Xcel Energy 2019 Year End Earnings Report

• 2019 earnings per share were $2.64 compared with $2.47 per share in 2018.
• Xcel Energy reaffirms 2020 EPS earnings guidance of $2.73 to $2.83 per share.

 

MINNEAPOLIS–(BUSINESS WIRE)–Xcel Energy Inc. (NASDAQ: XEL) today reported 2019 GAAP and ongoing earnings of $1,372 million, or $2.64 per share, compared with $1,261 million, or $2.47 per share in 2018.

Earnings reflect higher electric margins primarily due to non-fuel riders and regulatory rate outcomes, higher natural gas margins and lower O&M expenses, partially offset by lower AFUDC, increased depreciation and interest expenses.

“We delivered strong financial results again in 2019, with earnings at the upper end of our guidance range. Xcel Energy continues to deliver consistent and solid performance, meeting or exceeding earnings guidance for the 15th consecutive year,” said Ben Fowke, chairman, president and CEO of Xcel Energy.

“We are proud of our continued progress in leading the clean energy transition on our path to 80% carbon reductions by 2030 and 100% carbon-free electricity by 2050, all while providing great value for our customers, communities, and shareholders. We took important steps on that journey this past year, completing three major Steel for Fuel wind projects, which contribute to the almost 4,700 megawatts of additional wind expected on our system by 2021. We begin the new year well-positioned to deliver on our financial objectives in 2020 and beyond.”

At 9:00 a.m. CDT today, Xcel Energy will host a conference call to review financial results. To participate in the call, please dial in 5 to 10 minutes prior to the start and follow the operator’s instructions.

US Dial-In:		(800) 367-2403
International Dial-In:		(800) 714-1899
Conference ID:		8911094

The conference call also will be simultaneously broadcast and archived on Xcel Energy’s website at www.xcelenergy.com. To access the presentation, click on Investor Relations. If you are unable to participate in the live event, the call will be available for replay from 12:00 p.m. CDT on Jan. 30 through 12:00 p.m. CDT on Feb. 2.

Replay Numbers
US Dial-In:		(888) 203-1112
International Dial-In:		(719) 457-0820
Access Code:		8911094

Except for the historical statements contained in this report, the matters discussed herein are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements, including the 2020 earnings per share (EPS) guidance, long-term EPS and dividend growth rate, as well as assumptions and other statements are intended to be identified in this document by the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “will,” “would” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information. The following factors, in addition to those discussed in Xcel Energy’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: changes in environmental laws and regulations; climate change and other weather, natural disaster and resource depletion, including compliance with any accompanying legislative and regulatory changes; ability of subsidiaries to recover costs from customers; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including inflation rates, monetary fluctuations and their impact on capital expenditures and the ability of Xcel Energy Inc. and its subsidiaries to obtain financing on favorable terms; availability or cost of capital; our customers’ and counterparties’ ability to pay their debts to us; assumptions and costs relating to funding our employee benefit plans and health care benefits; our subsidiaries’ ability to make dividend payments; tax laws; operational safety, including our nuclear generation facilities; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices; costs of potential regulatory penalties; effects of geopolitical events, including war and acts of terrorism; cyber security threats and data security breaches; fuel costs; and employee work force and third party contractor factors.

This information is not given in connection with any

sale, offer for sale or offer to buy any security.

XCEL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(amounts in millions, except per share data)
		Three Months Ended December 31								Twelve Months Ended December 31
		2019				2018				2019				2018
Operating revenues
Electric		$	2,231			$	2,300			$	9,575			$	9,719
Natural gas		544				558				1,868				1,739
Other		23				22				86				79
Total operating revenues		2,798				2,880				11,529				11,537
Operating expenses
Electric fuel and purchased power		830				947				3,510				3,854
Cost of natural gas sold and transported		272				305				918				843
Cost of sales — other		12				10				40				35
Operating and maintenance expenses		574				624				2,338				2,352
Conservation and demand side management expenses		73				74				285				290
Depreciation and amortization		446				442				1,765				1,642
Taxes (other than income taxes)		141				139				569				556
Total operating expenses		2,348				2,541				9,425				9,572
Operating income		450				339				2,104				1,965
Other income (expense)		2				(7		)		16				(14		)
Equity earnings of unconsolidated subsidiaries		10				10				39				35
Allowance for funds used during construction — equity		22				30				77				108
Interest charges and financing costs
Interest charges — includes other financing costs of $7, $7, $26 and $25, respectively		195				176				773				700
Allowance for funds used during construction — debt		(10		)		(13		)		(37		)		(48		)
Total interest charges and financing costs		185				163				736				652
Income before income taxes		299				209				1,500				1,442
Income taxes		7				(6		)		128				181
Net income		$	292			$	215			$	1,372			$	1,261
Weighted average common shares outstanding:
Basic		525				515				519				511
Diluted		526				515				520				511
Earnings per average common share:
Basic		$	0.56			$	0.42			$	2.64			$	2.47
Diluted		0.56				0.42				2.64				2.47

