to our capital investment plans. We are excited to aggregate all of these updates as well as provide others to give everyone a comprehensive update and new ten year plan later in the third quarter of this year. For the quarter, we are right on track to meet our positively revised 2025 capital investment target of $5,300,000,000 Through the first half of twenty twenty five, we invested $2,400,000,000 of base work for the benefit of our customers and communities. Finally, I want to provide an overview of how we’re thinking about the financing of our $5,500,000,000 of capital investment increases and touch on where our credit metrics are currently tracking.

We continue to explore the most efficient forms of financing to fund the incredible growth our businesses continue to experience. During the quarter, we made significant strides toward both addressing and derisking our future equity financing plans. We did this by: Announcing the proposed sale of our Ohio Gas LDC with the intent of recycling the proceeds back into our Texas businesses Executing additional forward sales under our ATM program, which totaled $165,000,000 for the first half of the year and executing $920,000,000 of a forward sale of common equity to be settled by the February. As Jason highlighted, we have made a strategic decision to allocate more capital to our high growth businesses in Texas and recycle capital through the proposed sale of our Ohio Gas LDC business. The proceeds from this transaction are intended to support the funding of the $5,500,000,000 increases we have already announced this year.

With additional progress in our Ohio rate case proceeding, we anticipate having a transaction signed by the end of the year, with a closing expected by the end of next year. I want to be clear that we view this transaction similarly to the others we have executed. This sale will not result in making a downward revision in our earnings guidance. Today’s announced $500,000,000 increase to the 2025 capital plan will help partially offset the investments we have made previously in our Ohio gas business. In addition to the announcement related to our Ohio gas business, we were able to derisk our planned equity issuances for 2026 and 2027 through forward sales of our common equity.

With the execution of $165,000,000 of forward sales under our ATM program and $920,000,000 through our block transaction, we have been able to satisfy our anticipated common equity needs for both ’twenty six and 2027. Now, moving to an update on our credit metrics. As of the end of the quarter, our trailing twelve month adjusted FFO to debt ratio based on the Moody’s rating methodology was 14.1% when removing transitory storm related costs. Much like our historical profile, we anticipate our credit metrics to strengthen throughout the remainder of the year. As a reminder, we anticipate receiving nearly $400,000,000 in securitization proceeds related to the May storms in the third quarter of this year.

In addition, in light of the progress in the hurricane barrel storm securitization process I highlighted a moment ago, we expect to receive nearly $1,300,000,000 of proceeds by the end of the year or early next year. Also, as we mentioned on our first quarter call, with the bulk of our rate cases now complete, we anticipate a 5% improvement to our operating cash flow beginning next year. We expect this cash flow to allow us to more efficiently self fund capital investments for the benefit of customers. This same operating cash flow improvement helps fund today’s $500,000,000 announced increase without any anticipated need for incremental common equity. And although we are not formally changing our guide regarding incremental investments requiring funding with 50% equity and 50% debt, this new operating cash flow profile may provide financing flexibility to reduce that ratio in the future.

With the anticipated receipt of the combined $1,700,000,000 of securitization proceeds, in addition to improved operating cash flow, we remain confident that we will exit 2025 with a 100 to 150 basis point cushion above our downgrade threshold without the need for common equity issuances. With the 2025 in the books, we are right on plan to deliver our full year results. We are reaffirming our 2025 non GAAP EPS guidance range of $1.74 to 1.76 which equates to 8% growth at the midpoint from our delivered 2024 non GAAP EPS of $1.62 Over the long term, we continue to expect to grow non GAAP EPS at the mid to high end of the 6% to 8% range annually through 02/1930. We also expect to grow dividends per share in line with earnings growth over the same period of time. We look forward to the 2025 and executing for the benefit of all stakeholders.

And with that, I’ll now turn the call over back to Jason.

