Xcel Energy First Quarter 2020 Earnings Report

• GAAP 2020 first quarter earnings per share were $0.56 compared with $0.61 per share in 2019.
• Xcel Energy reaffirms 2020 EPS earnings guidance of $2.73 to $2.83 per share, which assumes the implementation of contingency plans will be sufficient to offset the negative impacts of the COVID-19 pandemic under the base case scenario. For additional information, see Notes 5 and 6.

MINNEAPOLIS–(BUSINESS WIRE)–Xcel Energy Inc. (NASDAQ: XEL) today reported 2020 first quarter GAAP and ongoing earnings of $295 million, or $0.56 per share, compared with $315 million, or $0.61 per share in the same period in 2019.

The decrease in earnings primarily reflects the negative impact of weather. The impact of COVID-19 did not significantly affect first quarter 2020 results, but could have a material impact on our financial results going forward.

“Xcel Energy achieved solid first quarter results, experiencing only minor impacts from COVID-19 due to the timing of stay-at-home policies in our service territories. We are responding to the economic impact from this global pandemic by implementing contingency plans to minimize the impact on our financial results that should allow us to deliver earnings within our guidance range of $2.73 to $2.83 per share. However, these are unprecedented times and the ultimate economic impact from the pandemic may be greater than anticipated,” said Ben Fowke, chairman and CEO of Xcel Energy.

“Our customers and communities are counting on Xcel Energy to deliver the reliable energy that is needed to support local hospitals, emergency responders, grocery stores and other critical operations. We’re also doing more than ever to support our communities. Along with the Xcel Energy Foundation, we have already donated $1.5 million to local nonprofit organizations, including those that address food scarcity and local chapters of the United Way. In total, we are planning to donate approximately $20 million in corporate giving, including COVID-19 relief in 2020. Together we will make it through these very challenging times.”

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:		(866) 575-6539
International Dial-In:		(400) 120-8590
Conference ID:		9177602

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 May 7 through 12:00 p.m. CDT on May 10.

Replay Numbers
US Dial-In:		(888) 203-1112
International Dial-In:		(719) 457-0820
Access Code:		9177602

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 objectives, future sales, future bad debt expense, and future operating performance, 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, 2019 and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: uncertainty around the impacts and duration of the COVID-19 pandemic; operational safety, including our nuclear generation facilities; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices and fuel costs; qualified employee work force and third-party contractor factors; ability to recover costs, changes in regulation and subsidiaries’ ability 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; effects of geopolitical events, including war and acts of terrorism; cyber security threats and data security breaches; seasonal weather patterns; 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; and costs of potential regulatory penalties.

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 March 31
		2020				2019
Operating revenues
Electric		$	2,203			$	2,325
Natural gas		583				794
Other		25				22
Total operating revenues		2,811				3,141
Operating expenses
Electric fuel and purchased power		797				914
Cost of natural gas sold and transported		285				479
Cost of sales — other		9				10
Operating and maintenance expenses		579				597
Conservation and demand side management expenses		74				72
Depreciation and amortization		463				433
Taxes (other than income taxes)		149				150
Total operating expenses		2,356				2,655
Operating income		455				486
Other (expense) income, net		(11		)		4
Equity earnings of unconsolidated subsidiaries		11				9
Allowance for funds used during construction — equity		23				20
Interest charges and financing costs
Interest charges — includes other financing costs of $7 and $6, respectively		199				189
Allowance for funds used during construction — debt		(10		)		(10		)
Total interest charges and financing costs		189				179
Income before income taxes		289				340
Income tax (benefit) expense		(6		)		25
Net income		$	295			$	315
Weighted average common shares outstanding:
Basic			526				515
Diluted			527				516
Earnings per average common share:
Basic		$	0.56			$	0.61
Diluted		0.56				0.61

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 months ended March 31, 2020 and 2019, 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 global outbreak of the novel coronavirus (COVID-19) pandemic has adversely impacted economic conditions worldwide. Efforts to control the spread of COVID-19 have led to shutdowns or curtailments of various industries, disrupting supply chains and markets. Beginning in mid-March, wide-spread government mandates (e.g., shelter-in-place) or other initiatives impacted our service territories.

Xcel Energy’s 2020 first quarter earnings were $0.56 per share compared to $0.61 per share in 2019, largely reflecting unfavorable weather impacts. COVID-19 did not significantly impact first quarter 2020 results, but could have a material impact on our financial results in the future.

