OGE Energy Corp. reports 2023 results and outlook for 2024
- OGE Energy Corp. reported earnings of $2.07 per diluted share in 2023, down from $3.32 in 2022.
- OG&E contributed $2.12 per diluted share in 2023, compared to $2.19 in 2022.
- Other operations resulted in a loss of $0.05 per diluted share in 2023, an increase from a loss of $0.03 in 2022.
- The company forecasts consolidated earnings of $2.12 per average diluted share for 2024, with a focus on consistent growth and long-term shareholder value.
- Net income decreased primarily due to milder weather, higher expenses, and lower revenues in 2023 compared to 2022.
- Other operations reported increased losses in 2023 due to higher interest expenses.
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Insights
The reported earnings of OGE Energy Corp. reflect a notable decrease from $3.32 to $2.07 per diluted share year-over-year. This decline is primarily attributed to the absence of income from natural gas midstream operations after the company's strategic exit from that segment. The sale of Energy Transfer units in the previous year was a significant contributor to earnings and its one-time nature should be accounted for when analyzing the company's ongoing performance.
Furthermore, the reported decrease in net income for OG&E is due to a combination of milder weather, higher depreciation and increased operation and maintenance expenses. These factors are crucial as they suggest a rise in costs that could affect future profitability if not managed effectively. The guidance for 2024, with a midpoint of $2.12 per diluted share, suggests stability in the company's outlook, but it's imperative to monitor whether the cost management strategies and capital investment recovery will offset the rising expenses.
For investors and stakeholders, the consistency in dividend payments, with the latest declaration, indicates a commitment to shareholder returns. However, the growth rate target of five to seven percent for consolidated earnings per share should be examined against the backdrop of the company's operational challenges and strategic investments in infrastructure.
OGE Energy Corp.'s focus on leveraging low customer rates and investing in infrastructure projects is a strategic move within the energy sector. By targeting the economic vitality of Oklahoma and Arkansas, the company is positioning itself to capitalize on regional growth. The emphasis on strong load growth is particularly significant, as it indicates the company's anticipation of increased demand for electricity. This could potentially lead to higher revenue streams and enhanced stability in their financial performance.
However, the energy sector is highly sensitive to external factors such as weather conditions, regulatory changes and market dynamics. The reported milder weather impacting OG&E's earnings is a testament to this volatility. As OGE Energy continues to divest from natural gas midstream operations and focuses on its regulated electric utility, the company's risk profile may change, potentially affecting its stock valuation and investor sentiment.
The reported earnings and financial guidance of OGE Energy Corp. provide insight into the company's market positioning and potential for growth. The company's target for a consistent growth rate in earnings per share is an important metric for investors, as it suggests a strategic vision for steady expansion. This is further supported by the company's investment in lower-risk infrastructure projects, which may enhance long-term shareholder value.
It is critical to assess the company's performance within the broader context of the utility market, where competition and regulatory frameworks play significant roles. The ability of OGE Energy to maintain low customer rates while investing in infrastructure could be a key differentiator in a competitive landscape. The projected earnings growth, coupled with a commitment to dividends, may make the company attractive to investors seeking stability in a traditionally conservative sector.
- OG&E, a regulated electric company, contributed earnings of
$2.12 $2.19 - Other operations, which includes the holding company, contributed a loss of
$0.05 $0.03
"In 2023, our team delivered outstanding results as we provided safe and reliable electricity to our customers," said Sean Trauschke, Chairman, President and CEO of OGE Energy Corp. "The fundamentals of our business are strong and our sustainable business model to leverage our low rates and excellent service drives economic growth in
Discussion of 2023 Results
OG&E contributed net income of
Other Operations resulted in a loss of
OGE Energy's net income was
Fourth Quarter Results
For the three months ended December 31, 2023, OGE Energy reported net income of
2024 Outlook and Consolidated Earnings per Share Growth Rate
The midpoint of OGE Energy's consolidated earnings guidance for 2024 is
The guidance assumes, among other things, approximately 201.5 million average diluted shares outstanding and normal weather for the remainder of the year. OG&E has significant seasonality in its earnings due to weather on a year over year basis.