Jason Wells, CEO, CenterPoint Energy: Thank you, Chris. I’m proud of our team’s continued execution over the past quarter and the results that put us firmly on track to deliver on our financial guidance this year. We are looking forward to sharing our ten year plan refresh later this quarter. I believe that this refresh plan will reflect our confidence in our exciting growth prospects ahead and why we have such strong conviction that we have one of the most tangible long term growth plans in the industry.

Conference Operator: At this time, we will begin taking questions. If you wish to ask a question, please press star one one on your touch tone keypad. The company request that when asking a question, callers pick up their telephone handsets. Thank you.

Julian Dumoulin Smith, Analyst, Jefferies: Our

Conference Operator: first question comes from Julian Dumoulin Smith from Jefferies. Please go ahead.

Julian Dumoulin Smith, Analyst, Jefferies: Hey. Good morning, team. Thank you guys very much. Nicely done again.

Jason Wells, CEO, CenterPoint Energy: Good morning, Julian.

Julian Dumoulin Smith, Analyst, Jefferies: Hear me okay? Hey. Excellent. Thank you. So a a few different things here.

Thank you. Maybe just kicking it off here. Just with Beryl, can you go back a little bit and just timeline and expectations to close that out here? I mean, it seems like you’re coming to some finality here. And then secondly, just on the six gigawatts, the updated number, I mean, it’s just not a trivial number to kind of update quarter over quarter here.

Can you elaborate and elucidate a little bit further what exactly comprises and especially the timeline? I mean, front end loaded can that be at this point, just especially as you continue to compound these kinds of numbers? And then I got a quick follow-up, if you don’t mind.

Chris Foster, CFO, CenterPoint Energy: Sure. Good morning, Julian. How about I take the first piece with respect to the Barrow related cost recovery proceeding? We are on track at this point. In fact, this week, we had some mediated sessions with parties to see if we could seek potentially the potential for a settlement framework.

The hearings are currently actually set publicly for next Thursday. So as you can imagine, we’d love to be able to make progress and ideally be in a situation where we could ideally push out those hearings if possible, reflecting progress in those discussions. So quite a bit of activity here in the near term.

Jason Wells, CEO, CenterPoint Energy: Julian, this is Jason. Hey, thanks for the question on the interconnection load growth. The six gigawatts we referenced this quarter, as you said, it’s not trivial at all. What I think is really unique and what we try to highlight is the diverse set of drivers that that are driving that increase. What I would say is probably about two thirds of that increase relates to data center activity, the other one third, I would put more in the camp of advanced manufacturing, energy exports and life sciences.

In terms of the demand or the timing of that demand, these customers are really looking for interconnections sort of late twenty twenty six, 2027 and ’28. So this is sort of relatively near term. I think thankfully, we’ve got excess capacity on our system. You know, we’ve built our transmission system, our substations where we can move quickly to address these interconnection requests. And I think that is just creating a great set of conditions where we continue to see increases in the interconnection queue quarter after quarter.

So we’re looking to move quickly to address these new demands.

Julian Dumoulin Smith, Analyst, Jefferies: Excellent. Thank you. And then if I may, just a quick question here on the adjustment for the quarter with the mobile gen here. How long do you expect that to remain a drag there? Just given the dynamics here on those assets over time, just to understand the drag that you’re currently booking here, how long is that going to remain the case in terms of a drag?

Jason Wells, CEO, CenterPoint Energy: Yeah, this is a reflection of the transaction we announced where we’ve effectively contributed these assets to San Antonio for free through no later than ’27 could be as early as fall of twenty six. And so we see a drag in earnings over that period of time. And then as we’ve talked about the market for these assets has doubled, and we intend to remarket them as soon as they free up. So again, early as fall of twenty six, no later than the spring of twenty seven, these will flip to be a tailwind for the company.

Julian Dumoulin Smith, Analyst, Jefferies: Excellent. Alright, guys. I’ll leave it there. Lots more to ask. Alright.

All the best. Alright. See you soon.

Chris Foster, CFO, CenterPoint Energy: Thank you.