We experienced sales declines for the first quarter of 2020 (weather normalized and adjusted for 2020 leap day) of 1.0% for electric and increases of 0.4% for natural gas. For the month of March, weather-adjusted electric retail sales declined 3.0% with C&I sales declining 4.0%, while weather-adjusted firm natural gas sales declined by 4.6%. These decreases were primarily driven by reduced sales volumes experienced in the second half of March 2020. See Note 5 for further information regarding COVID-19.

The following summarizes diluted EPS for Xcel Energy:

		Three Months Ended March 31
Diluted Earnings (Loss) Per Share		2020				2019
Public Service Company of Colorado (PSCo)		$	0.24			$	0.27
NSP-Minnesota		0.20				0.22
Southwestern Public Service Company (SPS)		0.08				0.10
NSP-Wisconsin		0.06				0.05
Equity earnings of unconsolidated subsidiaries		0.01				0.01
Regulated utility (a)		0.60				0.65
Xcel Energy Inc. and Other		(0.04		)		(0.04		)
Total (a)		$	0.56			$	0.61

(a) Amounts may not add due to rounding.

PSCo — Earnings decreased $0.03 per share for the first quarter of 2020, reflecting lower natural gas margins primarily due to unfavorable weather, higher depreciation and O&M, partially offset by higher electric margin and AFUDC.

NSP-Minnesota — Earnings decreased $0.02 per share for the first quarter of 2020, driven by reduced natural gas margins primarily due to unfavorable weather as well as lower electric margin, which reflects the unfavorable weather experienced in North and South Dakota. NSP-Minnesota also recognized increased interest and higher depreciation, partially offset by lower O&M and income taxes.

SPS — Earnings decreased $0.02 per share for the first quarter of 2020, reflecting lower electric margin primarily due to a 2019 New Mexico Public Regulation Commission (NMPRC) revised order eliminating a $10 million retroactive refund of tax reform benefits. SPS also recognized additional depreciation and less AFUDC, partially offset by lower income taxes.

NSP-Wisconsin — Earnings increased $0.01 per share for the first quarter of 2020, driven by reduced O&M and higher electric margin, partially offset by additional depreciation and lower natural gas margin.

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

Components significantly contributing to changes in 2020 EPS compared with the same period in 2019:

Diluted Earnings (Loss) Per Share		Three Months Ended March 31
GAAP and ongoing diluted EPS — 2019		$	0.61
Components of change — 2020 vs. 2019:
Higher depreciation and amortization		(0.04		)
Lower electric and natural gas margins		(0.03		)
Higher interest		(0.01		)
Lower ETR (a)		0.03
Lower O&M		0.03
Lower other (expense) income, net (b)		(0.02		)
Other (net)		(0.01		)
GAAP and ongoing diluted EPS — 2020		$	0.56

(a)		Includes production tax credits (PTCs) and timing of tax reform regulatory decisions, which are primarily offset in electric margin.
(b)		Decrease is primarily due to the performance of rabbi trust investments associated with deferred compensation, which is offset in O&M.

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 10, 20 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.

There was no impact on sales for the first quarter of 2020 due to THI or CDD. Percentage change in normal and actual HDD:

	Three Months Ended March 31
	2020 vs. Normal			2019 vs. Normal			2020 vs. 2019
HDD	(5.5	)%		10.5	%		(14.1	)%

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

	Three Months Ended March 31
	2020 vs. Normal				2019 vs. Normal				2020 vs. 2019
Retail electric	$	(0.011	)		$	0.018			$	(0.029	)
MN decoupling and sales true-up	0.006				(0.005		)		0.011
Electric total	$	(0.005	)		$	0.013			$	(0.018	)
Firm natural gas	(0.007		)		0.017				(0.024		)
Total	$	(0.012	)		$	0.030			$	(0.042	)

Sales Growth (Decline) — Sales growth (decline) for actual and weather-normalized sales in 2020 compared to the same period in 2019:

		Three Months Ended March 31
		PSCo			NSP-Minnesota			SPS			NSP-Wisconsin			Xcel Energy
Actual
Electric residential		(0.9	)%		(4.8	)%		(1.4	)%		(6.3	)%		(3.0	)%
Electric commercial and industrial		0.2			(3.9	)		3.3			(0.4	)		(0.6	)
Total retail electric sales		(0.2	)		(4.2	)		2.3			(2.2	)		(1.3	)
Firm natural gas sales		(6.6	)		(13.4	)		N/A			(14.4	)		(9.3	)

