01—Abstract
Summary
Summary of the 10-K filed February 22, 2024. Cited figures are marked; the original filing is the authoritative source.
WEC Energy Group, Inc. reported 2023 net income attributed to common shareholders of $1,331.7 milliona, down from $1,408.1 million in 2022, and diluted earnings per share of $4.22 versus $4.45.
The decline was driven mainly by an $86.9 millionb decrease in Illinois segment earnings, largely due to an $178.9 million impairment tied to the ICC's November 2023 disallowance of previously incurred capital costs at PGL and NSG, and a $92.0 million increase in the corporate and other segment's net loss driven by higher interest expense. The Wisconsin segment offset part of this with a $92.9 million increase in net income to $851.3 million, reflecting the PSCW's 2023 rate orders, which took effect January 1, 2023. The company's capital plan is substantial.
WEC expects to invest $23.7 billionc under its ESG Progress Plan, including approximately $19.5 billion in regulated utility capital expenditures from 2024 to 2028, and forecasts 2024 total capital expenditures and acquisitions of $4.13 billion. The plan includes retiring roughly 1,800 MWs of additional fossil-fueled generation by 2031 and building renewable and natural gas-fired capacity. Operating cash flow rose to $3,018.4 million from $2,060.7 million, while financing activities provided $522.8 million, and total debt reached $18,797.9 million.
Current liabilities exceeded current assets by $2,319.1 milliond. The board increased the quarterly dividend to $0.835 per share in January 2024, an annual rate of $3.34, and continues to target a 65-70% payout ratio. The filing also notes ongoing regulatory uncertainty in Illinois, including the pause on SMP spending pending a proceeding expected to last twelve months, and the ICC's limited-scope rehearing whose decision is expected in the second quarter of 2024.
02—Key points
Key Highlights
- Net income attributed to common shareholders fell to $1,331.7 million from $1,408.1 million, and diluted EPS declined to $4.22 from $4.45.
- Illinois segment net income dropped $86.9 million to $140.0 million, driven by an $178.9 million impairment related to ICC disallowances of previously incurred PGL and NSG capital costs.
- Wisconsin segment net income rose $92.9 million to $851.3 million, reflecting PSCW rate orders effective January 1, 2023.
- Operating cash flow increased to $3,018.4 million from $2,060.7 million, driven largely by lower fuel and purchased power payments.
- Planned capital investment under the ESG Progress Plan totals $23.7 billion, including about $19.5 billion in regulated utility capital expenditures for 2024-2028.
- Quarterly dividend raised to $0.835 per share in January 2024 (annual $3.34), with a stated payout target of 65-70% of earnings.
- Total debt rose to $18,797.9 million, with a debt-to-total-capitalization ratio of 61.5% at December 31, 2023.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Wec Energy Group kept $0.15.
- Revenue$8.89B100.0%
- Cost of revenue−$3.19B35.9%
- Gross profit$5.70B64.1%
- Operating costs−$3.79B42.7%
- Operating income$1.91B21.5%
- Interest, other & tax−$576.3M6.5%
- Net income$1.33B15.0%
Where FY2023 revenue went
$8.89B- Operating costs: $3.79B, 43% of revenue
- Cost of revenue: $3.19B, 36% of revenue
- Net income: $1.33B, 15% of revenue
- Interest, other & tax: $576.3M, 6.5% of revenue
Kept 15% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 22, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $8.89B$9.60B | −7.3% |
| Cost of Revenue | $3.19B$4.36B | −26.8% |
| Gross Profit | $5.70B$5.24B | +8.8% |
| Operating Expenses | $6.99B$7.67B | −9.0% |
| Operating Income | $1.91B$1.92B | −0.8% |
| Interest Expense | $726.90M$515.10M | +41.1% |
| Net Income | $1.33B$1.41B | −5.4% |
| EPS (Basic) | $4.22$4.46 | −5.4% |
| EPS (Diluted) | $4.22$4.45 | −5.2% |
| Shares Outstanding (Basic) | 315.40M315.40M | 0.0% |
| Shares Outstanding (Diluted) | 315.90M316.10M | −0.1% |
05—Questions
Frequently Asked Questions
Why did earnings decline in 2023 despite higher Wisconsin utility results?
The Illinois segment's net income fell $86.9 million, mainly due to a $178.9 million impairment from the ICC's November 2023 disallowance of certain PGL and NSG capital costs. The corporate and other segment's net loss also widened by $92.0 million, driven by higher interest expense on long-term and short-term debt, which offset the $92.9 million gain in the Wisconsin segment.
What is the status of the Illinois SMP spending pause?
In November 2023 the ICC ordered PGL to pause SMP spending until it completes a proceeding on the optimal pipeline replacement method and a prudent investment level. The ICC initiated that proceeding on January 31, 2024, and it is expected to last twelve months. A limited-scope rehearing was granted on January 3, 2024, with a decision expected in the second quarter of 2024, and the company anticipates appealing the disallowance to the Illinois circuit court.
How large is the company's planned capital spending?
The ESG Progress Plan totals $23.7 billion. The filing projects regulated utility capital expenditures of approximately $19.5 billion from 2024 to 2028, approximately $3 billion for the company's share of ATC capital expenditures over five years, and approximately $1.2 billion in non-utility energy infrastructure over the same period. Total projected capital expenditures and acquisitions are $4,130.5 million for 2024.
What are the company's dividend commitments?
On January 18, 2024, the Board increased the quarterly dividend to $0.835 per share, an increase of 7% and an annual rate of $3.34 per share. The Board affirmed a dividend policy targeting a payout ratio of 65-70% of earnings. Dividends paid on common stock totaled $984.2 million in 2023.
What drove the improvement in operating cash flow?
Operating cash flow increased $957.7 million to $3,018.4 million. The largest factor was a $1.54 billion increase in cash from lower payments for fuel and purchased power and lower natural gas costs. These gains were partly offset by a $403.7 million decrease from collateral paid to counterparties and realized derivative losses, and a $168.2 million increase in interest payments.
06—Continue