WEC Energy (WEC) Beats On Q2 Earnings, Misses Revenues

WEC Energy Group (NYSE:WEC) reported second-quarter 2016 adjusted earnings of 57 cents per share, 3.6% above the Zacks Consensus Estimate of 55 cents. However, quarterly earnings were down by a penny year over year.

Thanks to its long-term planning, operating efficiency and financial discipline, the company was able to deliver strong performance in the reported quarter.

GAAP earnings in the reported quarter were 57 cents per share compared with 35 cents recorded in the year ago quarter.

Total Revenue

WEC Energy’s total revenue was $1,602 million, lagging the Zacks Consensus Estimate of $2,131 million by 24.8%.

However, reported revenues surpassed the year-ago figure of $990 million by 61.8%. The increase was driven by additional revenues of $620 million from the Integrys acquisition.

Highlights of the Release

Residential use of electricity in second -quarter 2016 was up 7.7% year over year. Electricity used by small commercial and industrial customers increased 2.2%. Electricity used by large commercial and industrial customers – excluding the iron ore mines in Michigan's Upper Peninsula – was up 0.3%.

Total operating expenses in the quarter under review rose 53.8% year over year to $1,269.9 million, mainly due to higher operation and maintenance, depreciation and amortization expenses, and cost of sales.

Operating income in the reported quarter was $332.1 million, up 100.3% from $165.8 million a year ago.

The company’s net interest expenses in the second quarter increased 61.9% year over year to $100.1 million.

At the end of the second quarter, WEC Energy Group's utilities served an additional 38,000 customers from the same period a year ago. Wisconsin utilities added about 9,000 electric customers and 14,000 natural gas customers in the past year. The company's natural gas utilities in Illinois, Michigan and Minnesota added nearly 15,000 customers compared to the year-ago level.

Financial Position

As of Jun 31, 2016, WEC Energy had cash and cash equivalents of $32.1 million, compared with $49.8 million as of Dec 31, 2015.

As of Jun 31, 2016, WEC Energy had long-term debts of $8.9 billion, compared with $9.1 billion as of Dec 31, 2015.

In the first half of 2016, cash flow from operating activities was $1,224.1 million, substantially higher than $716.5 million in the year-ago period.

WEC Energy’s capital expenditure in the first half of 2016 was $618.7 million, 68% higher than the comparable year-ago period.

Upcoming Peer Releases

American Electric Power (NYSE:AEP) is set to report second-quarter 2016 results on Jul 28. The Zacks Consensus Estimate for the quarter stands at 90 cents per share.

CMS Energy (NYSE:CMS) is set to report second-quarter 2016 results on Jul 28. The Zacks Consensus Estimate for the quarter stands at 35 cents per share.

PG&E Corporation (NYSE:PCG) is set to report second-quarter 2016 results on Jul 28. The Zacks Consensus Estimate for the quarter stands at 94 cents per share.

Zacks Rank

WEC Energy Group currently has a Zacks Rank #3 (Hold).

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