Minneapolis-based Xcel Energy Inc (NYSE:XEL) recorded operating earnings of 46 cents per share in the first quarter of 2015, missing the Zacks Consensus Estimate of 50 cents by 8%. Quarterly earnings also declined 11.5% from the year-ago figure due to lower revenue contribution from electric and natural gas sales.
On a GAAP basis, quarterly earnings were 30 cents per share. The variance between operating and GAAP earnings was due to a 16 cent loss from the Monticello project.
Total Revenue
Xcel Energy’s first-quarter revenues of $2,962.2 million also lagged the Zacks Consensus Estimate of $3,258 million by 9.1% and dropped 7.5% year over year. Lower revenues were largely due to a much milder winter this quarter as compared to a precipitous drop in temperatures in the year-ago period.
Segment Revenue
Electric: Revenues from this segment in the quarter declined 3.3% year over year to $2,224.9 million.
Natural Gas: Quarterly revenues from the Natural Gas business also decreased 18.6% to nearly $716 million.
Other: Segment revenues of $21.4 million in the reported quarter increased a marginal 0.7% from the year-ago period.
Quarterly Highlights
Total operating expenses decreased 3.6% year over year to $2,611.4 million. The costs shrunk primarily due to cost of natural gas sold and transported and reduced expenses from electric fuel and purchased power.
Operating income for the quarter inched plunged nearly 29% year over year to $350.8 million.
Total interest charges and financing costs, after Allowance for funds used during construction ("AFUDC"), increased 7.2% year over year at the end of the first quarter of 2015 to $138.8 million.
Financial Update
Total debt as of Mar 31, 2015, was $12.7 billion out of which long-term debt was $11.5 billion.
In 2015, Xcel Energy plans to issue $500 million of senior unsecured bond. The company’s four subsidiaries collectively expect to issue first mortgage bonds worth $1,200 million.
2015 Guidance
Xcel Energy reiterated its 2015 earnings guidance in the range of $2.00–$2.15 per share.
On a weather-normalized basis, the company expects retail electric utility sales to increase 1% and natural gas sales to increase in the range of 0–1%.
Various operating expenses such as depreciation expense, property taxes and interest expense are expected to rise over 2014 levels.
The company anticipates delivering long-term annual earnings per share growth of 4–6% and targets a dividend payout ratio between 60–70%.
Other Utility Releases
American Electric Power Company Inc (NYSE:AEP) reported first-quarter 2015 operating earnings of $1.28 per share, beating the Zacks Consensus Estimate of $1.11 by 15.3%.
DTE Energy (NYSE:DTE) reported first-quarter 2015 operating earnings per share of $1.65, beating the Zacks Consensus Estimate of $1.49 by 10.7%.
NextEra Energy (NYSE:NEE) announced first-quarter 2015 adjusted earnings of $1.41 per share, beating the Zacks Consensus Estimate of $1.28 by 10.2%.
Our View
Owing to fluctuating weather patterns, the financial results of these utilities also tend to be volatile. Xcel Energy’s first-quarter 2015 results failed to impress with both earnings and revenues missing expectations.
In early 2015, Xcel Energy filed a resource plan with the Minnesota Public Utilities Commission proposing to reduce carbon emissions by 30% by 2020 and 40% by 2030. These aggressive targets will not only help in meeting state mandates but also assist the company in providing clean energy and reliable services to its customers.
Xcel Energy currently carries a Zacks Rank #3 (Hold).