Exchange: LSE | Sector: Utilities | Industry: General Utilities
Q1 2025
Published: May 1, 2025
Earnings Highlights
Revenue of $4.08B up 12.2% year-over-year
EPS of $0.75 increased by 50% from previous year
Gross margin of 50.5%
Net income of 646.00M
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Dominion Energy Inc (0IC9.L) QQ1 2025 Results: Resilient EBITDA Foundation and High Capex Drive Negative Free Cash Flow Amid Regulated Utility Demand
Executive Summary
Dominion Energy reported a solid start to QQ1 2025, underpinned by a strong top line and robust EBITDA in a traditionally regulated utility framework. Revenue of $4.076 billion increased 12.2% year-over-year and 19.9% quarter-over-quarter, supported by favorable rate recoveries and volume dynamics within its regulated segments. Gross profit reached $2.06 billion with a gross margin of 50.5%, while EBITDA stood at $1.929 billion and operating income at $1.223 billion, signaling strong operating leverage within a capital-intensive utility portfolio. Net income was $646 million, or $0.75 per diluted share, up meaningfully versus the year-ago period and markedly higher than the prior quarter, reflecting improved operating performance and a swing from prior-period non-cash adjustments.
However, the quarter also reflects a pronounced capital expenditure cadence, with investments in property, plant and equipment totaling $3.214 billion and free cash flow negative at $(2.031) billion despite $1.183 billion of operating cash flow. This underscores Dominion’s ongoing strategic investment in rate-base expansion and renewable/contracted assets, which, while pressuring near-term cash generation, is intended to support longer-term earnings stability and compliance-driven returns. The balance sheet remains asset-light on liquidity metrics in the short term (current ratio under 1.0 at 0.730; cash ratio at 0.0404), but is supported by a diversified, high-quality asset base and substantial long-term debt aligned with regulated asset deployment. The dividend remains a focal point of the equity story with a payout ratio of 88.1% and a dividend yield around 1.19%. Investors should monitor regulatory approval pipelines, rate-case outcomes, interest rate environment, and capex pacing to judge long-horizon cash flow sustainability and dividend coverage.
Net Income: $646 million; YoY +46.49%; QoQ +950% (driven by base effects and swing from prior quarter).
Financial Highlights
Overview of QQ1 2025 performance with YoY and QoQ comparisons where available:
- Revenue: $4.076 billion; YoY +12.22%; QoQ +19.88%.
- Gross Profit: $2.06 billion; YoY +22.18%; QoQ +37.15%.
- EBITDA: $1.929 billion; EBITDA margin ~47.33% (EBITDARatio 0.4733).
- Operating Income: $1.223 billion; YoY +46.82%; QoQ +212.79%.
- Net Income: $646 million; YoY +46.49%; QoQ +950% (driven by base effects and swing from prior quarter).
- EPS (diluted): $0.75; YoY +50.0%; QoQ +341.18%.
- Free Cash Flow: $(2.031) billion; Operating Cash Flow: $1.183 billion; Capital Expenditures: $(3.214) billion.
- Cash at End of Period: $477 million; Cash and Equivalents: $355 million.
- Balance Sheet: Total Assets $104.555 billion; Total Liabilities $73.833 billion; Total Equity $27.365 billion. Long-term debt: $39.949 billion; Total debt: $44.103 billion; Net debt: $43.748 billion.
- Liquidity/Leverage: Current ratio 0.730; Quick ratio 0.529; Cash ratio 0.0404; Debt-to-capitalization 0.617; Debt-to-Equity 1.612.
- Valuation (end QQ1 2025): P/E ~18.49; P/B ~1.75; P/S ~11.72; Dividend Payout ~88.1%; Dividend Yield ~1.19%; EV/EBITDA ~47.45.
- Revenue mix: Regulated electric and gas distribution segments form the core cash flow engine; Contracted Assets exposure provides nonregulated upside tied to renewable and LNG assets.
Notes: All figures in USD unless stated otherwise. Management commentary and forward-looking guidance were not included in the provided transcript data; where applicable, commentary mirrors typical utility investor discourse on rate-base growth, capital allocation, and regulatory risk.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
4.08B
12.22%
19.88%
Gross Profit
2.06B
22.18%
37.15%
Operating Income
1.22B
46.82%
212.79%
Net Income
646.00M
46.49%
950.00%
EPS
0.75
50.00%
341.18%
Key Financial Ratios
currentRatio
0.73
grossProfitMargin
50.5%
operatingProfitMargin
30%
netProfitMargin
15.8%
returnOnAssets
0.62%
returnOnEquity
2.36%
debtEquityRatio
1.61
operatingCashFlowPerShare
$1.39
freeCashFlowPerShare
$-2.38
dividendPayoutRatio
88.1%
priceToBookRatio
1.75
priceEarningsRatio
18.49
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: The earnings transcript data was not provided in the input. Consequently, no verbatim management quotes from the QQ1 2025 call are included. The analysis below integrates likely themes that are typically discussed by utility management during quarterly calls and aligns with the disclosed financials.
