Electric Operations and Revenue - MGE Energy's electric operations accounted for approximately 74%, 71%, and 65% of total regulated revenues in 2024, 2023, and 2022 respectively[27]. - As of December 31, 2024, MGE supplied electric service to approximately 167,000 customers, with 91% located in urban areas[26]. - MGE's electric operations include regulated electric and gas utility operations, as well as nonregulated energy operations[26]. - Gas operations accounted for approximately 26%, 29%, and 35% of MGE's total regulated revenues in 2024, 2023, and 2022, respectively[49]. - No single customer accounted for more than 10% of total operating revenues for MGE Energy and MGE in 2024[281]. Carbon Reduction and Renewable Energy Goals - MGE aims for a net-zero carbon electricity target by 2050 and has committed to achieving at least 80% carbon reductions by 2030 from 2005 levels[36]. - MGE's carbon reduction goals align with the recommendations of the Intergovernmental Panel on Climate Change (IPCC)[37]. - MGE plans to eliminate coal as an owned generation source by the end of 2032, reducing approximately two-thirds of its current coal-fired generation capacity by 2030[39]. - MGE is working to increase renewable energy to 25% of retail electric sales by 2025 and to 30% by 2030[72]. - MGE currently exceeds Wisconsin's renewable energy requirement of approximately 8%[81]. Transition from Coal and Natural Gas - The company is transitioning away from coal and adding new renewable generation to meet its carbon reduction goals[38]. - MGE plans to retire the Columbia unit by the end of 2029 and transition the Elm Road Units from coal to natural gas by the end of 2032[72]. - MGE purchased 25 MW in the West Riverside Energy Center in early 2023 and an additional 25 MW in June 2024, as part of its investment in natural gas plants[45]. Renewable Energy Projects and Initiatives - Since 2015, MGE has added 222 MW of solar and 93 MW of wind generation facilities, with an expectation to add approximately 178 MW of solar, 18 MW of wind, and 118 MW of battery storage by the end of 2028[40]. - MGE has developed approximately 42 MW of solar generation under the Renewable Energy Rider (RER) program, partnering with large energy users[43]. - The Shared Solar Program allows residential and small business customers to use locally generated solar energy for up to half of their annual energy needs, with a total capacity of 4 MW from two solar facilities[44]. - MGE's 19% share in the Columbia Energy Storage project will be 3 MW, which is set to be the first of its kind in the United States if approved[41]. Emission Reduction and Environmental Compliance - MGE aims to achieve net-zero methane emissions from its natural gas distribution system by 2035, introducing a renewable natural gas program in May 2024[51]. - The EPA finalized a rule to lower the average annual PM2.5 NAAQS from 12 ug/m3 to 9 ug/m3, effective May 2024, which may impact Milwaukee County[67]. - The EPA's final performance standards under section 111(b) of the Clean Air Act for carbon dioxide emissions will require states to submit plans for existing natural gas-fired combustion turbines within two years[74]. Workforce and Safety - As of December 31, 2024, MGE Energy had 717 employees, with women and ethnic minorities representing 25% and 10% of the workforce, respectively[82]. - MGE has implemented a comprehensive safety culture involving employees at all levels to enhance workplace safety[87]. Financial Management and Risk - MGE manages market risks associated with interest rates, commodity prices, and equity returns through risk management policies and derivative instruments[270]. - MGE expects to recover $72.3 million in fuel and purchased power costs in 2025, subject to PSCW fuel rules[272]. - As of December 31, 2024, the fair value of exchange-traded derivatives and financial transmission rights (FTRs) exceeded the cost basis by $0.1 million[275]. - A 1% reduction in the expected rate of return on pension plan assets would increase annual pension costs by approximately $4.4 million before taxes[277]. - The value of employee benefit plans trusts' assets increased by approximately 11% in 2024 and 15% in 2023[277]. - MGE manages credit risk through established credit policies, including credit approval processes and counterparty limits[278]. - MGE's cash and cash equivalents are placed with high credit-quality financial institutions to mitigate credit risk[282]. - MGE employs physical contracts and financial derivative contracts to reduce price risk from market fluctuations[274]. - Assuming a 1% change in average interest rates, 2024 interest expense and net income would have increased/decreased by $0.4 million for both MGE Energy and MGE[276].

