Xcel Energy Inc. · NASDAQ:XEL
Xcel Energy — Q2 2020 Earnings Presentation
34 slides from Xcel Energy's earnings presentation, Jul 30, 2020
Slide 1: Second Quarter 2020 Earnings Report Presentation
SECOND QUARTER 2020 EARNINGS REPORT PRESENTATION JULY 30, 2020
Slide 2: Safe Harbor
Safe Harbor Except for the historical statements contained in this presentation, 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-t
Slide 3: COVID-19 Impacts and Mitigation
COVID-19 Impacts and Mitigation • Reaffirming original 2020 earnings guidance of $2.73 to $2.83 per share * • Executing continuity plans well; employee and customer safety remains paramount • 2020 Q2 sales significantly impacted, but better than assumed in base case scenario • Execution of O&M conti
Slide 4: Advancing Economic Recovery
Advancing Economic Recovery Docket No. E,G999/CI-20-492 Minnesota Relief and Recovery Proposal – Potential Projects Wind Repowering Grid Resiliency Solar Generation EV Infrastructure ~$1.0-1.4 billion ~$850 million ~$650 million ~$150 million Incremental investment: Accelerated investment: Increment
Slide 5: ESG Highlights
ESG Highlights • Dakota Range moving from 80% PTC to 100% PTC with substantial customer savings • Early retirement of coal-fired Craig unit 2 announced • Recent climate risk assessment results in full alignment with TCFD recommendations • SPS Texas & New Mexico retail electric rates were the lowest
Slide 6: EPS Results by Operating Company
EPS Results by Operating Company Second Quarter YTD Operating Company 2020 2019 2020 2019 PSCo $ 0.21 $ 0.20 $ 0.45 $ 0.47 NSPM 0.22 0.19 0.43 0.41 SPS 0.14 0.11 0.22 0.22 NSPW 0.02 0.02 0.09 0.06 Equity earnings 0.01 0.01 0.02 0.02 Regulated utility 0.60 0.53 1.20 1.18 Holding company and other (0.
Slide 7: Quarterly GAAP and Ongoing EPS Change
Quarterly GAAP and Ongoing EPS Change $0.03 $0.02 ( $0.05) $0.05 ($0.03) ( $0.01) $0.07 $0.54 $0.46 2019 Q2 2020 Q2 EPS EPS * Electric margin includes ~$0.03 of positive weather impacts (post decoupling) ** Includes PTCs and tax reform regulatory amounts, which are primarily offset in electric margi
Slide 8: YTD GAAP and Ongoing EPS Change
YTD GAAP and Ongoing EPS Change $0.08 $0.04 $0.02 ($0.09) $0.10 ($0.04) ($0.03) ($0.03) ($0.02) $1.07 $1.10 2019 YTD 2020 YTD EPS EPS * Combined electric and natural gas margins include ~$0.02 of negative weather impacts (post decoupling) ** Includes PTCs and tax reform regulatory amounts, which are
Slide 9: Electric Margin
Electric Margin Second Quarter YTD Diluted Earnings (Loss) Per Share 2020 2020 Electric margin (excluding reductions in sales and demand) $0.09 $0.09 Reductions in sales and demand * (0.07) (0.07) Higher electric margins $0.02 $0.02 * Excludes weather impact, net of decoupling/sales true-up and decr
Slide 10: Sales and Customer Data
Sales and Customer Data 2020 YTD W/A Retail Electric Sales Growth 2020 Q2 YoY Electric Customer Growth (leap year adjusted) 1.3% 1.0% 0.9% 0.8% 0.6% -3.0% -2.7% -4.4% -4.1% -5.8% NSPM NSPW PSCo SPS Xcel Energy NSPM NSPW PSCo SPS Xcel Energy 2020 YTD W/A Natural Gas Sales Growth 2020 Q2 YoY Natural G
Slide 11: W/A Electric Sales Growth
W/A Electric Sales Growth Q2 Sales Stronger than Base Case Scenario Assumptions April May June Residential C&I 8.9% Total Retail 5.1% 3.2% -4.7% -6.7% -9.6% -10.6% -10.0% -13.7% 10
Slide 12: Retail Sales Scenarios – Full Year 2020
