WEC Energy Group posts 2023 results
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Insights
The reported net income and earnings per share (EPS) of WEC Energy Group provide critical insight into the company's financial health and operational efficiency. While the net income for 2023 shows a decrease from 2022, the adjusted EPS indicates an increase. This suggests that, despite the non-cash charge related to capital investments disallowed by the Illinois Commerce Commission (ICC), the company's underlying profitability has improved. Investors should consider the implications of the ICC's decision as it may affect future capital expenditure strategies and regulatory relationships.
Furthermore, the decline in consolidated revenues and reduced electricity and natural gas deliveries could be indicative of broader economic trends or increased competition. These factors could potentially influence the company's market share and pricing power. The increase in dividends for the 21st consecutive year reflects a strong commitment to shareholder returns, which could be attractive to income-focused investors.
The decrease in retail deliveries of electricity and natural gas deliveries in Wisconsin, excluding natural gas used for power generation, is a critical data point. It highlights a potential shift in energy consumption patterns, possibly due to increased energy efficiency, consumer conservation efforts, or a transition to alternative energy sources. This trend could have long-term strategic implications for WEC Energy Group's business model and investment in infrastructure.
Additionally, the mention of weather-normal basis adjustments is essential for understanding the true demand for energy, independent of variable weather conditions. This metric provides a more stable view of energy consumption and can be used to forecast future energy needs and guide infrastructure development.
Investors should note the company's focus on reliability, customer satisfaction, financial discipline and environmental stewardship. These pillars are increasingly important to consumers and may play a significant role in brand loyalty and the company's competitive edge. However, the reported decrease in residential, small and large commercial and industrial electricity use may suggest a need for WEC Energy Group to innovate and adapt to changing market demands.
The company's growth opportunities, as mentioned by the executive chairman, should be examined in the context of the energy sector's evolution, including the rise of renewable energy sources and the potential for regulatory changes. Investors should assess how well-positioned WEC Energy Group is to capitalize on these opportunities and whether their strategic initiatives align with industry trends.
Full-year 2023 earnings include a non-cash charge of
For the fourth quarter of 2023, WEC Energy Group recorded net income based on GAAP of
Excluding the non-cash charge, WEC Energy Group's adjusted earnings for the fourth quarter of 2023 totaled
Consolidated revenues for the full year were
"We delivered another year of strong results in 2023, despite an historically warm start to the year and a disappointing regulatory decision in
For the full year, retail deliveries of electricity — excluding the iron ore mine in
Electricity consumption by small commercial and industrial customers was 1.1 percent lower during 2023. Electricity use by large commercial and industrial customers — excluding the iron ore mine — declined by 3.2 percent.
Residential electricity use decreased by 3.6 percent.
On a weather-normal basis, retail deliveries of electricity during 2023 — excluding the iron ore mine — were down by 1.0 percent.
Natural gas deliveries in
On Jan. 18, the board of directors declared a quarterly cash dividend of
Earnings per share listed in this news release are on a fully diluted basis.
Non-GAAP Earnings Measures
A reconciliation of GAAP net income and earnings per share to adjusted net income and earnings per share is included below for the full year and quarter ended Dec. 31, 2023. There were no adjustments to GAAP net income or earnings per share in 2022.
Net Income | ||||
(in millions) | 2023 Full Year | 2023 Q4 | ||
WEC Energy Group GAAP | $ 1,331.7 | $ 218.5 | ||
Impairment related to ICC disallowances pre-tax | 178.9 | 178.9 | ||
Tax impact | (49.1) | (49.1) | ||
WEC Energy Group Adjusted net income | $ 1,461.5 | $ 348.3 | ||
Earnings Per Share | ||||
2023 Full Year | 2023 Q4 | |||
WEC Energy Group GAAP | $ 4.22 | $ 0.69 | ||
Impairment related to ICC disallowances | 0.41 | 0.41 | ||
WEC Energy Group Adjusted earnings per share | $ 4.63 | $ 1.10 | ||
Diluted averages shares outstanding (millions) | 315.9 | 315.8 | ||
We have provided adjusted earnings (non-GAAP earnings) in this news release as a complement to, and not as an alternative to, reported earnings presented in accordance with GAAP. The adjusted earnings exclude a non-cash impairment charge related to certain previously incurred capital costs that were disallowed by the ICC. The ICC's disallowance of costs of this nature is highly unusual and not indicative of WEC Energy Group's operating performance. Therefore, we believe that the presentation of adjusted earnings is relevant and useful to investors to understand WEC Energy Group's operating performance. Management uses such measures internally to evaluate the company's performance and manage its operations.
