PG&E Bankruptcy & Davey – FAQs
How is PG&E’s bankruptcy going to affect my Davey stock?
PG&E is an important customer for Davey, and we expect that will continue. While PG&E is reorganizing in bankruptcy to seek relief from the liabilities of wildfires. During the bankruptcy and beyond, PG&E’s operations require the support of services that Davey provides. In fact, PG&E, and the regulatory and judicial agencies with authority over PG&E, have continued to place a large emphasis on safety and vegetation management. The utility lines that power millions of Californians will likely not disappear anytime soon, nor will the need to have partners keeping the vegetation clear from these utility lines. Therefore, Davey will continue to strategically manage its business to meet those needs, while managing our risk.
As background information, Davey’s stock is determined by an outside organization and it is formulated based on both how the S&P, our peer group, and Davey performs. So although PG&E is an important client of ours, they are only one of a multitude of factors that impact our stock valuation. In fact, in terms of the greatest impact, our performance is driven much more by our employees serving our customers safely, with high quality, and effectively. Davey’s stock this year, even after PG&E’s filing of bankruptcy, rose 10.5%.
What is Davey doing to actively manage the risk of the PG&E bankruptcy?
Davey has been actively managing the potential risk of a PG&E bankruptcy. In anticipation of PG&E’s bankruptcy filing, Davey has been proactively managing our accounts receivable and our work in progress with PG&E. Due to the good work of our finance and operations teams, we have reduced the amount of money PG&E owes us going into bankruptcy. In fact, at this point, PG&E’s pre-petition receivables account for less than 2 percent of our total receivables. It may be that we have a one-time impact to our bottom line in terms of the payments for pre-petition receivables, but we are monitoring post-petition receivables to ensure we are meeting specific measurables for post-petition work, which have been met to date.
In addition, Davey has engaged a legal team to protect its creditor status in the bankruptcy, including seeking critical vendor status and appointment to the Unsecured Creditors’ Committee.
Davey was appointed to the Unsecured Creditors’ Committee. What is the unsecured creditors’ committee and what does it mean that Davey is on it?
The creditors’ committee is a group that represents PG&E’s unsecured creditors during a bankruptcy proceeding. Erika Schoenberger, our General Counsel and Joe Paul, our Chief Financial Officer were appointed to serve in mid-February. Davey was also appointed as co-chair of the Committee. Having a seat on this committee means that Davey will have more direct involvement as the bank proceedings as it progresses. Many of the other 9 members represent financial institutions, and Davey is one of the only service trade creditors on the committee and is the only member appointed in both this bankruptcy and PG&E’s 2007 bankruptcy.
What about the risk to Davey from the wildfire lawsuits?
Managing the wildfire risk is a key part of our financial sustainability strategic plan. Specifically, we have taken some steps over the past year to decrease our wildfire risk, including negotiating stronger contract terms, managing our insurance programs carefully, making strategic operational choices to engage in work in lower risk areas, and the legal team is actively executing a strategy to limit our risk in the ongoing lawsuits.
Will there be layoffs because of the PG&E bankruptcy?
We don’t anticipate any layoffs related to the bankruptcy. In general, utility operations are subject to supply and demand, and that often causes a fluctuation in the supply of work. Our employee decisions are driven by operational needs, not by the bankruptcy, and at this time we anticipate that to continue to be the case.
How can I help?
The strength of Davey is its employees. Our team of financial, legal, operational and communication experts are able to position the company more strongly based on your strong performance as a service provider that our customers can depend on. We ask that you continue to drive and focus on those things that deliver the strength of our business and look for opportunities to serve the customer’s needs even in challenging circumstances. Your excellence will be the differentiator that our team tasked with managing through the PG&E bankruptcy will be counting on.