From: Brian Manthey (news media)
414-221-4444
brian.manthey@we-energies.com
Colleen F. Henderson, CFA (investment community)
414-221-2592
colleen.henderson@wecenergygroup.com
Nov. 4, 2015
WEC Energy Group posts third quarter results
MILWAUKEE - WEC Energy Group Inc. (NYSE: WEC) recorded net income based on Generally Accepted Accounting Principles (GAAP) of $182.5 million or 58 cents a share for the third quarter of 2015. WEC Energy Group was formed on June 29 when Wisconsin Energy completed the acquisition of Integrys.
Wisconsin Energy’s stand-alone earnings for the third quarter, excluding acquisition costs, increased to 61 cents a share. In the corresponding quarter a year ago, Wisconsin Energy’s stand-alone earnings, adjusted for acquisition costs, were 57 cents a share.
2015 Q3 | 2014 Q3 | ||
WEC Energy Group GAAP EPS | $0.58 | $0.56 | |
Acquisition Costs (post tax) | $0.01 | $0.01 | |
Integrys Q3 Earnings | $(0.21) | — | |
Impact of Additional Shares | $0.23 | — | |
Wisconsin Energy Adjusted EPS | $0.61 | $0.57 | |
Systemwide revenue for the third quarter of 2015 totaled $1.70 billion. Wisconsin Energy’s stand-alone third quarter revenue, which excludes $0.63 billion of revenue from Integrys, was $1.07 billion. This compares with revenue of $1.03 billion in the third quarter of 2014.
“Since the close of the acquisition at the end of the second quarter, we’ve made significant progress in focusing our six operating utilities on world-class reliability, customer satisfaction, and financial discipline,” said Gale Klappa, chairman and chief executive.
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“I’m very pleased with our post-acquisition work, and we remain highly confident that the merger will deliver tangible benefits to our customers, to the communities we serve, and to the stockholders who count on us to create value,” Klappa added.
For the first nine months of 2015, WEC Energy Group reported net income based on Generally Accepted Accounting Principles of $459.2 million or $1.78 a share.
Wisconsin Energy’s stand-alone earnings for the first nine months of this year, excluding acquisition costs, were $2.10 a share. For the first nine months of 2014, Wisconsin Energy’s stand-alone earnings, adjusted for acquisition costs, were $2.08 a share.
2015 YTD | 2014 YTD | ||
WEC Energy Group GAAP EPS | $1.78 | $2.05 | |
Acquisition Costs (post tax) | $0.29 | $0.03 | |
Integrys Q3 Earnings | $(0.21) | — | |
Impact of Additional Shares | $0.24 | — | |
Wisconsin Energy Adjusted EPS | $2.10 | $2.08 | |
“We delivered solid results through an unusual pattern of summer weather - a cool July, a cool August, followed by an unseasonably warm September,” Klappa said.
At the end of September 2015, We Energies was serving approximately 6,000 more electric customers and 10,000 more natural gas customers than a year ago.
To facilitate comparison with prior periods, the information on electricity sales that follows for the third quarter of 2015 reflects data for We Energies customers only.
Residential use of electricity rose by 11.5 percent over last year's third quarter. Consumption of electricity by small commercial and industrial customers grew by 1.6 percent. Electricity use by large commercial and industrial customers - excluding the iron ore mines in Michigan's Upper Peninsula - increased by 0.6 percent.
On a weather normal basis, retail sales of electricity - excluding the iron ore mines - were essentially level with sales in last year’s third quarter.
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Conference call
A conference call is scheduled at 1 p.m. Central time, Nov. 4. The presentation will review 2015 third-quarter earnings and will discuss the company's outlook for the future.
All interested parties, including stockholders, news media and the general public, are invited to listen to the presentation. The conference call may be accessed by dialing 866-439-9410 up to 15 minutes before the call begins. International callers may dial 706-643-5658. The conference ID is 31622849.
Access also may be gained through the company's website (wecenergygroup.com). Select ‘Third Quarter Earnings Release and Conference Call' and then select ‘Webcast’. In conjunction with this earnings announcement, WEC Energy Group will post on its website a package of detailed financial information on its third quarter performance. The materials will be available at 6:30 a.m. Central time, Nov. 4.
Replay
A replay will be available on the website and by phone after the presentation. Access to the webcast replay will be available on the website about two hours after the presentation. Access to a phone replay also will be available approximately two hours after the presentation and remain accessible through Nov. 17, 2015. Domestic callers should dial 855-859-2056. International callers should dial 404-537-3406. The replay conference ID is 31622849.
Non-GAAP earnings measures
We have provided adjusted earnings (non-GAAP earnings) in this press release as a complement to, and not as an alternative to, reported earnings presented in accordance with GAAP. The adjusted stand-alone earnings of Wisconsin Energy exclude the results of operations of Integrys Energy Group and its subsidiaries and costs related to the acquisition of Integrys, as well as the additional WEC Energy Group shares of common stock that were issued as part of the acquisition. Costs related to the acquisition of Integrys are not indicative of the company’s operating performance.
