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PG&E Corp (PCG)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 came in steady operationally with flat GAAP EPS year over year ($0.24) and core EPS at $0.31, while revenue declined modestly YoY to $5.90B; management reaffirmed 2025 non-GAAP core EPS of $1.48–$1.52 but trimmed GAAP EPS to $1.26–$1.32 on higher non-core items tied to SB 901 and wildfire-related costs .
  • Against S&P Global consensus, EPS was essentially in line (0.31 actual vs 0.316*) and revenue missed (actual $5.90B vs $6.24B*), reflecting lower commodity pass-throughs and cost-of-capital/dilution headwinds offset by customer capital investment and O&M savings .
  • Strategic posture remains constructive: data center pipeline rose to 10 GW (from 8.7 GW in Q1), Rule 30 interim approval accelerates large-load connections, and equity needs are “fully satisfied” to fund the $63B 2024–2028 plan; no additional equity expected through 2028 .
  • Near-term catalyst focus: California wildfire framework/affordability legislation (management expects “meaningful measures”), cost-of-capital decision for 2026 ROE, and continued evidence of bill stabilization/decline into 2026–2027 supporting the “simple, affordable model” narrative .

What Went Well and What Went Wrong

  • What Went Well

    • Reaffirmed 2025 core EPS guidance ($1.48–$1.52) with a bias toward the midpoint; reiterated at least 9% core EPS growth annually in 2026–2028 and no further equity through 2028 .
    • Data center pipeline expanded to 10 GW; management reiterated each 1 GW can reduce electric bills by 1–2% over time; CPUC granted interim implementation of Rule 30 to expedite large-load connections .
    • O&M execution: on track to meet or exceed 2% non-fuel O&M reduction target; CFO cited “nearly 100 initiatives” driving savings, with AI improving inspection/vegetation workflows .
    • Quote: “Our bills went down this year, and our forecasts show residential combined bills to be essentially flat for the remainder of 2025 and going down again in 2026.” – CEO .

  • What Went Wrong

    • GAAP EPS guide lowered to $1.26–$1.32 (from $1.29–$1.35) on higher non-core items (SB 901 securitization, wildfire-related costs); wildfire-related Kincade/Dixie claim costs rose y/y .
    • Revenue below consensus; Q2 operating income declined vs prior year (to $1,096MM from $1,134MM), reflecting lower authorized ROE (10.28% vs 10.7%) and equity dilution partially offset by higher rate base .
    • Policy uncertainty remains near term around AB 1054 enhancements and affordability package; management opposes securitization proposals viewed as raising long-run costs .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Total Operating Revenues ($USD Millions)$5,986 $5,983 $5,898
Operating Income ($USD Millions)$1,134 $1,220 $1,096
GAAP Diluted EPS ($)$0.24 $0.28 $0.24
Non-GAAP Core EPS ($)$0.31 $0.33 $0.31

Estimate vs Actual – Q2 2025

  • EPS: Consensus 0.316*, Actual 0.31 (non-GAAP core)
  • Revenue: Consensus $6.239B*, Actual $5.898B
    Values retrieved from S&P Global.*

Segment Revenue Breakdown

Segment Revenue ($USD Millions)Q2 2024Q2 2025
Electric$4,458 $4,414
Natural Gas$1,528 $1,484

Profitability KPI

KPIQ2 2024Q2 2025
Non-GAAP Adjusted EBITDA ($USD Millions)$2,283$2,362

Operational KPIs (execution)

KPIQ1 2025Q2 2025
Underground powerlines constructed (miles)24 32
Strengthened poles/covered lines (miles)26 103
Data center pipeline (GW)8.7 10.0

Non-core items and adjustments (Q2)

  • Non-core items totaled $154MM after tax ($0.07/sh), flat y/y; key drivers included Wildfire Fund amortization/accretion ($0.04), investigation remedies ($0.01), wildfire-related costs ($0.02) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GAAP EPSFY 2025$1.29–$1.35 $1.26–$1.32 Lowered
Non-GAAP Core EPSFY 2025$1.48–$1.52 $1.48–$1.52 Maintained
Non-core items (after tax, $MM)FY 2025$400–$430 $470–$510 Increased
Amortization of Wildfire Fund (EPS impact)FY 2025~$0.10 ~$0.11 Increased
SB 901 securitization (EPS impact)FY 2025~$0.01 ~$0.02 Increased
Wildfire-related costs net of recoveries (EPS impact)FY 2025~$0.02 ~$0.04 Increased
Investigation remedies (EPS impact)FY 2025~$0.04 ~$0.04 Maintained
Bankruptcy/legal (EPS impact)FY 2025~$0.02–$0.01 ~$0.02–$0.01 Maintained
Prior period net regulatory impact (EPS impact)FY 2025~(0.01) ~(0.01) Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (two quarters ago)Q1 2025 (prior)Q2 2025 (current)Trend
Wildfire policy (AB 1054)Emphasized prudency standard, disallowance cap, fund liquidity; investor assurances needed .Expected constructive 2025 outcome; avoid specifics, focus on capital access and affordability .“Meaningful measures” likely this session; opt-in construct; management sees no need for large upfront utility equity; fund payouts pro rata if multiple events exceed resources .Constructive, with clearer stances on funding mechanics.
Affordability/billsStabilizing bills; Jan ‘25 flat YoY .2025 bills down vs 2024; 2026 bills forecast down .2025 flat; 2026 down; path to 2027 flat-to-down; opposes securitization that would raise costs .Improving bill trajectory; stronger anti-securitization view.
Data center/AI loadPipeline 5.5 GW .Pipeline 8.7 GW; 1–2% bill reduction per GW .Pipeline 10 GW; 50+ projects; San Jose filings; “Goldilocks” load; 1–2% per GW reiterated .Accelerating growth and diversification.
O&M and lean ops/AIDelivered 4% non-fuel O&M reduction in 2024 .Continuing >2% reductions; inflation/tariff absorption via lean ops .~100 initiatives; expect to beat 2% target; AI improving inspections/veg mgmt .Execution broadening; tech-enabled savings.
Financing/equity/capitalEquity need de-risked for 2024–2028; dividend 20% by 2028 .Plan unchanged; modest debt timing shift .No additional equity through 2028; reevaluating 2026 Holdco debt paydown; focus on IG at parent .Higher financing flexibility, IG prioritization.
Regulatory filingsStanding up GRC/Rule 30 .2027 GRC filing timeline; 10-year undergrounding by YE .Rule 30 interim approval; 2027 GRC is “lowest % increase in a decade” .Momentum in filings/constructive outcomes.