Conference Operator: Our next question comes from Nick Campanella from Barclays. Please go ahead.

Nick Campanella, Analyst, Barclays: Hey. Thanks for, taking my questions and for the updates. Just just a question on the capital. You know, it seems like you’re well positioned on the system to connect the six gigs right away. You’re highlighting a lot of other tailwinds that are not in the plan.

Is this going to be more skewed towards the ten year kind of plan? Or do you see a lot of this kind of falling into the five year plan? And then I just wanted to kind of clarify the comments from Chris at the end with the fifty-fifty funding. Do you still see the ability in the five year plan to fund with less equity? Thanks.

Jason Wells, CEO, CenterPoint Energy: Hey, good morning, Nick and appreciate the questions. Know, look, from a capital standpoint, I really think we were trying to emphasize two points here. I think there is an upward bias towards CapEx through the remainder of this decade. There is still opportunity based on the capital investment opportunities I outlined in our prepared remarks. The second point that we are trying to highlight and will be much clearer as we roll out our new ten year plan is the longevity of the spend.

We continue to see this capital investment opportunity drive significant capital investment well into the next decade. And so there’s still in short more opportunity here through the remainder of this decade and then extending well into the next.

Chris Foster, CFO, CenterPoint Energy: Maybe if I could build on the second one, Nick. In short, what I was pointing to was that as we look to the third quarter update that we’d be providing in particular and again, that’s a third quarter update that would not be on our third quarter call. It’d be delinked from that in the calendar third quarter. We would be providing an update on how to think about how we’re going be funding growth CapEx going forward. I think what you saw today is maybe a little preview of some improvements we’ve had in our focus on improving operating cash flows through legislative proposals and our rate cases.

And so I think you can envision a situation we’re able to update and improve from the current fiftyfifty equity debt profile that we provide. And with something to keep in mind, as we look at the $500,000,000 that we rolled into the 2025 plan, we were still able to report today FFO to debt at 14.1%. So pleased with that outcome given historically Q2 has been really our lowest quarter from a recovery pattern standpoint.

Jason Wells, CEO, CenterPoint Energy: And Nick, if I could wrap kind of our two answers. In my prepared remarks, alluded to one sort of an upward bias in CapEx for the remainder of the decade. And two, I do think we have the ability to fund incremental CapEx this decade without any additional common equity.

Unidentified: Okay. Okay, thank you for

Nick Campanella, Analyst, Barclays: the clarification. I appreciate that. And then just, as we’re getting into the later innings of this barrel proceeding, the agencies are still on negative outlook and just is there anything else that they’re kind of communicating to you that they’re looking for now that your metrics are starting to get back into that range?

Chris Foster, CFO, CenterPoint Energy: I appreciate the question. It’s certainly key. And I can’t speak certainly on exactly on their behalf. But in the nature of our conversations have been really around two areas of focus. The first have been the ability to effectively execute the underlying rate cases themselves.

And so as you’ve seen in both of our Texas cases, as well as Minnesota and Indiana, we’ve completed all of those. The second key area of focus has been the cost recovery filings themselves, both for the May storms or the derecho event as well as Beryl. We have now fully completed, as I mentioned, the derecho related or May storms process. We’ll be in a position to execute that securitization here in the calendar third quarter. So we’re definitely on track there.

And I do believe that they are closely watching the barrel outcome. And again, as I mentioned, I think where we are at this point is a place where we do see a path to have very constructive conversations here in the coming days. And so I think that could ideally position us well for other agencies to revisit that timeframe, because really the key step in the process is the cost recovery prudency step. After that, it’s a very straightforward process for executing the financing order and then the securitization itself later this year.

Nick Campanella, Analyst, Barclays: All right. Hey, thanks for the time. Appreciate it.

Conference Operator: Thank you. Our next question comes from Jeremy Tonet from JPMorgan Securities. Please go ahead.

