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WEC ENERGY GROUP, INC. (WEC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered strong year-over-year and sequential growth: revenue rose to $2.28B (+3.0% YoY, +22.5% QoQ) and diluted EPS surged to $1.43 (+107% YoY, +88% QoQ), with operating margin expanding to ~25.9% (from ~15.4% in Q4 2023) .
  • Management reaffirmed 2025 EPS guidance of $5.17–$5.27 and introduced Q1 2025 EPS guidance of $2.13–$2.23, citing execution and demand visibility; dividend raised 6.9% to $0.8925 per quarter ($3.57 annualized) .
  • Strategic load catalysts strengthened: Microsoft’s data center build resumed with incremental land purchases; a new Cloverleaf campus targeting ~1 GW initial load was announced, all incremental to WEC’s plan—supporting balanced generation investments in renewables and gas to meet rising demand .
  • Regulatory and financing visibility improved: Wisconsin utilities’ ROE held at 9.8% with a 53% equity layer; ATC ROE set at 10.48% enabling a reserve unwind; WEC expects $700–$800M common equity in 2025 via ATM and plans 50% equity content for incremental capital .

What Went Well and What Went Wrong

What Went Well

  • Operating performance: Q4 operating income rose to $590.9M with operating margin ~25.9%, reflecting disciplined cost management and execution (operating income up ~73% YoY) .
  • Demand catalysts: Data center momentum accelerated—Microsoft resumed paused construction and expanded land holdings; Cloverleaf announced ~1 GW development in Port Washington, adding incremental load beyond current plans .
  • Financing and dividend policy: 2025 EPS guidance reaffirmed; disciplined capital markets execution in 2024 ($4.5B external funding, ~$200M common equity) and 2025 plan for $700–$800M common equity issuance; dividend increased 6.9%, marking 22 consecutive years of raises .
    • CEO: “We have significant growth opportunities ahead. And we will continue to focus on enhancing value for our customers and stockholders.” .

What Went Wrong

  • Weather headwinds: 2024 experienced the warmest winter on record, a ~$0.25 EPS headwind vs normal, requiring offsets via O&M, fuel, tax, and financing actions .
  • O&M trajectory: 2024 day-to-day O&M ended ~2% higher YoY versus initial guidance of +6–7% due to delays and initiatives; 2025 O&M could rise ~8–10% vs 2024 actual with projects entering service and reliability spending (vegetation) ramping .
  • Illinois uncertainty: Ongoing proceedings (future of natural gas; safety modernization) and prior ICC disallowances resulted in charges (2024: $0.06 EPS; 2023: $0.41 EPS) and push-pull on CapEx pacing; management awaits decisions and appeals outcomes .

Financial Results

Note: Margins are calculated from cited operating income and revenue.

Quarterly Performance (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$1.772 $1.864 $2.284
Operating Income ($USD Millions)$364.8 $383.7 $590.9
Operating Margin (%)20.6% (calc from )20.6% (calc from )25.9% (calc from )
Diluted EPS ($)$0.67 $0.76 $1.43

Year-over-Year (Q4 2023 vs Q4 2024)

MetricQ4 2023Q4 2024YoY Change
Revenue ($USD Billions)$2.218 $2.284 +3.0%
Operating Income ($USD Millions)$341.4 $590.9 +73.0%
Operating Margin (%)15.4% (calc from )25.9% (calc from )+1050 bps
Diluted EPS ($)$0.69 $1.43 +107%
Adjusted EPS ($)$1.10 N/A (no adjustment in Q4 2024) N/A

Segment/Earnings Drivers (YoY EPS contribution per management)

ItemIncremental EPS (YoY)Commentary
ATC (transmission)+$0.07 Higher ROE (10.48%) and capital investment
Energy Infrastructure+$0.13 PTC rate increase and higher renewable output
Utilities (net)+$0.06 Rate base growth, fuel/tax/other offsets vs O&M, D&A, interest

KPIs and Volumes

KPIQ2 2024Q3 2024FY 2024
Retail electricity deliveries (ex-iron ore mine) YoY+0.5% +0.7% +0.5%
Weather-normal electricity deliveries YoY-0.3% +0.4% +0.1%
Small C&I electricity use YoY+0.3% +1.0% +0.7%
Large C&I electricity use YoY (ex-iron ore)-0.1% -0.2% +0.1%
Residential electricity use YoY+1.4% +1.3% +0.5%
Natural gas deliveries in WI YoY (ex generation)N/AN/A-2.9%
Weather-normal gas deliveries YoYN/AN/A-0.1%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EPS (diluted)FY 2025$5.17–$5.27 $5.17–$5.27 Maintained
EPS (diluted)Q1 2025N/A$2.13–$2.23 New
Dividend per shareOngoing$0.8350 quarterly (2024) $0.8925 quarterly; $3.57 annualized (effective Mar 1, 2025) Raised
O&M (day-to-day)FY 2025 vs 2024N/A+8–10% vs 2024 actual (after +2% in 2024 vs initial +6–7%) Higher vs actual
Equity issuanceFY 2025N/A$700–$800M via ATM/DRIP/EBPs; 50% equity content for incremental capital Set
WI regulatory parametersTest years 2025–2026Prior practice53% equity layer, 9.8% ROE reaffirmed Maintained
ATC ROEFY 2024/Q410.38% accruals 10.48% (reserve unwind planned in Q4 2024) Increased

