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PG&E (PCG), the large California utility has had a difficult few years marred by several lawsuits due to everything from a gas line explosion in San Bruno that blew up dozens of homes in 2010 and more than 30 wildfires triggered by PG&E equipment since 2017. Settlements for these lawsuits have run into the tens of billions of dollars.
Given the challenges the utility and its aging infrastructure faces, it is not surprising that on March 12, 2023, Christopher A. Foster, the CFO of the company informed PG&E that he is resigning from his position effective May 4, 2023 after just two years in the position.
Welcome to edition 33 of C-Suite Transitions, a weekly series on InsideArbitrage that tracks appointments and departures at publicly traded companies during the prior week. We highlight five appointments and departures each week by picking the largest companies from the full list of management changes.
Sudden Departures
Pacific Gas and Electric Company (PG&E), a subsidiary of PG&E Corporation (PCG), is one of the largest combined natural gas and electric companies in the United States serving millions of customers in California. The company has a long history, dating back to 1905. It uses fossil fuel-fired, nuclear, hydroelectric, fuel cell, photovoltaic, and hydroelectric sources to produce electricity.
Along with natural gas-fired electric generation facilities, it provides service to residential, commercial, industrial, and agricultural customers.
Christopher A. Foster Chief Financial Officer Resigns
On March 12, 2023, Christopher A. Foster, Executive Vice President, and Chief Financial Officer of PG&E Corporation, informed PG&E Corporation that he is resigning from his positions effective May 4, 2023 to pursue another opportunity as Executive Vice President and Chief Financial Officer of CenterPoint Energy.
In March 2021, Chris Foster was appointed Chief Financial Officer and Executive Vice President of PG&E Corporation. Mr. Foster was in charge of the treasury, tax, investor relations, accounting, audit, and financial planning departments and most recently held the positions of vice president and interim CFO. Mr. Foster previously held the position of Vice President, Treasury & Investor Relations.
He is leaving the company to join a comparatively smaller utility Centerpoint Energy (CNP) in Texas. Mr. Foster succeeded Jason Wells at PG&E, who also left the company for CenterPoint. CenterPoint Energy is a Fortune 500 electric and natural gas utility that serves markets in Indiana, Ohio, Louisiana, Minnesota, Mississippi, and Texas.
“Chris is an outstanding leader and one of the most well-respected CFOs in the utility sector. He has a proven track record in managing financial and operational areas, delivering results in a regulated business environment, driving a utility-focused strategy, and optimizing value for stakeholders,” said CenterPoint Energy’s Chief Executive Officer Dave Lesar.
Carolyn Burke Chief Financial Officer
PG&E Corporation appoints Carolyn Burke, a finance and operations executive with extensive leadership and turnaround experience in Fortune 500 energy and financial services companies, Executive Vice President and Chief Financial Officer, effective May 4, 2023.
Ms. Burke most recently served as Executive Vice President and Chief Financial Officer at Chevron Phillips Chemical Company. Prior to that, she served as Executive Vice President, Strategy at Dynegy, where she was a member of the executive management team that oversaw the company’s successful transition from bankruptcy to success in power generation and retail electric sales.
According to the filing, Ms. Burke will be paid an annual base salary of $725,000, as well as a sign-on bonus of $400,000 in cash and $400,000 in restricted stock units. She will be eligible for annual incentive awards with a participation rate of 75% of her base salary as the initial target.
Power Outages
According to Poweroutage.us, more than 113,000 customers in California were without electricity as of Wednesday. Pacific Glass & Electric (PG&E) said in a statement that this week’s storm went above and beyond what they had anticipated. Winds of up to 80 miles per hour were experienced in some areas of the San Francisco Bay Area, which only made the outages worse. According to a PG&E spokesperson, extensive structural damage could cause delays in repairs.
Carbon Neutrality
The company intends to exceed the state’s renewable and carbon-free requirements under Senate Bill 100, which calls for 60% renewables and zero-carbon resources by 2030 and 100% renewables and zero-carbon resources by 2045. Last year, PG&E released an action plan to meet California’s aggressive carbon neutrality goals five years early in 2040 and to actively remove more greenhouse gases than it emits by 2050.