Jeremy Tonet, Analyst, JPMorgan Securities: Hi. Good morning.

Jason Wells, CEO, CenterPoint Energy: Good morning, Jeremy.

Jeremy Tonet, Analyst, JPMorgan Securities: Just a couple quick ones for me. Has the finalization of SB six impacted inbound interconnection interest in any fashion at this point?

Jason Wells, CEO, CenterPoint Energy: No, I wouldn’t say it’s changed at all the velocity of the interconnection request. I do think that there are questions around, so where the cost allocation potential changes may go. But I think there are many other drivers that continue to support these load interconnection requests. So they continue at an accelerated pace.

Jeremy Tonet, Analyst, JPMorgan Securities: Got it. Thank you for that. And then just wondering, you talked a little bit about Houston revitalization work and just wondering if you could expand a bit more, I guess, and how this aligns with city efforts priorities here going forward.

Jason Wells, CEO, CenterPoint Energy: Yeah, no, thanks for the question. This is exciting time for Downtown Houston. This has been a project that’s been in the works for decades. We’ve received the federal funding to effectively bury the interstate system that circles the effectively circles the downtown area, and isolates it from the rest of the Greater Houston region. By doing so it frees up a significant portion of land that will be used to redevelop parks, more mixed use space.

It’s just an incredibly exciting time. But with all of that construction work, it gives us an opportunity as the roads are torn up to replace the underground network here in in the downtown. There are a couple of substations that we’ve alluded to that will need to be moved to help facilitate some of this redevelopment effort. We will build those to a modern indoor gas insulated substation design standard. So And I just think it’s an incredible time to be a partner, with the city to help, with what will be an exciting transformation of the downtown here in Houston.

Jeremy Tonet, Analyst, JPMorgan Securities: Got it. Thanks for that. Just a last quick one if I could. If I think about all this CapEx coming into plan without equity, it seems like that would drive upward pressure to the CAGR here or are there any other components of the equation that I’m

Unidentified: not appreciating at this point?

Jason Wells, CEO, CenterPoint Energy: I appreciate the question and look, as we continue to reiterate, there’s more tailwinds and headwinds here. We’ve constructive really resolved these rate cases. We’ve had thankfully some legislation that’s helped reduce regulatory lag, which helps us more efficiently invest for the benefit of our customers. And look, we’ll update what that means from an earnings guidance standpoint here later in this calendar quarter, but certainly more tailwinds than we have headwinds.

Jeremy Tonet, Analyst, JPMorgan Securities: Understood. I’ll leave it there. Thank you.

Conference Operator: Our next question comes from Andrew Wazel from Scotiabank. Please go ahead.

Andrew Wazel, Analyst, Scotiabank: Hey. Good morning, everybody. Thanks for all the updates. My first question, I just wanna to further elaborate on the Houston Downtown project. I know it’s a really big one that’s been talked about for a long time.

It seems like you’re talking about it a bit more detailed and a bit more confidently today. Is there any reason for that? Has it been progressing a bit more? And can you maybe talk a little bit more about timing and potential magnitude of when the spending might show up in the capital plan?

Jason Wells, CEO, CenterPoint Energy: Yeah, good morning, Andrew. It is an exciting project that is continuing to come into greater focus and clarity. We, the city made some commitments as it relates to some of the modifications to our convention center here that has jump started this project in terms of work that we need to do with with one of the two substations. And so what I would say is work is beginning as we speak, under this project. This is something you know, that it’s going to be a multi year effort, I think the bulk of this spend is really going to be through the remainder of this decade, some of that kind of early part of next.

But think about this as a driver over call it the next five, six years. You know, the larger infrastructure project to bury this interstate system is going to be much longer in nature, you know, a multi decade investment project for this region. But the work that we have to do upfront helps kind of enable the early part of that. So think of our work as sort of front end loaded and over the next five years or so.