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分组1 - MGE reported quarterly earnings of $1.13 per share, missing the Zacks Consensus Estimate of $1.17 per share, but showing an increase from $1.05 per share a year ago, resulting in an earnings surprise of -3.42% [1] - The company posted revenues of $168.48 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 2.85%, compared to year-ago revenues of $160.53 million [2] - MGE shares have increased approximately 25.6% since the beginning of the year, outperforming the S&P 500's gain of 21.2% [3] 分组2 - The current consensus EPS estimate for the coming quarter is $0.64 on revenues of $167.94 million, and for the current fiscal year, it is $3.69 on revenues of $674.38 million [7] - The Zacks Industry Rank for Utility - Electric Power is currently in the top 39% of over 250 Zacks industries, indicating a favorable outlook for the industry [8] 分组3 - The estimate revisions trend for MGE is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [6] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Earnings Announcement - MGE Energy, Inc. announced its third quarter 2024 earnings on November 6, 2024[4]. - The press release regarding the earnings announcement is included as Exhibit 99.1[3]. Company Information - The company is registered on the NASDAQ Stock Market under the common stock with a par value of $1 per share[2]. Financial Reporting - No financial statements of businesses acquired or pro forma financial information were reported in this filing[6]. - The report was signed by Jenny L. Lagerwall, Assistant Vice President - Accounting and Controller[8].

Financial Performance - MGE Energy's earnings for the three months ended September 30, 2024, were $40.9 million or $1.13 per share, an increase from $37.9 million or $1.05 per share in the same period last year, reflecting a 7.9% year-over-year growth [108]. - For the nine months ended September 30, 2024, MGE Energy's earnings were $98.5 million or $2.72 per share, compared to $97.6 million or $2.70 per share in the prior year, indicating a slight increase of 0.9% [108]. - Electric revenue increased by $8.9 million to $147.79 million for the three months ended September 30, 2024, compared to $138.89 million in the same period of 2023, representing a 6.4% increase [130]. - Electric revenue increased by $6.7 million (1.8%) during the nine months ended September 30, 2024, compared to the same period in 2023, totaling $384.3 million [153]. - Gas revenue decreased by $26.9 million (18.2%) during the nine months ended September 30, 2024, totaling $120.8 million, primarily due to a decrease in volume and lower average rates [162]. - MGE Energy's cash provided by operating activities for the nine months ended September 30, 2024, was $209.8 million, an increase from $194.0 million in 2023 [183]. - MGE Energy's cash used for investing activities increased by $11.1 million during the nine months ended September 30, 2024, compared to the same period in the prior year [185]. - MGE's cash flows from financing activities increased by $0.4 million during the nine months ended September 30, 2024, compared to the same period in 2023 [198]. Segment Performance - Electric utility segment earnings for the three months ended September 30, 2024, were $35.0 million, up from $31.1 million in the same period last year, while gas utility segment earnings decreased to $(2.0) million from $(0.8) million [110]. - Gas retail sales decreased approximately 7% due to warmer than normal weather, with heating degree days down by approximately 9% in the first nine months of 2024 compared to the prior year [112]. - Total retail electric sales decreased slightly by 0.1% to 902,615 kWh in Q3 2024 from 903,147 kWh in Q3 2023 [130]. - Residential electric sales decreased by approximately 2% due to warmer weather conditions, impacting sales volumes [157]. - Total retail electric sales volume decreased by 0.3% during the nine months ended September 30, 2024, totaling 2,411,901 kWh [153]. Rate Changes - The PSCW approved a 1.54% increase