XEL - Earnings call transcript Q4 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone, and welcome to the Xcel Energy 2017 Year-End Earnings Conference Call. Today's call is being recorded. And now, your host for today's conference, Mr. Paul Johnson, Vice President of Investor Relations. Mr. sir. ahead, go please Johnson,

Paul A. Johnson

Good morning, release XXXX earnings Xcel welcome call. to conference Energy's year-end and

Joining Ben President today and Officer. me are Bob Executive and Frenzel, Officer; Chief Executive Vice and Financial Fowke, Chief Chairman, President,

our Slides addition, are you to your our on and available website. XXXX recent In management discuss available tax will developments. morning, answer have business of questions. other the that we reform, call team we results, This on accompany review today's members and regulatory update

some cause reminder, during anticipated conference differ a the earnings comments As of Significant with today's filing our those SEC. call the information. release forward-looking factors from our and are in may results contain described that in could to

earnings are addition, measures. metrics that call, on certain In today's non-GAAP we will ongoing discuss

million reconciliation and earnings I'll charges of and Tax available that, Cuts these to turn earnings EPS $X.XX release, which With one-time related comparable $XX the Ben. on The to in are a Act. is our included a exclude GAAP to website. or charge over ongoing measures, call GAAP and the our share earnings per explanation Our an Jobs

Benjamin G. S. Fowke

CapEx XX project XXX in transmission XXXX. had $X the investment I of employees event. outstanding hosting the accomplishments I successfully billion the the to our Well, and hope in with of enjoyed to Super certainly And in Xcel different completed in good the and efforts working year Super fantastically a XXXX, weren't start with we Vikings and performing lights Bowl key was miles XXXX, Glad some it entailing enjoyed fun of strategically, Bowl. think it and everyone. thank wanted lines, everybody Minneapolis. a stayed on. We while financially, I morning XX-year Paul, utilities. you, operationally. And our of Energy, Bowl, over a Super We at recognize

midpoint AWEA while reducing a years, provider wind lowering and energy successfully refuel of completed named another cost have will our cost. and XX% strong system. United in which exceeding included factor its of ledger This new were consecutive productivity outage in was to diminish XXXX, work $X.XX our that of Employer year for We part companies year. EPS our best XXth which utility a our honor. list SAP was Xcel capacity for lower not multi-year and guidance. of implementation, which earnings operations ongoing that structure. year efficiency a asset management XXth of of general is States guidance. Times technology results, consecutive is our for We one one we through by performance received Military And Energy This or had times a initiative, the the with meeting financial our the Vets the on nuclear achieving Our of fourth XX year, Best XXth consecutive our number ranking the named drive

our the areas ratings. that customers beneficial actions preserve tax wanted year points; the to in in dividend. to our raised our overview will increased is all I the important investments news, customers, Tax reduce provide later. our X.X%, details dividend and will revenue our is represents take over additional We reform opportunity we give make and we straight of which requirements, also believe and credit bills, XXth the Finally, Bob reform that our more key lower result and which by customer provides are to for you to high-level

billion base. be expect to reform it to rate adds We over essentially next as the earnings tax mildly five our $X.X accretive will years, approximately our

X% range guidance to X% dividend EPS $X.XX; to X%; our rate of growth reaffirming XXXX $X.XX of and and our to EPS are growth We of X%. long-term

us strategy our and to success; Finally, keeping we in been strategy let it's do in bills clean Energy The X,XXX early and as customer Steel-for-Fuel We is well a lead which any calls energy range provide November, our to energy back carbon in we transition customer its me XXXX, increase by of supply with renewables of an at bids introduced XXX transition This to by while our XX% gas an the natural not of Comanche and of for of plant. stakeholders great no wide XXX to Implementation low. with anticipate changes XXXX some of Colorado our supported year, updates. addition bills. a from introduced the Energy megawatts received recent Last allow two of or for our megawatts mix in coal of energy opportunity and portfolio achieve retirement storage, will you the as XX% a Colorado In Energy up plan Plan units Colorado the we the megawatts solar, Xcel is RFP. Plan. of continue to reduction. wind,

a bids, reform median $XX just the $XX the were responded robust Hearings are wind solar while this in coming still pricing. number hour, to evaluating and per the for week, from solar bids expect a pricing to refresh pleased under have hour. megawatt we bids at we their were the the in we're the on for decision per March. see proposals just with settlement megawatt in scheduled tariff commission of to levelized While Bidders option were of process attractive and and pleased We tax considerations. approximately

we in approves the decision portfolio a final a settlement, file Assuming commission expected the commission recommended with this summer. April will