Andrew Wazel, Analyst, Scotiabank: Okay, great. That’s helpful. Next question, you’ve mentioned this a couple of times, but saying additional increases to CapEx this year wouldn’t need additional equity. Can you I mean, how high can that go? I know you’re going to give the more detailed update later this quarter, but I mean are you talking magnitude of $500,000,000 like you did this quarter?

Or are you talking $4,000,000,000 like you did a few months ago? I mean can you give us some sizing of what is a comment like that supposed to mean?

Jason Wells, CEO, CenterPoint Energy: I appreciate the question. Look, I think, we were working hard to improve our operating cash flow profile. We feel confident as Chris said, and some of the other activities underway including the sale of the Ohio gas business. And so that does give us flexibility order of magnitude more than what we’ve increased today. But maybe I’ll just leave it at that.

And we look forward to discussing it more later here in the third quarter.

Andrew Wazel, Analyst, Scotiabank: Okay, fair enough. We’ll be we’ll try our best to be patient. Last one, apologies if

Nick Campanella, Analyst, Barclays: I missed it, but what exactly was in

Andrew Wazel, Analyst, Scotiabank: the $500,000,000 increase today? What is that spending going toward?

Chris Foster, CFO, CenterPoint Energy: Sure, Andrew, you should think about it as dominated by us stepping into our electric transmission work starting this year, a little bit of system resiliency related investments and then a small amount of Texas Gas related investments. Recall that we’ve also talked about over the long term, some potential opportunities there in the Texas Gas business for substantial infrastructure work here in the greater Houston area.

Andrew Wazel, Analyst, Scotiabank: Okay, so kind of more of the same?

Chris Foster, CFO, CenterPoint Energy: Correct. Very

Andrew Wazel, Analyst, Scotiabank: good. Thanks so much. Looking forward to

Nick Campanella, Analyst, Barclays: the next round of updates.

Chris Foster, CFO, CenterPoint Energy: Thank you.

Conference Operator: Our next question comes from Steve Fleishman from Wolfe Research. Please go ahead. Hey, good morning. I guess just could you give us a sense of any timing on the gas LDC sale process and closing?

Chris Foster, CFO, CenterPoint Energy: Sure, Steve. Generally speaking, we’d like to be in a position to be able to announce towards the end of this calendar year, putting us in a position to ideally, if you just look at history about a year later in a position to close. And so where we are at this point is we’ve just recently kicked off the process. As you know, our focus philosophically has been on and will continue to have the focus here of not rebasing our earnings through any kind of capital asset recycling like this. We’ve got a strong amount of interest even in kicking off the process so far, which is a good thing.

And maybe just one other thing I’d want to emphasize is flexibility. We want to be flexible for counterparties in terms of where their interest lies relative to where the expertise is they bring to kind of an operating and management team as we go. And so good progress so far, but ideally putting ourselves in a position to be able to announce more toward the end of this

Conference Operator: year. Okay. And then one other area that you’ve talked in the past about as opportunities is data centers in Indiana. Is there anything to kind of update there?

Jason Wells, CEO, CenterPoint Energy: Yes. Good morning, Steve. We continue to have, I think, very productive conversations up in Indiana around potential new data center demand. Look, as we’ve stressed in previous calls, think it’s a really unique situation up there. That is candidly, think very compelling for a number of these data centers, you know, it’s abundant land, good access to water on our system in particular, we have excess capacity that’s available today.

We’re commissioning as we speak a simple cycle plant that has been designed and built to be converted to CCGT if needed. And so there’s a clear pathway to significant electric capacity. So it continues to be a series of active discussions in that region as well.

Conference Operator: Okay, thank you.

Chris Foster, CFO, CenterPoint Energy: Thank you.

Conference Operator: Our next question comes from Bill Apicelli from UBS. Please go ahead.

Andrew Wazel, Analyst, Scotiabank: Hey. Good morning. Just one question for me to to clarify on the equity again. So the the base plan is, you know, the 2,750,000,000.00, of equity or equity like then plus the Ohio asset sale that you’ve highlighted, right? And then I think what you’re communicating here is that additional capital beyond that, the target would be then to not have to issue additional equity.