XCEL ENERGY INC. AND SUBSIDIARIES

Notes to Investor Relations Earnings Release (Unaudited)

Due to the seasonality of Xcel Energy’s operating results, quarterly financial results are not an appropriate base from which to project annual results.

Non-GAAP Financial Measures

The following discussion includes financial information prepared in accordance with generally accepted accounting principles (GAAP), as well as certain non-GAAP financial measures such as ongoing return on equity (ROE), electric margin, natural gas margin, ongoing earnings and ongoing diluted EPS. Generally, a non-GAAP financial measure is a measure of a company’s financial performance, financial position or cash flows that excludes (or includes) amounts that are adjusted from measures calculated and presented in accordance with GAAP. Xcel Energy’s management uses non-GAAP measures for financial planning and analysis, for reporting of results to the Board of Directors, in determining performance-based compensation, and communicating its earnings outlook to analysts and investors. Non-GAAP financial measures are intended to supplement investors’ understanding of our performance and should not be considered alternatives for financial measures presented in accordance with GAAP. These measures are discussed in more detail below and may not be comparable to other companies’ similarly titled non-GAAP financial measures.

Ongoing ROE

Ongoing ROE is calculated by dividing the net income or loss of Xcel Energy or each subsidiary, adjusted for certain nonrecurring items, by each entity’s average stockholder’s equity. We use these non-GAAP financial measures to evaluate and provide details of earnings results.

Electric and Natural Gas Margins

Electric margin is presented as electric revenues less electric fuel and purchased power expenses. Natural gas margin is presented as natural gas revenues less the cost of natural gas sold and transported. Expenses incurred for electric fuel and purchased power and the cost of natural gas are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are generally offset in operating revenues. Management believes electric and natural gas margins provide the most meaningful basis for evaluating our operations because they exclude the revenue impact of fluctuations in these expenses. These margins can be reconciled to operating income, a GAAP measure, by including other operating revenues, cost of sales – other, operating and maintenance (O&M) expenses, conservation and demand side management (DSM) expenses, depreciation and amortization and taxes (other than income taxes).

Earnings Adjusted for Certain Items (Ongoing Earnings and Ongoing Diluted EPS)

GAAP diluted EPS reflects the potential dilution that could occur if securities or other agreements to issue common stock (i.e., common stock equivalents) were settled. The weighted average number of potentially dilutive shares outstanding used to calculate Xcel Energy Inc.’s diluted EPS is calculated using the treasury stock method. Ongoing earnings reflect adjustments to GAAP earnings (net income) for certain items. Ongoing diluted EPS is calculated by dividing the net income or loss of each subsidiary, adjusted for certain items, by the weighted average fully diluted Xcel Energy Inc. common shares outstanding for the period. Ongoing diluted EPS for each subsidiary is calculated by dividing the net income or loss of such subsidiary, adjusted for certain items, by the weighted average fully diluted Xcel Energy Inc. common shares outstanding for the period.

We use these non-GAAP financial measures to evaluate and provide details of Xcel Energy’s core earnings and underlying performance. We believe these measurements are useful to investors to evaluate the actual and projected financial performance and contribution of our subsidiaries. For the three and twelve months ended Dec. 31, 2019 and 2018, there were no such adjustments to GAAP earnings and therefore GAAP earnings equal ongoing earnings for these periods.

Note 1. Earnings Per Share Summary

The following summarizes diluted EPS for Xcel Energy:

		Three Months Ended December 31								Twelve Months Ended December 31
Diluted Earnings (Loss) Per Share		2019				2018				2019				2018
Public Service Company of Colorado (PSCo)		$	0.25			$	0.17			$	1.11			$	1.08
NSP-Minnesota		0.24				0.17				1.04				0.96
Southwestern Public Service Company (SPS)		0.09				0.08				0.51				0.42
NSP-Wisconsin		0.03				0.04				0.15				0.19
Equity earnings of unconsolidated subsidiaries		0.01				0.01				0.05				0.04
Regulated utility (a)		0.62				0.47				2.86				2.69
Xcel Energy Inc. and Other		(0.07		)		(0.05		)		(0.22		)		(0.22		)
Total (a)		$	0.56			$	0.42			$	2.64			$	2.47
(a) Amounts may not add due to rounding.

