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WEC Energy Beats on Q2 Earnings but Misses on Revenues - Analyst Blog

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WEC Energy GroupWEC reported second-quarter 2015 adjusted earnings of 59 cents per share, beating the Zacks Consensus Estimate of 55 cents by nearly 7.3%. Quarterly earnings increased by a penny from the year-ago level.

On a GAAP basis, reported earnings were 35 cents per share, down nearly 40% from the year-ago level due to lower revenues and higher operating expenses. The difference between GAAP and adjusted earnings was due to costs of 24 cents related to the acquisition of Integrys Energy Group.

Total Revenue

WEC Energy's total revenue stood at $991.2 million, lagging the Zacks Consensus Estimate of $1,058 million by 6.3%. The top line also fell 5% from $1,043.7 million in the prior-year quarter, primarily due to cooler temperatures in June that led to lower customer demand for air conditioning.

Residential use of electricity declined 5% year over year in the quarter. Electricity use by large commercial and industrial customers (excluding iron ore mines in Michigan's Upper Peninsula) also went down 1.4%. However, electricity consumption by small commercial and industrial customers increased 2.3% during the quarter.

Operational Update

Total operating expenses rose 2.7% year over year to $827.6 million in the quarter, mainly due to higher operation and maintenance, depreciation and amortization expenses, and property and revenue taxes.

Operating income in the quarter stood at $165.8 million, down 31.1% from $240.7 million a year ago.

The company's net interest expenses increased 5.3% year over year to $62.1 million due to higher long-term debt.

Business Update

At the end of Jun 2015, WEC Energy served around 5,500 and 8,300 more electricity and natural gas customers, respectively, compared with the prior-year level.

Financial Position

As of Jun 30, 2015, WEC Energy had cash and cash equivalents of $214.4 million versus $61.9 million as of Dec 31, 2014. The company's long-term debt increased to $8,547.6 million as of Jun 30, 2015 from $4,186.4 million as of Dec 31, 2014.

In the first half of 2015, cash flow from operating activities was $715.9 million, slightly down from $721.3 million in the year-ago period. WEC Energy invested $356.5 million during the period as capital expenditure, compared with $305.5 million in the prior-year period.

Zacks Rank

Currently, WEC Energy holds a Zacks Rank #2 (Buy). Other favorable stocks in the utility space include Empresa Nacional de Electricidad S.A. EOC and Enersis S.A. ENI , both sporting a Zacks Rank #1 (Strong Buy), and American Electric Power Co., Inc. AEP , holding the same rank as WEC Energy.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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