Energy, Automobile, EV, Renewable News | Xcel Energy Third Quarter 2023 Earnings Report

Xcel Energy Third Quarter 2023 Earnings Report

October 27, 2023

Third quarter GAAP diluted earnings per share were $1.19 in 2023 compared with $1.18 in 2022.
Third quarter diluted ongoing earnings per share were $1.23 in 2023 compared with $1.18 in 2022.
Year-to-date GAAP diluted earnings per share for 2023 were $2.47 compared to $2.48 in 2022.
Year-to-date diluted ongoing earnings per share for 2023 were $2.52 compared to $2.48 in 2022.
Xcel Energy narrows its 2023 ongoing EPS guidance to $3.32 to $3.37 from $3.30 to $3.40 per share.
Xcel Energy initiates 2024 EPS guidance of $3.50 to $3.60 per share.

MINNEAPOLIS–(BUSINESS WIRE)–Xcel Energy Inc. (NASDAQ: XEL) today reported 2023 third quarter GAAP earnings of $656 million, or $1.19 per share, compared with $649 million, or $1.18 per share in the same period in 2022 and ongoing earnings of $682 million, or $1.23 per share, compared with $649 million, or $1.18 per share in the same period in 2022. See Note 7 for reconciliation from GAAP to ongoing earnings.

Third quarter ongoing earnings results reflect the impact of increased recovery of infrastructure investments, higher sales and demand, lower operating and maintenance (O&M) expenses, partially offset by increased interest charges and depreciation.

“Xcel Energy delivered solid performance during the third quarter,” said Bob Frenzel, chairman, president and CEO of Xcel Energy. “As a result, we are narrowing our 2023 ongoing earnings guidance to $3.32 to $3.37 per share and initiating 2024 guidance of $3.50 to $3.60 per share.”

“We made significant progress on our industry-leading clean energy transition plans. In September, we filed a proposed plan for the largest clean energy transition effort in Colorado history. The plan includes approximately 6,500 MW of renewable energy and battery storage, and approximately 600 MW of natural gas resources to ensure reliability. With the benefits of the Inflation Reduction Act, the resources in the plan would have an annual rate impact of approximately 2.3%.”

“In addition, in October the U.S. Department of Energy selected the Heartland Hydrogen Hub, including multiple clean hydrogen projects from Xcel Energy, to receive up to $925 million in federal funding. The award will serve as a catalyst for a future hydrogen ecosystem in the Upper Midwest,” said Frenzel. “The future is bright for Xcel Energy, our communities, customers and investors.”

At 9:00 a.m. CDT today, Xcel Energy will host a conference call to review financial results. To participate in the call, please dial in 5 to 10 minutes prior to the start and follow the operator’s instructions.

US Dial-In:	1 (866) 580-3963
International Dial-In:	(400) 120-0558
Conference ID:	2633836

The conference call also will be simultaneously broadcast and archived on Xcel Energy’s website at www.xcelenergy.com. To access the presentation, click on Investors under Company. If you are unable to participate in the live event, the call will be available for replay from Oct. 27th through Oct. 30th.

Replay Numbers
US Dial-In:	1 (866) 583-1035
Access Code:	2633836#

Except for the historical statements contained in this report, the matters discussed herein are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements, including those relating to 2023 and 2024 EPS guidance, long-term EPS and dividend growth rate objectives, future sales, future expenses, future tax rates, future operating performance, estimated base capital expenditures and financing plans, projected capital additions and forecasted annual revenue requirements with respect to rider filings, expected rate increases to customers, expectations and intentions regarding regulatory proceedings, and expected impact on our results of operations, financial condition and cash flows of resettlement calculations and credit losses relating to certain energy transactions, as well as assumptions and other statements are intended to be identified in this document by the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “will,” “would” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information. The following factors, in addition to those discussed in Xcel Energy’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2022 and subsequent filings with the Securities and Exchange Commission, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: operational safety, including our nuclear generation facilities and other utility operations; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices and fuel costs; qualified employee work force and third-party contractor factors; violations of our Codes of Conduct; our ability to recover costs and our subsidiaries’ ability to recover costs from customers; changes in regulation; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including recessionary conditions, inflation rates, monetary fluctuations, supply chain constraints and their impact on capital expenditures and/or the ability of Xcel Energy Inc. and its subsidiaries to obtain financing on favorable terms; availability or cost of capital; our customers’ and counterparties’ ability to pay their debts to us; assumptions and costs relating to funding our employee benefit plans and health care benefits; our subsidiaries’ ability to make dividend payments; tax laws; uncertainty regarding epidemics, the duration and magnitude of business restrictions including shutdowns (domestically and globally), the potential impact on the workforce, including shortages of employees or third-party contractors due to quarantine policies, vaccination requirements or government restrictions, impacts on the transportation of goods and the generalized impact on the economy; effects of geopolitical events, including war and acts of terrorism; cyber security threats and data security breaches; seasonal weather patterns; changes in environmental laws and regulations; climate change and other weather events; natural disaster and resource depletion, including compliance with any accompanying legislative and regulatory changes; costs of potential regulatory penalties and wildfire damages in excess of liability insurance coverage; regulatory changes and/or limitations related to the use of natural gas as an energy source; challenging labor market conditions and our ability to attract and retain a qualified workforce; and our ability to execute on our strategies or achieve expectations related to environmental, social and governance matters including as a result of evolving legal, regulatory and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite financing, and changes in carbon markets.