Potential themes to be aware of (based on company fundamentals and industry norms):
- Strategy and operations: Emphasis on rate-base growth through capital investments in transmission, distribution, and contracted assets to support regulated earnings and long-term reliability.
- Market conditions: Steady demand for electricity and gas in regulated markets; potential upside from regulated rate cases and cost-of-service adjustments; exposure to commodity price environment for nonregulated assets remains relevant through the Contracted Assets segment.
- Capital allocation: Ongoing capital expenditure cadence (~$3.2B in Q1) supports future earnings but constrains near-term free cash flow; focus on maintaining investment-grade credit metrics while funding growth.
- Safety, reliability and customer focus: Durable revenue base underpinned by large customer footprint and essential service nature; regulatory frameworks are the primary drivers of earnings stability.
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Forward Guidance
No explicit quantitative guidance was provided in the QQ1 2025 release. Given Dominion’s business model, the following forward-looking considerations are relevant:
- Regulated earnings trajectory hinges on rate-base growth approvals and timely execution of capital projects in transmission and distribution.
- Cash flow will be heavily influenced by capex pacing and the extent to which rate-case outcomes offset operating costs and depreciation.
- Balance sheet resilience relies on maintaining credit metrics within utility norms despite high total debt; interest rate sensitivity and regulatory lag could affect financing costs and dividend coverage.
- Industry trends such as the acceleration of decarbonization and the expansion of contracted renewables could create nonregulated growth opportunities through the Contracted Assets segment, subject to project execution risk and off-take agreements.
Key factors investors should monitor: rate-case outcomes, capitalization rate adjustments, project milestones for renewables and LNG ventures, interest rate environment, and regulatory coordination across jurisdictions guiding rate recovery and depreciation schedules.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0IC9.L Focus
50.54%
30.00%
2.36%
18.49%
0OAL.L
1.00%
14.20%
1.68%
18.49%
0HEC.L
33.30%
25.80%
2.93%
18.21%
0HS2.L
86.50%
29.10%
5.73%
63.21%
KOS.L
0.74%
-11.60%
-10.10%
-2.45%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Dominion Energy presents a classic regulated-utility investment profile: predictable earnings supported by rate-base growth and a sizeable asset base, offset by high capital intensity and leverage. The QQ1 2025 results show meaningful YoY and QoQ improvement in revenue, gross profit, and EBITDA, but negative free cash flow reflects continued heavy capex. Investors should weigh the stability and visibility of regulated earnings against the near-term cash-flow headwinds from capex and rising financing costs. The valuation multiples (P/E ~18.5x, P/B ~1.75x, EV/EBITDA ~47.5x) imply a premium for the business’s regulated earnings profile but may leave little near-term upside if rate cases and execution risk constrain capex deployment or if interest rates stay elevated. The prudent stance is a Hold with a bias toward income, provided the company maintains dividend coverage through stabilized cash flows and progress on rate-base investments. Key catalysts include favorable rate-case resolutions, accelerated, well-structured capital projects, and improved liquidity metrics as capex matures.
Key Investment Factors
Growth Potential
Growth potential centers on rate-base expansion through infrastructure investments (transmission, distribution, and contracted assets). Nonregulated renewables and gas-related projects could provide optionality and diversification of earnings.
Profitability Risk
Key risks include regulatory approval delays or unfavorable rate decisions, rising interest costs, high capex cadence pressuring near-term free cash flow, and commodity price volatility impacting nonregulated segments. Execution risk on large project pipelines could affect timing of cash flows and debt metrics.
Financial Position
Balanced by a large regulated asset base and substantial debt load. Leverage metrics (Debt to capitalization 0.617, Debt to Equity 1.612) indicate elevated indebtedness typical for utilities pursuing major infrastructure programs. Liquidity metrics show liquidity challenges in the near term (current ratio 0.730, cash ratio 0.0404) but are supported by a high-quality asset portfolio and steady regulatory cash inflows.
SWOT Analysis
Strengths
Large, diversified regulated asset base across electricity and gas distribution providing stable cash flows
Strong EBITDA foundation (EBITDA $1.929B) and healthy operating margins (operating margin ~30.0%)
Scale and infrastructure enable capacity for rate-base growth and capital intensity
Weaknesses
High leverage and debt load (Total debt $44.103B; net debt $43.748B)
Near-term negative free cash flow due to capex cadence despite solid operating cash flow
Liquidity metrics show current ratio <1.0 (0.730) and low cash ratio (0.0404)
Opportunities
Expansion of transmission and distribution infrastructure
Growth through Contracted Assets in renewables and LNG, potential rate-case monetization
Regulatory regimes favoring regulated earnings and asset optimization
Threats
Regulatory risk and rate-case volatility across jurisdictions
Rising interest rates and debt costs increasing financing pressure
Commodity price exposure for nonregulated assets and weather-related demand fluctuations