8-K: Xcel Energy Reports First Quarter 2025 Earnings, Reaffirms Full-Year Guidance

Xcel Energy's first quarter 2025 earnings per share (EPS) were $0.84, compared to $0.88 in 2024, while the company reaffirmed its 2025 ongoing EPS guidance of $3.75 to $3.85.

Summary

• Xcel Energy reported first quarter 2025 GAAP earnings of $483 million, or $0.84 per share.
• This compares to $488 million, or $0.88 per share, in the same period in 2024.
• The decrease in EPS was primarily driven by higher O&M expenses, depreciation, and interest charges, partially offset by increased recovery of infrastructure investments.
• The company reaffirmed its 2025 ongoing EPS guidance of $3.75 to $3.85.
• Xcel Energy reached a milestone in February with Minnesota regulators approving a resource plan that includes nearly 5,000 megawatts of new wind, solar, battery storage, and gas by 2030.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While earnings are down slightly, the company reaffirmed its full-year guidance and is making progress on key strategic initiatives. The wildfire litigation remains a significant risk.

Positives

• Minnesota regulators approved a resource plan including nearly 5,000 MW of new wind, solar, battery storage, and gas by 2030.
• The company is mitigating wildfire risk through operating investments and regulatory support, including settlements for Texas System Resiliency and Colorado Wildfire Mitigation Plans.
• Weather-normalized retail electric sales are projected to increase ~3% in 2025.
• Weather-normalized retail firm natural gas sales are projected to increase ~1% in 2025.
• Capital rider revenue is projected to increase $200 million to $210 million (net of PTCs) in 2025.

Negatives

• First quarter GAAP earnings were $0.84 per share, down from $0.88 per share in 2024.
• The decrease in EPS was primarily driven by higher O&M expenses, depreciation, and interest charges.
• The company has recorded $290 million of total estimated losses for the Smokehouse Creek Fire Complex (before available insurance).
• O&M expenses are projected to increase ~3% in 2025.
• Depreciation expense is projected to increase approximately $210 million to $220 million in 2025.
• Interest expense (net of AFUDC debt) is projected to increase $165 million to $175 million, net of interest income in 2025.

Risks

• Operational safety, including nuclear generation facilities and other utility operations.
• Commodity risks associated with energy markets and production.
• Rising energy prices and fuel costs.
• Changes in regulation.
• Reductions in credit ratings.
• General economic conditions, including recessionary conditions, inflation rates, and supply chain constraints.
• Cybersecurity threats and data security breaches.
• Climate change and other weather events.
• Costs of potential regulatory penalties and wildfire damages in excess of liability insurance coverage.
• Challenging labor market conditions and the ability to attract and retain a qualified workforce.
• The company faces potential liabilities related to the Smokehouse Creek Fire Complex, with estimated losses of $290 million recorded (before insurance).

Future Outlook

Xcel Energy expects to deliver long-term annual EPS growth of 6% to 8% based off of $3.55 per share (the mid-point of 2024 original ongoing earnings guidance of $3.50 to $3.60 per share) and deliver annual dividend increases of 4% to 6%.

Management Comments

• As we continue to advance our mission to make energy work better for our customers, we are building new generation, investing in system resilience and leading the energy transition to meet the goals and aspirations of the communities we serve, said Bob Frenzel, chairman, president and CEO of Xcel Energy.

Industry Context

Xcel Energy's focus on renewable energy and grid modernization aligns with broader industry trends towards decarbonization and increased grid reliability. The company's investments in wind, solar, and battery storage reflect the growing importance of these technologies in the energy mix.

Comparison to Industry Standards

• Xcel Energy's long-term EPS growth target of 6-8% is comparable to other large utilities like NextEra Energy (NEE) and Duke Energy (DUK), which also aim for similar growth rates.
• The company's dividend payout ratio target of 50-60% is within the typical range for utilities, which are often seen as income-generating investments.
• The company's focus on wildfire mitigation is particularly relevant given the increasing frequency and severity of wildfires in the Western United States, a challenge faced by other utilities like PG&E (PCG) and Southern California Edison (EIX).

Legal Proceedings

• SPS is aware of approximately 25 complaints relating to the Smokehouse Creek Fire Complex and has recorded $290 million of total estimated losses for the matter (before available insurance).
• PSCo is aware of 307 complaints relating to the Marshall Fire, but is unable to estimate the amount or range of possible losses in connection with the Marshall Fire.

Stakeholder Impact

• The company's performance and strategic decisions impact shareholders, customers, employees, and the communities it serves.
• Rate case outcomes and regulatory decisions directly affect customer rates.
• Investments in infrastructure and clean energy impact the reliability and sustainability of energy supply.
• Wildfire mitigation efforts are crucial for protecting communities and infrastructure.

Next Steps

• NSP-Minnesota will file additional RFPs for approved resource needs beginning in late 2025 or early 2026.
• A CPUC decision on the Colorado Electric Resource Plan is expected by the fall of 2025 (Phase I) with the competitive solicitation for resource additions expected in early 2026.
• SPS expects a PUCT decision on the Texas System Resiliency Plan settlement by the third quarter of 2025.
• SPS has requested commission decisions by September 2025 on the Excess Liability Insurance Deferral.

Key Dates

Keywords

Xcel Energy, earnings, EPS, financial results, guidance, wildfire mitigation, resource plan, rate case, regulation, Smokehouse Creek Fire, Marshall Fire