This information is not given in connection with any

sale, offer for sale or offer to buy any security.

XCEL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(amounts in millions, except per share data)

	Three Months Ended Sept. 30						Nine Months Ended Sept. 30
	2023			2022			2023			2022
Operating revenues
Electric	$	3,387		$	3,699		$	8,751		$	9,255
Natural gas		245			357			1,926			1,923
Other		30			26			87			79
Total operating revenues		3,662			4,082			10,764			11,257

Operating expenses
Electric fuel and purchased power		1,181			1,497			3,328			3,772
Cost of natural gas sold and transported		70			173			1,084			1,134
Cost of sales — other		14			11			37			32
Operating and maintenance expenses		586			611			1,864			1,827
Conservation and demand side management expenses		76			86			215			259
Depreciation and amortization		618			607			1,807			1,807
Taxes (other than income taxes)		168			173			489			523
Loss on Comanche Unit 3 litigation		34			—			34			—
Total operating expenses		2,747			3,158			8,858			9,354

Operating income		915			924			1,906			1,903

Other income (expense), net		3			(15	)		19			(20	)
Earnings from equity method investments		7			1			27			27
Allowance for funds used during construction — equity		26			20			63			53

Interest charges and financing costs
Interest charges — includes other financing costs of $8, $8, $16 and $16, respectively		269			244			790			705
Allowance for funds used during construction — debt		(14	)		(7	)		(36	)		(19	)
Total interest charges and financing costs		255			237			754			686

Income before income taxes		696			693			1,261			1,277
Income tax expense (benefit)		40			44			(101	)		(80	)
Net income	$	656		$	649		$	1,362		$	1,357

Weighted average common shares outstanding:
Basic		552			548			551			546
Diluted		552			548			552			546

Earnings per average common share:
Basic	$	1.19		$	1.19		$	2.47		$	2.48
Diluted		1.19			1.18			2.47			2.48

XCEL ENERGY INC. AND SUBSIDIARIES

Notes to Investor Relations Earnings Release (Unaudited)

Due to the seasonality of Xcel Energy’s operating results, quarterly financial results are not an appropriate base from which to project annual results.

Non-GAAP Financial Measures

The following discussion includes financial information prepared in accordance with generally accepted accounting principles (GAAP), as well as certain non-GAAP financial measures such as ongoing return on equity (ROE), ongoing earnings and ongoing diluted EPS. Generally, a non-GAAP financial measure is a measure of a company’s financial performance, financial position or cash flows that adjusts measures calculated and presented in accordance with GAAP. Xcel Energy’s management uses non-GAAP measures for financial planning and analysis, for reporting of results to the Board of Directors, in determining performance-based compensation and communicating its earnings outlook to analysts and investors. Non-GAAP financial measures are intended to supplement investors’ understanding of our performance and should not be considered alternatives for financial measures presented in accordance with GAAP. These measures are discussed in more detail below and may not be comparable to other companies’ similarly titled non-GAAP financial measures.

Ongoing ROE

Ongoing ROE is calculated by dividing the net income or loss of Xcel Energy or each subsidiary, adjusted for certain nonrecurring items, by each entity’s average stockholder’s equity. We use these non-GAAP financial measures to evaluate and provide details of earnings results.

