OGE ENERGY CORP. (OGE)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 EPS was $0.53 versus $0.51 in Q2 2024, on operating revenues of $741.6M versus $662.6M; results were modest beats versus Wall Street consensus EPS of $0.522* and revenue of $720.0M*, aided by weather‑normalized load growth and cost control .
• OG&E contributed $0.53 EPS and $107.7M net income; holding company was flat and benefited from a one‑time legacy midstream item, driving consolidated net income of $107.5M .
• 2025 EPS guidance of $2.21–$2.33 was maintained, with management now expecting results in the top half of the range; consolidated EPS CAGR target of 5%–7% off the 2025 midpoint was reiterated .
• Strategic catalysts: ~550 MW of new gas CTs on track for 2026; two additional CTs (~450 MW) proposed for 2029; CWIP/PISA legislation and an SPP notice to construct a ~$240M Fort Smith–Muskogee transmission line, staged 2027–2029, strengthen regulatory and financing positioning .

Values marked with * are retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

• Revenue and EPS beat consensus: $741.6M vs $720.0M* and $0.53 vs $0.522*, with improved weather‑normalized load and lower O&M supporting results. Management pointed to the top half of guidance for 2025, signaling confidence in H2 seasonality and demand strength .
• Weather‑normalized load growth and customer additions: YTD weather‑normalized load grew 6.5%; customer growth near 1%, with residential and commercial leading demand; “we are confident in achieving results in the top half of our earnings guidance range,” CFO said .
• Regulatory and legislative progress: CWIP/PISA in OK/AR expected to reduce customer costs and strengthen financing flexibility; SPP NTC for Fort Smith–Muskogee transmission with recovery via FERC formula; “These changes give us greater flexibility to minimize customer impacts and to finance construction” .

What Went Wrong

• Milder weather and higher interest/depreciation on the growing asset base pressured OG&E net income YoY ($107.7M vs $109.3M); industrial and oilfield classes showed softness due to outages and maintenance cycles .
• Parent results benefited from a one‑time legacy midstream item; CFO advised investors to “largely ignore that” in thinking about ongoing parent drag, although the full‑year reported EPS will include it .
• Credit watch dialogue persists: management acknowledged Moody’s negative outlook in Q1 and continues to target ~17% FFO/debt while pursuing credit‑accretive policies; rating resolution timeline communicated at 12–18 months .

Financial Results

Consolidated P&L and Margins

Values marked with * are retrieved from S&P Global.

Q2 2025 Actual vs Consensus

Values marked with * are retrieved from S&P Global.

Segment Results

KPIs (OG&E)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “We are on track to deliver in the top half of our earnings guidance range… Additional generation projects under construction are all on time and all on budget” .
• CFO: “We anticipate consolidated earnings in the top half of our guidance range… Our next refi isn’t until 2027, and it’s a modest $125 million… CWIP/PISA will save customers $190 million on Horseshoe Lake Units 13 and 14” .
• CEO on capacity strategy: “We’ve expressed our strong preference to own these assets… while we’re building them, we do secure short‑term bridge capacity” .

Q&A Highlights

• Industrial/oilfield softness: driven by planned/unplanned outages and maintenance cycles; overall portfolio growth remains strong at 6.5% YTD weather‑normalized load .
• Parent one‑time benefit: CFO emphasized it is one‑time and should be ignored for ongoing parent drag, though full‑year reported EPS will include it .
• Capacity additions and ownership vs PPAs: strong preference to own; interim bridge capacity as needed; updated filings to follow IRP/RFP outcomes .
• Guidance context: pointing to top half of EPS range includes the midstream legacy benefit in reported results .
• Capacity planning: management does not expect to be long capacity by decade end; any surplus would be de minimis and quickly filled by growth .

Estimates Context

• Q2 2025 actual vs consensus: EPS $0.53 vs $0.522*; revenue $741.6M vs $720.0M*; 5 EPS estimates and 1 revenue estimate underpin consensus. Modest beats on both lines .
• Q1 2025 was a stronger beat: EPS $0.31 vs $0.222*; revenue $747.7M vs $660.2M*, reflecting robust commercial/residential demand and recovery of capital investments .

Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

• Q2 delivered small beats on both EPS and revenue versus consensus, with management raising conviction to the top half of full‑year guidance—setup is constructive into the seasonally stronger H2 .
• Weather‑normalized load growth remains strong, led by residential/commercial; customer growth near 1% supports volume trajectory and rate base leverage .
• Regulatory tailwinds (CWIP/PISA, FERC formula recovery) and the SPP NTC for a ~$240M transmission project de‑risk capital deployment and cash recovery timing—supporting balance sheet strength and equity‑friendly total return .
• Capacity program is advancing (~550 MW in 2026 and proposed ~450 MW by 2029); preference to own assets with interim bridge solutions reduces execution risk tied to large load ramps (e.g., data centers) .
• Watch industrial/oilfield normalization and weather variability; higher interest/depreciation from a growing asset base are ongoing headwinds to margins .
• Credit outlook remains a monitoring item; management targets ~17% FFO/debt and is pursuing credit‑accretive actions; next refi is modest ($125M) and only due in 2027 .
• Near‑term catalysts: filings tied to generation RFPs and potential data center agreements; Oklahoma rate review filing by year‑end; Arkansas to follow, which can clarify returns and cost recovery pace .