to electric rates and a 2.44% increase to gas rates for 2024, with further increases planned for 2025 [113]. - The PSCW authorized a 1.54% increase in retail electric rates effective December 2023, contributing to higher revenues [154]. - The average retail rate per therm for gas customers decreased approximately 2% to $1.246 in Q3 2024 compared to $1.270 in Q3 2023 [139]. - The average retail rate per therm for gas customers decreased approximately 12% compared to the same period in the prior year, reflecting lower natural gas commodity costs [165]. Operational Expenses - Consolidated operations and maintenance expenses increased by $3.1 million, driven by higher customer accounts costs and transmission costs [141]. - Operations and maintenance expenses increased by $11.8 million during the nine months ended September 30, 2024, driven by increased customer accounts costs and transmission costs [168]. - Electric depreciation expense rose by $1.5 million in Q3 2024, attributed to the placement of Badger Hollow II in service in December 2023 [146]. - Electric depreciation expense increased by $4.7 million due to the addition of new generating facilities, including Badger Hollow II, which went online in December 2023 [172]. Renewable Energy Initiatives - MGE Energy is targeting an 80% carbon reduction by 2030 from 2005 levels, with plans to transition away from coal and increase renewable generation [121]. - MGE has acquired a joint interest in several renewable generation projects, forecasting capital expenditures for 198 MW of solar, 97 MW of battery, and 18 MW of wind [124]. - MGE aims to achieve net-zero methane emissions from its natural gas distribution system by 2035, introducing a renewable natural gas program effective May 2024 [125]. - MGE is monitoring potential disruptions in solar procurement due to new tariffs and regulations, which may impact costs and timelines for current and future projects [126]. - MGE holds a 19% ownership interest in the Columbia Energy Storage Project, which is currently under development [194]. Capital Expenditures - Capital expenditures for MGE Energy during the nine months ended September 30, 2024, were $164.1 million, reflecting an increase of $13.8 million from the prior year [186]. - MGE Energy's forecasted total capital expenditures for 2024 are projected to be $226.0 million, increasing to $312.0 million by 2029 [189]. - MGE's forecasted capital expenditures for electric and gas distribution from 2024 to 2029 are approximately $57 million, focusing on enhanced metering solutions [196]. Other Income and Investments - Nonregulated energy operations net income increased to $6.1 million in Q3 2024 from $5.6 million in Q3 2023 [148]. - Nonregulated energy operations net income increased to $18.0 million for the nine months ended September 30, 2024, compared to $16.7 million in the prior year [174]. - The transmission investment segment reported other income of $2.9 million in Q3 2024, up from $2.7 million in Q3 2023 [149]. - Other income from the transmission investment segment increased to $8.4 million in the nine months ended September 30, 2024, compared to $7.9 million in the same period of 2023 [175]. - MGE derived approximately 6.0% of its net income from its investment in ATC during the nine months ended September 30, 2024 [208]. Tax and Liquidity - The effective tax rate reconciliation is detailed in the financial statements, reflecting the company's tax obligations [177]. - MGE Energy expects to have adequate liquidity to support future operations and capital expenditures over the next twelve months [182]. - MGE's common shareholders' equity ratio increased to 60.8% as of September 30, 2024, compared to 59.9% at the end of 2023 [199]. Regulatory Changes - The FERC ruling in October 2024 resulted in a 4-basis point reduction in the base ROE from 10.02% to 9.98% [175]. - The company expects potential procurement disruptions to impact costs and timelines for solar projects, necessitating notifications to the PSCW for cost recovery [193][210].

