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WEC ENERGY GROUP, INC. (WEC)·Q2 2025 Earnings Summary

Executive Summary

  • Solid quarter with headline beats: Q2 revenue $2.01B and diluted EPS $0.76 both exceeded S&P Global consensus; revenue beat by ~15% and EPS by ~8% as warmer weather and rate base growth drove performance while guidance was reaffirmed . Consensus: Revenue $1.7538B*, EPS $0.7048* (Actuals vs estimates detailed below; S&P Global data) .
  • Management reaffirmed FY25 EPS guidance of $5.17–$5.27 and long‑term 6.5%–7% EPS CAGR; provided Q3 EPS guidance of $0.74–$0.80, signaling confidence into 2H25 despite tight regional capacity .
  • Load backdrop improving: retail electric deliveries ex‑mine +1.0% YoY in Q2; weather‑normal +1.1%; residential +1.6%; small C&I +0.6%; large C&I +0.8% .
  • Strategic/capacity updates: Paris 110 MW battery online; PSCW approved 1,100 MW CTs ($1.2B), 128 MW RICE ($300M) and verbal approval for 2 Bcf LNG (~$456M); Oak Creek units 7 & 8 extended through 2026 to address tight Midwest supply; very large customer tariff (10.48% ROE, 57% equity) pending PSCW review .

What Went Well and What Went Wrong

  • What Went Well

    • Beat on both revenue and EPS vs consensus; CEO cited “a warm start to the summer, steady execution of our capital plan and a continued focus on operating efficiency” as key drivers .
    • Rate base growth and favorable weather improved utility earnings; CFO quantified drivers: +$0.12 from rate base growth, +$0.04 vs normal weather (net +$0.02 YoY), +$0.07 from timing of fuel/tax/other .
    • Strategic progress: 110 MW battery in service; PSCW approvals for CTs/RICE/LNG; data‑center pipeline (Microsoft campus; Vantage potential up to 3.5 GW) supports multiyear demand outlook (1.8 GW five‑year forecast) .

  • What Went Wrong

    • Energy Infrastructure segment down $0.03 EPS due to storm damage at Texas solar facilities; insurance recovery may offset later but timing uncertain .
    • Higher D&A (−$0.05) and day‑to‑day O&M (−$0.02) pressured results; full‑year O&M expected to rise 8–10% vs 2024 given vegetation management, assets placed in service, and prior‑year actions .
    • Tight regional capacity necessitated extending Oak Creek coal units 7 & 8 through 2026; while not requiring significant incremental CapEx, it underscores system tightness and planning complexity .

Financial Results

Summary vs Prior Periods

MetricQ4 2024Q1 2025Q2 2025
Operating Revenues ($USD Billions)$2.284 $3.150 $2.010
Diluted EPS ($)$1.43 $2.27 $0.76
Net Income Attributed to Common ($USD Millions)$453.5 $724.2 $245.4
Operating Income ($USD Millions)$590.9 $937.5 $404.9
Operating Margin (%)25.9% 29.8% 20.2%

Notes: Operating Margin = Operating Income / Operating Revenues (computed from cited figures).

Q2 2025 Actual vs Consensus

MetricConsensusActualSurprise
Revenue ($USD Billions)$1.7538*$2.0095 +14.6%
Diluted EPS ($)$0.7048*$0.76 +7.9%

Values marked with * retrieved from S&P Global.

KPIs (Demand/Volumes)

KPI (YoY unless noted)Q1 2025Q2 2025
Retail electricity deliveries (ex‑iron ore mine)+2.9% +1.0%
Residential usage+5.5% +1.6%
Small C&I usage+2.1% +0.6%
Large C&I usage (ex‑mine)+1.1% +0.8%
Weather‑normal retail deliveries+0.7% +1.1%

Segment breakdown: Not disclosed numerically in the 8‑K/press release. Management noted Utility earnings +$0.16 YoY; ATC +$0.01; Energy Infrastructure −$0.03; Corporate/Other −$0.03 (EPS impact) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Diluted EPSFY 2025$5.17–$5.27 $5.17–$5.27 Maintained
Diluted EPSQ3 2025—$0.74–$0.80 Introduced (intra‑quarter)
O&M expense growth (vs 2024)FY 20258%–10% (prior) 8%–10% Maintained
Long‑term EPS CAGRMulti‑year6.5%–7% (prior) 6.5%–7% Maintained
Annualized DividendOngoing$3.57 (prior) $3.57; payout 65%–70% target Maintained

Additional context:

