Xcel Energy Second Quarter 2013 Earnings Report

Xcel Energy Second Quarter 2013 Earnings Report

  • 2013 second quarter earnings per share were $0.40 compared with $0.38 per share in 2012.

  • Xcel Energy reaffirms 2013 earnings guidance of $1.85 to $1.95 per share.

MINNEAPOLIS--(BUSINESS WIRE)-- Xcel Energy Inc. (NYS: XEL) today reported 2013 second quarter earnings of $197 million, or $0.40 per share, compared with 2012 earnings of $183 million, or $0.38 per share.

Second quarter 2013 earnings were favorably impacted by increased electric and natural gas margins. The increase in electric margin was mainly due to rate increases in Colorado, Wisconsin, South Dakota and Texas, along with interim rate increases, subject to refund, in Minnesota and North Dakota. Natural gas margins were positively impacted by cooler weather compared with the second quarter of last year. These positive drivers were partially offset by higher operating and maintenance expenses and depreciation and amortization, reflecting our continued infrastructure investment in our utility business.


"In addition to a solid quarter financially, we continued to demonstrate our strong operational capabilities," said Ben Fowke, Chairman, President and Chief Executive Officer. "In June, Minnesota experienced several severe thunderstorms which impacted more than 600,000 of our customers. We coordinated a workforce of 1,100 linemen from 14 states and several hundred support personnel to handle the state's record electrical outage. As a result, power was restored to 96 percent of our customers within three days. I'm proud of all the workers who labored tirelessly to complete this effort in an orderly, safe and timely fashion."

"Regarding developments in our Minnesota electric rate case, the Administrative Law Judge's recommendation provided for approximately $127 million in revenue, well below our request," stated Fowke. "However, the ALJ also recommended approximately $34 million in additional cost deferrals. The additional deferrals combined with favorable weather and certain other items position Xcel Energy to deliver 2013 earnings within the guidance range of $1.85 to $1.95 per share."

At 10:00 a.m. CDT today, Xcel Energy will host a conference call to review financial results. To participate in the call, please dial in 5 to 10 minutes prior to the start and follow the operator's instructions.

US Dial-In:

(877) 941-6009

International Dial-In:

(480) 629-9722

Conference ID:

4628633

The conference call also will be simultaneously broadcast and archived on Xcel Energy's website at www.xcelenergy.com. To access the presentation, click on Investor Relations. If you are unable to participate in the live event, the call will be available for replay from 2:00 p.m. CDT on Aug. 1 through 11:59 p.m. CDT on Aug. 2.

Replay Numbers

US Dial-In:

(800) 406-7325

International Dial-In:

(303) 590-3030

Access Code:

4628633#

Except for the historical statements contained in this release, the matters discussed herein, are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements, including our 2013 earnings per share guidance and assumptions, are intended to be identified in this document by the words "anticipate," "believe," "estimate," "expect," "intend," "may," "objective," "outlook," "plan," "project," "possible," "potential," "should" and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date. Factors that could cause actual results to differ materially include, but are not limited to: general economic conditions, including inflation rates, monetary fluctuations and their impact on capital expenditures and the ability of Xcel Energy Inc. and its subsidiaries (collectively, Xcel Energy) to obtain financing on favorable terms; business conditions in the energy industry, including the risk of a slow down in the U.S. economy or delay in growth recovery; trade, fiscal, taxation and environmental policies in areas where Xcel Energy has a financial interest; customer business conditions; actions of credit rating agencies; competitive factors, including the extent and timing of the entry of additional competition in the markets served by Xcel Energy Inc. and its subsidiaries; unusual weather; effects of geopolitical events, including war and acts of terrorism; state, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, have an impact on rates or have an impact on asset operation or ownership or impose environmental compliance conditions; structures that affect the speed and degree to which competition enters the electric and natural gas markets; costs and other effects of legal and administrative proceedings, settlements, investigations and claims; actions by regulatory bodies impacting our nuclear operations, including those affecting costs, operations or the approval of requests pending before the Nuclear Regulatory Commission; financial or regulatory accounting policies imposed by regulatory bodies; availability or cost of capital; employee work force factors; and the other risk factors listed from time to time by Xcel Energy in reports filed with the Securities and Exchange Commission (SEC), including Risk Factors in Item 1A and Exhibit 99.01 of Xcel Energy Inc.'s Annual Report on Form 10-K for the year ended Dec. 31, 2012 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.