		Three Months Ended March 31
		PSCo (a)			NSP-Minnesota			SPS			NSP-Wisconsin			Xcel Energy
Weather-normalized
Electric residential		1.0	%		0.2	%		0.6	%		1.6	%		0.7	%
Electric commercial and industrial		0.6			(3.2	)		3.4			0.4			(0.1	)
Total retail electric sales		0.7			(2.2	)		2.8			0.8			0.1
Firm natural gas sales		0.8			2.6			N/A			3.3			1.5

		Three Months Ended March 31 (Leap Year Adjusted)
		PSCo (a)			NSP-Minnesota			SPS			NSP-Wisconsin			Xcel Energy
Weather-normalized
Electric residential		(0.1	)%		(0.9	)%		(0.5	)%		0.5	%		(0.4	)%
Electric commercial and industrial		(0.5	)		(4.3	)		2.3			(0.7	)		(1.2	)
Total retail electric sales		(0.4	)		(3.3	)		1.7			(0.3	)		(1.0	)
Firm natural gas sales		(0.4	)		1.4			N/A			2.1			0.4

(a)

Colorado Public Utilities Commission (CPUC) approved a historical 10-year weather normalization approach for retail electric, effective March 1, 2020, which did not materially impact the weather-normalized calculation.

Weather-normalized and leap-year adjusted electric sales growth (decline)

All companies were negatively impacted by COVID-19 in March 2020. In addition, the following items impacted sales in each of the companies:

• PSCo — Residential sales declined slightly due to lower use per customer, partially offset by an increase in 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 energy industry.
• NSP-Minnesota — Residential sales declined reflecting lower use per customer, partially offset by customer additions. The decline in C&I sales was a result of lower use by certain customers in the energy, manufacturing and services sectors, partially offset by customer growth.
• SPS — Residential sales decreased slightly primarily due to lower use per customer. C&I sales grew based on higher sales to large customers in the oil and natural gas industry in the Permian Basin.
• NSP-Wisconsin — Residential sales growth was primarily attributable to customer additions, partially offset by less use per customer. The decline in C&I sales was largely due to lower use per customer, partially offset by customer additions and decreased sales to the manufacturing sector, which was partially offset by an increase in the energy sector.

Weather-normalized and leap-year adjusted natural gas sales growth (decline)

• Natural gas sales reflect an increase in the number of customers combined with lower customer use and the negative impacts of COVID-19 in March 2020.

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 March 31
(Millions of Dollars)		2020				2019
Electric revenues		$	2,203			$	2,325
Electric fuel and purchased power		(797		)		(914		)
Electric margin		$	1,406			$	1,411

Changes in electric margin:

(Millions of Dollars)		Three Months Ended March 31, 2020 vs. 2019
PTCs flowed back to customers (offset by a lower ETR)		$	(23	)
Estimated impact of weather (net of decoupling/sales true-up)		(13		)
New Mexico tax reform related regulatory settlement (2019)		(10		)
Regulatory rate outcomes (Colorado and Wisconsin)		13
Non-fuel riders		13
Wholesale transmission revenue (net)		5
Sales growth (excluding weather impact, net of decoupling/sales true-up)		4
Other (net)		6
Total decrease in electric margin		$	(5	)

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 March 31
(Millions of Dollars)		2020				2019
Natural gas revenues		$	583			$	794
Cost of natural gas sold and transported		(285		)		(479		)
Natural gas margin		$	298			$	315

Changes in natural gas margin:

(Millions of Dollars)		Three Months Ended March 31, 2020 vs. 2019
Estimated impact of weather		$	(17	)
Transport sales		(2		)
Regulatory rate outcomes (Wisconsin)		(1		)
Retail sales growth		2
Infrastructure and integrity riders		1
Conservation revenue (offset in expenses)		1
Other (net)		(1		)
Total decrease in natural gas margin		$	(17	)

O&M Expenses — O&M expenses decreased $18 million, or 3.0%, for the first quarter of 2020. Significant changes are summarized as follows:

(Millions of Dollars)		Three Months Ended March 31, 2020 vs. 2019
Employee benefits		$	(15	)
Distribution		(10		)
Generation		(2		)
Strategic initiatives		7
Other (net)		2
Total decrease in O&M expenses		$	(18	)

• Employee benefits were lower primarily due to change in deferred compensation related liability, offset in Other (Expense) Income;
• Distribution expenses declined due to storms, labor and overtime;
• Generation expenses were lower from timing of maintenance and overhauls at power plants, partially offset by an increase in wind related amounts; and
• Strategic initiatives expenses were higher due to increased spending on customer experience transformation program expenses and advanced grid infrastructure.

Depreciation and Amortization — Depreciation and amortization increased $30 million, or 6.9%, for the first quarter of 2020.

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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