Is that correct?

Chris Foster, CFO, CenterPoint Energy: You’ve got it right, Bill. Maybe if I could just kind of step through it briefly. The simple way to think about it is that $2.75 of what we’ve indicated is we were front footed on equity and so we’ve already derisked a third of that. So you can go ahead and reduce by that amount. And then what Jason was emphasizing is we do see even in the period now between now and the end of the decade, an additional upward bias on CapEx that we could fund without incremental common equity.

Andrew Wazel, Analyst, Scotiabank: Okay, and would that contemplate additional asset sales beyond Ohio?

Chris Foster, CFO, CenterPoint Energy: It would not. And so maybe if I can touch on that for you, that if you look at the Ohio gas LBC sale, it was specifically intended to help us fund what is now $5,500,000,000 total update we provided this year. So you combine that with the operating cash flow improvement, which really came through the mix of legislative and regulatory outcomes, it certainly helps our operating cash flow focus. Maybe just one simple example of that is if you looked at Indiana, for example, as you know, we have to basically hold back about 20% of our CapEx while we’re out of a rate case. Well, we were out of a rate case for nearly fifteen years there, right?

So you can imagine now we’ve been able to catch up there. And maybe that’s just one discrete example to help you see kind of how the operating cash flows have improved here.

Andrew Wazel, Analyst, Scotiabank: Okay, great. That’s it for me. Thank you.

Chris Foster, CFO, CenterPoint Energy: Thank you.

Conference Operator: Our next question comes from Anthony Crowdell from Mizuho. Please go ahead.

Ben Vallejo, Director of Investor Relations, CenterPoint Energy0: Hey, good morning, team. Maybe a third crack at it. I want to jump on Bill’s question. Have you quantified what that like optionality is for how much more additional CapEx you could absorb without having to either do like Bill mentioned an asset sale or additional equity like by the end of the decade? What’s that balance sheet capacity that you have there?

Jason Wells, CEO, CenterPoint Energy: Good morning, It’s Jason. Hey, I appreciate the other question. We’re not going to get any more specific. As I indicated, we’re talking about something north of the CapEx increase that we announced today. So north of $500,000,000 After that, we haven’t quantified the capacity.

And so it’s just part of the excitement that’s building for the plan refresh that we intend to provide here later in the quarter.

Ben Vallejo, Director of Investor Relations, CenterPoint Energy0: Great. And then I guess on operating cash flow, you just mentioned there’s a 5% and I missed my question. Is it a 5% growth of operating cash flow or it’s a 5% improvement that the total operating cash flow growth is greater than the earnings per share growth?

Jason Wells, CEO, CenterPoint Energy: It’s a 5% improvement in operating cash flows. So the actual operating cash flows increased by 300 basis points, which equates to a 5% increase in operating cash flows.

Ben Vallejo, Director of Investor Relations, CenterPoint Energy0: Great. And then just lastly, you guys are very clear on the tough decision of selling Ohio and focusing where you have greater customers or also maybe greater growth. But how do you balance that with maybe thicker equity layers and better ROEs? Like and I guess it’s a hard balance. I’m wondering if you maybe could shed some light on that.

Ohio did provide maybe thicker equity layers. I think I forgot the settled return. I think it was like 9.7% or something like for other jurisdiction maybe with greater growth but lower equity ratios.

Jason Wells, CEO, CenterPoint Energy: We take a number of factors into it. From a financial standpoint, as we stressed here, it’s an incredible business, but we see the recycling of these proceeds to enhance the earned cash returns of the consolidated enterprise. So you might look at just the earned or the allowed returns or the authorized equity ratios. Importantly, it’s as much an interest to improve kind of the earned cash returns and we see the opportunity of recycling these proceeds from this asset sale and improving the overall consolidated earned cash return profile. So, a number of different financial metrics we’re looking at and then it comes down to focus as well.