Retail Sales Scenarios – Full Year 2020 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Mild Case Impact Mild • Severe impact through May followed by recovery in Q3 • YoY electric sales down 2% (C&I down 4%, residential up ~1%); nat. gas sales flat Moderate • Negative EPS impact up to $0.11 Severe Base Case
Slide 13: Liquidity Profile
Liquidity Profile $ Millions Over $5 Billion in Liquidity Available Total Entity & Credit Facility * Amount Drawn ** Cash Liquidity Liquidity Hold Co $1,250 $76 $1,174 $621 $1,795 NSPM $500 $10 $490 $682 $1,172 NSPW $150 $0 $150 $10 $160 PSCo $700 $8 $692 $9 $701 SPS $500 $2 $498 $186 $684 Sub-Total
Slide 14: SPS New Mexico Electric Rate Case
SPS New Mexico Electric Rate Case Docket # 19-00170-UT • In 2019, SPS filed an electric rate case seeking a revised rate increase of $47 million, based on an ROE of 10.1%, an equity ratio of 54.8% and a historic test year • In May 2020, the New Mexico commission approved a settlement without modific
Slide 15: SPS Texas Electric Rate Case
SPS Texas Electric Rate Case Docket # 49831 • In March 2020, SPS filed an update to its rate case filed in August 2019, requesting: – Base rate increase of $130 million – ROE of 10.1% and equity ratio of 54.62% – Rate base of $2.6 billion – June 30, 2019 HTY • In May 2020, SPS reached an uncontested
Slide 16: PSCo Colorado Natural Gas Rate Case
PSCo Colorado Natural Gas Rate Case Docket # 20AL-0049G • In February 2020, PSCo filed a natural gas rate case requesting: – Revised net rate increase of $121 million (net of PSIA rider transfer) – ROE of 9.95% and equity ratio of 55.8% – Rate base of ~$2.2 billion – September 30, 2019 HTY adjusted
Slide 17: PSCo Rider Filing
PSCo Rider Filing Wildfire Docket # 20A-0300E • In July 2020, PSCo filed for rider recovery of: Advanced Grid Docket # 20AL-0301E – Proposed wildfire mitigation plan – Advanced grid investments • Filing avoids a full electric rate case • Commission decision anticipated in 2021 Q2 Net Revenue Require
Slide 18: 2020 GAAP & Ongoing EPS Guidance: $2.73 – $2.83
2020 GAAP & Ongoing EPS Guidance: $2.73 – $2.83 Earnings Drivers Key Assumptions (as compared to 2019 levels unless noted) Regulatory proceedings Constructive outcomes in all proceedings Weather Normal weather for the rest of the year W/A retail electric sales Decline of approximately 4% (Base Case)
Slide 19: 2020 Q2 Highlights
2020 Q2 Highlights • Effectively mitigating COVID-19 impacts • Filed Minnesota stimulus proposal to help rejuvenate the economy and create jobs • Closed on Mankato plant sale; net gain to fund charitable causes • Announced early retirement of the coal-fired Craig unit 2 • Achieved full alignment wit
Slide 20: Appendix
APPENDIX 19
Slide 21: COVID-19 Proactive Response
COVID-19 Proactive Response Safety and Reliability Our Customers Our People Our Communities • Business continuity • No disconnects for • Expanded coverage for • ~$20 million in planned plans exercised residential customers COVID-19 medical costs corporate giving, • Work from home • Entry into homes
Slide 22: COVID-19 Related Expenses
COVID-19 Related Expenses • Bad debt expense: • Normal levels ~$40 million/year • Reached $65 million in 2008-09 recession • Incremental COVID-19 expense deferral requests: − Orders approved in Minnesota, Wisconsin, Texas, New Mexico and Michigan − Settlement reached in Colorado, pending commission
Slide 23: COVID-19 O&M Contingency Plans
COVID-19 O&M Contingency Plans • O&M expected to decline 4-5% in 2020 to offset revenue declines from COVID-19 • Management actions include: • Natural attrition and hiring freeze • Employee expenses • Consulting services • Variable/incentive compensation • Certain work activities 22
