Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Xcel Energy Inc (XEL, Financial) delivered ongoing earnings of $1.25 per share for the third quarter, exceeding the previous year's $1.23 per share.
- The company reaffirmed its 2024 earnings guidance of $3.50 to $3.60 per share and initiated 2025 guidance of $3.75 to $3.85 per share.
- Xcel Energy Inc (XEL) introduced a five-year $45 billion capital investment plan focused on clean energy, customer electrification, new load growth, and safety and reliability.
- The company has maintained a strong track record, delivering on its earnings guidance for 19 consecutive years.
- Xcel Energy Inc (XEL) has successfully settled 86 of the 179 submitted claims related to the Smokehouse Creek wildfire, demonstrating progress in resolving outstanding liabilities.
Negative Points
- The Minnesota Commission disallowed $46 million of replacement power costs, resulting in a $35 million charge for Xcel Energy Inc (XEL) in the third quarter.
- Higher O&M expenses decreased earnings by $0.09 per share, reflecting increased generation maintenance and storm expenses.
- Higher depreciation and amortization, driven by capital investment programs, decreased earnings by $0.08 per share.
- The company faced higher interest charges, decreasing earnings by $0.08 per share due to rising interest rates and increased debt levels.
- Xcel Energy Inc (XEL) is facing increased costs from recent excess liability insurance renewals, impacting financial performance.
Q & A Highlights
Q: Can you provide more details on the recent large land acquisition by a customer and its impact on Xcel's load growth outlook?
A: The acquisition was in Minnesota by an undisclosed customer, and it is part of our high-probability load forecast. This acquisition is included in our 5% consolidated load growth outlook. We are actively negotiating service agreements, ensuring that all customers benefit from these large loads, which drive economic growth and benefit all customers. (Brian Van Abel, CFO)
Q: How does the recent $1.1 billion equity issuance fit into Xcel's financing plan, and are there plans for further equity issuance this year?
A: The $1.1 billion equity issuance fulfills our equity needs for the year. We may be opportunistic if conditions are favorable, but we do not need to issue more equity this year. We view the ATM as an efficient mechanism for equity issuance but will consider other options as needed. (Brian Van Abel, CFO)
Q: Can you explain the rationale behind the increase in CapEx and its relation to the equity issuance?
A: The CapEx increase is primarily due to rolling forward our plan, resulting in a larger base. The lower equity issuance compared to the CapEx increase is due to improved cash flow and timing of capital investments. We maintain stable credit metrics and expect a 40-60 debt-equity mix going forward. (Brian Van Abel, CFO)
Q: What actions has Xcel taken to mitigate wildfire risks, and how are these reflected in your financial guidance?
A: We have enhanced power line safety settings and PSPS capabilities, and are investing in system hardening and segmentation. We are also working on regulatory filings for wildfire mitigation. Our 2025 guidance includes constructive regulatory outcomes for cost recovery of wildfire mitigation efforts. (Robert Frenzel, CEO; Brian Van Abel, CFO)
Q: How does Xcel's updated capital plan relate to the expected rate base growth and customer bill impacts?
A: The $6 billion capital increase results in a 40 basis point increase in rate base CAGR due to rolling forward the plan. We expect a 1% to 3% bill impact over the next five years, which is manageable given our starting position with bills below the national average. Our investments in clean generation and efficiency programs help keep bills low. (Brian Van Abel, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
