WEC Energy Group, Inc. (WEC) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The company shows strong financial performance with a reaffirmed earnings guidance and significant capital investment plans. The Q&A reveals proactive strategies to address local opposition and affordability concerns, with transparency and community engagement. The management's commitment to growth, even amid uncertainties, and the positive impact of hyperscaler contributions on customer rates further strengthen the outlook. However, some management responses lack specifics, which slightly tempers the overall positive sentiment.
Key Financial Performance
Adjusted Earnings Per Share (EPS) $5.27 for 2025, an increase of $0.39 (8%) year-over-year. The increase was driven by weather impacts ($0.35 favorable in 2025 compared to $0.25 unfavorable in 2024), rate base growth ($0.74), and incremental AFUDC equity ($0.12). These were partially offset by higher depreciation, amortization, O&M expenses, and taxes ($0.46).
Utility Operations Adjusted Earnings $0.63 higher in 2025 compared to 2024. Weather contributed $0.35, rate base growth added $0.74, and incremental AFUDC equity contributed $0.12. These were offset by $0.46 in higher expenses.
Retail Electric Deliveries in Wisconsin Increased 1.1% year-over-year in 2025, excluding the iron ore mine. Growth was slightly ahead of forecast in all segments.
Investment in American Transmission Company Earnings increased by $0.02 in 2025 compared to 2024, driven by $0.06 from capital investment for demand growth and reliability, partially offset by a one-time gain in 2024.
Energy Infrastructure Segment Earnings Increased by $0.10 in 2025 due to higher production tax credits from solar generation projects acquired in late 2024 and early 2025.
Corporate and Other Segment Earnings Decreased by $0.24 in 2025 due to higher interest expenses from increased debt balances and gains recorded in 2024 from early debt retirements.
Common Equity Issuance Approximately $800 million issued in 2025, consistent with the company's plan.
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Operating Highlights
Renewable Energy Projects: Investing $12.6 billion over the next 5 years to add 6,500 megawatts to the generation fleet, including 7 renewable generation projects and 2 battery storage facilities under construction.
Natural Gas Generation: Investing $7.4 billion between 2026 and 2030 in modern, efficient natural gas generation and LNG storage, including combustion turbines and rice units.
Microsoft Data Center Expansion: Microsoft is expanding its data center campus, adding 15 new buildings and increasing forecasted demand by 500 megawatts, contributing $1 billion to the capital plan.
Vantage Data Centers: Vantage is developing facilities for Oracle and OpenAI, with a $15 billion investment for the first phase and a potential demand of 3.5 gigawatts over time.
Foxconn Expansion: Foxconn plans to invest over $0.5 billion in its Racine County campus, adding 1,300 jobs.
Rockwell Automation and Uline: Rockwell Automation is building a new manufacturing site, potentially its largest globally, and Uline is expanding its operations in Southeast Wisconsin.
Capital Plan Execution: Executing a $37.5 billion capital plan over the next 5 years to meet growing energy demands.
Rate Base Growth: Achieved $0.74 per share growth in earnings due to Wisconsin rate review outcomes and incremental AFUDC equity from projects under construction.
Illinois Settlement: Reached a proposed settlement with the Illinois Attorney General to resolve 12 pending cases, including $2.3 billion in open dockets, with a $130 million rate base reduction and $125 million customer credits over 3 years.
Dividend Policy: Increased annualized dividend by 6.7% to $3.81 per share, marking the 23rd consecutive year of dividend growth.
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Risk or Challenges
Illinois Settlement Impact: The company faces a $130 million rate base reduction and a $125 million customer refund over three years as part of a proposed settlement in Illinois. This could impact financial performance and operational flexibility.
Regulatory Risks: Pending approval of the Illinois settlement and the Wisconsin large customer tariff creates uncertainty. Delays or unfavorable rulings could affect financial outcomes and strategic plans.
Debt and Financing: The company plans to issue $4-5 billion in debt and $900 million to $1.1 billion in equity in 2026. High debt levels and interest expenses could strain financials, especially with rising interest rates.
Capital Plan Execution: The $37.5 billion capital plan relies on timely execution of projects. Delays or cost overruns in renewable energy and LNG projects could disrupt growth targets.
Economic Dependence on Large Customers: Significant growth projections are tied to large customers like Microsoft and Vantage Data Centers. Any changes in their plans could impact demand forecasts and capital allocation.
Weather Dependency: Earnings are sensitive to weather conditions, as seen in the 2025 results. Unfavorable weather could negatively impact utility revenues.
