01—Abstract
Summary
Summary of the 10-Q filed May 3, 2024. Cited figures are marked; the original filing is the authoritative source.
WEC Energy Group, Inc. reported net income attributed to common shareholders of $622.3 milliona, or $1.97 per diluted share, for the three months ended March 31, 2024, compared with $507.5 million, or $1.61 per diluted share, in the same period of 2023.
Operating revenues were $2,680.2 millionb versus $2,888.1 million a year earlier, with lower natural gas costs passed through to customers driving the decline. The increase in earnings was driven mainly by the Illinois segment, where net income attributed to common shareholders rose $74.4 million to $187.5 million following the PGL and NSG rate orders effective December 1, 2023 and February 1, 2024. The company's ESG Progress Plan for 2024-2028 totals $23.7 billion, including about $19.5 billion of regulated utility capital expenditures and roughly $1.2 billion in non-utility energy infrastructure investment.
Cash provided by operating activities was $863.6 millionc, and total capital expenditures were $444.5 million for the quarter. Short-term debt rose to $2,574.2 million, with commercial paper outstanding of $2,570.0 million, and the debt-to-total-capitalization ratio was 60.5% on an actual basis. Several regulatory matters remain pending.
The ICC has paused PGL's SMP spending pending a proceeding that began January 31, 2024, and a limited-scope rehearing decision is expected by June 1, 2024. Wisconsin utilities filed 2025 and 2026 rate increase requests, and PGL's and NSG's UEA and QIP rider reconciliations remain open, with disallowances, if any, potentially material.
02—Key points
Key Highlights
- Net income attributed to common shareholders rose to $622.3 million ($1.97 diluted EPS) from $507.5 million ($1.61 diluted EPS) in the first quarter of 2023, an increase of $114.8 million.
- Illinois segment net income increased $74.4 million to $187.5 million, driven by the PGL and NSG rate orders, with SMP costs moved from the QIP rider into base rates.
- Operating revenues declined to $2,680.2 million from $2,888.1 million, as natural gas costs passed through to customers fell; the average per-unit cost of natural gas decreased approximately 36% at the Wisconsin segment.
- Capital expenditures were $444.5 million in the quarter, and the company projects $19.5 billion of regulated utility capital expenditures from 2024 to 2028 within a $23.7 billion ESG Progress Plan.
- Short-term debt increased to $2,574.2 million, and the company retired $756.9 million of long-term debt during the quarter; the April 2024 quarterly dividend was declared at $0.835 per share.
- The PGL and NSG rate orders disallowed $236.2 million and $1.7 million of capital costs; a $178.9 million non-cash impairment was recorded in Q4 2023, and an ICC rehearing decision is expected by June 1, 2024.
- WE, WPS, and WG filed requests in April 2024 for 2025 and 2026 rate increases, with a decision expected in the fourth quarter of 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Wec Energy Group kept $0.23.
- Revenue$2.68B100.0%
- Cost of revenue−$927.1M34.6%
- Gross profit$1.75B65.4%
- Operating costs−$939.7M35.1%
- Operating income$813.4M30.3%
- Interest, other & tax−$191.1M7.1%
- Net income$622.3M23.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 3, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $2.68B$2.89B | −7.2% |
| Cost of Revenue | $927.10M$1.31B | −29.2% |
| Gross Profit | $1.75B$1.58B | +11.1% |
| Operating Expenses | $1.87B$2.22B | −15.9% |
| Operating Income | $813.40M$669.30M | +21.5% |
| Interest Expense | $192.00M$172.20M | +11.5% |
| Net Income | $622.30M$507.50M | +22.6% |
| EPS (Basic) | $1.97$1.61 | +22.4% |
| EPS (Diluted) | $1.97$1.61 | +22.4% |
| Shares Outstanding (Basic) | 315.60M315.40M | +0.1% |
| Shares Outstanding (Diluted) | 315.90M315.90M | 0.0% |
05—Questions
Frequently Asked Questions
How did WEC Energy's earnings change in the first quarter of 2024?
Net income attributed to common shareholders increased $114.8 million to $622.3 million, or $1.97 per diluted share, compared with $507.5 million, or $1.61 per diluted share, in the first quarter of 2023. The Illinois segment contributed the largest increase, at $74.4 million, followed by the corporate and other segment at $19.2 million and the Wisconsin segment at $9.2 million.
What drove the increase in Illinois segment earnings?
The increase was driven by higher natural gas margins from the ICC rate orders for PGL and NSG, effective December 1, 2023 and February 1, 2024. SMP costs previously recovered under PGL's QIP rider are now included in base rates, and because base revenues are concentrated in winter months, this shift produced a large increase in first quarter margins.
What are the main regulatory risks to investors?
The ICC has ordered PGL to pause SMP spending pending a proceeding that began January 31, 2024, and granted a limited-scope rehearing. Reconciliations of PGL's QIP rider (annual costs of $192 million to $348 million) and PGL's and NSG's UEA rider remain pending, and the filing states that disallowances, if any, could be material and have a material adverse impact on results of operations.
How much capital does the company plan to invest?
The company expects total capital expenditures for its regulated utility businesses of approximately $19.5 billion from 2024 to 2028, about $1.2 billion in non-utility energy infrastructure over the same period, and a share of ATC's projected capital expenditures of approximately $3 billion. These are within the $23.7 billion ESG Progress Plan.
How did the company's debt position change?
Short-term debt increased to $2,574.2 million at March 31, 2024, from $2,020.9 million at December 31, 2023, as commercial paper was used to repay $600.0 million of 0.80% Senior Notes that matured in March 2024. The debt-to-total-capitalization ratio was 60.5% on an actual basis and 59.9% on the adjusted basis that treats the 2007 Junior Notes as the majority of rating agencies do.
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