It’s an incredible jurisdiction we have the privilege to serve up there. But with so much growth here, it helps focusing management’s attention on, you know, this exponential growth that we’ve been talking about in the Greater Eastern Region. So a number of different factors financially though, I wouldn’t just concentrate on a difference between the authorized return on equity or equity layer.

Ben Vallejo, Director of Investor Relations, CenterPoint Energy0: Great. And will we see you in September? Are we going to be virtual in September? Any clarity on like early September, late, anything like that?

Chris Foster, CFO, CenterPoint Energy: Anthony, we’re still working on exactly how to do it. I think at this stage, we would intend to come to the East Coast.

Ben Vallejo, Director of Investor Relations, CenterPoint Energy0: Thanks so much for taking my questions.

Ben Vallejo, Director of Investor Relations, CenterPoint Energy: Yeah.

Conference Operator: Our last question comes from Paul Fremont from Ladenburg Thalmann and Co. Please go ahead.

Unidentified: Hi there. Congratulations on a really strong quarter. I guess my first question really is a follow-up of Jeremy’s earlier question. With all of this spending, your plan is to update your EPS guidance later in the year. Is that the takeaway there?

Jason Wells, CEO, CenterPoint Energy: We will provide a full plan refresh. So an extension of that ten year CapEx plan into the middle of the next decade. And then one of the resulting, obviously impacts from that will be, a discussion around the earnings power of the company. It’ll be a comprehensive financial update, CapEx, financing, earnings, all of it here at the end of the calendar third quarter.

Unidentified: And then given sort of the large increases that we’ve seen in your spending plan between now and the third quarter, would you expect to provide any type of an update of your ’25 through ’29 spending broken down by Houston Electric, Sigiko and your gas operations?

Jason Wells, CEO, CenterPoint Energy: Yeah, you know, as part of this plan refresh, plan to provide, obviously, an update over the full ten years. So kind of maybe the through the end of this decade, plus the initiation of the next five years into into the 2030s. And then to your point, sufficient detail by operating company to help understand sort of the growth in each of those jurisdictions. Yeah, we’ll provide a pretty significant financial update around all of those elements.

Unidentified: Yeah, but I’m talking like between now and the third quarter update that you’re talking about any additional breakout of five years under sort of the existing numbers?

Jason Wells, CEO, CenterPoint Energy: I wouldn’t anticipate anything between now and the plan refresh.

Unidentified: And then a couple of I guess housecleaning questions. The rate base for the Ohio subsidiary that you’re selling?

Chris Foster, CFO, CenterPoint Energy: Sure, Paul. That’s $1,500,000,000 as of the end of last year.

Unidentified: And then and the tax base of that of the Ohio LDC?

Chris Foster, CFO, CenterPoint Energy: Obviously, at this point, reviewing what the tax implications would be there for any transaction. So tough to get into more detail today.

Unidentified: Great. And one more question. And then the additional billion of gas spend that’s included in the 4,500,000,000.0 increase since we’ve seen from the first quarter, right, in your ten year plan?

Chris Foster, CFO, CenterPoint Energy: No, I think you should assume that there is opportunity outside the existing plan for the large project that we’ve referenced in Houston that would allow us to have a high pressure distribution line that encircles the city over a long period of time. There’s only a small amount of that currently in plan at this stage, Paul.

Unidentified: Great. Okay, so that would be incremental and may show up in the next ten year plan or the ten year plan update.

Julian Dumoulin Smith, Analyst, Jefferies: Great. That’s

Unidentified: it for me. Thank you so much.

Chris Foster, CFO, CenterPoint Energy: Thank you. Thanks, Paul. Operator, with that final question, that will conclude our call for today. Thank you.

Conference Operator: This concludes the CenterPoint Energy’s second quarter twenty twenty five earnings conference call. Thank you for your participation.

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