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Guidance & Outlook
Projected Electric Demand Growth: The company is projecting a total of 3.9 gigawatts of electric demand growth in its 5-year plan, driven by expansions from Microsoft and Vantage Data Centers, among others.
Capital Plan: The company plans to execute a $37.5 billion capital plan over the next 5 years, with $1 billion added due to increased demand projections.
Earnings Per Share Growth: The company is projecting long-term earnings per share growth of 7% to 8% annually on a compound basis between 2026 and 2030, with acceleration to the upper half of the range starting in 2028.
Investments in Natural Gas and LNG: Between 2026 and 2030, the company expects to invest $7.4 billion in modern, efficient natural gas generation and LNG storage, including combustion turbines, rice units, and facility upgrades.
Renewable Energy Investments: The company plans to invest $12.6 billion over the next 5 years to add 6,500 megawatts to its renewable generation fleet, including 7 renewable generation projects and 2 battery storage facilities currently under construction.
Rate Reviews and Regulatory Updates: The company plans to file rate reviews in Wisconsin for forward-looking test years 2027 and 2028 in April. Additionally, a proposed settlement in Illinois is expected to resolve 12 pending cases, subject to commission approval.
2026 Earnings Guidance: The company reaffirmed its annual guidance for 2026, projecting earnings of $5.51 to $5.61 per share, assuming normal weather conditions.
Debt and Equity Funding: In 2026, the company expects debt funding in the range of $4 billion to $5 billion and plans to issue $900 million to $1.1 billion of common equity.
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Shareholder Return Plan
Dividend Increase: The Board increased the dividend by 6.7% to an annualized $3.81 per share. This marks the 23rd consecutive year of dividend increases.
Dividend Policy: The company maintains a policy of paying out 65% to 70% of earnings in dividends.
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Key Q&A
Q:Can you elaborate on the 500 megawatts being put in for Microsoft and the associated $1 billion CapEx?
A:Microsoft is working on a 1,364-acre site and has started adding to the north of Highway 11, referred to as Project North. The 500 megawatts are part of this development, and Microsoft has plans for further land purchases and development. The $1 billion CapEx stretches beyond the 5-year period, with potential growth opportunities extending to 2031 and beyond.
Q:Do you have any further details on the size and speed of Microsoft's multistage development?
A:Microsoft is starting with 570 acres for the 500 megawatts, with additional undeveloped land and plans for further purchases. However, the company refrains from getting ahead of Microsoft's plans and emphasizes the positive outlook for development in Wisconsin.
Q:How are negotiations progressing for Point Beach and the decision on replacement power for 2030?
A:The contracts for Point Beach end in 2030 and 2033. The company is in communication with NextEra and is factoring in potential replacement power into its fall update. The planning process includes evaluating system performance, future growth, and sales forecasts.
Q:Are you seeing additional interest from other hyperscaler customers, and how are you addressing local opposition to data centers?
A:There is significant interest from other hyperscalers, and discussions are ongoing. The company is focusing on transparency and proactive community engagement to address local opposition. The large customer tariff ensures hyperscalers pay their fair share, protecting other customers.
Q:Why is growth at 6.5%-7% in the first half of the 5-year plan, and what could move it to 7%-8%?
A:The growth rate mirrors the capital plan, with projects ramping up over time. The additional $1 billion in CapEx, expected in 2029-2030, strengthens the long-term outlook. The company is slightly ahead of schedule on some projects.
Q:What is the status of the VLC tariff and the timing of the GRC filing?
A:The VLC tariff is expected to go through the full commission decision process, ensuring data centers pay their fair share. The GRC filing is on track for April, with numbers being finalized.
Q:What are your thoughts on further derisking the $1 billion ATM for 2026?
A:The company has significant capacity for hybrid financing, with $600 million issued last year. The $900 million to $1.1 billion is for common equity financing, relying on the ATM for execution.
Q:How are you addressing election rhetoric around affordability in Wisconsin?
A:The company is focused on keeping rates low through various initiatives, including a $55 million positive fuel recovery to be returned to customers. Affordability is a key consideration in the upcoming rate case filing.
Q:What are the near-term milestones for the Illinois PRP?
A:The company plans to retire 35 miles of pipeline this year, ramping up annually until 2028. The settlement allows for forward-looking capital plans, with the safety monitor overseeing progress.
Q:Is there a chance to settle the Illinois rate cases, and how are you offsetting the settlement headwinds?