PSCo — Earnings increased $0.03 per share for 2019, reflecting higher electric margin due primarily to capital riders and increased natural gas margin attributable to capital riders, weather and sales growth, partially offset by lower AFUDC and higher depreciation, interest and O&M.

NSP-Minnesota — Earnings increased $0.08 per share for 2019, reflecting higher electric margin resulting from regulatory rate outcomes and capital riders and lower O&M, partially offset by increased depreciation.

SPS — Earnings increased $0.09 per share for 2019, reflecting higher electric margin attributable to lower capacity costs, regulatory rate outcomes and higher demand revenue and higher AFUDC, partially offset by increased interest and depreciation.

NSP-Wisconsin — Earnings decreased $0.04 per share for 2019, reflecting lower electric margin, primarily related to sales decline and the impact of unfavorable weather, higher depreciation and lower AFUDC.

Xcel Energy Inc. and Other — Xcel Energy Inc. and Other primarily includes financing costs at the holding company.

Components significantly contributing to changes in 2019 EPS compared with the same period in 2018:

Diluted Earnings (Loss) Per Share		Three Months Ended December 31				Twelve Months Ended December 31
GAAP and ongoing diluted EPS — 2018		$	0.42			$	2.47
Components of change — 2019 vs. 2018:
Higher electric margins		0.07				0.29
Lower ETR (a)		0.02				0.15
Higher natural gas margins		0.03				0.08
Lower O&M		0.07				0.02
Higher depreciation and amortization		(0.01		)		(0.18		)
Higher interest		(0.03		)		(0.11		)
Lower AFUDC		(0.02		)		(0.08		)
Other (net)		0.01				—
GAAP and ongoing diluted EPS — 2019		$	0.56			$	2.64
(a) Includes production tax credits (PTCs) and timing of tax reform regulatory decisions, which are primarily offset in electric margin.

The following summarizes the ROE for Xcel Energy and its utility subsidiaries at Dec. 31:

ROE — 2019		NSP-Minnesota			PSCo			SPS			NSP-Wisconsin			Operating Companies			Xcel Energy
GAAP and ongoing ROE		9.31	%		8.69	%		9.71	%		8.27	%		9.06	%		10.78	%
ROE — 2018		NSP-Minnesota			PSCo			SPS			NSP-Wisconsin			Operating Companies			Xcel Energy
GAAP and ongoing ROE		9.10	%		8.91	%		9.14	%		10.77	%		9.14	%		10.65	%

Note 2. Regulated Utility Results

Estimated Impact of Temperature Changes on Regulated Earnings — Unusually hot summers or cold winters increase electric and natural gas sales, while mild weather reduces electric and natural gas sales. The estimated impact of weather on earnings is based on the number of customers, temperature variances, the amount of natural gas or electricity historically used per degree of temperature and excludes any incremental related operating expenses that could result due to storm activity or vegetation management requirements. As a result, weather deviations from normal levels can affect Xcel Energy’s financial performance.

Degree-day or Temperature-Humidity Index (THI) data is used to estimate amounts of energy required to maintain comfortable indoor temperature levels based on each day’s average temperature and humidity. Heating degree-days (HDD) is the measure of the variation in the weather based on the extent to which the average daily temperature falls below 65° Fahrenheit. Cooling degree-days (CDD) is the measure of the variation in the weather based on the extent to which the average daily temperature rises above 65° Fahrenheit. Each degree of temperature above 65° Fahrenheit is counted as one CDD, and each degree of temperature below 65° Fahrenheit is counted as one HDD. In Xcel Energy’s more humid service territories, a THI is used in place of CDD, which adds a humidity factor to CDD. HDD, CDD and THI are most likely to impact the usage of Xcel Energy’s residential and commercial customers. Industrial customers are less sensitive to weather.

Normal weather conditions are defined as either the 20-year or 30-year average of actual historical weather conditions. The historical period of time used in the calculation of normal weather differs by jurisdiction, based on regulatory practice. To calculate the impact of weather on demand, a demand factor is applied to the weather impact on sales. Extreme weather variations, windchill and cloud cover may not be reflected in weather-normalized estimates.