This information is not given in connection with any sale, offer for sale or offer to buy any security.

XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(amounts in thousands, except per share data)

Three Months Ended June 30

Six Months Ended June 30

2013

2012

2013

2012

Operating revenues

Electric

$

2,219,877

$

2,036,829

$

4,312,073

$

3,973,611

Natural gas

341,321

221,313

1,010,917

842,348

Other

17,715

16,526

38,772

36,788

Total operating revenues

2,578,913

2,274,668

5,361,762

4,852,747

Operating expenses

Electric fuel and purchased power

1,011,044

854,373

1,936,087

1,718,353

Cost of natural gas sold and transported

188,765

89,759

628,140

507,705

Cost of sales — other

7,881

5,944

16,292

13,248

Operating and maintenance expenses

562,557

534,014

1,091,788

1,044,698

Conservation and demand side management program expenses

60,445

58,615

124,477

122,322

Depreciation and amortization

243,934

226,641

492,640

455,313

Taxes (other than income taxes)

102,051

99,632

215,478

205,256

Total operating expenses

2,176,677

1,868,978

4,504,902

4,066,895

Operating income

402,236

405,690

856,860

785,852

Other income, net

413

728

4,335

4,465

Equity earnings of unconsolidated subsidiaries

7,529

7,502

15,106

14,660

Allowance for funds used during construction — equity

22,109

15,194

41,863

28,644

Interest charges and financing costs

Interest charges — includes other financing costs of $12,229, $6,036, $18,038 and $12,116, respectively

146,828

151,921

286,441

303,751

Allowance for funds used during construction — debt

(10,316

)

(7,683

)

(19,074

)

(14,290

)

Total interest charges and financing costs

136,512

144,238

267,367

289,461

Income from continuing operations before income taxes

295,775

284,876

650,797

544,160

Income taxes

98,893

101,801

217,327

177,316

Income from continuing operations

196,882

183,075

433,470

366,844

(Loss) income from discontinued operations, net of tax

(25

)

(15

)

(43

)

109

Net income

$

196,857

$

183,060

$

433,427

$

366,953

Weighted average common shares outstanding:

Basic

497,747

487,717

493,786

487,538

Diluted

498,036

488,017

494,303

488,006

Earnings per average common share:

Basic

$

0.40

$

0.38

$

0.88

$

0.75

Diluted

0.40

0.38

0.88

0.75

Cash dividends declared per common share

$

0.28

$

0.27

$

0.55

$

0.53

XCEL ENERGY INC. AND SUBSIDIARIES
Notes to Investor Relations Earnings Release (Unaudited)

Due to the seasonality of Xcel Energy's operating results, quarterly financial results are not an appropriate base from which to project annual results.

The only common equity securities that are publicly traded are common shares of Xcel Energy Inc. The earnings and earnings per share (EPS) of each subsidiary discussed below do not represent a direct legal interest in the assets and liabilities allocated to such subsidiary but rather represent a direct interest in our assets and liabilities as a whole. EPS by subsidiary is a financial measure not recognized under generally accepted accounting principles (GAAP) that is calculated by dividing the net income or loss attributable to the controlling interest of each subsidiary by the weighted average fully diluted Xcel Energy Inc. common shares outstanding for the period. We use this non-GAAP financial measure to evaluate and provide details of earnings results. We believe that this measurement is useful to investors to evaluate the actual and projected financial performance and contribution of our subsidiaries. This non-GAAP financial measure should not be considered as an alternative to our consolidated fully diluted EPS determined in accordance with GAAP as an indicator of operating performance.

Note 1.Earnings Per Share Summary

The following table summarizes the diluted earnings per share for Xcel Energy:

Three Months Ended June 30

Six Months Ended June 30

Diluted Earnings (Loss) Per Share

2013

2012

2013

2012

Public Service Company of Colorado (PSCo)

$

0.20

$

0.20

$

0.43

$

0.39

NSP-Minnesota

0.16

0.13

0.37

0.29

Southwestern Public Service Company (SPS)

0.05

0.06

0.08

0.08

NSP-Wisconsin

0.02

0.01

0.06

0.04

Equity earnings of unconsolidated subsidiaries

0.01

0.01

0.02

0.02

Regulated utility — continuing operations (a)

0.44

0.41

0.96

0.82

Xcel Energy Inc. and other costs

(0.04

)

(0.03

)

(0.08

)

(0.07

)

GAAP diluted earnings per share

$

0.40

$

0.38

$

0.88

$

0.75

(a)

See Note 2.