Conference call
A conference call is scheduled for 1 p.m. Central time, Thursday, Feb. 1. The call will review 2023 earnings and the company's outlook for the future.
All interested parties, including stockholders, news media and the general public, are invited to listen. Access the call at 888-330-2443 up to 15 minutes before it begins. The number for international callers is 240-789-2728. The conference ID is 3088105.
Conference call access also is available at wecenergygroup.com. Under 'Webcasts,' select 'Q4 Earnings.' In conjunction with this earnings announcement, WEC Energy Group will post on its website a package of detailed financial information on its 2023 performance. The materials will be available at 6:30 a.m. Central time, Thursday, Feb. 1.
Replay
A replay will be available on the website and by phone. Access to the webcast replay will be available on the website about two hours after the call. Access to a phone replay also will be available approximately two hours after the call and remain accessible through Feb. 15, 2024. Domestic callers should dial 800-770-2030. International callers should dial 647-362-9199. The replay conference ID is 3088105.
WEC Energy Group (NYSE: WEC), based in
The company's principal utilities are We Energies, Wisconsin Public Service, Peoples Gas, North Shore Gas, Michigan Gas Utilities, Minnesota Energy Resources and Upper Michigan Energy Resources. Another major subsidiary, We Power, designs, builds and owns electric generating plants. In addition, WEC Infrastructure LLC owns a growing fleet of renewable generation facilities in states ranging from
WEC Energy Group (wecenergygroup.com) is a Fortune 500 company and a component of the S&P 500. The company has approximately 35,000 stockholders of record, 7,000 employees and more than
Forward-looking statements
Certain statements contained in this press release are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based upon management's current expectations and are subject to risks and uncertainties that could cause our actual results to differ materially from those contemplated in the statements. Readers are cautioned not to place undue reliance on these statements. Forward-looking statements include, among other things, statements concerning management's expectations and projections regarding earnings, earnings growth rates, dividend payments and future results. In some cases, forward-looking statements may be identified by reference to a future period or periods or by the use of forward-looking terminology such as "anticipates," "believes," "estimates," "expects," "forecasts," "guidance," "intends," "may," "objectives," "plans," "possible," "potential," "projects," "should," "targets," "will" or similar terms or variations of these terms.
Factors that could cause actual results to differ materially from those contemplated in any forward-looking statements include, but are not limited to: general economic conditions, including business and competitive conditions in the company's service territories; timing, resolution and impact of rate cases and other regulatory decisions; the company's ability to continue to successfully integrate the operations of its subsidiaries; availability of the company's generating facilities and/or distribution systems; unanticipated changes in fuel and purchased power costs; key personnel changes; unusual, varying or severe weather conditions; continued industry restructuring and consolidation; continued advances in, and adoption of, new technologies that produce power or reduce power consumption; energy and environmental conservation efforts; electrification initiatives, mandates and other efforts to reduce the use of natural gas; the company's ability to successfully acquire and/or dispose of assets and projects and to execute on its capital plan; terrorist, physical or cyber-security threats or attacks and data security breaches; construction risks; labor disruptions; equity and bond market fluctuations; changes in the company's and its subsidiaries' ability to access the capital markets and shareholder approval of related proposals; changes in tax legislation or our ability to use certain tax benefits and carryforwards; federal, state, and local legislative and regulatory changes, including changes in rate-setting policies or procedures and environmental standards, the enforcement of these laws and regulations or permit conditions and changes in the interpretation of regulations by regulatory agencies; supply chain disruptions; inflation; political or geopolitical developments, including impacts on the global economy, supply chain and fuel prices, generally, from ongoing global conflicts; the impact from any health crises, including epidemics and pandemics; current and future litigation and regulatory investigations, proceedings or inquiries; changes in accounting standards; the financial performance of the American Transmission Company as well as projects in which the company's energy infrastructure business invests; the ability of the company to obtain additional generating capacity at competitive prices; goodwill and its possible impairment; and other factors described under the heading "Factors Affecting Results, Liquidity and Capital Resources" in Management's Discussion and Analysis of Financial Condition and Results of Operations and under the headings "Cautionary Statement Regarding Forward-Looking Information" and "Risk Factors" contained in the company's Form 10-K for the year ended December 31, 2022, and in subsequent reports filed with the Securities and Exchange Commission. Except as may be required by law, the company expressly disclaims any obligation to publicly update or revise any forward-looking information.