Slide 24: COVID-19 Stay-at-Home Orders
COVID-19 Stay-at-Home Orders • Stay-at-home March 27 - May 18 • Stay-at-home March 26 - April 26 • Businesses open with occupancy CO • Businesses open with occupancy MN limitations and other guidelines limitations and other guidelines • Fall school guidelines expected July 30 • Fall school approach
Slide 25: Pension Profile
Pension Profile No Changes to Pension Funding Funded Status Targeted Asset Allocations Domestic and Long-duration international fixed income 90% equity securities securities ~83% 37% 30% Short-to- intermediate fixed income Alternative securities January 2020 * Current Estimate ** investments 14% Cas
Slide 26: ROE Results – GAAP and Ongoing Earnings
ROE Results – GAAP and Ongoing Earnings GAAP and Ongoing ROE 2019 Rate Base Twelve Months Ended 6/30/2020 SPS 10.88% 16% 9.26% 9.42% 8.55% 8.70% NSPM 8.18% $30 37% PSCo Billion 41% NSPM NSPW PSCo SPS Total Xcel NSPW OpCo Energy 6% 25
Slide 27: Xcel Energy W/A Sales Growth
Xcel Energy W/A Sales Growth Residential C&I Total Retail Electric Natural Gas Electric Natural Gas 2.3% 1.5% 2.4% 2.7% 0.8% 0.4% 1.3% -0.5% -0.3% -0.7% -4.1% -6.4% YTD YTD YTD YTD 2018 2019 2020* 2018 2019 2020* 2018 2019 2020* 2018 2019 2020* * Leap year adjusted Extreme weather variations, wind c
Slide 28: 2020 YTD W/A Electric Sales Growth
2020 YTD W/A Electric Sales Growth NSPM NSPW PSCo SPS Residential C&I Total Retail 2.2% 2.4% 2.8% 1.3% -3.0% -3.3% -2.7% -4.4% -5.8% -5.5% -7.1% -9.2% Leap year adjusted Extreme weather variations, wind chill and cloud cover may not be reflected in growth (decline) estimates 27
Slide 29: Retail Electric Sales and Revenue By Class
Retail Electric Sales and Revenue By Class Residential Small C&I Large C&I Percent of revenue 37% 41% 21% Percent of sales (KWh) 28% (~70% decoupled) 40% (~40% decoupled) 32% (~25% decoupled) 1% sales impact ~$5 million ~$20 million Considerations Highest-margin class Demand charges ~56% of base rev
Slide 30: Retail Electric Sales and Revenue by Sector
Retail Electric Sales and Revenue by Sector Residential Manufacturing Trade, Transport & Utilities Professional & Other Services Education & Health Services Natural Resources & Mining Financial Services & Real Estate Leisure & Hospitality Other Public Administration Information Services Revenue ($)
Slide 31: Retail Electric C&I Demand Charges
Retail Electric C&I Demand Charges % of % of Demand % of Demand Revenue Based on Company C&I Base Revenue Based on Greater of the Current Month Peak or Prior Levels Revenue Current Month Peak NSPM 44% 25% 75% - Greater of current month peak or 50% of peak in past year NSPW 32% 85% 15% - Highest mont
Slide 32: Natural Gas Sales and Revenue
Natural Gas Sales and Revenue Sales (MMBtu) Revenue ($) 30% Large C&I 30% Large C&I Residential 35% Residential 62% C&I C&I Transport 22% 32% & Other 43% Transport & Other 100 bp sales impact = ~$4 million (pre-tax) 6% 31
Slide 33: 2020 Long-term Debt Financing Plan
2020 Long-term Debt Financing Plan $ Millions Issuer Security Amount Status Tenor Coupon Hold Co Senior Unsecured Bonds ~$600 Completed 10 Yr 3.40% PSCo First Mortgage Bonds ~$750 Completed 11 Yr / 31 Yr 1.90% / 2.70% SPS First Mortgage Bonds ~$350 Completed 30 Yr 3.15% NSPW First Mortgage Bonds ~$1
Slide 34: © 2020 Xcel Energy Inc.
(2) Xcel Energy’ © 2020 Xcel Energy Inc.