MGE Energy Reports Fourth-Quarter and Full-Year 2023 Earnings

Rhea-AI Summary

MGE Energy, Inc. (MGEE) reported strong financial results for Q4 and full year 2023, with GAAP earnings of $117.7 million, or $3.25 per share, compared to $111.0 million, or $3.07 per share, in the prior year. Investments in renewable generation fueled asset growth, leading to increased electric earnings. Gas retail therm deliveries decreased due to warmer weather, impacting gas net income. Operating revenues for Q4 2023 were $164.7 million, down from $189.8 million in 2022.

Insights

Financial Analyst

The reported increase in MGE Energy's GAAP earnings for the full year of 2023, rising to $117.7 million from $111.0 million the previous year, indicates a positive trajectory in the company's financial performance. The earnings per share (EPS) growth from $3.07 to $3.25 reflects effective cost management and successful investments in renewable generation assets. This performance could be attractive to investors seeking companies with a focus on sustainable energy and consistent growth in EPS.

However, the decrease in gas retail therm deliveries, notably a 13% drop year-over-year, suggests vulnerability to weather-related demand fluctuations. This is a critical factor for investors to consider, as it highlights the potential volatility in earnings from the gas segment of the business. The completion of renewable projects like the Red Barn wind and Badger Hollow II solar projects is a strategic move, potentially offsetting some of the risks associated with the gas business and aligning with global trends towards renewable energy investments.

Energy Market Analyst

The completion of the Red Barn wind project and the Badger Hollow II solar project in 2023 is significant for MGE Energy's strategic positioning in the renewable energy market. Transitioning towards more cost-effective renewable generation is not only beneficial for the company's asset growth but also aligns with regulatory trends and consumer demand for greener energy sources. This shift could improve the company's long-term valuation and market position as investors increasingly look for environmentally responsible investment opportunities.

However, the reported decrease in gas consumption by commercial, industrial and residential customers could signal a broader trend of energy efficiency and a shift away from natural gas. This could have implications for MGE Energy's traditional gas business, necessitating a continued focus on diversifying and expanding renewable energy offerings to maintain revenue stability and growth.

Climate Impact Analyst

The reported warmer-than-normal weather contributing to a decrease in gas sales underscores the increasing impact of climate variability on energy companies. MGE Energy's experience reflects a broader industry challenge where traditional energy demand forecasting becomes less predictable in the face of climate change. Companies that proactively invest in renewable energy sources, as MGE Energy has done, may be better insulated against such uncertainties.

The move towards renewables is not only a strategic business decision but also a response to the growing societal and regulatory pressures to address climate change. The completion of new renewable projects and the associated asset growth may enhance MGE Energy's reputation as a forward-thinking, environmentally responsible company, which could be beneficial for stakeholder relations and long-term brand value.

MADISON, Wis.--(BUSINESS WIRE)-- MGE Energy, Inc. (Nasdaq: MGEE), today reported financial results for the fourth quarter and full year of 2023.

MGE Energy's GAAP (Generally Accepted Accounting Principles) earnings for the full year of 2023 were $117.7 million, or $3.25 per share, compared to $111.0 million, or $3.07 per share, for the same period in the prior year.

MGE continues to invest in new, cost-effective renewable generation, which is helping to fuel the company's asset growth. An increase in electric investments included in rate base contributed to increased electric earnings for 2023. The Red Barn wind project was completed in April 2023 and Badger Hollow II solar project was completed in December 2023.

During 2023, gas retail therm deliveries decreased approximately 13% compared to the prior year, primarily due to warmer-than-normal weather in 2023. Gas use by commercial and industrial customers was approximately 10% lower during 2023, and residential gas consumption decreased by approximately 15%.

MGE Energy's earnings for the fourth quarter of 2023 were $20.1 million, or 55 cents per share, compared to $21.1 million, or 58 cents per share, for the same period in the prior year. Gas net income decreased $1.9 million in the fourth quarter of 2023 compared to the same period in the prior year as a result of lower gas sales. During the fourth quarter of 2023, gas retail therm deliveries decreased approximately 15% compared to the fourth quarter of 2022, primarily due to warmer-than-normal weather in 2023.

MGE Energy, Inc.
(In thousands, except per-share amounts)
(Unaudited)
Three Months Ended December 31,		2023				2022
Operating revenues		$	164,652			$	189,833
Operating income		$	24,169			$	27,935
Net income		$	20,083			$	21,051
Earnings per share - basic		$	0.55			$	0.58
Earnings per share - diluted		$	0.55			$	0.58
Weighted average shares outstanding - basic			36,163				36,163
Weighted average shares outstanding - diluted			36,192				36,176
Year Ended December 31,		2023				2022
Operating revenues		$	690,431			$	714,519
Operating income		$	146,385			$	137,743
Net income		$	117,699			$	110,952
Earnings per share - basic		$	3.25			$	3.07
Earnings per share - diluted		$	3.25			$	3.07
Weighted average shares outstanding - basic			36,163				36,163
Weighted average shares outstanding - diluted			36,186				36,174

About MGE Energy

MGE Energy is a public utility holding company. Its principal subsidiary, Madison Gas and Electric, generates and distributes electricity to 163,000 customers in Dane County, Wis., and purchases and distributes natural gas to 176,000 customers in seven south-central and western Wisconsin counties. MGE's roots in the Madison area date back more than 150 years.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements are based on MGE Energy's current expectations, estimates and assumptions regarding future events, which are inherently uncertain. We caution you not to place undue reliance on any forward-looking statements, which are made as of the date of this press release. We undertake no obligation to revise or update publicly any such forward-looking statements to reflect any change in expectations or in events, conditions or circumstances on which any such statements may be based. For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to our business in general, please refer to the "Risk Factors" sections in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240221666232/en/

Steve B. Schultz

Media Relations

608-252-7219 | sbschultz@mge.com

Ken Frassetto

Investor Relations

608-252-4723 | kfrassetto@mge.com

Source: MGE Energy, Inc.

FAQ

What were MGE Energy's GAAP earnings for the full year of 2023?

MGE Energy reported GAAP earnings of $117.7 million for the full year of 2023.

How did MGE Energy's earnings per share in 2023 compare to the prior year?

In 2023, MGE Energy's earnings per share were $3.25, higher than the $3.07 per share in the prior year.

What projects did MGE Energy complete in 2023?

MGE Energy completed the Red Barn wind project in April 2023 and the Badger Hollow II solar project in December 2023.

Why did gas retail therm deliveries decrease in 2023?

Gas retail therm deliveries decreased in 2023 primarily due to warmer-than-normal weather.

How did MGE Energy's net income for the fourth quarter of 2023 compare to the same period in the prior year?

MGE Energy's net income for the fourth quarter of 2023 was $20.1 million, lower than the $21.1 million in the same period in the prior year.