WEC Energy(US:WEC)2024-07-31 18:50PART I. FINANCIAL INFORMATION This section provides the unaudited financial statements and management's discussion and analysis for WEC Energy Group ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) This section presents WEC Energy Group's unaudited condensed consolidated financial statements, including income statements, balance sheets, cash flow statements, and detailed notes on accounting policies, acquisitions, and regulatory matters Condensed Consolidated Income Statements Net income attributable to common shareholders increased to $833.6 million for the six months ended June 30, 2024, driven by the Illinois segment, despite a Q2 decrease to $211.3 million Consolidated Income Statement Highlights (in millions, except per share amounts) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenues | $1,772.0 | $1,830.0 | $4,452.2 | $4,718.1 | | Operating Income | $364.8 | $425.3 | $1,178.2 | $1,094.6 | | Net Income Attributed to Common Shareholders | $211.3 | $289.7 | $833.6 | $797.2 | | Diluted Earnings Per Share | $0.67 | $0.92 | $2.64 | $2.52 | Condensed Consolidated Balance Sheets Total assets increased to $44.58 billion as of June 30, 2024, driven by property, plant, and equipment growth, while long-term debt and common shareholders' equity also rose Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $2,584.1 | $2,795.7 | | Property, Plant, and Equipment, net | $32,263.8 | $31,581.5 | | Total Assets | $44,582.2 | $43,939.7 | | Total Current Liabilities | $3,491.6 | $5,114.8 | | Long-Term Debt | $16,907.8 | $15,512.8 | | Total Liabilities | $32,187.8 | $31,868.2 | | Common Shareholders' Equity | $12,082.9 | $11,724.2 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities increased to $1.90 billion, while net cash used in investing activities decreased to $1.25 billion, and financing activities shifted to a $512.5 million net use Consolidated Cash Flow Summary (in millions) | Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $1,901.0 | $1,754.3 | | Net Cash Used in Investing Activities | $(1,250.8) | $(2,101.4) | | Net Cash Provided by (Used in) Financing Activities | $(512.5) | $305.0 | | Net Change in Cash, Cash Equivalents, and Restricted Cash | $137.7 | $(42.1) | Notes to Condensed Consolidated Financial Statements These notes detail recent acquisitions, revenue disaggregation, credit loss management, regulatory assets, debt financing, environmental contingencies, and pending regulatory rate cases - In May 2024, WE acquired an additional 100 MW of West Riverside's capacity for $98.2 million333537 - The allowance for credit losses decreased by $26.6 million in the first half of 2024, primarily due to customer write-offs and lower required reserve percentages61 - Asset Retirement Obligations (AROs) increased by $169.4 million in H1 2024, mainly due to new obligations under the EPA's new Coal Combustion Residuals (CCR) Rule74 - In Q2 2024, the company issued $862.5 million of 4.375% Convertible Senior Notes due 2027 and $862.5 million of 4.375% Convertible Senior Notes due 202984 - WE, WPS, and WG filed requests with the PSCW for rate increases for 2025 and 2026, citing capital investments, inflation, and higher interest rates, with a decision expected in Q4 2024186187188 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses the corporate strategy, including the ESG Progress Plan, analyzes Q2 and H1 2024 operational results by segment, and details liquidity, capital resources, and significant business risks Corporate Strategy and Developments The company's ESG Progress Plan targets significant carbon and methane emission reductions by 2030 and net-zero by 2050, supported by retiring fossil-fueled generation and investing $7.0 billion in regulated renewables - The company aims to reduce carbon emissions from its electric generation fleet by 60% by the end of 2025 and 80% by the end of 2030 (from a 2005 baseline), targeting net carbon neutrality by 2050208 - The company plans to invest approximately $7.0 billion from 2024-2028 in regulated renewable energy in Wisconsin, including 2,700 MW of solar, 880 MW of wind, and 250 MW of battery storage211212 - A target has been set to achieve net-zero methane emissions across natural gas distribution operations by the end of 2030 through operational improvements and the use of Renewable Natural Gas (RNG)215 Results of Operations Consolidated earnings increased by $36.4 million to $833.6 million for H1 2024, driven by the Illinois segment, despite a decrease in the Wisconsin segment and a Q2 consolidated