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Institutional investors have informed management on several occasions that, for the remainder of 2015, they are interested in, and focused on, the performance of legacy Wisconsin Energy and subsidiaries, excluding the impact of the Integrys acquisition. In addition, the earnings guidance and performance expectations previously provided by the company were based upon legacy Wisconsin Energy’s operations. Therefore, we believe that the presentation of adjusted earnings is relevant and useful to investors. Management also uses such measures internally to evaluate the company’s performance for 2015.
WEC Energy Group (NYSE: WEC), based in Milwaukee, is one of the nation’s premier energy companies, serving 4.4 million customers in Wisconsin, Illinois, Michigan and Minnesota.
The company’s principal utilities are We Energies, Wisconsin Public Service, Peoples Gas, North Shore Gas, Michigan Gas Utilities, and Minnesota Energy Resources. The company's other major subsidiary, We Power, designs, builds and owns electric generating plants.
WEC Energy Group (wecenergygroup.com), a component of the S&P 500, has approximately $29 billion of assets, 9,000 employees and 60,000 stockholders of record.
Tables follow
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WEC ENERGY GROUP, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited) | Three Months Ended | Nine Months Ended | ||||||||||||||
September 30 | September 30 | |||||||||||||||
(in millions, except per share) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Operating revenues | $ | 1,698.7 | $ | 1,033.3 | $ | 4,077.8 | $ | 3,772.0 | ||||||||
Operating expenses | ||||||||||||||||
Cost of sales | 590.6 | 407.4 | 1,557.5 | 1,735.9 | ||||||||||||
Other operation and maintenance | 535.9 | 249.4 | 1,153.6 | 780.8 | ||||||||||||
Depreciation and amortization | 176.5 | 99.8 | 382.6 | 295.2 | ||||||||||||
Property and revenue taxes | 50.0 | 30.6 | 113.8 | 91.5 | ||||||||||||
Total operating expenses | 1,353.0 | 787.2 | 3,207.5 | 2,903.4 | ||||||||||||
Operating income | 345.7 | 246.1 | 870.3 | 868.6 | ||||||||||||
Equity in earnings of transmission affiliate | 40.0 | 18.0 | 70.4 | 52.8 | ||||||||||||
Other income, net | 11.1 | 2.9 | 40.2 | 12.1 | ||||||||||||
Interest expense | 103.8 | 60.4 | 225.6 | 181.7 | ||||||||||||
Other expense | (52.7 | ) | (39.5 | ) | (115.0 | ) | (116.8 | ) | ||||||||
Income before income taxes | 293.0 | 206.6 | 755.3 | 751.8 | ||||||||||||
Income tax expense | 110.5 | 80.3 | 296.1 | 284.9 | ||||||||||||
Net income | $ | 182.5 | $ | 126.3 | $ | 459.2 | $ | 466.9 | ||||||||
Earnings per share | ||||||||||||||||
Basic | $ | 0.58 | $ | 0.56 | $ | 1.79 | $ | 2.07 | ||||||||
Diluted | $ | 0.58 | $ | 0.56 | $ | 1.78 | $ | 2.05 | ||||||||
Weighted average common shares outstanding (in millions) | ||||||||||||||||
Basic | 315.7 | 225.5 | 256.2 | 225.6 | ||||||||||||
Diluted | 317.1 | 227.4 | 257.8 | 227.6 | ||||||||||||
Dividends per share of common stock | $ | — | $ | 0.39 | $ | 1.29 | $ | 1.17 | ||||||||
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WEC ENERGY GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in millions, except share and per share amounts) | September 30, 2015 | December 31, 2014 | ||||||
Assets | ||||||||
Property, plant and equipment | ||||||||
In service | $ | 25,741.5 | $ | 15,509.0 | ||||
Accumulated depreciation | (7,930.6 | ) | (4,485.1 | ) | ||||
17,810.9 | 11,023.9 | |||||||
Construction work in progress | 936.4 | 191.8 | ||||||
Leased facilities, net | 37.9 | 42.0 | ||||||
Net property, plant and equipment | 18,785.2 | 11,257.7 | ||||||
Investments | ||||||||
Equity investment in transmission affiliate | 999.4 | 424.1 | ||||||
Other | 97.0 | 32.8 | ||||||
Total investments | 1,096.4 | 456.9 | ||||||
Current assets | ||||||||
Cash and cash equivalents | 22.2 | 61.9 | ||||||
Accounts receivable and unbilled revenues, net of reserves of $128.7 and $74.5, respectively | 844.7 | 643.4 | ||||||
Materials, supplies, and inventories | 719.8 | 400.6 | ||||||