A:It is too early to consider settlements. The company reaffirms its 7%-8% long-term growth rate, with growth driven by hyperscalers paying their fair share, minimizing the burden on other customers.
Q:Could Microsoft’s ramp lower rates for other customers, and what is the size of the upcoming Wisconsin rate case?
A:Microsoft's contributions could reduce the burden on other customers over time as corporate allocations are spread across a larger rate base. The size of the Wisconsin rate case is still being finalized.
Q:Is the Microsoft announcement a replacement for the canceled Caledonia project?
A:No, Microsoft had already purchased the land before the Caledonia project cancellation and is still looking for additional land to replace it.
Q:Why not opt for new build generation to replace the Point Beach PPA?
A:New build generation could be more economical than the high prices of the Point Beach PPA, but the company is still analyzing options.
Q:Are there retired coal plant sites available for new build generation?
A:No, retired coal plant sites have been repurposed for economic development. The company is exploring other locations with access to natural gas lines.
Q:Why is residential usage projected to decline slightly in 2026?
A:The forecast assumes customer growth but a slight decline in usage per customer, reflecting a conservative approach.
Q:What is the cash component of the Illinois impairment?
A:The $125 million cash credits will be returned to customers over three years, with $50 million in the first year and $75 million split over the next two years.
Q:How does the VLC tariff interact with the general rate case?
A:The VLC tariff ensures transparency by separating costs for very large customers from general customers. The general rate case will reflect this separation.
Q:Will data center activity exceeding expectations benefit other customers?
A:Yes, over time, corporate allocations spread across a larger rate base could reduce the burden on other customers.
Q:Does the timing of the VLC ruling affect the general rate case?
A:No, the general rate case will proceed independently, assuming the current VLC filing.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on Microsoft's future development plans, including the size and speed of the multistage development. They also refrained from elaborating on the potential size of the upcoming Wisconsin rate case and the exact impact of data center activity on customer rates. Additionally, they did not provide clear details on the locations being considered for new build generation to replace the Point Beach PPA.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI infrastructure
Attorney General
Automation
Foxconn
LNG
Peoples Gas
Rockwell
acre Vantage
approval
base
building
community
corridor gigawatts
debt
energy
expansion
filing
funding
gain
generation project
ground
material
minute
north
partner
phase project
rate review
reconciliation rider
request
retirement
review Wisconsin
rider QIP
segment weather
settlement Illinois
share basis
spending
test
variance
weather sale
week
WEC Transcript
WEC Energy Group, Inc. (WEC) Q4 2025 Earnings Call Transcript
Positive2-5
The company shows strong financial performance with a reaffirmed earnings guidance and significant capital investment plans. The Q&A reveals proactive strategies to address local opposition and affordability concerns, with transparency and community engagement. The management's commitment to growth, even amid uncertainties, and the positive impact of hyperscaler contributions on customer rates further strengthen the outlook. However, some management responses lack specifics, which slightly tempers the overall positive sentiment.
WEC Energy Group, Inc. (WEC) Q3 2025 Earnings Call Transcript
Positive10-30
The earnings call summary and Q&A highlight strong financial guidance, significant capital investment in renewable and natural gas projects, and positive growth forecasts. The reaffirmed earnings guidance and dividend growth are positive indicators. While there are some uncertainties, such as the Point Beach capacity and Microsoft's site search, the overall sentiment is positive. The company's strategic focus on renewable energy and robust supply chain management further support a positive outlook. Thus, the stock price is likely to experience a positive movement in the next two weeks.
WEC Energy Group, Inc. (WEC) Q2 2025 Earnings Call Transcript
Unknown7-30
The earnings call highlights strong future potential with significant capital plans and demand growth, but current results show a decrease in segment earnings due to higher interest expenses. The Q&A reveals uncertainties in meeting future demand and supply chain constraints, with management providing vague responses on critical issues. The reaffirmed earnings guidance and long-term growth expectations are positive, but the lack of clarity and immediate financial challenges balance the sentiment to neutral.
Earnings call transcript: WEC Energy Q1 2025 beats expectations, stock rises
Positive5-6
The earnings call summary and Q&A reveal a positive outlook. Strong financial performance is evident with increased EPS, utility operations earnings, and a significant capital investment plan. The dividend increase and long-term growth projections further bolster confidence. While there are some concerns about the MISO auction and pipeline spending, the company's strategic partnerships and renewable energy investments mitigate these risks. Overall, the sentiment leans positive with a focus on growth and shareholder returns, suggesting a likely stock price increase.
WEC Report
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