Tables follow
WEC ENERGY GROUP, INC. | ||||||||
CONSOLIDATED INCOME STATEMENTS (Unaudited) | Three Months Ended | Year Ended | ||||||
December 31 | December 31 | |||||||
(in millions, except per share amounts) | 2023 | 2022 | 2023 | 2022 | ||||
Operating revenues | $ 2,217.5 | $ 2,558.4 | $ 8,893.0 | $ 9,597.4 | ||||
Operating expenses | ||||||||
Cost of sales | 761.1 | 1,235.4 | 3,191.2 | 4,358.9 | ||||
Other operation and maintenance | 553.9 | 580.3 | 2,100.5 | 1,938.0 | ||||
Impairment related to Illinois Commerce Commission disallowances | 178.9 | — | 178.9 | — | ||||
Depreciation and amortization | 324.5 | 284.6 | 1,264.2 | 1,122.6 | ||||
Property and revenue taxes | 57.7 | 77.7 | 250.2 | 253.7 | ||||
Total operating expenses | 1,876.1 | 2,178.0 | 6,985.0 | 7,673.2 | ||||
Operating income | 341.4 | 380.4 | 1,908.0 | 1,924.2 | ||||
Equity in earnings of transmission affiliates | 45.4 | 46.3 | 177.5 | 194.7 | ||||
Other income, net | 46.8 | 34.7 | 177.7 | 128.8 | ||||
Interest expense | 193.5 | 150.2 | 726.9 | 515.1 | ||||
Other expense | (101.3) | (69.2) | (371.7) | (191.6) | ||||
Income before income taxes | 240.1 | 311.2 | 1,536.3 | 1,732.6 | ||||
Income tax expense | 21.6 | 59.0 | 204.6 | 322.9 | ||||
Net income | 218.5 | 252.2 | 1,331.7 | 1,409.7 | ||||
Preferred stock dividends of subsidiary | 0.3 | 0.3 | 1.2 | 1.2 | ||||
Net (income) loss attributed to noncontrolling interests | 0.3 | 0.8 | 1.2 | (0.4) | ||||
Net income attributed to common shareholders | $ 218.5 | $ 252.7 | $ 1,331.7 | $ 1,408.1 | ||||
Earnings per share | ||||||||
Basic | $ 0.69 | $ 0.80 | $ 4.22 | $ 4.46 | ||||
Diluted | $ 0.69 | $ 0.80 | $ 4.22 | $ 4.45 | ||||
Weighted average common shares outstanding | ||||||||
Basic | 315.4 | 315.4 | 315.4 | 315.4 | ||||
Diluted | 315.8 | 315.9 | 315.9 | 316.1 | ||||
Dividends per share of common stock | $ 0.7800 | $ 0.7275 | $ 3.1200 | $ 2.9100 | ||||
WEC ENERGY GROUP, INC. | ||||
CONSOLIDATED BALANCE SHEETS (Unaudited) | December 31, | December 31, | ||
(in millions, except share and per share amounts) | 2023 | 2022 | ||
Assets | ||||
Current assets | ||||
Cash and cash equivalents | $ 42.9 | $ 28.9 | ||
Accounts receivable and unbilled revenues, net of reserves of | 1,503.2 | 1,818.4 | ||
Materials, supplies, and inventories | 775.2 | 807.1 | ||
Prepaid taxes | 173.9 | 201.8 | ||
Other prepayments | 76.8 | 69.8 | ||
Other | 223.7 | 261.7 | ||
Current assets | 2,795.7 | 3,187.7 | ||
Long-term assets | ||||
Property, plant, and equipment, net of accumulated depreciation and amortization of | 31,581.5 | 29,113.8 | ||
Regulatory assets (December 31, 2023 and December 31, 2022 include | 3,249.8 | 3,264.6 | ||
Equity investment in transmission affiliates | 2,005.9 | 1,909.2 | ||
Goodwill | 3,052.8 | 3,052.8 | ||
Pension and OPEB assets | 870.9 | 916.7 | ||
Other | 383.1 | 427.3 | ||
Long-term assets | 41,144.0 | 38,684.4 | ||
Total assets | $ 43,939.7 | $ 41,872.1 | ||
Liabilities and Equity | ||||
Current liabilities | ||||
Short-term debt | $ 2,020.9 | $ 1,647.1 | ||
Current portion of long-term debt (December 31, 2023 and December 31, 2022 include | 1,264.2 | 881.2 | ||
Accounts payable | 896.6 | 1,198.1 | ||
Other | 933.1 | 884.6 | ||
Current liabilities | 5,114.8 | 4,611.0 | ||
Long-term liabilities | ||||
Long-term debt (December 31, 2023 and December 31, 2022 include | 15,512.8 | 14,766.2 | ||
Deferred income taxes | 4,918.5 | 4,625.6 | ||
Deferred revenue, net | 356.4 | 370.7 | ||
Regulatory liabilities | 3,697.7 | 3,735.5 | ||
Intangible liabilities | 594.8 | 335.4 | ||
Environmental remediation liabilities | 463.7 | 499.6 | ||
Asset retirement obligations | 374.2 | 479.3 | ||
Pension and OPEB obligations | 176.0 | 171.6 | ||
Other | 659.3 | 660.6 | ||
Long-term liabilities | 26,753.4 | 25,644.5 | ||