a In hearing settlement megawatts There shortly. settlement documents. with been issues filed Mexico, project working Texas reached tax which finalizing New a Next, we also of in the of which quick and XXX-megawatt to no reform, a are still wind of has and and commission. reached settlement in a Texas were the on the effective in result file are I'll our shows New December. on request savings. with various parties, wind significant Hearings provide self-build SPS with settlement proposal, Mexico, provided we analysis PPA. customer update outstanding, meaningful which parties Commission X,XXX our principle we held plan with At examiner, the the the on We've wind Texas in the clearly in the and the includes

expect of of the and our the commissions first final by that, on We Bob? from regulatory outlook year. end over update. me to Bob quarter decisions and call to With this more a both the detail let financial results turn provide

Robert C. Frenzel

will Thanks, results, of please Ben, full-year comments focus results XXXX earnings fourth our details and everyone. quarter morning, our release. and on for good My see

by per earnings year earnings increased earnings performance tax share financial $X.XX increased we effective per a reduce per due compared indicated, earnings expense, the Lower netted which strong lower equity share. operational depreciation and increased earnings expenses, of were increase and largely taxes increase and $X.XX to $X.XX per earnings by ongoing increases share XXXX. tax with The per for electric and share higher rate, interest reduced driver and effective earnings note per realized $X.XX and by of share. most to riders earnings other and Ben due another partly in recover of to lower As include our margin. rate through by per $X.XX expenses rate wind XXXX O&M deliver higher credits, additions, share, margins, to due the an $X.XX is ongoing drivers positive higher these property offsetting natural year share. largely in which $X.XX a to AFDC which customers investments, which electric combined income capital our non-fuel to by significant to flow production back gas Please tax Partially items capital

electric increased X.X% year-adjusted Turning and X.X% in on sales and sales to year-adjusted sales, Natural leap weather gas for basis. a XXXX. leap our weather XXXX increase

the C&I electric largely segments across driven and sales by Our gains large companies. our gas XXXX in are natural operating

cost our strong fossil as operations able and weather nuclear see gas has we the normal. and management costs, growth the territories of realized as fleets positive use and in improvements our efficiency. our lower to been improved generally continue sector, generation improve in the compared across to lower to predominantly attributable by continue for growth of service another per residential impact businesses, customer, We offset adverse We to in natural but and in to in energy businesses. We customer $X.XX year offset the primarily electric largely efficiency both that we're XXXX,

continuous below XXXX productivity slightly expenses commitment through O&M This Our levels. flat improvement Xcel XXXX our in technology consistent our being to O&M has longer of across with Energy. resulted of is in keeping all objective term

Colorado, period. of Interim Now, pending cases. XXXX. we rates have a in over update on let be effective rate rate four-year are $XXX case In increase expected an electric million to seeking June a me provide quick our

January. increase also implemented period. in We Colorado, case Interim rates over seeking a million have three-year were in natural multi-year $XXX a gas

in be Texas with million. in case anticipate of electric of third the XXXX. And We rate XXXX quarter to we anticipate second half of implemented commission electric million seeking retroactively XXXX. in pending case a a a a have to rates a and New increase January finally, We decision a in implementation pending seeking $XX net the decision We final increase. $XX of rate Mexico rates of have final

jurisdictions, these All was our we provide and other of of regulators Act expected to proceedings will the with proposed. and we're in Jobs the having benefits impacts discussions before and the filed legislation In Cuts active our Tax these rate formal cases, regarding and new customers. proceedings tax were how the

our stakeholders be the the new As just apprised few progress to these expect on With law. minutes we impacts keep outcomes, a of let constructive. conversations, we'll we that, of me the spend through which potential

which For our more has information, disclosure. earnings see release, an please extensive

few key let a takeaways. me with However, start

believe to earlier, revenue to beneficial we reform As customers said lower Ben requirements. due tax is our

this lower our corporate our holding able value year. lower customers. expect also reduces deliver production to be earnings credit guidance to on the to rate of the tax company the yield debt wind and tax The tax offset on We

in continue our have they our and projects remain offsets we to customers. However, identified beneficial very to

adversely law analysis, the our impact from reduce and metrics. Finally, in a changes cash credit operations will tax static