Assets held for sale | 140.2 | — | ||||||
Deferred income taxes | 250.8 | 242.7 | ||||||
Other | 204.2 | 186.8 | ||||||
Total current assets | 2,181.9 | 1,535.4 | ||||||
Deferred charges and other assets | ||||||||
Regulatory assets | 2,805.5 | 1,271.2 | ||||||
Goodwill | 3,389.1 | 441.9 | ||||||
Other long-term assets | 511.5 | 200.3 | ||||||
Total deferred charges and other assets | 6,706.1 | 1,913.4 | ||||||
Total assets | $ | 28,769.6 | $ | 15,163.4 | ||||
Capitalization and liabilities | ||||||||
Capitalization | ||||||||
Common stock - $.01 par value; 325,000,000 shares authorized; 315,684,451 and 225,517,339 shares outstanding, respectively | $ | 3.2 | $ | 2.3 | ||||
Additional paid in capital | 4,350.6 | 300.1 | ||||||
Retained earnings | 4,264.9 | 4,117.0 | ||||||
Accumulated other comprehensive income | 11.2 | 0.3 | ||||||
Preferred stock of subsidiaries | 81.5 | 30.4 | ||||||
Long-term debt | 8,727.0 | 4,186.4 | ||||||
Total capitalization | 17,438.4 | 8,636.5 | ||||||
Current liabilities | ||||||||
Current portion of long-term debt | 606.0 | 424.1 | ||||||
Short-term debt | 661.5 | 617.6 | ||||||
Accounts payable | 777.6 | 363.3 | ||||||
Accrued payroll and benefits | 154.9 | 95.1 | ||||||
Other | 466.8 | 168.6 | ||||||
Total current liabilities | 2,666.8 | 1,668.7 | ||||||
Deferred credits and other liabilities | ||||||||
Regulatory liabilities | 1,312.3 | 830.6 | ||||||
Deferred income taxes | 4,690.4 | 2,906.7 | ||||||
Deferred revenue, net | 588.1 | 614.1 | ||||||
Pension and other postretirement benefit obligations | 427.7 | 203.8 | ||||||
Environmental remediation | 611.5 | 32.6 | ||||||
Other long-term liabilities | 1,034.4 | 270.4 | ||||||
Total deferred credits and other liabilities | 8,664.4 | 4,858.2 | ||||||
Commitments and contingencies | ||||||||
Total capitalization and liabilities | $ | 28,769.6 | $ | 15,163.4 | ||||
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WEC ENERGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | Nine Months Ended | |||||||
September 30 | ||||||||
(in millions) | 2015 | 2014 | ||||||
Operating Activities | ||||||||
Net income | $ | 459.2 | $ | 466.9 | ||||
Reconciliation to cash provided by operating activities | ||||||||
Depreciation and amortization | 390.9 | 312.9 | ||||||
Deferred income taxes and investment tax credits, net | 220.1 | 258.5 | ||||||
Contributions to pension and other postretirement plans | (109.3 | ) | (12.0 | ) | ||||
Change in – | ||||||||
Accounts receivable and unbilled revenues | 269.5 | 221.1 | ||||||
Inventories | (101.4 | ) | (49.9 | ) | ||||
Other current assets | 75.6 | 37.2 | ||||||
Accounts payable | (55.9 | ) | (27.7 | ) | ||||
Accrued taxes, net | 57.9 | (10.3 | ) | |||||
Other current liabilities | 40.0 | (36.8 | ) | |||||
Other, net | (173.4 | ) | (125.3 | ) | ||||
Net cash provided by operating activities | 1,073.2 | 1,034.6 | ||||||
Investing Activities | ||||||||
Capital expenditures | (765.1 | ) | (513.0 | ) | ||||
Cost of removal, net of salvage | (26.7 | ) | (18.2 | ) | ||||
Business acquisition, net of cash acquired of $156.3 million | (1,329.9 | ) | — | |||||
Investment in transmission affiliate | (5.6 | ) | (10.5 | ) | ||||
Proceeds from asset sales | 26.7 | — | ||||||
Other, net | 4.7 | 12.8 | ||||||
Net cash used in investing activities | (2,095.9 | ) | (528.9 | ) | ||||
Financing Activities | ||||||||
Exercise of stock options | 26.4 | 31.7 | ||||||
Purchase of common stock | (66.1 | ) | (84.2 | ) | ||||
Dividends paid on common stock | (310.9 | ) | (264.0 | ) | ||||
Issuance of long-term debt | 1,650.0 | 250.0 | ||||||
Retirement of long-term debt | (27.1 | ) | (322.0 | ) | ||||
Change in short-term debt | (270.5 | ) | (61.6 | ) | ||||
Other, net | (18.8 | ) | 7.1 | |||||
Net cash provided by (used in) financing activities | 983.0 | (443.0 | ) | |||||
Net change in cash and cash equivalents | (39.7 | ) | 62.7 | |||||
Cash and cash equivalents at beginning of period | 61.9 | 26.0 | ||||||
Cash and cash equivalents at end of period | $ | 22.2 | $ | 88.7 | ||||
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