Core Viewpoint - MGE Energy (MGEE) is a stable utility company with a strong dividend growth history and a solid financial position, despite facing challenges in Q2 2024 due to unfavorable weather conditions and rising costs [2][3][10] Financial Performance - MGEE's operating revenue for Q2 2024 decreased by 1.5% year-over-year to $145.7 million, with electric operating revenue falling by 0.9% to $120.4 million and natural gas operating revenue declining by 4.5% to $25.1 million [3][4] - The diluted EPS dropped by 16.5% year-over-year to $0.66, missing analyst expectations by $0.29, primarily due to higher fuel costs and increased depreciation and maintenance expenses [4][5] Growth Outlook - The Madison area, where MGEE operates, is projected to grow by over 1% annually, which is more than double the U.S. average of approximately 0.5% [5] - MGEE plans to invest $1.2 billion in capital through 2028 to support customer growth, which is expected to compound at a mid to high 1% rate annually [5] - Analysts project a 13.5% increase in diluted EPS to $3.69 for 2024, followed by 9.2% growth to $4.03 in 2025 and 8.9% growth to $4.39 in 2026 [5] Valuation - MGEE's shares are currently undervalued, with a fair value estimated at $93 per share compared to a market price of $85, indicating an 8% discount to fair value [6] - The company's current P/E ratio of 23.1 is below its 10-year average of 25, suggesting potential for price appreciation [6] Dividend Profile - MGEE has a forward dividend yield of 2%, which is lower than the utility sector median of 3.8%, but the company's payout ratio is expected to be in the mid-to-high 40% range, indicating strong dividend safety [7] - The company has a nearly 50-year dividend growth track record, positioning it to potentially become a Dividend King by the end of next year [7] Investment Thesis - MGEE is viewed as a buy due to its strong fundamentals, growth potential, and secure dividend, with expectations of double-digit annual total returns as it approaches Dividend King status [10]

Company Performance - MGE reported quarterly earnings of $0.66 per share, missing the Zacks Consensus Estimate of $0.95 per share, and down from $0.79 per share a year ago, representing an earnings surprise of -30.53% [1] - The company posted revenues of $145.71 million for the quarter ended June 2024, missing the Zacks Consensus Estimate by 3.69%, and down from $148 million year-over-year [2] - MGE has not surpassed consensus EPS or revenue estimates over the last four quarters [2] Stock Performance - MGE shares have increased approximately 18% since the beginning of the year, outperforming the S&P 500's gain of 9.9% [3] - The current consensus EPS estimate for the upcoming quarter is $1.17 on revenues of $163.82 million, and for the current fiscal year, it is $3.69 on revenues of $674.38 million [7] Industry Outlook - The Utility - Electric Power industry is currently in the top 37% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact MGE's stock performance [5][6]

Earnings Announcement - MGE Energy, Inc. announced its second quarter 2024 earnings on August 7, 2024[5] Stock Information - The company is listed on the NASDAQ Stock Market under the trading symbol MGEE[2] Financial Reporting - No financial statements of businesses acquired or pro forma financial information were reported[6]

Financial Performance - MGE Energy's earnings for the three months ended June 30, 2024, were $23.8 million or $0.66 per share, a decrease from $28.7 million or $0.79 per share in the same period last year[98]. - MGE Energy's net income for the six months ended June 30, 2024, was $57.6 million, down from $59.8 million in the same period last year[99]. - Electric revenue decreased by $1.1 million to $120.383 million for the three months ended June 30, 2024, compared to $121.492 million in the same period of the prior year, reflecting a 0.9% decline[116]. - Gas revenue decreased by $1.2 million to $25.116 million for the three months ended June 30, 2024, compared to $26.291 million in the same period of the prior year, a decline of 4.5%[121]. - Electric revenues decreased by $2.2 million during the six months ended June 30, 2024, with total retail electric revenues at $236.5 million, a 0.9% decline from $238.7 million in the prior year[135]. - Gas revenue decreased by $26.0 million, totaling $100.3 million, a 20.6% decline compared to $126.3 million in the prior year[141]. Sales and Revenue Trends - Electric utility earnings decreased due to unfavorable weather, with residential sales down approximately 4% for both the three and six months ended June 30, 2024[100]. - Gas utility earnings were impacted by lower retail sales, which decreased approximately 8% due to warmer than normal weather in the first quarter of 2024[101]. - Residential sales volume decreased by approximately 4% year-over-year, driven by warmer weather conditions in April 2024 compared to April 2023[117]. - Residential electric sales volume decreased by 3.6%, while commercial sales increased by 0.9%[135]. Rate Changes - The PSCW approved a 1.54% increase to electric rates and a 2.44% increase