Lawsuits
In recent years, PG&E has faced significant legal and financial challenges. The company has been held responsible for multiple wildfires that occurred in California since 2017, which were caused by its equipment. These wildfires caused significant damage and loss of life, leading to lawsuits and criminal charges against the company. On September 29, 2022, PG&E Fire Victim Trust announced former executives and directors of Pacific Gas & Electric agreed to pay $117 million to settle a lawsuit and claims of more than 80,000 people who lost their homes in wildfires that PG&E’s faulty electrical grid started.
On April 20, 2022, Pacific Gas & Electric agreed to pay $55 million in penalties and costs to resolve civil lawsuits brought by prosecutors regarding wildfires that burned through six Northern California counties. The agreement enables PG&E to avoid criminal prosecution for starting both the Kincade fire in 2019 and the Dixie fire in 2018, the second-largest fire in California history.
Bankruptcy
On January 2019, Pacific Gas & Electric filed for voluntary Chapter 11 bankruptcy protection to protect itself from potential fire liabilities that could cost tens of billions of dollars. In a court document submitted to the U.S. Bankruptcy Court, PG&E listed assets of $71.39 billion and liabilities of $51.69 billion. On July 1, 2020, PG&E emerged from bankruptcy.
The company has been looking for ways to finance its proposed $50 billion in capital expenditures between 2022 and 2026. The plan is crucial to the company’s efforts to significantly reduce the possibility of wildfires being started by PG&E’s power lines and to enhance safety.
Earnings (Investor Presentation)
Appointments
1. Norwegian Cruise Line Holdings (NCLH): $12.47
On March 20, 2023, the company announced that Harry Sommer would become President and Chief Executive Officer of the company, effective July 1, 2023.
| MarketCap: $5.43B | Avg. Daily Volume (30 days): 14,144,974 | Revenue (TTM): $4.84B |
| Net Income Margin (TTM): -46.86% | ROE (TTM): -181.50% | Net Debt: $13.25B |
| P/E: -2.38 | Forward P/E: 13.66 | EV/EBIDTA (TTM): -25.25 |
| P/S (TTM): 1.09 | P/B (TTM): 77.38 | 52 Week Range: $10.31 – $23.43 |
| MarketCap: $17.82B | Avg. Daily Volume (30 days): 3,503,099 | Revenue (TTM): $9.32B |
| Net Income Margin (TTM): 11.34% | ROE (TTM): 10.86% | Net Debt: $15.47B |
| P/E: 17.76 | Forward P/E: N/A | EV/EBIDTA (TTM): 13.16 |
| P/S (TTM): N/A | P/B (TTM): N/A | 52 Week Range: $24.71 – $33.08 |
| MarketCap: $5.83B | Avg. Daily Volume (30 days): 7,869,289 | Revenue (TTM): $5.34B |
| Net Income Margin (TTM): 22.18% | ROE (TTM): 47.70% | Net Debt: $1.93B |
| P/E: 5.21 | Forward P/E: 4.90 | EV/EBIDTA (TTM): 3.71 |
| P/S (TTM): 1.55 | P/B (TTM): 3.95 | 52 Week Range: $22.61 – $37.23 |
4. Sealed Air Corp. (SEE): $43.42
On March 15, 2023, Sealed Air announced Dustin Semach will join as Chief Financial Officer, effective April 17, 2023.
| MarketCap: $6.47B | Avg. Daily Volume (30 days): 1,339,190 | Revenue (TTM): $5.64B |
| Net Income Margin (TTM): 8.71% | ROE (TTM): 165.76% | Net Debt: $3.3B |
| P/E: 13.50 | Forward P/E: 11.98 | EV/EBIDTA (TTM): 8.57 |
| P/S (TTM): 1.15 | P/B (TTM): 18.45 | 52 Week Range: $41.09 – $69.97 |
5. PG&E Corp. (PCG): $15.54
On March 14, 2023, the Board of Directors of PG&E Corporation appointed Carolyn J. Burke as Executive Vice President and Chief Financial Officer of PG&E Corporation, effective May 4, 2023.