Percentage increase (decrease) in normal and actual HDD, CDD and THI:

		Three Months Ended December 31									Twelve Months Ended December 31
		2019 vs. Normal			2018 vs. Normal			2019 vs. 2018			2019 vs. Normal			2018 vs. Normal			2019 vs. 2018
HDD		9.9	%		6.4	%		2.7	%		10.4	%		2.2	%		6.8	%
CDD		N/A			N/A			N/A			5.4			26.7			(15.5	)
THI		N/A			N/A			N/A			(8.8	)		37.3			(33.2	)

Weather — Estimated impact of temperature variations on EPS compared with normal weather conditions:

		Three Months Ended December 31												Twelve Months Ended December 31
		2019 vs. Normal				2018 vs. Normal				2019 vs. 2018				2019 vs. Normal				2018 vs. Normal				2019 vs. 2018
Retail electric		$	0.005			$	0.004			$	0.001			$	0.040			$	0.114			$	(0.074	)
Firm natural gas		0.007				0.004				0.003				0.027				0.007				0.020
Total (excluding decoupling)		$	0.012			$	0.008			$	0.004			$	0.067			$	0.121			$	(0.054	)
Decoupling – Minnesota		(0.001		)		(0.002		)		0.001				—				(0.051		)		0.051
Total (adjusted for decoupling)		$	0.011			$	0.006			$	0.005			$	0.067			$	0.070			$	(0.003	)

Sales Growth (Decline) — Sales growth (decline) for actual and weather-normalized sales in 2019 compared to the same period in 2018:

		Three Months Ended December 31
		PSCo			NSP-Minnesota			SPS			NSP-Wisconsin			Xcel Energy
Actual
Electric residential		1.7	%		0.7	%		2.5	%		0.2	%		1.3	%
Electric commercial and industrial		—			(2.3	)		2.5			(4.4	)		(0.5	)
Total retail electric sales		0.7			(1.5	)		2.5			(3.1	)		—
Firm natural gas sales		8.0			0.3			N/A			(2.5	)		4.9
		Three Months Ended December 31
		PSCo			NSP-Minnesota			SPS			NSP-Wisconsin			Xcel Energy
Weather-normalized
Electric residential		0.3	%		0.6	%		4.3	%		1.1	%		1.0	%
Electric commercial and industrial		—			(2.3	)		2.6			(4.3	)		(0.5	)
Total retail electric sales		0.3			(1.5	)		2.9			(2.8	)		—
Firm natural gas sales		2.7			0.5			N/A			0.8			1.9
		Twelve Months Ended December 31
		PSCo			NSP-Minnesota			SPS			NSP-Wisconsin			Xcel Energy
Actual
Electric residential		0.1	%		(3.5	)%		0.3	%		(1.8	)%		(1.5	)%
Electric commercial and industrial		(0.6	)		(4.0	)		3.5			(3.2	)		(1.1	)
Total retail electric sales		(0.3	)		(3.9	)		2.8			(2.8	)		(1.2	)
Firm natural gas sales		12.9			3.6			N/A			(2.0	)		8.8
		Twelve Months Ended December 31
		PSCo			NSP-Minnesota			SPS			NSP-Wisconsin			Xcel Energy
Weather-normalized
Electric residential		(0.1	)%		0.1	%		1.9	%		1.1	%		0.4	%
Electric commercial and industrial		(0.6	)		(3.0	)		3.8			(2.6	)		(0.5	)
Total retail electric sales		(0.3	)		(2.1	)		3.4			(1.6	)		(0.3	)
Firm natural gas sales		4.1			1.1			N/A			(2.5	)		2.7

Year-to-date weather-normalized electric sales growth (decline)

• PSCo — Residential sales declined due to lower use per customer, partially offset by an increased number of customers. The decline in commercial and industrial (C&I) was mainly due to lower use per customer, primarily led by the food products and service industries, partially offset by growth in the metal mining and fabricated metal and industries. The decrease in customer use was partially offset by an increase in the number of C&I customers.
• NSP-Minnesota — Flat residential sales reflect lower use per customer offset by customer additions. The decline in C&I sales was a result of customer growth being offset by lower use per customer, and certain customers moving to co-generation. Decreased sales to C&I customers were driven by the energy and manufacturing sectors.
• SPS — Residential sales grew largely due to an increase in customers and higher use per customer. C&I sales grew based on higher use per small C&I customer and an overall increase in the number of C&I customers. In addition, the increase in C&I sales was driven by the oil and natural gas industry in the Permian Basin.
• NSP-Wisconsin — Residential sales growth was primarily attributable to customer additions and more use per customer. The decline in C&I sales was largely due to lower use per customer and decreased sales to the frac sand mining, food and manufacturing sectors, which was partially offset by customer additions.