OGE Energy is focused on creating long‐term shareholder value by targeting the consistent growth of consolidated earnings per share of five to seven percent, supported by strong load growth enabled by low customer rates and a strategy of investing in lower risk infrastructure projects that improve the economic vitality of the communities it serves in
More information regarding the Company's financial results, 2024 earnings guidance and consolidated earnings per share growth rate is contained in the Company's Form 10-K filed with the Securities and Exchange Commission.
Dividend Declared
On February 19, 2024, the Company's Board of Directors approved a second quarter dividend of
Conference Call Webcast
OGE Energy Corp. will host an earnings and business update on Wednesday, February 21, 2024, at 8 a.m. CST. The conference will be available through the Investor Center at www.oge.com.
OGE Energy Corp. is the parent company of OG&E, a regulated electric company with approximately 896,000 customers in
Some of the matters discussed in this news release may contain forward-looking statements that are subject to certain risks, uncertainties, and assumptions. Such forward-looking statements are intended to be identified in this document by the words "anticipate," "believe," "estimate," "expect," "forecast," "intend," "objective," "plan," "possible," "potential," "project," "target" and similar expressions. Actual results may vary materially. Factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to: general economic conditions, including the availability of credit, access to existing lines of credit, access to the commercial paper markets, actions of rating agencies and inflation rates, and their impact on capital expenditures; the ability of the Company and its subsidiary to access the capital markets and obtain financing on favorable terms, as well as inflation rates and monetary fluctuations; the ability to obtain timely and sufficient rate relief to allow for recovery of items such as capital expenditures, fuel and purchased power costs, operating costs, transmission costs and deferred expenditures; prices and availability of electricity, coal and natural gas; competitive factors, including the extent and timing of the entry of additional competition in the markets served by the Company, potentially through deregulation; the impact on demand for services resulting from cost-competitive advances in technology, such as distributed electricity generation and customer energy efficiency programs; technological developments, changing markets and other factors that result in competitive disadvantages and create the potential for impairment of existing assets; factors affecting utility operations such as unusual weather conditions; catastrophic weather-related damage; unscheduled generation outages; unusual maintenance or repairs; unanticipated changes to fossil fuel, natural gas or coal supply costs or availability due to higher demand, shortages, transportation problems or other developments; environmental incidents; or electric transmission or gas pipeline system constraints; availability and prices of raw materials and equipment for current and future construction projects; the effect of retroactive pricing of transactions in the SPP markets or adjustments in market pricing mechanisms by the SPP; federal or state legislation and regulatory decisions and initiatives that affect cost and investment recovery, have an impact on rate structures or affect the speed and degree to which competition enters the Company's markets; environmental laws, safety laws or other regulations that may impact the cost of operations, restrict or change the way the Company's facilities are operated or result in stranded assets; changes in accounting standards, rules or guidelines; the discontinuance of accounting principles for certain types of rate-regulated activities; the cost of protecting assets against, or damage due to, terrorism or cyberattacks, including losing control of our assets and potential ransoms, and other catastrophic events; changes in the use, perception or regulation of generative artificial intelligence technologies, which could limit our ability to utilize such technology, create risk of enhanced regulatory scrutiny, generate uncertainty around intellectual property ownership, licensing or use, or which could otherwise result in risk of damage to our business, reputation or financial results; creditworthiness of suppliers, customers and other contractual parties, including large, new customers from emerging industries such as cryptocurrency; social attitudes regarding the utility and power industries; identification of suitable investment opportunities to enhance shareholder returns and achieve long-term financial objectives through business acquisitions and divestitures; increased pension and healthcare costs; national and global events that could adversely affect and/or exacerbate macroeconomic conditions, including inflationary pressures, rising interest rates, supply chain disruptions, economic recessions, pandemic health events and uncertainty surrounding continued hostilities or sustained military campaigns, and their collateral consequences; costs and other effects of legal and administrative proceedings, settlements, investigations, claims and matters, including, but not limited to other risk factors listed in the reports filed by the Company with the Securities and Exchange Commission, including those listed within the Company's most recent Form 10-K for the year ended December 31, 2023.
