01—Abstract
Summary
Summary of the 10-K filed February 27, 2014. Cited figures are marked; the original filing is the authoritative source.
Wisconsin Energy Corporation reported 2013 net income of $577.4 milliona, or $2.51 diluted earnings per share from continuing operations, up from $546.3 million and $2.35 in 2012.
Total operating revenues were $4.52 billionb, compared with $4.25 billion in 2012. Utility energy operating income rose to $719.4 million from $647.7 million, driven mainly by favorable winter weather and pricing increases. Non-utility energy operating income was $367.1 million, and the company expects comparable earnings from that segment in 2014.
The company is pursuing a capital program of $3.2 billion to $3.5 billionc over 2014 through 2018, including estimated capital expenditures of $711.0 million in 2014, $804.2 million in 2015 and $621.8 million in 2016. Investors should note a growing set of regulatory and environmental exposures: loss of two iron ore mine customers in Michigan that switched to an alternative electric supplier effective September 1, 2013; the planned conversion of the Valley Power Plant from coal to natural gas at a cost of $65 million to $70 million; and pending EPA greenhouse gas and coal combustion product rules. The Board increased the quarterly dividend to $0.39 per share in January 2014 and approved a new share repurchase program of up to $300 million for 2014 through 2017.
Balance sheet metrics were stable, with total assets of $14.77 billiond and a debt-to-total-capitalization ratio of 55.2% as reported, or 52.5% on an adjusted basis that treats the Junior Notes partly as equity. The company made no federal income tax payments for 2013 and does not expect to make any for 2014, due to bonus depreciation provisions.
02—Key points
Key Highlights
- Net income of $577.4 million in 2013, versus $546.3 million in 2012; diluted EPS from continuing operations of $2.51, versus $2.35.
- Total operating revenues of $4.52 billion in 2013, versus $4.25 billion in 2012.
- Utility energy segment operating income of $719.4 million, up from $647.7 million, primarily due to colder winter weather and pricing increases.
- Non-utility energy segment (We Power leases of Power the Future plants) operating income of $367.1 million, with comparable earnings expected in 2014.
- Estimated capital expenditures of $711.0 million (2014), $804.2 million (2015) and $621.8 million (2016); $3.2 billion to $3.5 billion expected over 2014 to 2018.
- Quarterly dividend increased to $0.39 per share for 2014 (annual $1.56); new share repurchase program of up to $300 million for 2014 through 2017.
- Loss of two iron ore mine customers in Michigan to an alternative electric supplier effective September 1, 2013, with a System Support Resource agreement with MISO for the Presque Isle plant.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Wec Energy Group kept $0.13.
- Revenue$4.52B100.0%
- Cost of revenue−$1.83B40.4%
- Gross profit$2.69B59.6%
- Operating costs−$1.61B35.7%
- Operating income$1.08B23.9%
- Interest, other & tax−$501.5M11.1%
- Net income$578.6M12.8%
Where FY2013 revenue went
$4.52B- Cost of revenue: $1.83B, 40% of revenue
- Operating costs: $1.61B, 36% of revenue
- Net income: $578.6M, 13% of revenue
- Interest, other & tax: $501.5M, 11% of revenue
Kept 13% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 27, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $4.52B$4.25B | +6.4% |
| Cost of Revenue | $1.83B— | — |
| Gross Profit | $2.69B— | — |
| Operating Income | $1.08B$1.00B | +8.0% |
| Interest Expense | $250.90M$248.20M | +1.1% |
| Net Income | $578.60M$546.30M | +5.9% |
| EPS (Basic) | $2.54$2.37 | +7.2% |
| EPS (Diluted) | $2.51$2.35 | +6.8% |
| Shares Outstanding (Basic) | 227.60M230.20M | −1.1% |
| Shares Outstanding (Diluted) | 229.70M232.80M | −1.3% |
05—Questions
Frequently Asked Questions
How did the company's earnings change in 2013?
Net income rose to $577.4 million from $546.3 million in 2012. Diluted earnings per share from continuing operations were $2.51, compared with $2.35. The utility energy segment drove most of the increase, with operating income of $719.4 million versus $647.7 million, helped by favorable winter weather and pricing increases.
What are the company's main capital spending plans?
The company expects to invest between $3.2 billion and $3.5 billion in capital projects over 2014 through 2018. Estimated capital expenditures are $711.0 million in 2014, $804.2 million in 2015 and $621.8 million in 2016, mostly for upgrading electric and gas distribution systems.
How is the dividend and share repurchase policy evolving?
On January 16, 2014, the Board raised the quarterly dividend to $0.39 per share, up from $0.3825, and affirmed a dividend payout target of 65% to 70% in 2017. The Board also authorized a new repurchase program of up to $300 million of common stock from January 1, 2014 through the end of 2017.
What regulatory and environmental risks does the filing highlight?
The filing cites pending EPA rules on greenhouse gas emissions from existing plants and coal combustion products, which could be classified as hazardous waste. It also notes that the Valley Power Plant conversion to natural gas is expected to cost $65 million to $70 million, and that additional environmental controls may be needed at the Presque Isle plant.
How much debt does the company carry?
Long-term debt including current maturities was $4.71 billion at year-end 2013. The ratio of debt to total capitalization was 55.2% on an actual basis and 52.5% on an adjusted basis, which attributes $250 million of the Junior Notes to equity, consistent with rating agency treatment.
06—Continue