However, and would credit reasonable the to be reform on working cost for result and benefits plans our of actively with strong with which reduces taken capital customers tax which provides will develop dependent any sheet, to customers. We're capital near-term a alternatives, at the our maintaining provide We're maintaining strong terms quality a and focused tax metrics. actions company's while law. very regulatory on regulators balance the new our largely of access our as impacts credit of

regulatory additional of tax the taxes, in commissions. to up. various We reform a actions another any In And straight metrics. correspondingly, lower regulatory or We anticipate consecutive lower deferred moderate of equity we to time or XXth flow of equity target. year. focus our year. We and our regulatory base actions deferral was potential We capital response, credit Wisconsin. million Minnesota; some the for in five-year case or growth adjustments, to multi-year FFO regulated depreciation higher sufficient and an asset Energy. plan plan by XX% future proposals issue the over $XXX end of will X% strong to will prior $XXX guidance will consolidated X% results issuance, cases; of Even and rate gas taxes project to for reduction expenditure dividend and ratings. electric increased wrap electric our state maintain agency that cash in for we of proceedings, should our be to ROEs, in of regulators. expect the realized and million XX% utilities; issuance and, resolved grid be expenses. earnings areas year and that, earnings X% result with With ongoing summary, lower depend an our equity range several delivered including: Xcel avoidance and five-year in upper at The or any expenditures our these in case amount include: ultimate changes above at debt potential Ultimately, decrease great and amortization; a natural proposed of the and XXXX of rating our O&M advanced X.X% authorized in ratios, capital of investment on Colorado; revisions our in I'll Some our the decoupling capital accelerated a XXth additional modest equity. the to up in expenditures of rate the actions in We implementation period to within growth for

proposed which of South diverse stakeholders for settlement strategy. the our the X,XXX two in in proposes wind in Energy projects megawatts for approval We wind continued and on retirement of Upper and Dakota, received reached a facilities. Mexico. on execute group Midwest, Colorado coal of principle reached X,XXX of Plan, new Texas Steel-for-Fuel We the renewable addition New a a megawatts and regulatory XXX-megawatt with of the wind to build We settlements the to in farm

well-positioned X% $X.XX are our deliver We prepared objective, our remarks. to to range share, to earnings we'll our $X.XX earnings ongoing per Operator, questions. objective. growth and growth XXXX X% our dividend on guidance of X% This X% to take any concludes

Benjamin G. S. Fowke

there? you Operator,

Operator

for our question, Merrill And Bank with go Julien to America Lynch. first we Dumoulin-Smith of

Robert C. Frenzel

Hey, Julien.

Josephine Moore

hopping Josephine on in morning. here Julien. the Good is Congrats results. actually This for

Benjamin G. S. Fowke

morning. Good Okay.

Josephine Moore

have question. I morning. Good just a quick

base CapEx with I think you Colorado Clean growth rate you're X% what further upper base from upside Energy to that EPS rate that tax growth? said into looking your with X% rate. at end your Plan, wondering, was translate that reform I X.X%, is hitting the growth is new the new of the then the

Benjamin G. S. Fowke

base CEP, is question our CapEx... the So in is not which if

Josephine Moore

Exactly.

Benjamin G. S. Fowke

what rate grow ...if will to base do growth? included, that's that

Josephine Moore

how go? further much it up Like Exactly. can

Robert C. Frenzel

we I from and process, still ultimate the on bids in final think which that pending. really what are see depends

I higher CAGR. estimate basis rate think is a probably in XX good points base

Josephine Moore

it. just Got then, issuance. And on Great. equity the

quarter. You that just million you DRIP? $XXX part then had just as in still the additional the think, of third million Would DRIP? Are that expanding the announced, the you $XXX to I on be said

Robert C. Frenzel

$XXX don't of large program. DRIP I million, likely was we size No. the reinvestment quarter at think call, dividend in of sort indicated our the third the as

market think I million $XXX contemplate the issuance. in we'd a

Josephine Moore

question. then, Got it, great. And one last

reform part that's strategy. Just Have that trying the subject – think the the tax had were had you on as thinking ratio you increase X-K in think mentioned possibility? any and with mitigation of earlier conversations you of equity I you do commissions to that a

Benjamin G. S. Fowke

is Ben. this Yeah,

to regulators. them, equity SPS. dialogue I be think equity our strong. at stay And ratios the importance a there'll I is going think to Everybody increased to potentially, sheet that other look strong higher cash think maybe I preliminary, also And our think having constructive flow. around higher And balance tax reform. we've but on also had but going so with make lost of at amortization obviously contributes of are think ratings benefits the is dialogues credit all consumer, I which recognized dialogues we're regulators they're ratio sure I not the to

So, we're what encouraged so by far. heard we've

Josephine Moore

Got to yet not EPS like growth it. reflected ratio assumptions a are rate, not the And in that of X% that's yet higher X% equity right?

