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XE

XCEL ENERGY INC (XEL)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 ongoing EPS was $1.24, down slightly year over year (vs $1.25) and below S&P Global consensus ($1.32), while GAAP EPS of $0.88 reflected a non-recurring Marshall Wildfire settlement charge; revenue grew 7.7% year over year to $3.915B but modestly missed consensus ($3.948B). *
  • Management reaffirmed 2025 ongoing EPS guidance ($3.75–$3.85) and initiated 2026 guidance ($4.04–$4.16), with an updated 5-year capital plan of $60B targeting ~11% annualized rate base growth; long-term EPS growth objective raised to 6–8%+ with ~9% expected through 2030.
  • Sequentially, ongoing EPS rose sharply versus Q2 ($0.75) and revenue increased 19%, driven by regulatory outcomes, sales growth, and higher AFUDC, partially offset by higher O&M, depreciation, and financing costs.
  • Catalysts: data center load contracting progress (targeting ~3 GW in base plan), Colorado/SPS RFP outcomes, and constructive regulatory settlements; headwinds include wildfire-related claims and rising benefit/insurance costs.

What Went Well and What Went Wrong

What Went Well

  • Regulatory outcomes and sales growth added $0.18 to EPS; AFUDC contributed $0.08, supporting ongoing EPS of $1.24 despite cost pressures.
  • Updated 5-year, $60B infrastructure plan with safe-harbored renewable/storage projects and 19 natural gas CTs on order to secure equipment amid extended lead times.
  • Strong progress with large-load economic development: energized Meta’s Minnesota data center and moved additional data center load from pipeline to contracts; management emphasized customer bill affordability and “lowest share of wallet.”

What Went Wrong

  • O&M increased $37M in Q3, including ~$25M higher health and benefit costs; 2025 O&M outlook raised to ~5% (from ~4%).
  • Financing costs rose $58M year over year in Q3 (pressure from higher debt levels and rates); depreciation rose $69M with system investment.
  • Non-recurring Marshall Wildfire settlement recognized ($287M), reducing GAAP EPS to $0.88; note the call referenced $290M charge, a minor discrepancy with the 8‑K.

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenues ($USD Billions)$3.906 $3.287 $3.915
GAAP Diluted EPS ($)$0.84 $0.75 $0.88
Ongoing Diluted EPS ($)$0.84 $0.75 $1.24
Operating Income ($USD Millions)$677 $577 $749
Operating Margin (%)17.3% 17.6% 19.1%
Net Income ($USD Millions)$483 $444 $524
Net Income Margin (%)12.4% 13.5% 13.4%

YoY and sequential comparisons (Q3 2025 focus):

MetricQ3 2024Q3 2025YoY ChangeQ2 2025Seq Change
Revenues ($USD Billions)$3.644 $3.915 +7.4% $3.287 +19.1%
GAAP Diluted EPS ($)$1.21 $0.88 −27.3% $0.75 +17.3%
Ongoing Diluted EPS ($)$1.25 $1.24 −0.8% $0.75 +65.3%
Operating Margin (%)25.0% 19.1% −590 bps 17.6% +150 bps
Net Income Margin (%)18.7% 13.4% −530 bps 13.5% −10 bps

Segment revenue breakdown (Q3):

SegmentQ3 2024 ($MM)Q3 2025 ($MM)YoY Change
Electric$3,393 $3,638 +$245 / +7.2%
Natural Gas$239 $264 +$25 / +10.5%
Other$12 $13 +$1 / +8.3%
Total$3,644 $3,915 +$271 / +7.4%

KPI stack (Q3 2025 vs Q3 2024):

KPIQ3 2024 ($MM)Q3 2025 ($MM)YoY Change
O&M Expenses$655 $692 +$37
Depreciation & Amortization$681 $750 +$69
Total Interest Charges$305 $348 +$43
AFUDC – Equity$44 $79 +$35
Other Income (net)$39 $46 +$7