PSCo — PSCo's earnings were flat for the second quarter of 2013 and increased $0.04 per share for the six months ended June 30, 2013. Higher electric and natural gas margins and lower interest charges were offset by higher depreciation and operating and maintenance (O&M) expenses. Higher margins resulted from electric rate increases, effective May 2012 and January 2013, and increased natural gas margins due to cooler weather compared to the prior year.

NSP-Minnesota — NSP-Minnesota's earnings increased $0.03 per share for the second quarter of 2013 and $0.08 per share for the six months ended June 30, 2013. Earnings were positively impacted by the Minnesota and North Dakota interim electric rates, subject to refund, an electric rate increase in South Dakota and lower interest charges. Further, natural gas margins increased due to cooler weather which contributed approximately $0.01 per share and $0.04 per share for the three and six month periods, respectively. These factors were partially offset by higher O&M expenses and depreciation.

SPS — SPS' earnings decreased $0.01 per share for the second quarter of 2013 and were flat for the six months ended June 30, 2013. Rate increases in Texas, effective May 2013, did not fully offset higher O&M expenses, depreciation and interest charges.

NSP-Wisconsin — NSP-Wisconsin's earnings increased $0.01 per share for the second quarter of 2013 and $0.02 per share for the six months ended June 30, 2013. Higher earnings from electric and gas rates, effective January 2013, and the effect of cooler weather were partially offset by higher depreciation and O&M expenses.

The following table summarizes significant components contributing to the changes in 2013 EPS compared with the same period in 2012, which are discussed in more detail later in the release:

Three Months

Six Months

Diluted Earnings (Loss) Per Share

Ended June 30

Ended June 30

2012 GAAP diluted earnings per share

$

0.38

$

0.75

Components of change — 2013 vs. 2012

Higher electric margins

0.03

0.15

Higher natural gas margins

0.03

0.06

Higher AFUDC - Equity

0.01

0.03

Lower interest charges

0.01

0.02

Lower effective tax rate

0.01

-

Higher taxes (other than income taxes)

-

(0.01

)

Higher operating and maintenance expenses

(0.04

)

(0.06

)

Higher depreciation and amortization

(0.02

)

(0.05

)

Dilution from direct stock purchase plan and benefit plans

(0.01

)

(0.01

)

2013 GAAP diluted earnings per share

$

0.40

$

0.88

Note 2.Regulated Utility Results — Continuing Operations

Estimated Impact of Temperature Changes on Regulated Earnings — Unusually hot summers or cold winters increase electric and natural gas sales while, conversely, mild weather reduces electric and natural gas sales. The estimated impact of weather on earnings is based on the number of customers, temperature variances and the amount of natural gas or electricity the average customer historically uses per degree of temperature. Accordingly, deviations in weather from normal levels can affect Xcel Energy's financial performance, from both an energy and demand perspective.

Degree-day or Temperature-Humidity Index (THI) data is used to estimate amounts of energy required to maintain comfortable indoor temperature levels based on each day's average temperature and humidity. Heating degree-days (HDD) is the measure of the variation in the weather based on the extent to which the average daily temperature falls below 65° Fahrenheit, and cooling degree-days (CDD) is the measure of the variation in the weather based on the extent to which the average daily temperature rises above 65° Fahrenheit. Each degree of temperature above 65° Fahrenheit is counted as one cooling degree-day, and each degree of temperature below 65° Fahrenheit is counted as one heating degree-day. In Xcel Energy's more humid service territories, a THI is used in place of CDD, which adds a humidity factor to CDD. HDD, CDD and THI are most likely to impact the usage of Xcel Energy's residential and commercial customers. Industrial customers are less sensitive to weather.

Normal weather conditions are defined as either the 20-year or 30-year average of actual historical weather conditions. The historical period of time used in the calculation of normal weather differs by jurisdiction based on the time period used by the regulator in establishing estimated volumes in the rate setting process. To calculate the impact of weather on demand, a demand factor is applied to the weather impact on sales as defined above to derive the amount of demand associated with the weather impact.

The percentage increase (decrease) in normal and actual HDD, CDD and THI are provided in the following table:

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