8-K: OGE Energy Corp. Reports 2023 Earnings and Provides 2024 Outlook

OGE Energy Corp. announced its 2023 earnings of $2.07 per diluted share, down from $3.32 in 2022, and provided a 2024 earnings guidance of $2.12 per diluted share.

Summary

• OGE Energy Corp. reported full-year 2023 earnings of $2.07 per diluted share, a decrease from $3.32 per diluted share in 2022.
• The 2022 earnings included $1.16 per diluted share from natural gas midstream operations, which the company exited in 2022.
• OG&E, the regulated electric company, contributed $2.12 per diluted share in 2023, compared to $2.19 per diluted share in 2022.
• Other operations, including the holding company, reported a loss of $0.05 per diluted share in 2023, compared to a loss of $0.03 per diluted share in 2022.
• OG&E's net income was $426.4 million in 2023, down from $439.5 million in 2022, primarily due to milder weather, higher depreciation and interest expenses, and increased operation and maintenance expenses.
• OGE Energy's net income for 2023 was $416.8 million, compared to $665.7 million in 2022.
• For the fourth quarter of 2023, OGE Energy reported net income of $48.2 million, or $0.24 per diluted share, compared to $50.3 million, or $0.25 per diluted share, in the same period of 2022.
• The company's 2024 earnings guidance is $2.12 per average diluted share, with a range of $2.06 to $2.18 per average diluted share.
• OG&E's 2024 earnings are forecasted at $2.22 per average diluted share, while the holding company is expected to have a loss of $0.10 per average diluted share.
• The company is targeting a 5% to 7% consistent growth of consolidated earnings per share.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to the company's focus on long-term growth and infrastructure investments, but tempered by the decrease in 2023 earnings and the projected loss for the holding company in 2024.

Positives

• OGE Energy is focused on creating long-term shareholder value.
• The company's sustainable business model leverages low rates and excellent service to drive economic growth.
• OG&E's earnings increased in the fourth quarter of 2023 compared to the same period in 2022.
• The company is investing in lower-risk infrastructure projects.
• The company has a strong customer base of approximately 896,000 customers.

Negatives

• OGE Energy's 2023 earnings decreased compared to 2022, primarily due to the absence of natural gas midstream operations income.
• OG&E's net income decreased in 2023 due to milder weather, higher depreciation and interest expenses, and increased operation and maintenance expenses.
• Other operations reported a loss of $0.05 per diluted share in 2023.
• The holding company is expected to have a loss of $0.10 per average diluted share in 2024.

Risks

• The company's performance is subject to general economic conditions, including inflation and interest rates.
• The company's ability to access capital markets and obtain financing on favorable terms is a risk.
• The company's performance is affected by weather conditions, which can impact demand and costs.
• The company faces risks related to regulatory decisions, environmental laws, and technological developments.
• The company is exposed to risks related to cyberattacks and terrorism.
• The company is exposed to risks related to the use of generative artificial intelligence technologies.
• The company is exposed to risks related to national and global events that could adversely affect macroeconomic conditions.

Future Outlook

OGE Energy's 2024 earnings guidance is $2.12 per average diluted share, with a range of $2.06 to $2.18 per average diluted share, and the company is targeting a 5% to 7% consistent growth of consolidated earnings per share.

Management Comments

• Sean Trauschke, Chairman, President and CEO of OGE Energy Corp., stated that the team delivered outstanding results in 2023 by providing safe and reliable electricity.
• He also noted that the fundamentals of the business are strong and the sustainable business model drives economic growth.

Industry Context

This announcement reflects the challenges faced by utility companies due to weather fluctuations and increasing operational costs, while also highlighting the importance of infrastructure investments and customer growth. The exit from natural gas midstream operations is a strategic shift towards focusing on the core regulated electric business.

Comparison to Industry Standards

• OGE's performance is comparable to other regulated utilities that have experienced similar challenges with weather and cost pressures.
• Companies like American Electric Power (AEP) and Entergy (ETR) have also reported fluctuations in earnings due to weather and operational expenses.
• OGE's focus on infrastructure investment aligns with industry trends to modernize grids and improve reliability.
• The targeted 5-7% EPS growth is a common goal for utilities seeking to provide consistent shareholder returns.

Stakeholder Impact

• Shareholders will receive a second quarter dividend of $0.4182 per share.
• Customers will benefit from the company's focus on providing safe and reliable electricity.
• The company's investments in infrastructure will contribute to the economic vitality of the communities it serves.
• Employees will continue to work towards the company's goals of long-term growth and operational excellence.

Next Steps

• The company will continue to focus on infrastructure investments and customer growth.
• The company will host an earnings and business update conference call.
• The company will pay a second quarter dividend on April 26, 2024.

Key Dates

Keywords

Earnings, OGE Energy, OG&E, Dividend, Financial Results, Electric Utility, Shareholder Value, 2024 Outlook, Net Income, EPS