Earnings Adjusted for Certain Items (Ongoing Earnings and Ongoing Diluted EPS)

GAAP diluted EPS reflects the potential dilution that could occur if securities or other agreements to issue common stock (i.e., common stock equivalents) were settled. The weighted average number of potentially dilutive shares outstanding used to calculate Xcel Energy Inc.’s diluted EPS is calculated using the treasury stock method. Ongoing earnings reflect adjustments to GAAP earnings (net income) for certain items. Ongoing diluted EPS for Xcel Energy is calculated by dividing net income or loss, adjusted for certain items, by the weighted average fully diluted Xcel Energy Inc. common shares outstanding for the period. Ongoing diluted EPS for each subsidiary is calculated by dividing the net income or loss for such subsidiary, adjusted for certain items, by the weighted average fully diluted Xcel Energy Inc. common shares outstanding for the period.

We use these non-GAAP financial measures to evaluate and provide details of Xcel Energy’s core earnings and underlying performance. For instance, to present ongoing earnings and ongoing diluted earnings per share, we may adjust the related GAAP amounts for certain items that are non-recurring in nature. We believe these measurements are useful to investors to evaluate the actual and projected financial performance and contribution of our subsidiaries. These non-GAAP financial measures should not be considered as an alternative to measures calculated and reported in accordance with GAAP.

Note 1. Earnings Per Share Summary

Xcel Energy’s third quarter GAAP diluted earnings were $1.19 per share, compared with $1.18 per share in the same period in 2022 and ongoing diluted earnings were $1.23 per share in 2023, compared with $1.18 per share in 2022. The increase in ongoing earnings per share was primarily driven by increased recovery of infrastructure investments, higher sales and demand and lower O&M expenses, partially offset by increased interest charges and depreciation. Fluctuations in electric and natural gas revenues associated with changes in fuel and purchased power and/or natural gas sold and transported generally do not significantly impact earnings (changes in costs are offset by the related variation in revenues).

Summarized diluted EPS for Xcel Energy:

	Three Months Ended Sept. 30						Nine Months Ended Sept. 30
Diluted Earnings (Loss) Per Share	2023			2022			2023			2022
PSCo	$	0.41		$	0.45		$	0.97		$	1.02
NSP-Minnesota		0.47			0.49			0.95			0.94
SPS		0.30			0.25			0.55			0.52
NSP-Wisconsin		0.06			0.07			0.18			0.19
Earnings from equity method investments — WYCO		0.01			0.01			0.03			0.02
Regulated utility ^(a)		1.25			1.28			2.68			2.69
Xcel Energy Inc. and Other		(0.06	)		(0.09	)		(0.22	)		(0.21	)
GAAP diluted EPS ^(a)		1.19			1.18			2.47			2.48
Loss on Comanche Unit 3 litigation ^(b)		0.05			—			0.05			—
Ongoing diluted EPS ^(a)	$	1.23		$	1.18		$	2.52		$	2.48

^(a)	Amounts may not add due to rounding.
^(b)	See Note 7.

PSCo — GAAP diluted earnings decreased $0.04 per share and ongoing diluted earnings increased $0.01 per share for the third quarter. Year-to-date GAAP diluted earnings decreased $0.05 per share and ongoing diluted earnings were flat. Year-to-date ongoing earnings primarily reflect higher recovery of infrastructure investment (electric and natural gas), which were offset by increased depreciation and interest charges. See Note 7 for reconciliation from GAAP to ongoing earnings.

NSP-Minnesota — GAAP and ongoing earnings decreased $0.02 per share for the third quarter of 2023 and increased $0.01 per share year-to-date. The year-to-date change was driven by increased recovery of electric infrastructure investments, partially offset by higher O&M expenses, interest charges and unfavorable weather.

SPS — GAAP and ongoing earnings increased $0.05 per share for the third quarter of 2023 and $0.03 year-to-date. The impact of regulatory rate outcomes and sales growth was partially offset by unfavorable weather, increased depreciation and interest expenses.

NSP-Wisconsin — GAAP and ongoing earnings decreased $0.01 per share for the third quarter of 2023 and year-to-date. Additional electric and natural gas infrastructure investment recoveries were offset by higher depreciation, O&M expenses and interest expenses.

Xcel Energy Inc. and Other — Primarily includes financing costs and interest income at the holding company and earnings from Energy Impact Partners (EIP) funds equity method investments. Year-to-date fluctuations are largely attributable to increased interest rates.