Benjamin G. S. Fowke

I would equity if stream the the the things we that's we yield that offset hope consumers of if – tax holdco. million for think et Well, help the I that higher is get have mean one going that revenues $XXX of cetera, that that we're difference ratios, could to to ultimately at we the back

Josephine Moore

Got it.

Okay, great. much. you very Thank

Operator

to question, we Morningstar. for next And go our Miller Travis with

Benjamin G. S. Fowke

morning. Good

Robert C. Frenzel

Hi, Travis.

Travis Miller

XXXX. the of and me those of Give timing the tax and and of on approaching process the wondering early there was some in that into rate the increase rate are regulators getting sense maybe that reform in that? again, incorporating delay stuff regulatory might some I XXXX what's even how expecting decisions chance you're and the a

Robert C. Frenzel

We've got of at particularly of ones in the this dialogues Bob. it's New all where rate Colorado. Texas, cases the point, our constructive pending a two and with lot Mexico jurisdictions almost we've Travis, cases across had

of I impacts regulators of parts to and those think all are cases. tax as stakeholders as the either cases or reform cases adjuncts the the contemplating those those in

that one we're Dakota not say filed part it potentially of XXXX case the expecting I'd Dakota a our case it in and under-earning the as tax impacts contemplates or South South rate case think reform. guess either filing testimony estimate don't in of XXXX. our So, our potentially is filed we're there I timing rate I consideration revenues or or in the contemplates

Travis Miller

Okay.

would Minnesota, about process Okay. about And you there given what the... go regulatory the how

Benjamin G. S. Fowke

In commission. active multi-year a to commissions we'll options. Well, next dialogues implications of actual figure docket through there'll your back earlier holistic is to Colorado, educating as bringing right constructive having them settlements, settlements, to actions. for think full that Travis, some we're we reform. We're account the be plan, dialogue, way still effects in on the or now reform. that them the but tax of accounting that's an Minnesota, to And out we're deferral I we'll the question, this comment discuss complicated, a we're in appreciate be an my not rate And, presenting that tax in case have our and essentially, unanimous about either

Travis Miller

Okay, great. That's I had. all

Robert C. Frenzel

we've say We we three of six next in release. one months. Travis, entire the you jurisdictions. where to an page other conversations thing sort the where our just guide I'd should a over earnings and to those to you to the as point are go we expect pretty with dialogue regulatory That each had give of good I'd is to-date put of

Travis Miller

Okay, Thanks great. Perfect. much. so

Benjamin G. S. Fowke

Hey, thanks, Travis.

Operator

with And Jonathan Bank. Arnold question, we for next to go our Deutsche

Benjamin G. S. Fowke

Jonathan. Hey,

Constantine Lednev

Constantine Hi. Good behalf. on morning. It's Jonathan's Lednev actually

Benjamin G. S. Fowke

today. their priority. second got call Everybody's proxies I the on the guess we're

Constantine Lednev

issuance. just the the Actually, Is quick incremental to lumped of issuance. over XXXX guidance or kind it together share mentioned back that five $XXX you of (XX:XX). spread doesn't be going assume million somewhere? a and is a count front on end more years the question The equity the or to the

Robert C. Frenzel

reform conversations front-loaded dates. time with agencies spent back-loaded, really and than companies, rating with pinpointing those well the and regulatory as will we conversations but the of probably following how We have more depend both haven't actually the our the a operating on conversations. exact we lot it on credit as agencies approach It's in tax

the backdated, I to good but is year. $X.XX So we for that it be affirm do this wouldn't $X.XX expect to

Constantine Lednev

comment guess for $XXX right? I CapEx, of And same the the million Okay. goes

Robert C. Frenzel

is Most that issue. any Yeah, capital but little of XXXX, the and more probably the Again, in backdated of say stuff I'd plan. XXXX a probably trimming the comments. bit is progress, think XXXX is in in similar a underway XXXX, I capital

Benjamin G. S. Fowke

just I add a we maybe think story improving but $XXX supply at efficiency. chain are quiet really that million, too, to Xcel, really it's to our

our I with less that more become results done basis, see ability things I efficient, pleased you're can how You're O&M, with are done both to more also get And but going think efficiently. per and with seeing nuclear when in unit financially. performing more capital. our our more in you get you be to, on can't that operationally well a operations

So specific are take do targeted that. projects there just opportunities now. we to any We don't to have out know

Constantine Lednev

Yeah. great. Okay,

in other so the are both in think answered I already questions remarks thanks. the Q&A, and

Benjamin G. S. Fowke

Thank you.

Operator

next Zhou Capital to Advisors. our Joe with question, go For Avon we

Andrew Stuart Levi

Andy it's doing? are guys. Levi, you Hi, How

Benjamin G. S. Fowke

Andy, hey.

