Xcel Energy Inc (XEL) Q4 2024 Earnings Call Highlights: Strong Ongoing Earnings and Strategic ...

GuruFocus.com
07 Feb
  • GAAP Earnings for 2024: $3.44 per share.
  • Ongoing Earnings for 2024: $3.50 per share, excluding a non-recurring charge.
  • Ongoing Earnings for 2023: $3.35 per share.
  • Revenue Increase from Rate Cases and Riders: $0.87 per share.
  • Higher Other Income: $0.16 per share, due to interest income and gain on debt repurchase.
  • Higher Depreciation and Amortization: Decreased earnings by $0.40 per share.
  • Higher Interest Charges: Decreased earnings by $0.24 per share.
  • Higher O&M Expenses: Decreased earnings by $0.13 per share.
  • Weather Adjusted Electric Sales Increase: 3% in Q4 and 1% for the full year.
  • O&M Expenses Increase: $96 million in 2024.
  • 2025 Earnings Guidance: $3.75 to $3.85 per share.
  • Five-Year Base Capital Plan: $45 billion.
  • Equity Issuance in 2024: Nearly $1.4 billion.
  • Smokehouse Creek Wildfire Claims Settled: 113 out of 199 claims, with $73 million committed in settlements.
  • Warning! GuruFocus has detected 9 Warning Signs with XEL.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Xcel Energy Inc (NASDAQ:XEL) delivered ongoing earnings of $3.50 per share for 2024, within their guidance range for the 20th consecutive year.
  • The company invested over $7.5 billion in infrastructure to support energy needs, focusing on advanced technology, transmission, and carbon-free generation.
  • Xcel Energy Inc (NASDAQ:XEL) achieved a 97% availability in their wind fleet, marking their best performance in five years.
  • The Sherco Solar Project's first phase began commercial operations, with future phases set to make it the largest solar facility in the upper Midwest.
  • The company has maintained residential electric and natural gas bills below the national average, with historical growth rates well below inflation.

Negative Points

  • Xcel Energy Inc (NASDAQ:XEL) recorded a charge of $0.06 per share due to a disallowance of replacement power costs from a 2011 outage.
  • Higher depreciation and amortization decreased earnings by $0.40 per share, reflecting capital investment programs.
  • Higher interest charges, net of AFUDC debt, decreased earnings by $0.24 per share due to increased debt levels and higher interest rates.
  • O&M expenses increased by $96 million in 2024, driven by investments in wildfire mitigation and increased costs from generation maintenance.
  • The company faced challenges with regulatory lag, particularly in the SPS region, affecting growth despite increased customer load.

Q & A Highlights

Q: Can you provide insights on the impact of renewable permitting and siting on your projects, and what's embedded in your plan from a transferability perspective? A: Robert Frenzel, CEO: We support broad energy strategies and permanent reform to build necessary infrastructure. Our projects are not on federal lands, and our permitting needs are light for wind, solar, and storage. We expect our capital plan for 2025 and beyond to remain intact. Brian Van Abel, CFO, added that they have $700 million annually in transferability embedded in forecasts.

Q: How do you view the potential for federal wildfire policy changes and their impact on Xcel Energy? A: Robert Frenzel, CEO: The California fires have highlighted the need for solutions at both federal and state levels. We are engaged in active dialogues to protect customers and communities. Federal efforts may focus on setting standards and insurance backstops, while state discussions involve roles and responsibilities for wildfire mitigation.

Q: What are your thoughts on adding incremental gas-fired generation to meet higher-than-expected load growth? A: Robert Frenzel, CEO: We continue to focus on achieving 80% carbon reduction by 2030, but dispatchable resources like gas are necessary. We plan to add peaking gas resources and convert some coal stations to gas, maintaining a sustainability footprint while addressing load growth.

Q: Can you elaborate on the tone of conversations with data center customers and the impact on your sales growth outlook? A: Brian Van Abel, CFO: We have signed contracts for about 50% of our new data center capacity and expect to execute the remaining contracts by fall. The tone with data center customers remains positive, with no slowdown in demand. We anticipate a data center in every operating company, contributing to our long-term sales growth.

Q: How are you addressing labor availability for your capital projects? A: Robert Frenzel, CEO: We are actively working with trade organizations and educational institutions to secure the necessary talent. Our efforts include partnerships with vendor partners and recruitment at various educational levels to ensure we have the human capital needed for our build-out.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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