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q2 2024, Q-1: Q3 2024)Current Period (Q4 2024)Trend
Data centers and load growthQ2: limited public detail; volumes stable . Q3: 1,800 MW incremental demand in plan; Microsoft expanded to ~1,900 acres .Microsoft resumed paused area; added ~240 acres more; Cloverleaf announced ~1 GW initial campus; all incremental to plan .Accelerating incremental demand
Generation mix & reliabilityQ2: focus on fundamentals; renewables/gas build not detailed . Q3: $28B 5-year plan; gas CTs/RICE; LNG +2 Bcf .Balanced mix; Paris Solar online; Garien Solar expected; continued CTs and RICE, LNG lateral/storage decisions pending .Execution underway
RegulatoryQ3: WI rate case decision expected by year-end; IL SMP ALJ/proposed order timeline; future of gas docket extended to 2026 .WI finalized written orders for 2025–2026; IL SMP decision expected Q1; appeals and tariff filings progressing .Progressing toward resolution
Financing/equity contentQ3: ATM initiated; 2024 common equity up to ~$200M; 2025 plan equity content for incremental capital .2024 executed ~$4.5B external funding incl. ~$$200M equity; 2025 $700–$800M common equity; 50% equity content policy reiterated .Stable financing cadence
O&M and cost disciplineQ3: higher O&M vs 2023 impacted quarter; tailwinds expected in Q4 .2024 O&M +2% vs initial +6–7% guidance; 2025 O&M could rise 8–10% with reliability initiatives .Rising with project ramp

Management Commentary

  • CEO: “We delivered another year of solid results on virtually every meaningful measure — from customer satisfaction, to financial performance to steady execution of our capital plan.” .
  • CFO: “The estimated weather headwind was $0.25 per share… We were able to offset this by implementing a variety of initiatives such as O&M and fuel management as well as tax and financing activities.” .
  • CEO on data centers: “Microsoft purchased an additional 240 acres… Cloverleaf expects the load to be 1 gigawatt… all incremental to our current plan.” .
  • CFO on 2025: “We are reaffirming our annual guidance of $5.17 to $5.27 per share… and expect to issue $700 million to $800 million of common equity.” .
  • CEO on Wisconsin ROE/equity layer: “The commission maintained a 53% financial equity layer and a 9.8% return on equity for our Wisconsin utilities.” .

Q&A Highlights

  • Data center trajectory: Microsoft’s design review pause lifted on one area; closed-loop water considerations ongoing; tariffs with large customers expected within 6 months and structured to ensure fair cost allocation .
  • Cloverleaf campus: Initial ~1 GW; construction could start as early as fall; energy flows ramp over 3–4 years, likely impacting 2028–2029 period .
  • Illinois SMP and CapEx: If staff’s preferred option is adopted, annual CapEx may need to ramp toward ~$300–$350M from ~ $90M currently, requiring time to reestablish contracts and permits .
  • ATC ROE and timing: ROFR legislation being pursued; bids could occur 1H; tranche 2.1 investment largely post-5-year plan (late 2020s/early 2030s) .
  • Debt extinguishment: Opportunistic tool dependent on market rates; not embedded in base plan .

Estimates Context

  • Wall Street consensus EPS and revenue for Q4 2024 from S&P Global were unavailable due to request limits; we cannot quantify beats/misses at this time. Values to be updated when S&P Global access is available.
    • S&P Global consensus retrieval failed due to “Daily Request Limit Exceeded.”
  • Despite lack of consensus figures, management reaffirmed FY 2025 EPS guidance ($5.17–$5.27) and issued Q1 2025 EPS guidance ($2.13–$2.23), reflecting confidence in demand growth and capital execution .

Key Takeaways for Investors

  • Margin expansion plus strong sequential/YoY EPS growth underscores cost discipline and execution; weather headwinds were effectively offset in 2024 .
  • The data center narrative is a tangible multi-year load catalyst: Microsoft’s continued build and Cloverleaf’s 1 GW plan are incremental to WEC’s already robust 5-year plan—implying additional generation and transmission investments ahead .
  • Financing path is clear: expect $700–$800M common equity in 2025 and 50% equity content for incremental capital; dividend growth remains aligned with 65–70% payout policy .
  • Regulatory stability in Wisconsin (9.8% ROE, 53% equity layer) and ATC’s higher ROE support earnings; Illinois decisions are near-term swing factors for gas CapEx .
  • O&M will step up in 2025 as projects enter service and reliability spending increases—watch cost trajectory relative to sales growth and rate recovery .
  • Near-term trading: stock reactions may key off confirmed guidance, visible data center catalysts, and ATC ROE uplift; any Illinois SMP decision that ramps CapEx could be a headline driver .
  • Medium-term thesis: Balanced build-out (renewables + dispatchable gas + LNG) positions WEC to meet rising peak load reliably; incremental data center projects could push CAGR higher in late plan years, subject to regulatory approvals and execution .

Notes:

  • Operating margins are calculated from cited operating income and revenue figures.
  • S&P Global consensus data was unavailable due to request limits; estimate comparisons will be provided once accessible.