OGE ENERGY CORP. | ||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||
Year Ended December 31 (In millions except per share data) | 2023 | 2022 | 2021 | |||
OPERATING REVENUES | ||||||
Revenues from contracts with customers | ||||||
Other revenues | 67.0 | 71.5 | 65.0 | |||
Operating revenues | 2,674.3 | 3,375.7 | 3,653.7 | |||
FUEL, PURCHASED POWER AND DIRECT TRANSMISSION EXPENSE | 911.7 | 1,662.4 | 2,127.6 | |||
OPERATING EXPENSES | ||||||
Other operation and maintenance | 502.6 | 501.4 | 463.1 | |||
Depreciation and amortization | 506.6 | 460.9 | 416.0 | |||
Taxes other than income | 103.2 | 101.5 | 102.8 | |||
Operating expenses | 1,112.4 | 1,063.8 | 981.9 | |||
OPERATING INCOME | 650.2 | 649.5 | 544.2 | |||
OTHER INCOME (EXPENSE) | ||||||
Allowance for equity funds used during construction | 19.4 | 6.9 | 6.7 | |||
Other net periodic benefit income (expense) | 5.6 | (12.9) | (6.1) | |||
Gain (loss) on equity securities | — | 282.1 | (8.6) | |||
Equity in earnings of unconsolidated affiliates | — | — | 169.8 | |||
Gain on Enable/Energy Transfer transaction, net | — | — | 344.4 | |||
Other income | 48.2 | 74.6 | 26.3 | |||
Other expense | (29.0) | (44.6) | (39.9) | |||
Net other income | 44.2 | 306.1 | 492.6 | |||
INTEREST EXPENSE | ||||||
Interest on long-term debt | 205.0 | 162.1 | 154.8 | |||
Allowance for borrowed funds used during construction | (7.1) | (4.0) | (3.5) | |||
Interest on short-term debt and other interest charges | 23.5 | 8.2 | 7.0 | |||
Interest expense | 221.4 | 166.3 | 158.3 | |||
INCOME BEFORE TAXES | 473.0 | 789.3 | 878.5 | |||
INCOME TAX EXPENSE | 56.2 | 123.6 | 141.2 | |||
NET INCOME | $ 416.8 | $ 665.7 | $ 737.3 | |||
BASIC AVERAGE COMMON SHARES OUTSTANDING | 200.3 | 200.2 | 200.1 | |||
DILUTED AVERAGE COMMON SHARES OUTSTANDING | 200.9 | 200.8 | 200.3 | |||
BASIC EARNINGS PER AVERAGE COMMON SHARE | $ 2.08 | $ 3.33 | $ 3.68 | |||
DILUTED EARNINGS PER AVERAGE COMMON SHARE | $ 2.07 | $ 3.32 | $ 3.68 | |||
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||||
Year Ended December 31 (In millions) | 2023 | 2022 | 2021 | |||
OPERATING REVENUES | ||||||
Revenues from contracts with customers | ||||||
Other revenues | 67.0 | 71.5 | 65.0 | |||
Operating revenues | 2,674.3 | 3,375.7 | 3,653.7 | |||
FUEL, PURCHASED POWER AND DIRECT TRANSMISSION EXPENSE | 911.7 | 1,662.4 | 2,127.6 | |||
OPERATING EXPENSES | ||||||
Other operation and maintenance | 505.0 | 491.9 | 464.7 | |||
Depreciation and amortization | 506.6 | 460.9 | 416.0 | |||
Taxes other than income | 99.4 | 98.0 | 99.3 | |||
Operating expenses | 1,111.0 | 1,050.8 | 980.0 | |||
OPERATING INCOME | 651.6 | 662.5 | 546.1 | |||
OTHER INCOME (EXPENSE) | ||||||
Allowance for equity funds used during construction | 19.4 | 6.9 | 6.7 | |||