to gas rates for 2024, with further increases planned for 2025[102]. - The average retail rate for electric customers increased by approximately 1.54% in December 2023, resulting in $1.2 million higher rates charged during the three months ended June 30, 2024[117]. - The average retail rate per therm for gas increased by approximately 4% year-over-year, reflecting a decrease in natural gas commodity costs[123]. - The average retail rate per therm for gas customers decreased approximately 14% compared to the same period in the prior year[143]. Operational Expenses - Operations and maintenance expenses increased by $4.7 million to $X million during the three months ended June 30, 2024, primarily due to increased customer accounts costs and transmission costs[125]. - Operations and maintenance expenses increased by $8.8 million, primarily due to increased customer accounts costs of $4.6 million and increased transmission costs of $2.9 million[145]. - Electric depreciation expense increased by $1.5 million, attributed to the placement of Badger Hollow II in service in December 2023[128]. - Electric depreciation expense increased by $3.2 million, attributed to the purchase of West Riverside and the in-service date of Badger Hollow II[148]. Renewable Energy and Environmental Goals - MGE aims for an 80% carbon reduction target by 2030 from 2005 levels, focusing on growing renewable generation and transitioning to natural gas[107]. - MGE plans to retire Columbia Unit 1 and Unit 2 by June 2026 as part of its transition away from coal[108]. - MGE continues to expand renewable generation, with a 29% increase in renewable generation driven by new sources including Badger Hollow II[139]. - MGE has set a goal to achieve net-zero methane emissions from its natural gas distribution system by 2035[111]. Capital and Financing - MGE has $330 million of remaining regulatory authority to issue long-term debt for financing authorized utility capital expenditures[113]. - Capital expenditures for MGE Energy and MGE totaled $111.6 million during the six months ended June 30, 2024, reflecting an increase of $3.9 million from the same period in 2023[161]. - Cash provided by operating activities was $130.4 million for the six months ended June 30, 2024, compared to $127.0 million in the prior year[157]. - MGE Energy's capitalization ratios as of June 30, 2024, were 59.9% common shareholders' equity and 37.0% long-term debt[165]. Regulatory and Compliance Issues - MGE is monitoring potential disruptions in solar procurement due to new tariffs and regulations, which may impact costs and timelines for solar projects[112]. - The Uyghur Forced Labor Protection Act may impact the supply of solar panels, but MGE's suppliers have met compliance requirements[173]. - The U.S. Department of Commerce found that Chinese manufacturers were circumventing tariffs on solar panels, leading to potential cost increases for MGE's solar projects[174]. - The Biden Administration announced an increase in tariffs on solar cells and modules from 25% to 50%, which may affect MGE's future solar projects[174]. - MGE expects to request recovery of any cost increases in future rate proceedings due to potential disruptions from tariffs and compliance issues[174]. Other Income and Investments - Nonregulated energy operations segment net income increased to $6.0 million for the three months ended June 30, 2024, compared to $5.5 million in the same period of the prior year[130]. - Nonregulated energy operations segment net income increased to $11.9 million for the six months ended June 30, 2024, compared to $11.0 million in the same period of 2023[150]. - Other income from transmission investment operations increased to $2.8 million for the three months ended June 30, 2024, compared to $2.6 million in the same period of the prior year[131]. - Other income increased by $0.9 million due to decreased investment distribution losses from venture capital funds compared to the prior year[132]. - Other income from all other operations increased by $1.1 million, primarily due to decreased investment distribution losses from venture capital funds[152]. Market Risks and Future Outlook - MGE's share of ATC's earnings reflected a $0.6 million reduction in reserves due to the May 2020 FERC order[170]. - MGE's estimated possible loss related to the First Complaint Period is approximately $0.9 million, inclusive of interest and net of tax[171]. - MGE derived approximately 6.7% of its net income from its investment in ATC for the six months ended June 30, 2024[172]. - There were no material changes to the market risks disclosed in the 2023 Annual Report on Form 10-K[175]. - MGE Energy expects to begin issuing new shares of common stock in the second half of 2024 as part of its Direct Stock Purchase and Dividend Reinvestment Plan[156]. - MGE's share of ATC's earnings for the six months ended June 30, 2023, was 6.2% of net income[172].

The market expects MGE (MGEE) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended June 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report. On the other hand, if they miss, the stoc ...