01—Abstract
Summary
Summary of the 10-K filed February 24, 2022. Cited figures are marked; the original filing is the authoritative source.
WEC Energy Group, Inc. reported 2021 net income attributed to common shareholders of $1,300.3 milliona, up from $1,199.9 million in 2020, with diluted earnings per share of $4.11 versus $3.79.
The increase was driven mainly by the corporate and other segment (a $55.9 millionb smaller net loss, reflecting lower interest expense), the non-utility energy infrastructure segment (up $18.4 million on higher production tax credits from new wind parks), the Illinois segment (up $19.5 million on the SMP investment under the QIP rider), and the Wisconsin segment (up $16.1 million on higher retail sales volumes and rate increases). Operating revenues rose to $8,316.0 million from $7,241.7 million, largely reflecting higher natural gas costs passed through to customers after the February 2021 cold weather event. The company's capital plan is centered on its ESG Progress Plan, which calls for capital expenditures of approximately $16.4 billion for its regulated utility and non-utility energy infrastructure businesses from 2022 to 2026, plus a $1.3 billion share of ATC's projected capital expenditures.
The plan includes retiring about 1,600 MW of additional fossil-fueled generation by 2025 and reducing electric generation carbon emissions 60% by 2025 and 80% by 2030 from a 2005 baseline. Total debt rose to $15,590.1 millionc, and the ratio of debt to total capitalization was 58.8%.
The Board increased the quarterly dividend to $0.7275 per share in January 2022, equal to $2.91d annually, and reaffirmed a 65-70% payout ratio target. The filing also flags material risks, including rate case outcomes, environmental and greenhouse gas regulation, supply chain disruptions and inflation, the expiration of the QIP rider after 2023, credit rating and capital market access, and the ATC return-on-equity complaints, for which the company maintains a $39.1 million liability for potential refunds.
02—Key points
Key Highlights
- Net income attributed to common shareholders rose to $1,300.3 million in 2021 from $1,199.9 million in 2020; diluted EPS was $4.11 versus $3.79.
- Operating revenues increased to $8,316.0 million from $7,241.7 million, with natural gas revenues up $298.9 million at the Wisconsin segment and $350.9 million at the Illinois segment, reflecting higher gas costs passed through to customers.
- Capital expenditures totaled $2,252.8 million in 2021, and the company expects approximately $16.4 billion of capital expenditures for its regulated utility and non-utility energy infrastructure businesses from 2022 to 2026.
- The ESG Progress Plan targets 60% carbon emission reductions by 2025 and 80% by 2030 from a 2005 baseline, with net-zero CO2 emissions by 2050 and retirement of about 1,600 MW of additional fossil-fueled generation by 2025.
- Long-term debt totaled $13,693.1 million on a GAAP capitalization basis; the ratio of total debt to total capitalization was 58.8%, and the company was in compliance with all debt covenants.
- The Board raised the quarterly dividend to $0.7275 per share in January 2022 (annual $2.91, up 7.4%) and continues to target a 65-70% dividend payout ratio.
- The non-utility energy infrastructure segment contributed $279.2 million of net income, up $18.4 million, driven by higher production tax credits from new wind parks, though it faced operating losses at Coyote Ridge and Tatanka Ridge from grid congestion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Wec Energy Group kept $0.16.
- Revenue$8.32B100.0%
- Cost of revenue−$3.31B39.8%
- Gross profit$5.00B60.2%
- Operating costs−$3.29B39.6%
- Operating income$1.71B20.6%
- Interest, other & tax−$414.6M5.0%
- Net income$1.30B15.6%
Where FY2021 revenue went
$8.32B- Cost of revenue: $3.31B, 40% of revenue
- Operating costs: $3.29B, 40% of revenue
- Net income: $1.30B, 16% of revenue
- Interest, other & tax: $414.6M, 5.0% of revenue
Kept 16% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 24, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $8.32B$7.24B | +14.8% |
| Cost of Revenue | $3.31B$2.32B | +42.7% |
| Gross Profit | $5.00B$4.92B | +1.7% |
| Operating Expenses | $6.60B$5.54B | +19.2% |
| Operating Income | $1.71B$1.71B | +0.5% |
| Interest Expense | $471.10M$493.70M | −4.6% |
| Net Income | $1.30B$1.20B | +8.4% |
| EPS (Basic) | $4.12$3.80 | +8.4% |
| EPS (Diluted) | $4.11$3.79 | +8.4% |
| Shares Outstanding (Basic) | 315.40M315.40M | 0.0% |
| Shares Outstanding (Diluted) | 316.30M316.50M | −0.1% |
05—Questions
Frequently Asked Questions
What drove the increase in WEC Energy Group's 2021 earnings?
Net income attributed to common shareholders increased $100.4 million to $1,300.3 million. The largest contributors were a $55.9 million smaller loss at the corporate and other segment, largely from lower interest expense, an $18.4 million increase at the non-utility energy infrastructure segment on higher production tax credits, a $19.5 million increase at the Illinois segment from SMP investment under the QIP rider, and a $16.1 million increase at the Wisconsin segment from higher retail sales volumes and rate increases.
What is the company's capital spending outlook?
The company expects total capital expenditures of approximately $16.4 billion for its regulated utility and non-utility energy infrastructure businesses from 2022 to 2026, and forecasts its share of ATC's capital expenditures at $1.3 billion over the next five years. Estimated capital expenditures and acquisitions are $3,716.7 million for 2022, $3,181.6 million for 2023, and $3,157.3 million for 2024.
How is the company addressing its carbon emissions?
Under the ESG Progress Plan, the company announced goals in May 2021 to reduce carbon emissions from its electric generation fleet by 60% by 2025 and 80% by 2030 from a 2005 baseline, with a longer-term target of net-zero CO2 emissions by 2050. It has already retired more than 1,800 MW of coal-fired generation since the beginning of 2018 and expects to retire about 1,600 MW more by 2025, and it expects coal to be less than 5% of its power supply by the end of 2030.
What dividend does the company pay and how is it set?
On January 20, 2022, the Board increased the quarterly dividend to $0.7275 per share, an increase of 7.4%, equal to an annual dividend of $2.91 per share. The Board affirmed a dividend policy targeting a payout ratio of 65-70% of earnings, though payments remain subject to Board approval and to restrictions on subsidiary dividends to the parent.
What are the main risks flagged in the filing?
Key risks include rate case outcomes and recovery of prudently incurred costs, the expiration of the QIP rider after December 2023 without legislative extension, costs of environmental and greenhouse gas regulation, supply chain disruptions and inflation, capital project execution, access to capital markets and credit rating downgrades, and the potential for refunds related to ATC's allowed return on equity, for which a $39.1 million liability is recorded.
06—Continue