| MarketCap: $31.74B | Avg. Daily Volume (30 days): | Revenue (TTM): $21.68B |
| Net Income Margin (TTM): 8.30% | ROE (TTM): 8.13% | Net Debt: $53.54B |
| P/E: 19.01 | Forward P/E: 13.48 | EV/EBIDTA (TTM): 12.09 |
| P/S (TTM): 1.60 | P/B (TTM): 1.63 | 52 Week Range: $9.64 – $16.49 |
1. Norwegian Cruise Line Holdings (NCLH): $12.47
On March 20, 2023, Norwegian Cruise Line Holdings announced that Frank J. Del Rio will retire from his position as the company’s President and Chief Executive Officer and resign effective June 30, 2023.
| MarketCap: $5.43B | Avg. Daily Volume (30 days): 14,144,974 | Revenue (TTM): $4.84B |
| Net Income Margin (TTM): -46.86% | ROE (TTM): -181.50% | Net Debt: $13.25B |
| P/E: -2.38 | Forward P/E: 13.66 | EV/EBIDTA (TTM): -25.25 |
| P/S (TTM): 1.09 | P/B (TTM): 77.38 | 52 Week Range: $10.31 – $23.43 |
2. Range Resources Corp (RRC): $24.08
On March 16, 2023, Range Resources Corporation announced that Chief Executive Officer, Jeffrey L. Ventura will retire from his position as President, CEO, and director on May 10, 2023.
| MarketCap: $5.83B | Avg. Daily Volume (30 days): 7,869,289 | Revenue (TTM): $5.34B |
| Net Income Margin (TTM): 22.18% | ROE (TTM): 47.70% | Net Debt: $1.93B |
| P/E: 5.21 | Forward P/E: 4.90 | EV/EBIDTA (TTM): 3.71 |
| P/S (TTM): 1.55 | P/B (TTM): 3.95 | 52 Week Range: $22.61 – $37.23 |
3. First Financial Bancorp (FFBC): $22.08
On March 16, 2023, First Financial Bancorp. announced that John Gavigan, Chief Operating Officer, will separate from the company on April 1, 2023. Mr. Gavigan’s separation from employment is treated as terminated without “Cause”.
| MarketCap: $2.19B | Avg. Daily Volume (30 days): 199,931 | Revenue (TTM): $673.25M |
| Net Income Margin (TTM): 32.32% | ROE (TTM): 10.12% | Net Debt: $1.1B |
| P/E: 10.03 | Forward P/E: 7.99 | EV/EBIDTA (TTM): N/A |
| P/S (TTM): 2.87 | P/B (TTM): 1.00 | 52 Week Range: $18.22 – $26.47 |
4. Ritchie Bros Auctioneers (RBA): $54.22
On March 20, 2023, Ritchie Bros Auctioneers announced that Kari Taylor, Chief Revenue Officer of Ritchie Bros. Auctioneers Incorporated will step down effective April 3, 2023.
| MarketCap: $5.92B | Avg. Daily Volume (30 days): 1,895,205 | Revenue (TTM): $1.73B |
| Net Income Margin (TTM): 18.44% | ROE (TTM): 27.09% | Net Debt: $265.56M |
| P/E: 18.96 | Forward P/E: 22.03 | EV/EBIDTA (TTM): 14.82 |
| P/S (TTM): 3.41 | P/B (TTM): 4.55 | 52 Week Range: $48.28 – $71.79 |
5. Independence Realty Trust (IRT): $14.96
On March 13, 2023, Independence Realty Trust, announced that Farrell Ender, President resigns effective May 1, 2023.
| MarketCap: $3.55B | Avg. Daily Volume (30 days): 1,934,225 | Revenue (TTM): $628.53M |
| Net Income Margin (TTM): 18.65% | ROE (TTM): 3.27% | Net Debt: $2.64B |
| P/E: 28.32 | Forward P/E: 75.19 | EV/EBIDTA (TTM): 17.86 |
| P/S (TTM): 6.14 | P/B (TTM): 1.08 | 52 Week Range: $14.91 – $27.76 |
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