Components significantly contributing to changes in 2023 EPS compared to 2022:

Diluted Earnings (Loss) Per Share	Three Months Ended Sept. 30			Nine Months Ended Sept. 30
GAAP and ongoing diluted EPS — 2022	$	1.18		$	2.48

Components of change – 2023 vs. 2022
(Lower) higher natural gas revenues, net of cost of natural gas sold and transported		(0.01	)		0.07
Lower conservation and demand side management expenses (offset in electric revenues)		0.02			0.06
Higher other income (expense)		0.02			0.05
Lower taxes (other than income taxes)		0.01			0.05
Lower effective tax rate (ETR) ^(a)		0.01			0.03
Higher depreciation and amortization		(0.02	)		—
Higher interest charges		(0.03	)		(0.11	)
Higher (lower) electric revenues, net of electric fuel and purchased power		0.01			(0.08	)
Lower (higher) O&M expenses		0.03			(0.05	)
Loss on Comanche Unit 3 litigation		(0.05	)		(0.05	)
Other, net		0.02			0.02
GAAP diluted EPS — 2023		1.19			2.47
Loss on Comanche Unit 3 litigation (See Note 7)		0.05			0.05
Ongoing diluted EPS — 2023 ^(b)	$	1.23		$	2.52

^(a)	Includes production tax credits (PTCs) and plant regulatory amounts, which are primarily offset as a reduction to electric revenues.
^(b)	Amounts may not add due to rounding.

Note 2. Regulated Utility Results

Estimated Impact of Temperature Changes on Regulated Earnings — Unusually hot summers or cold winters increase electric and natural gas sales, while mild weather reduces electric and natural gas sales. The estimated impact of weather on earnings is based on the number of customers, temperature variances, the amount of natural gas or electricity historically used per degree of temperature and excludes any incremental related operating expenses that could result due to storm activity or vegetation management requirements. As a result, weather deviations from normal levels can affect Xcel Energy’s financial performance. However, decoupling mechanisms in Colorado (mechanism expired in September 2023) and sales true-up mechanisms in Minnesota predominately mitigate the positive and adverse impacts of weather for the electric utility in those jurisdictions.

Normal weather conditions are defined as either the 10, 20 or 30-year average of actual historical weather conditions. The historical period of time used in the calculation of normal weather differs by jurisdiction, based on regulatory practice. To calculate the impact of weather on demand, a demand factor is applied to the weather impact on sales. Extreme weather variations, windchill and cloud cover may not be reflected in weather-normalized estimates.

Weather — Estimated impact of temperature variations on EPS compared with normal weather conditions:

	Three Months Ended Sept. 30									Nine Months Ended Sept. 30
	2023 vs. Normal			2022 vs. Normal			2023 vs. 2022			2023 vs. Normal			2022 vs. Normal			2023 vs. 2022
Retail electric	$	0.032		$	0.074		$	(0.042	)	$	0.035		$	0.123		$	(0.088	)
Decoupling and sales true-up		0.007			(0.032	)		0.039			(0.015	)		(0.055	)		0.040
Electric total	$	0.039		$	0.042		$	(0.003	)	$	0.020		$	0.068		$	(0.048	)
Firm natural gas		(0.002	)		—			(0.002	)		0.024			0.019			0.005
Decoupling	$	0.001		$	—		$	0.001		$	0.001		$	—		$	0.001
Gas total	$	(0.001	)	$	—		$	(0.001	)	$	0.025		$	0.019		$	0.006
Total	$	0.038		$	0.042		$	(0.004	)	$	0.045		$	0.087		$	(0.042	)

Sales — Sales growth (decline) for actual and weather-normalized sales in 2023 compared to 2022:

	Three Months Ended Sept. 30
	PSCo		NSP-Minnesota		SPS		NSP-Wisconsin		Xcel Energy
Actual
Electric residential	(5.9	)%	0.7	%	3.6	%	0.3	%	(1.4	)%
Electric C&I	(2.0	)	(1.6	)	6.5		(2.3	)	0.5
Total retail electric sales	(3.4	)	(0.8	)	5.7		(1.6	)	(0.1	)
Firm natural gas sales	1.3		—		N/A		(3.2	)	0.6

	Three Months Ended Sept. 30
	PSCo		NSP-Minnesota		SPS		NSP-Wisconsin		Xcel Energy
Weather-Normalized
Electric residential	5.6	%	2.6	%	1.8	%	0.4	%	3.4	%
Electric C&I	1.7		(1.8	)	6.0		(2.5	)	1.3
Total retail electric sales	3.0		(0.4	)	4.9		(1.7	)	1.9
Firm natural gas sales	2.4		3.0		N/A		0.3		2.5