So deal you are the real now.

Andrew Stuart Levi

All time real. real maybe a is It's to do a it next call. That company another be... Everyone just deal. don't call, may you schedule you doing your when want there's

Benjamin G. S. Fowke

to want doing call. don't schedule when they our Maybe it we're

Andrew Stuart Levi

Vice versa. questions Anyway, Yes, been just ways. because of it kind goes and clarification both on I've off. two popping

on just I ago. $XXX million incremental the So initial the equity, a comments heard just of moment

timing see of So what I'm the a what just months, that trying amount first you on of of get you're the saying where – sense the that go timing timing decide of kind that – know are through is well, regulatory and, then the the – you is want to to couple falls equity, process because but the – and we kind out saying? next

Benjamin G. S. Fowke

up and right. you that's Bob mean, I add. I'll But let I the picked point think I is, on Andy. think

iterate what's credit and quality need important give on to this do signals to will So us They a the I We to to conversations them, have be them. the with important our think process. regulators. need is

preliminary think I our having we're earlier, mentioned eight all dialogues I across board as in again, the good So, states. of

Andrew Stuart Levi

additional you have comment? any do Bob,

Robert C. Frenzel

No, I all. got Ben it think

Andrew Stuart Levi

you ESOP discussions do loaded. then front-end get remember? you with equity just DRIP, so of block did last did it not Okay. things and you be you or mentioned kind time your of I The out, a did of at-the-money do just sticking And you and Bob then chunk larger through did equity figure or that, you an was that a kind block or or don't will

Robert C. Frenzel

Yeah.

me, the issuance, last last I the looking the think equity I'm issuance. believe issuance I but predated equity around it at-the-money room, was and

Benjamin G. S. Fowke

was. Yeah, it

Robert C. Frenzel

At-the-market issuance.

Benjamin G. S. Fowke

Yeah.

Andrew Stuart Levi

that issue to possibly some not trying get saying, equity comfortable and put in similar I'm see know at you're words a again, but don't we block conduit mouth would or that be point would what a to could you I just your it And done?

Robert C. Frenzel

I done opportunities an base is like. look Andy, probably what But at-the-market all and alternatives get it I'll case effectively. see to consider the we think, the

Benjamin G. S. Fowke

Yeah.

our that's that You about think tax million. mentioned by of essentially $XXX after but reform $X.X base, the – that's rate reducing Andy, it I to even net adds CapEx billion

to end be it's credit So I not assuming with our of the to credit why having, we the growth. support equity, even think have amounts earnings ratings. with dialogues which will constructive ratings equity and to lot that's But regulators, the of committed a day of we accretive at modest we are this are

Andrew Stuart Levi

as is a missing more I I just what guess at. But block better, my I'm whether not of that's if is trading Makes a get trying amount next lead timing a bit intact dynamics the just getting because story to get question. sense it's get and just you're that difference to of $XXX mean, than we too, important No. as I'm of obviously not it or trying when which relevant point. to I kind think little far a million to at-the-money.

wasn't was heard, that clear what So, other that's then earlier, I getting my I fault. on think question, it And I at. but what I my asked and was was

are there So in incremental not? those initiatives have X%, the X% than but other be whether contemplated currently not we pending on rate? X% I'm those more but X%. Is correct you'll or X% to that growth would that saying it are may you settlements that to projects of the final to be, grow to in not that X% regulatory you the or approval, have side got it's whatever that Colorado some out have may not

Robert C. Frenzel

our Andy, the forecast Colorado of is outside that's thing Plan. the Energy capital only

Andrew Stuart Levi

Okay.

Robert C. Frenzel

of things the our... that's of that are outside – So, or our that's only outside capital

Andrew Stuart Levi

That's still regulatory wise? pending

Robert C. Frenzel

correct. is That

Andrew Stuart Levi

you. a Thank you. Thank Thanks Okay. lot. clear. That's

Robert C. Frenzel

bet. You

Benjamin G. S. Fowke

Andy. Thanks,

Operator

over Therefore, remarks. roster. ladies any turn to that with have And gentleman, you I closing on and Mr. we will questions conference for Frenzel, the further our no

Robert C. Frenzel

Investor call morning. participating Relations earnings And our questions. everyone, contact please this with any for team Thanks, our follow-up in

Benjamin G. S. Fowke

lot. a Thanks

Operator

will participation. today's this And again, gentlemen, and ladies conference. Thank you for conclude your

You may disconnect. now

Xcel Energy (XEL) 7 Feb 182017 Q4 Earnings call transcript