earnings decline Net Income Attributed to Common Shareholders by Segment (in millions) | Segment | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | Change B/(W) | | :--- | :--- | :--- | :--- | | Wisconsin | $398.5 | $442.8 | $(44.3) | | Illinois | $213.2 | $143.2 | $70.0 | | Other states | $39.2 | $36.9 | $2.3 | | Electric transmission | $61.5 | $58.4 | $3.1 | | Non-utility energy infrastructure | $187.6 | $174.4 | $13.2 | | Corporate and other | $(66.4) | $(58.5) | $(7.9) | | Total | $833.6 | $797.2 | $36.4 | - The Illinois segment's H1 2024 earnings surged by $70.0 million due to a new rate order that shifted recovery of SMP costs to base rates, concentrating revenue recognition in the winter months288312 - The Wisconsin segment's H1 2024 earnings fell by $44.3 million due to higher operating expenses, unfavorable winter weather impacting sales, and higher interest expense290296 Liquidity and Capital Resources The company maintains liquidity through operating cash flow and capital market access, with a $12.3 billion capital plan for 2024-2026, and $2.54 billion available under credit facilities as of June 30, 2024 Estimated Capital Expenditures and Acquisitions (in millions) | Segment | 2024 | 2025 | 2026 | | :--- | :--- | :--- | :--- | | Wisconsin | $2,636.6 | $3,153.5 | $3,583.8 | | Illinois | $428.9 | $392.5 | $501.3 | | Other states | $123.5 | $104.1 | $109.9 | | Non-utility energy infrastructure | $948.8 | $286.6 | $29.8 | | Corporate and other | $21.9 | $14.0 | $2.0 | | Total | $4,159.7 | $3,950.7 | $4,226.8 | - The company plans significant investments in new generation, including the Paris, Darien, and Koshkonong solar/battery projects in Wisconsin and the Renegade solar project in Michigan367368369372 - As of June 30, 2024, the company was in compliance with all debt covenants and had $2.54 billion of available capacity under its revolving credit facilities384389 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company reports no material changes to its market risk exposures compared to the 2023 Annual Report on Form 10-K, referring to other sections for detailed disclosures - There have been no material changes related to market risk from the disclosures presented in the company's 2023 Annual Report on Form 10-K431 CONTROLS AND PROCEDURES Management concluded that disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting during Q2 2024 - Management concluded that as of June 30, 2024, the company's disclosure controls and procedures are effective432 - No material changes were made to the internal control over financial reporting during the second quarter of 2024433 PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity security sales, and other disclosures LEGAL PROCEEDINGS The company is subject to ordinary course legal proceedings, which management does not expect to materially impact the financial statements, beyond matters discussed in Notes 23 and 25 - The company is involved in legal proceedings arising in the ordinary course of business, but management does not expect them to have a material impact on financial statements434 RISK FACTORS There were no material changes to the company's risk factors compared to those disclosed in its 2023 Annual Report on Form 10-K - There were no material changes from the risk factors disclosed in the 2023 Annual Report on Form 10-K435 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS During Q2 2024, the company acquired 14,354 shares at an average price of $85.10, primarily from employees to satisfy tax withholding obligations on restricted stock vesting Issuer Purchases of Equity Securities (Q2 2024) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 – April 30 | — | $ — | | May 1 – May 31 | 14,354 | $85.10 | | June 1 – June 30 | — | $ — | | Total | 14,354 | $85.10 | - All shares purchased during the quarter were surrendered by employees to satisfy tax withholding obligations related to vesting restricted stock437 OTHER INFORMATION No directors or officers adopted or terminated any Rule 10b5-1 trading plans or other trading arrangements during the second quarter of 2024 - No directors or officers adopted or terminated any Rule 10b5-1 trading plans or other trading arrangements during the second quarter of 2024438 EXHIBITS This section lists exhibits filed with the Form 10-Q, including articles of amendment, debt indentures, officer certifications, and Inline XBRL data files - Exhibits filed include Articles of Amendment, indentures for new debt, certifications by the CEO and CFO, and Inline XBRL data files439440