Other net periodic benefit income (expense) | 6.5 | 1.2 | (4.3) | |||
Other income | 23.9 | 6.5 | 7.1 | |||
Other expense | (6.3) | (3.4) | (1.8) | |||
Net other income | 43.5 | 11.2 | 7.7 | |||
INTEREST EXPENSE | ||||||
Interest on long-term debt | 200.4 | 157.4 | 152.7 | |||
Allowance for borrowed funds used during construction | (7.1) | (4.0) | (3.5) | |||
Interest on short-term debt and other interest charges | 6.6 | 4.4 | 2.8 | |||
Interest expense | 199.9 | 157.8 | 152.0 | |||
INCOME BEFORE TAXES | 495.2 | 515.9 | 401.8 | |||
INCOME TAX EXPENSE | 68.8 | 76.4 | 41.8 | |||
NET INCOME | 426.4 | 439.5 | 360.0 | |||
Other comprehensive income, net of tax | — | — | — | |||
COMPREHENSIVE INCOME | $ 426.4 | $ 439.5 | $ 360.0 | |||
FINANCIAL AND STATISTICAL DATA | ||||||||
Three Months Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
(Dollars in millions) | 2023 | 2022 | 2023 | 2022 | ||||
Operating revenues by classification: | ||||||||
Residential | $ 204.4 | $ 257.6 | ||||||
Commercial | 150.2 | 182.7 | 688.4 | 818.3 | ||||
Industrial | 53.0 | 71.7 | 240.5 | 327.5 | ||||
Oilfield | 47.5 | 72.2 | 211.9 | 308.8 | ||||
Public authorities and street light | 52.5 | 65.4 | 234.9 | 299.0 | ||||
System sales revenues | 507.6 | 649.6 | 2,416.1 | 3,060.6 | ||||
Provision for rate refund | — | 0.6 | 2.0 | (1.2) | ||||
Integrated market | 13.9 | 28.2 | 71.6 | 163.8 | ||||
Transmission | 36.1 | 26.1 | 143.0 | 131.7 | ||||
Other | 9.1 | 7.4 | 41.6 | 20.8 | ||||
Total operating revenues | $ 566.7 | $ 711.9 | ||||||
MWh sales by classification (In millions) | ||||||||
Residential | 2.0 | 2.2 | 9.6 | 10.4 | ||||
Commercial | 2.0 | 2.0 | 8.5 | 7.8 | ||||
Industrial | 0.9 | 0.9 | 4.2 | 4.3 | ||||
Oilfield | 1.1 | 1.1 | 4.4 | 4.4 | ||||
Public authorities and street light | 0.7 | 0.7 | 3.0 | 3.1 | ||||
System sales | 6.7 | 6.9 | 29.7 | 30.0 | ||||
Integrated market | 0.1 | 0.2 | 0.8 | 1.1 | ||||
Total sales | 6.8 | 7.1 | 30.5 | 31.1 | ||||
Number of customers | 896,102 | 888,759 | 896,102 | 888,759 | ||||
Weighted-average cost of energy per kilowatt-hour (In cents) | ||||||||
Natural gas | 3.216 | 6.185 | 2.976 | 7.032 | ||||
Coal | 3.253 | 3.468 | 3.385 | 3.253 | ||||
Total fuel | 3.008 | 5.114 | 2.926 | 5.480 | ||||
Total fuel and purchased power | 2.667 | 4.563 | 2.837 | 5.096 | ||||
Degree days (A) | ||||||||
Heating - Actual | 1,166 | 1,432 | 3,092 | 3,652 | ||||
Heating - Normal | 1,413 | 1,413 | 3,568 | 3,568 | ||||
Cooling - Actual | 128 | 80 | 2,215 | 2,385 | ||||
Cooling - Normal | 62 | 62 | 1,893 | 1,893 | ||||
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SOURCE OGE Energy Corp.
FAQ
What were OGE Energy Corp.'s earnings per diluted share in 2023?
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