Xcel Energy Earnings, Sales Beat Ests - Analyst Blog

Xcel Energy Inc. XEL recorded operating earnings in the first quarter 2014 of 52 cents per share, up 4 cents from the year-ago quarter and also beating the Zacks Consensus Estimate by 4%.

The earnings outperformance stemmed from higher electric and natural gas sales due to severe cold weather that drove demand, as well as from favorable rate increases in several service territories. This was partially offset by escalating operation and maintenance cost as well as property taxes.

Total Revenue

Xcel Energy's revenue jumped 15.1% year over year to $3,202.6 million in the reported quarter. The sharp year-over-year upturn was due to encouraging electric and natural gas returns from the company's NSP-Minnesota and NSP-Wisconsin service areas.

Quarterly revenue also outpaced the Zacks Consensus Estimate by 11.2%.

Segment Revenue

Electric: Revenue from this segment surged 10% year over year to $2,302 million. This was mainly due to a 4.8% rise in residential electric sales.

Natural Gas: Revenue from the Natural Gas business also registered a substantial increase of 31.4% to $879.7 million on account of rising U.S. gas prices.

Other: Segment revenue of $21.2 million in the reported quarter is almost in-line with $21.1 million of the year-ago period.

Quarterly Highlights

Total operating expenses of Xcel Energy climbed 16.3% year over year to $2,708.6 million. The escalating costs can be attributed to a 42% rise in cost of natural gas sold and transported, compounded by a 15.4% rise in electric fuel and purchased power costs.

Operating income rose 8.7% year over year to $494 million as magnitude of increase in revenue outweighed the magnitude of increase in cost.

Total interest charges and financing costs, after Allowance for funds used during construction ("AFUDC") decreased 1% at the end of first quarter 2014 to $129.5 million.

Financial Update

Long-term debts as of Mar 31, 2014, were $11.2 billion. As of Apr 29, 2014, Xcel Energy had available liquidity of nearly $1.3 billion.

In Mar 2014, Xcel Energy issued $300 million, 4.3% first mortgage bonds due Mar 15, 2044. As of Mar 31, 2014, Xcel Energy sold 2.6 million shares for net proceeds of roughly $78 million.

Guidance

Xcel Energy reiterated its 2014 earnings in the range $1.90 to $2.05 per share. Operations and maintenance expenses are expected to increase in the range of 2-3% from the 2013 level.

Other Company Releases

NextEra Energy Inc. NEE posted adjusted earnings of $1.26 per share in the first quarter, higher than the Zacks Consensus Estimate of $1.09 per share.

NiSource Inc. NI reported first quarter 2014 earnings of 82 cents per share, beating the Zacks Consensus Estimate by 5.1%.

TECO Energy Inc. TE posted first quarter earnings of 23 cents marginally surpassing the Zacks Consensus Estimate of 22 cents.

Our View

Xcel Energy continued its good run by reporting both top- and bottom-line beats in the first quarter of 2014. The harsh winter weather proved to be a crucial demand driver that helped the company to book solid sales.

The constructive rate outcomes in the North Dakota and New Mexico service regions will fetch profitable returns in the coming quarters. Moreover, Xcel Energy's sizeable additions to its renewable portfolio are commendable given the current favorable climate for green energy in the U.S.  Xcel Energy currently retains a Zacks Rank #2 (Buy).