  • Very Large Customer tariff proposal at PSCW: 10.48% ROE, 57% equity ratio; designed to serve large loads (e.g., data centers); decision expected by 2Q26 .
  • Dividend declaration: 89.25c per share payable Sept. 1, 2025 (quarterly) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Data center demand (Microsoft; Vantage)General capital plan execution; demand not a focal point in PRs Microsoft campus progressing; Vantage site potential up to 3.5 GW (1.3 GW by end‑2027 target) not yet in forecast; 5‑yr demand growth outlook 1.8 GW Accelerating focus
Capacity/Generation mix—PSCW OKs 1,100 MW CTs ($1.2B), 128 MW RICE ($300M), 2 Bcf LNG (~$456M verbal approval); evaluating future CCGT; Paris 110 MW battery online Building capacity; diversified
Coal retirements/Extensions—Oak Creek 7 & 8 extended through 2026 due to tight MISO supply; minimal extra CapEx expected; Elm Road conversion to gas; assess Weston 4 Tight market response
Regulatory (VLC tariff)—VLC tariff (10.48% ROE; 57% equity) under PSCW review; broad customer alignment; decision expected by 2Q26 Clarity improving
Illinois PRP (Peoples Gas)—Replace ~1,100 miles of pipe by 2035; ramp to >$500M run‑rate by ~2028 (vs $90M/yr currently in plan) CapEx ramp ahead
Renewables policy/safe harbor—40–50% of portfolio safe‑harbored under OBBB; awaiting Treasury guidance; batteries provide extended ITC runway Policy monitoring
Storm/insurance—Texas solar storm damage loss recognized; pursuing insurance recovery One‑time headwind
Financing—$775M 3.375% convertible notes due 2028 priced; use for general corporate/short‑term debt Balance sheet flexibility

Management Commentary

  • “A warm start to the summer, steady execution of our capital plan and a continued focus on operating efficiency were major factors that shaped a strong quarter.” — Scott Lauber, President & CEO .
  • “Our second quarter 2025 [EPS] of $0.76… Weather positively impacted… by approximately $0.04 compared to normal… Rate base growth contributed $0.12… timing of fuel expense, tax, and other items added another $0.07… offset by $0.05 [higher D&A] and $0.02 [higher O&M].” — Xia Liu, CFO .
  • “We remain confident in our five year demand growth forecast of 1.8 gigawatts to serve the I‑94 corridor… [Vantage] site has the potential to reach 3.5 gigawatts of demand over time… [not] included in our current demand forecast.” — CEO .
  • “We started construction on 1,100 megawatts simple cycle combustion turbines… plan to invest $300 million for 128 megawatts of RICE… received verbal approval to build a 2 Bcf LNG storage facility ($456 million).” — CEO .
  • “We still expect O&M expense to grow 8%–10% for the full year… [drivers include] vegetation management, new assets placed in service…” — CFO .
  • “Our annualized dividend stands at $3.57 per share… target a payout ratio of 65–70% of earnings.” — CFO .

Q&A Highlights

  • Data center procurement and timing: Vantage targeting ~1.3 GW by end‑2027; WEC working on multiple levers (PPAs/new builds) to meet demand; system remains tight; more detail with fall capex plan .
  • Growth and capex cadence: Potential upward bias to capex from economic development, ATC tranche 2, PRP ramp; equity issuance planned $700–$800M in 2025; 50% equity content for incremental capex through 2029 .
  • VLC tariff outlook: Broad alignment with very large customers; process under PSCW review; tariff ROE 10.48% and 57% equity ratio reiterated .
  • Asset strategy: Evaluating CCGT addition; Oak Creek 7 & 8 cannot be extended beyond 2026 due to interconnect for new CTs; minimal CapEx to keep them online through 2026; Elm Road converting to gas; assessing Weston 4 .
  • Storm damage/insurance: Accounting loss taken at Texas solar; working with insurers and contractors; potential recovery in future periods .
  • Portfolio contracts: Port Washington lease and Point Beach PPA expiring mid‑2030; discussions ongoing, potential update by year‑end .

Estimates Context

  • Q2 2025 delivered a clean beat: Revenue $2.0095B vs $1.7538B* (+14.6%); EPS $0.76 vs $0.7048* (+7.9%). Drivers were favorable weather, rate base growth, and timing, partially offset by higher D&A and O&M .
  • With FY25 EPS guidance reaffirmed and Q3 EPS guide provided, street models may drift higher on utility earnings quality and load trajectory, while Energy Infrastructure storm loss is a non‑recurring item .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat and maintained FY guide; near‑term momentum supported by weather, rate base growth, and expanding load from regional economic development .
  • Tight capacity is a central narrative; WEC is adding CTs, RICE, LNG and batteries while extending Oak Creek units through 2026 to bridge demand growth—reduces reliability risk and underpins future earnings base .
  • Data center pipeline is a medium‑term upside lever; 1.8 GW five‑year forecast remains intact, with potential incremental load (Vantage/Microsoft) not yet fully embedded, creating optionality for the capex plan update in the fall .
  • O&M growth (8%–10% in 2025) and higher D&A are headwinds but manageable within reaffirmed EPS range; dividend policy (65%–70% payout; $3.57 annualized) remains intact .
  • Regulatory positioning constructive: PSCW approvals progressing; VLC tariff under review with broad customer alignment; Peoples Gas PRP ramp likely to add long‑duration, low‑risk capex .
  • One‑off storm loss in Energy Infrastructure clouds segment optics near‑term but may see insurance recovery; not indicative of core utility trajectory .
  • Into Q3, management’s $0.74–$0.80 EPS guide sets a clear bar; catalysts include fall capex plan update (potential upward bias), Point Beach/Port Washington contract updates, and VLC tariff progress .