	Nine Months Ended Sept. 30
	PSCo		NSP-Minnesota		SPS		NSP-Wisconsin		Xcel Energy
Actual
Electric residential	(4.4	)%	(0.1	)%	(3.3	)%	(2.6	)%	(2.4	)%
Electric C&I	(2.1	)	(0.7	)	5.5		(0.3	)	0.7
Total retail electric sales	(2.9	)	(0.5	)	3.8		(1.0	)	(0.2	)
Firm natural gas sales	4.9		(10.7	)	N/A		(12.7	)	(1.6	)

	Nine Months Ended Sept. 30
	PSCo		NSP-Minnesota		SPS		NSP-Wisconsin		Xcel Energy
Weather-Normalized
Electric residential	1.4	%	0.6	%	0.9	%	(0.5	)%	0.8	%
Electric C&I	(0.2	)	(0.9	)	5.7		(0.2	)	1.2
Total retail electric sales	0.3		(0.4	)	4.7		(0.3	)	1.1
Firm natural gas sales	1.6		(1.4	)	N/A		(1.9	)	0.4

Weather-normalized electric sales growth (decline) — year-to-date

PSCo — Residential sales increased due to a 1.3% increase in customers. The C&I sales decline was related to decreased use per customer, primarily in the manufacturing and agricultural sectors.
NSP-Minnesota — Residential sales increased due to a 1.1% increase in customers, partially offset by a decreased use per customer. C&I sales declined due to decreased use per customer, due to general economic conditions.
SPS — Residential sales growth was primarily attributable to a 0.7% increase in customers and increased use per customer. C&I sales increased due to higher use per customer, primarily driven by the energy sector.
NSP-Wisconsin — Residential sales declined due to decreased use per customer, offset by a 0.7% increase in customers. C&I sales decline was associated with decreased use per customer, experienced largely in the manufacturing sector.

Weather-normalized natural gas sales growth (decline) — year-to-date

Natural gas sales reflect a lower use per residential customer in all jurisdictions, partially offset by an increase in C&I use per customer in PSCo. In addition, residential and C&I customer growth was 1.2% and 0.7%, respectively.

Electric Margin — Electric margin is presented as electric revenues less electric fuel and purchased power expenses. Expenses incurred for electric fuel and purchased power are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are generally offset in operating revenues.

Electric revenues and fuel and purchased power expenses are impacted by fluctuations in the price of natural gas, coal and uranium. However, these price fluctuations generally have minimal earnings impact due to fuel recovery mechanisms. In addition, electric customers receive a credit for PTCs generated, which reduce electric revenue and income taxes.

Electric revenues, fuel and purchased power and margin:

	Three Months Ended Sept. 30						Nine Months Ended Sept. 30
(Millions of Dollars)	2023			2022			2023			2022
Electric revenues	$	3,387		$	3,699		$	8,751		$	9,255
Electric fuel and purchased power		(1,181	)		(1,497	)		(3,328	)		(3,772	)
Electric margin	$	2,206		$	2,202		$	5,423		$	5,483

(Millions of Dollars)	Three Months Ended Sept. 30, 2023 vs. 2022			Nine Months Ended Sept. 30, 2023 vs. 2022
Revenue recognition for the Texas rate case surcharge ^(a)	$	—		$	(85	)
Conservation and demand side management (offset in expense)		(14	)		(48	)
Estimated impact of weather (net of decoupling/sales true-up)		(2	)		(34	)
PTCs flowed back to customers (offset by lower ETR)		(10	)		(33	)
Non-fuel riders		39			70
Sales and demand ^(b)		18			38
Wholesale transmission (net)		(8	)		15
Regulatory rate outcomes (Minnesota, Colorado, Texas, New Mexico, Wisconsin, South Dakota and Michigan)		1			13
Other (net)		(20	)		4
Total increase (decrease)	$	4		$	(60	)

^(a)	The decline in electric margin is due to the recognition of the Texas rate case outcome in the second quarter of 2022, which was largely offset by recognition of previously deferred costs.
^(b)	Sales excludes weather impact, net of partial decoupling in Colorado (mechanism expired in September) and sales true-up mechanism in Minnesota.