Year-to-date weather-normalized natural gas sales growth

• Overall natural gas sales reflect an increase in the number of customers combined with higher customer use, particularly C&I at PSCo. This was partially offset by a decline in C&I sales at NSP-Wisconsin, driven by the frac sand mining industry.

Electric Margin — Electric revenues and fuel and purchased power expenses are impacted by fluctuations in the price of natural gas, coal and uranium used in the generation of electricity. However, these price fluctuations have minimal impact on electric margin due to fuel recovery mechanisms that recover fuel expenses. In addition, electric customers receive a credit for PTCs generated in a particular period.

Electric revenues and margin:

		Three Months Ended December 31								Twelve Months Ended December 31
(Millions of Dollars)		2019				2018				2019				2018
Electric revenues		$	2,231			$	2,300			$	9,575			$	9,719
Electric fuel and purchased power		(830		)		(947		)		(3,510		)		(3,854		)
Electric margin		$	1,401			$	1,353			$	6,065			$	5,865

Changes in electric margin:

		Three Months				Twelve Months
		Ended Dec. 31,				Ended Dec. 31,
(Millions of Dollars)		2019 vs. 2018				2019 vs. 2018
Non-fuel riders (a)		$	26			$	107
Regulatory rate outcomes (Minnesota, New Mexico, North and South Dakota)		16				95
Implementation of lease accounting standard (offset in interest expense and amortization)		5				22
Purchased capacity costs		1				22
Demand revenue		9				20
Wholesale transmission revenue (net)		(11		)		11
Timing of tax reform regulatory decisions (offset in income tax and amortization)		(15		)		(37		)
Estimated impact of weather (net of Minnesota decoupling)		1				(25		)
Firm wholesale generation		(6		)		(20		)
Sales declines (excluding weather impact)		—				(18		)
Other (net)		22				23
Total increase in electric margin		$	48			$	200
(a) Includes approximately $11 million and $60 million, respectively, of additional PTC benefit (grossed-up for tax) as compared to the same periods in 2018, which are credited to customers through various regulatory mechanisms.

Natural Gas Margin — Natural gas expense varies with changing sales and the cost of natural gas. However, fluctuations in the cost of natural gas has minimal impact on natural gas margin due to cost recovery mechanisms.

Natural gas revenues and margin:

		Three Months Ended December 31								Twelve Months Ended December 31
(Millions of Dollars)		2019				2018				2019				2018
Natural gas revenues		$	544			$	558			$	1,868			$	1,739
Cost of natural gas sold and transported		(272		)		(305		)		(918		)		(843		)
Natural gas margin		$	272			$	253			$	950			$	896

Changes in natural gas margin:

		Three Months				Twelve Months
		Ended Dec. 31,				Ended Dec. 31,
(Millions of Dollars)		2019 vs. 2018				2019 vs. 2018
Infrastructure and integrity riders		$	8			$	19
Estimated impact of weather		2				14
Transport sales		4				7
Retail sales growth		2				7
Other (net)		3				7
Total increase in natural gas margin		$	19			$	54

O&M Expenses — O&M expenses decreased $14 million, or 0.6%, for 2019. Significant changes are summarized below:

		Three Months				Twelve Months
		Ended Dec. 31,				Ended Dec. 31,
(Millions of Dollars)		2019 vs. 2018				2019 vs. 2018
Plant generation		$	(23	)		$	(20	)
Nuclear plant operations and amortization		(4		)		(8		)
Transmission		(7		)		(7		)
Distribution		(7		)		16
Other (net)		(9		)		5
Total decrease in O&M expenses		$	(50	)		$	(14	)

• Plant generation, transmission and distribution costs were lower due to timing of maintenance activities;
• Nuclear plant operations and amortization were lower largely reflecting improved operating efficiencies and reduced refueling outage costs; and
• Distribution expenses in 2019 were higher than 2018 due to storms, labor and overtime incurred primarily in the first six months of 2019.

Depreciation and Amortization — Depreciation and amortization increased $4 million, or 0.9%, for the fourth quarter of 2019 and $123 million, or 7.

Contacts

Paul Johnson, Vice President, Investor Relations (612) 215-4535

For news media inquiries only,

please call Xcel Energy Media Relations (612) 215-5300

Xcel Energy website address: www.xcelenergy.com

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