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Ongoing EPSFY 2025$3.75–$3.85 $3.75–$3.85 Maintained
Ongoing EPSFY 2026N/A$4.04–$4.16 Initiated
O&M Expense GrowthFY 2025 vs 2024~4% ~5% Raised
Interest Expense (net of AFUDC–debt)FY 2025$160–$170M $180–$190M Raised
Depreciation ExpenseFY 2025~$210–$220M increase ~$220–$230M increase Raised
Capital Rider Revenue (net of PTCs)FY 2025$255–$265M $255–$265M Maintained
Property TaxesFY 2025+$45–$55M +$45–$55M Maintained
AFUDC – EquityFY 2025$110–$120M $110–$120M Maintained
Long-term EPS Growth Objective2026–20306–8% 6–8%+; ~9% avg through 2030 Raised/clarified
Dividend Growth ObjectiveLong-term4–6% 4–6% Maintained
Dividend Payout Ratio TargetLong-term50–60% 45–55% Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Data center loadTariff development and RFPs; growing pipeline across jurisdictions Energized Meta MN DC; plan updated to ~3 GW base; remainder of original 2 GW targeted by YE; diversification beyond DCs Strengthening pipeline, contracting momentum
AI/technology initiativesWildfire risk modeling and system modernization plans Enterprise AI for inspection (drone imagery), risk models (TechnoSilva), PanoAI cameras; faster risk assessment Expanding deployment
Supply chain and equipmentProactive vendor engagement; resiliency plans 19 CTs on order; transformer/turbine lead times; EPC partnerships secured Improved readiness
Wildfire mitigation and litigationTexas SRP approved; Marshall trial scheduled; claims accruals updated Marshall settlements in principle; $287M charge; Texas claims settled/mediated progress, est. losses $410M De-risking trajectory, residual uncertainty
Regulatory/Rate casesMultiple active cases in MN/ND/WI/CO; constructive outcomes MN rebuttal updated revenue request; WI approvals; near-term CO procurement accelerated pre-2030 PTC cliff Constructive engagement
Financing and credit metricsATM equity, hybrid plans; targeted credit $3B equity content YTD; 2026–2030 plan needs ~$23B debt and $7B equity; FFO/debt path to ~17% longer term Balanced funding for growth

Management Commentary

  • “We expect this plan to deliver 7,500 MW of zero carbon renewable generation, 3,000 MW of natural gas fired generation, and almost 2,000 MW of energy storage… and approximately $5 billion of investment in our distribution and transmission systems to improve resiliency.”
  • “Over the past five years, our residential electricity and natural gas bills have been 28% and 12% below the national average… a typical residential bill is 14% and 20% lower than it was in 2014 when adjusted for inflation.”
  • “In the third quarter, we also energized Meta’s new data center in Minnesota… we continue to forecast 3% weather-normalized electric sales growth.”
  • “We have 19 natural gas CTs on order… ensuring certainty of equipment and labor in a tight market.”
  • “We reaffirm our 2025 EPS guidance of $3.75 to $3.85 and have initiated 2026 EPS guidance of $4.04 to $4.16… we expect to deliver 9% EPS growth on average through 2030.”

Q&A Highlights

  • Growth profile: 9% EPS CAGR through 2030 includes 2026; capital plan front-end loaded with upside from Colorado generation and future MISO/SPP transmission tranches (~$10B+ pipeline, some beyond 2030).
  • Load growth: SPS strength driven by Permian electrification; diversified sales growth with only ~3% of 5% growth from data centers and ~1.5% from SPS oil & gas; remaining from customer growth/electrification.
  • Transmission cost allocation: Lateral lines for data centers typically customer-funded; regional/super-regional transmission costs allocated through SPP/MISO, not fully borne by retail customers.
  • Credit metrics: Target ~17% FFO/debt over the plan; equity content (~40%) and debt (~60%) balanced to maintain strong metrics.
  • Equipment/labor: Long lead times for turbines/transformers; proactive ordering and EPC relationships to ensure speed-to-power for large loads.

Estimates Context

MetricQ1 2025Q2 2025Q3 2025
Primary EPS Consensus Mean ($)0.919*0.645*1.318*
Actual EPS – Ongoing ($)0.84 0.75 1.24
Surprise ($)−0.08*+0.11*−0.08*
Revenue Consensus Mean ($USD Billions)$3.932*$3.210*$3.948*
Actual Revenue ($USD Billions)$3.906 $3.287 $3.915
Surprise ($USD Billions)−$0.026*+$0.077*−$0.033*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Slight miss vs consensus on Q3 ongoing EPS and revenue amid elevated O&M/interest costs, but trajectory vs Q2 is strong with substantial sequential EPS/revenue gains and margin improvement. *
  • Reaffirmed 2025 EPS and initiated 2026 guidance signal confidence in regulatory recovery and load growth; watch for near-term Colorado/SPS procurement decisions and data center contract conversions.
  • The $60B capex plan underpins ~11% rate base growth; incremental pipeline (Colorado generation, MISO/SPP transmission, additional data centers) could extend the growth runway.
  • Cost pressures (benefits, insurance) and higher financing costs remain a headwind, but AFUDC, regulatory mechanisms, and capital rider revenue help offset earnings impact.
  • Wildfire risks are being de-risked (Marshall settlements in principle; Texas claims progress), yet residual uncertainty persists; monitor insurance recoveries and regulatory securitization outcomes.
  • Capital structure/credit: Planned ~$23B debt and ~$7B equity content (2026–2030) should support growth while maintaining targeted credit metrics (~17% FFO/debt longer term).
  • Near-term stock drivers: procurement outcomes (visibility on capex/adders), data center contracting cadence, MN/ND/WI rate case milestones, and evidence of O&M normalization versus elevated Q3 benefits costs.