Pacific Gas & Electric Co. (PCG) Earnings & Analysis

Latest quarter

PG&E reported third-quarter revenue of $6.2 billion, below the consensus of $6.6 billion. Adjusted earnings per share were $0.41, missing the consensus estimate of $0.42. CEO Patty Poppe also reported core earnings per share of $0.41 for the quarter.

Revenue fell from $6.3 billion a year earlier, while diluted earnings per share declined to $0.34 from $0.37. PG&E’s gross margin increased to 83.6% from 81.7%, and its operating margin rose to 20.2% from 19.3%. Free cash flow was −$794.0 million, compared with −$80.0 million a year earlier.

For the first nine months, CFO Carolyn Burke said customer capital investment was the primary driver of earnings growth. Burke also said timing and other items reduced year-to-date earnings, mainly reflecting a prior-year benefit from implementing a tax method change.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Patty Poppe said PG&E’s strategic review is assessing how the company is organized and financed, with an objective of achieving investment-grade credit ratings. She said structural options range from corporate ring-fencing to sales and separations, and PG&E expects to share the review’s outcome and planned path no later than next summer.

Poppe said comprehensive wildfire-policy reform had not been enacted and that action was needed to address risk under the current framework. In response to questions about alternatives, she said PG&E would consider capital allocation and other corporate structures alongside its policy efforts. She said a regulatory-approved spin, sale or separation of the gas business was among the possibilities for lowering borrowing costs for gas customers.

The CEO said PG&E’s previously announced $2 billion reduction to its 2027 capital plan could delay connections of clean-energy resources, system expansion and customer projects, including housing. Asked about data-center demand, Poppe said 1.8 gigawatts of projects previously expected online by 2030 remained in the plan. She also said approximately 174 megawatts of data-center projects had come online since 2024.

CFO Carolyn Burke said the deferred capital projects generally have longer development and construction timelines and were not expected to enter service until after 2027. She said that limited the effect on next year’s rate base, leaving PG&E’s 2027 rate-base guidance unchanged.

Burke said PG&E filed a proposal for 5,000 additional miles of undergrounding between 2028 and 2037, at an investment of $16.6 billion. She said a proposed regulatory methodology could prevent undergrounding from reaching customers in high-risk communities. When asked about the effect, Poppe said PG&E was still working through the exact number of miles that could result under the proposal.

Guidance

CFO Carolyn Burke said PG&E’s updated 2027 capital guidance is $11.4 billion, reflecting a previously announced $2 billion reduction. CEO Patty Poppe said PG&E is no longer providing guidance beyond 2027 during its strategic review. She said the company expects to share the review’s outcome no later than next summer.