Commitments and contingencies | ||||
Common shareholders' equity | ||||
Common stock – | 3.2 | 3.2 | ||
Additional paid in capital | 4,115.9 | 4,115.2 | ||
Retained earnings | 7,612.8 | 7,265.3 | ||
Accumulated other comprehensive loss | (7.7) | (6.8) | ||
Common shareholders' equity | 11,724.2 | 11,376.9 | ||
Preferred stock of subsidiary | 30.4 | 30.4 | ||
Noncontrolling interests | 316.9 | 209.3 | ||
Total liabilities and equity | $ 43,939.7 | $ 41,872.1 | ||
WEC ENERGY GROUP, INC. | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | Year Ended | |||
December 31 | ||||
(in millions) | 2023 | 2022 | ||
Operating activities | ||||
Net income | $ 1,331.7 | $ 1,409.7 | ||
Reconciliation to cash provided by operating activities | ||||
Depreciation and amortization | 1,264.2 | 1,122.6 | ||
Deferred income taxes and ITCs, net | 219.4 | 280.1 | ||
Impairment related to Illinois Commerce Commission disallowances | 178.9 | — | ||
Contributions and payments related to pension and OPEB plans | (16.7) | (15.1) | ||
Equity income in transmission affiliates, net of distributions | (33.0) | (74.3) | ||
Net change in transmission regulatory assets and liabilities | 19.8 | (85.8) | ||
Net gain on disposition of assets | (23.8) | (66.2) | ||
Change in – | ||||
Accounts receivable and unbilled revenues, net | 340.6 | (342.1) | ||
Materials, supplies, and inventories | 41.9 | (171.3) | ||
Amounts recoverable from customers | 17.4 | 60.0 | ||
Collateral on deposit | 22.1 | (108.1) | ||
Other current assets | 18.9 | (27.7) | ||
Accounts payable | (254.0) | 121.5 | ||
Other current liabilities | 47.5 | 126.9 | ||
Other, net | (156.5) | (169.5) | ||
Net cash provided by operating activities | 3,018.4 | 2,060.7 | ||
Investing activities | ||||
Capital expenditures | (2,492.9) | (2,314.9) | ||
Acquisition of Whitewater Cogeneration Facility | (76.0) | — | ||
Acquisition of Sapphire Sky Wind Energy LLC, net of cash acquired of | (442.6) | — | ||
Acquisition of Samson I Solar Energy Center LLC, net of cash acquired of | (257.3) | — | ||
Acquisition of Red Barn Wind Park | (143.8) | — | ||
Acquisition of West Riverside Energy Center | (95.3) | — | ||
Acquisition of Thunderhead Wind Energy LLC, net of cash acquired of | — | (382.0) | ||
Capital contributions to transmission affiliates | (63.7) | (45.5) | ||
Proceeds from the sale of assets | 32.8 | 69.0 | ||
Proceeds from the sale of investments held in rabbi trust | 10.4 | 15.4 | ||
Payments for American Transmission Company LLC's construction costs that will be reimbursed | (19.8) | (24.8) | ||
Reimbursement for American Transmission Company LLC's construction costs | 0.1 | 10.2 | ||
Insurance proceeds received for property damage | 2.5 | 41.6 | ||
Other, net | (12.6) | (11.4) | ||
Net cash used in investing activities | (3,558.2) | (2,642.4) | ||
Financing activities | ||||
Exercise of stock options | 6.3 | 33.6 | ||
Purchase of common stock | (16.6) | (69.2) | ||
Dividends paid on common stock | (984.2) | (917.9) | ||
Issuance of long-term debt | 2,170.0 | 1,999.3 | ||
Retirement of long-term debt | (1,005.4) | (92.1) | ||
Repayment of short-term loan | (0.8) | — | ||
Change in commercial paper | 373.7 | (252.6) | ||
Payments for debt extinguishment and issuance costs | (14.2) | (15.6) | ||
Other, net | (6.0) | (9.1) | ||
Net cash provided by financing activities | 522.8 | 676.4 | ||
Net change in cash, cash equivalents, and restricted cash | (17.0) | 94.7 | ||
Cash, cash equivalents, and restricted cash at beginning of year | 182.2 | 87.5 | ||
Cash, cash equivalents, and restricted cash at end of year | $ 165.2 | $ 182.2 | ||
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SOURCE WEC Energy Group
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