10-QPeriod: Q3 FY2010

XCEL ENERGY INC Quarterly Report for Q3 Ended Sep 30, 2010

Filed October 29, 2010For Securities:XELXELLL

Summary

Xcel Energy Inc. reported solid financial results for the nine months ended September 30, 2010, with net income increasing to $619.2 million, or $1.34 per diluted share, from $512.0 million, or $1.11 per diluted share, in the same period of 2009. This growth was driven primarily by higher operating revenues, particularly in the electric segment, and the positive impact of warmer temperatures leading to increased electric sales. The company also benefited from rate increases across its service territories and a one-time $25 million settlement related to a discontinued Corporate Owned Life Insurance (COLI) program. Despite the overall positive performance, investors should note certain non-recurring items that impacted reported earnings. These include a tax expense related to the Patient Protection and Affordable Care Act and charges related to the COLI program's tax and interest reconciliation. The company has also provided earnings guidance for the remainder of 2010 and 2011, indicating expected continued growth, driven by operational efficiencies, regulatory approvals, and ongoing investments in infrastructure.

Financial Highlights

39 data points
Beta

Revenue

$2.63B

Net Income

$311.25M

11.8% Net Margin

EPS (Diluted)

$0.67

Total Assets

$26.30B

Cash & Equivalents

$223.61M

Free Cash Flow

$613.11M

Financial Statements
Beta
Revenue$2.63B
Operating Expenses$2.06B
Operating Income$568.63M
Interest Expense$144.85M
Net Income$311.25M
EPS (Basic)$0.68
EPS (Diluted)$0.67
Shares Outstanding (Basic)460.47M
Shares Outstanding (Diluted)462.02M

Key Highlights

  • 1Net income increased to $619.2 million for the nine months ended Sept. 30, 2010, up from $512.0 million in the prior year period.
  • 2Diluted earnings per share rose to $1.34 for the nine months ended Sept. 30, 2010, from $1.11 in the same period of 2009.
  • 3Total operating revenues grew to $7.74 billion for the nine months ended Sept. 30, 2010, compared to $7.03 billion in the prior year.
  • 4Electric revenues saw a significant increase, driven by warmer weather, rate adjustments, and increased sales.
  • 5The company received a $25 million settlement from Provident related to its discontinued COLI program, contributing to 'Other Income'.
  • 6Xcel Energy provided earnings guidance for 2010 and 2011, projecting continued growth.

Frequently Asked Questions

The primary driver of Xcel Energy's revenue growth was a significant increase in electric operating revenues. This was supported by factors such as warmer temperatures leading to higher electric sales, approved rate increases across its operating jurisdictions, and the timing of revenue collection due to the implementation of seasonal rates in some areas. Commodity price fluctuations had a minimal impact on electric margin due to cost recovery mechanisms.

Yes, there were a few notable items. The company received a $25 million settlement related to its discontinued COLI program, which boosted 'Other Income.' However, it also recorded a non-recurring tax expense of approximately $17 million due to the Patient Protection and Affordable Care Act (Medicare Part D subsidies) and a $10 million tax and interest charge related to the COLI program's tax and interest reconciliation. These items were detailed in the notes to the financial statements.

Xcel Energy provided guidance indicating a positive outlook. For 2010, the company expects 'ongoing earnings' per share to be in the upper half of the previously issued range of $1.55 to $1.65. For 2011, ongoing earnings per share are projected to be between $1.65 and $1.75. These projections are based on assumptions of normal weather patterns, modest sales growth, constructive regulatory outcomes, and planned increases in revenue recovery through riders.

Xcel Energy is subject to extensive regulation across its operating jurisdictions. Key matters include ongoing base rate proceedings, recovery of transmission and renewable energy costs through various riders, and compliance with evolving environmental regulations, particularly those related to greenhouse gas emissions. The company is also involved in significant legal proceedings, including environmental litigation and matters related to past gas trading activities, the outcomes of which are uncertain.