Management Commentary

  • Strategic framing: “Our business fundamentals and core execution have never been stronger… our simple, affordable model is providing the framework to continue funding needed investment while holding customer bills at or below the rate of inflation.” – CEO .
  • Affordability: “Our bills went down this year… essentially flat for the remainder of 2025 and going down again in 2026… pathway for 2027 bills to be lower than they are today.” – CEO .
  • Data center load: “We’re actively working 10 gigawatts through various stages… more than 50 different projects… every gigawatt we bring online offers the opportunity to reduce electric bills by 1% to 2%.” – CEO .
  • Financing posture: “We have already issued the equity needed to fund our existing $63 billion investment plan through 2028… no intention of issuing additional equity at these levels.” – CFO .
  • Policy stance: “We are definitely not supporting the securitization proposals… would result in bills going up, not down.” – CEO .

Q&A Highlights

  • AB 1054/wildfire framework: Management expects a constructive package this session, emphasizing fund durability and maintaining investor protections; reiterated opt-in and skepticism of any large upfront utility contributions .
  • Securitization: Company opposes proposed securitization as ineffective for near-term customer savings and potentially raising overall capital costs; prefers alternatives (e.g., DOE-style debt financing) that directly lower bills .
  • Data center conversion timing: Expect rate benefits to begin in 2027 as San Jose and broader service territory projects energize; final engineering attrition roughly ~50% from initial apps; diversified, smaller “inference” projects dominate .
  • O&M savings runway: AI-enabled inspections/veg management and hundreds of lean projects underpin confidence to exceed 2% non-fuel O&M reduction target .
  • Cost of capital: Filed for 2026 ROE with a strong case; decision expected by year-end; filing assumes constructive AB 1054 outcome .

Estimates Context

  • Q2 2025 EPS: S&P Global consensus 0.316*, actual non-GAAP core EPS 0.31 – essentially in line .
  • Q2 2025 revenue: S&P Global consensus $6.239B*, actual $5.898B – miss .
  • Prior quarter (Q1 2025): S&P Global EPS consensus 0.340*, actual 0.33; revenue consensus $6.023B*, actual $5.983B. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Core earnings trajectory intact: 2025 core EPS guidance reaffirmed; multi-year plan (2026–2028 at least 9% CAGR) backed by rate base growth and O&M execution .
  • Guidance composition shifted: GAAP EPS trimmed on higher non-core (Wildfire Fund amortization, SB 901, wildfire-related costs); watch the mix as policy/settlement items evolve .
  • Structural affordability narrative strengthening: bills flat-to-down through 2027 supported by O&M savings, financing efficiencies, and beneficial load; this can be a valuation re-rating catalyst if legislation lands constructively .
  • Load growth is a real hedge: 10 GW DC pipeline with Rule 30 acceleration can broaden earnings and reduce customer bills; diversified project mix lowers single-project risk .
  • Financing and equity risk de-emphasized: equity needs through 2028 are “fully satisfied”; focus now on parent IG and optionality around Holdco debt timing .
  • Policy watchlist: AB 1054 enhancements and affordability package (including avoiding securitization) represent near-term swing factors for ROE, cash flows, and bill trajectories .
  • Tactical setup: Revenue can remain volatile versus consensus given commodity pass-throughs, but execution on O&M and large-load connections, plus constructive policy outcomes, are key stock catalysts over the next 1–2 quarters .

Sources

  • Q2 2025 8‑K and Press Release/Slides: financials, guidance, non-core items, O&M, DC pipeline .
  • Q2 2025 Earnings Call Transcript: management commentary on policy, affordability, data centers, financing, O&M .
  • Q1 2025 8‑K/Call: prior quarter comps, guidance baseline, O&M and DC pipeline context .
  • Q4 2024 8‑K/Slides: trend context for affordability narrative and policy framing .
  • Additional Q2 2025 Press Releases: Rule 30 interim approval and 10 GW pipeline; methane reduction achievement .

Estimates source: Values retrieved from S&P Global.*