OGE Energy (OGE) - 2025 Q1 - Quarterly Report

Part I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for OGE Energy Corp. and Oklahoma Gas and Electric Company (OG&E) for the three months ended March 31, 2025, including income statements, balance sheets, cash flow statements, and statements of stockholders' equity, along with combined notes detailing significant accounting policies, revenue recognition, debt, and regulatory matters OGE Energy Corp. Condensed Consolidated Financial Statements For the three months ended March 31, 2025, OGE Energy Corp. reported a significant increase in net income to $62.7 million from $18.6 million in the prior year period, driven by a 25.3% rise in operating revenues, though net cash from operating activities decreased substantially from $83.0 million to $15.9 million year-over-year OGE Energy Corp. Condensed Consolidated Statement of Income (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (In millions) | Q1 2024 (In millions) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenues | $747.7 | $596.8 | 25.3% | | Operating Income | $133.3 | $74.0 | 80.1% | | Net Income | $62.7 | $18.6 | 237.1% | | Diluted EPS | $0.31 | $0.09 | 244.4% | OGE Energy Corp. Condensed Consolidated Statement of Cash Flows (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (In millions) | Q1 2024 (In millions) | | :--- | :--- | :--- | | Net cash provided from operating activities | $15.9 | $83.0 | | Net cash used in investing activities | $(263.7) | $(243.5) | | Net cash provided from financing activities | $274.1 | $164.6 | OGE Energy Corp. Condensed Consolidated Balance Sheet Highlights | Metric | March 31, 2025 (In millions) | Dec 31, 2024 (In millions) | | :--- | :--- | :--- | | Total Current Assets | $1,008.8 | $895.1 | | Net Property, Plant and Equipment | $12,213.2 | $12,086.6 | | Total Assets | $13,953.2 | $13,716.0 | | Total Current Liabilities | $1,382.6 | $1,229.8 | | Long-Term Debt | $5,121.8 | $5,020.9 | | Total Liabilities | $9,337.5 | $9,075.1 | | Total Stockholders' Equity | $4,615.7 | $4,640.9 | Oklahoma Gas and Electric Company Condensed Financial Statements Oklahoma Gas and Electric Company (OG&E) saw its net income rise to $71.0 million for the first quarter of 2025, a substantial increase from $25.2 million in the same period of 2024, with operating revenues growing to $747.7 million, though net cash from operating activities declined significantly year-over-year OG&E Condensed Statement of Income (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (In millions) | Q1 2024 (In millions) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenues | $747.7 | $596.8 | 25.3% | | Operating Income | $133.3 | $74.0 | 80.1% | | Net Income | $71.0 | $25.2 | 181.7% | OG&E Condensed Statement of Cash Flows (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (In millions) | Q1 2024 (In millions) | | :--- | :--- | :--- | | Net cash provided from operating activities | $46.7 | $124.6 | | Net cash used in investing activities | $(263.4) | $(243.1) | | Net cash provided from financing activities | $241.3 | $122.6 | Combined Notes to Condensed Financial Statements The notes detail key accounting policies, including the significant role of regulatory assets and liabilities in OG&E's financial reporting, highlight the finalization of the 2023 Oklahoma General Rate Review resulting in a $126.7 million annual revenue increase, and disclose the issuance of $350.0 million in senior notes and an ongoing lawsuit seeking over $60.0 million in damages OG&E Revenues from Contracts with Customers by Classification (Q1) | Customer Classification | Q1 2025 (In millions) | Q1 2024 (In millions) | | :--- | :--- | :--- | | Residential | $283.6 | $221.4 | | Commercial | $206.6 | $148.8 | | Industrial | $61.6 | $53.0 | | Oilfield | $59.4 | $49.7 | | Public authorities and street light | $60.5 | $51.0 | - On April 1, 2025, OG&E issued $350.0 million of 5.80% senior notes due 2055 to repay short-term debt and fund its capital investment program[85] - OG&E is a defendant in a lawsuit seeking over $60.0 million in damages related to a fire at an apartment building. The company disputes the claims and believes its insurance policies will cover costs in excess of a non-material retention amount[105][106] - The 2023 Oklahoma General Rate Review was finalized, resulting in an annual revenue requirement increase of $126.7 million. The settlement also approved the current 9.5% return on equity and a capital structure with 53.50% common equity[108][109][110] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the significant increase in Q1 2025 net income to higher operating revenues at OG&E, driven by capital investment recovery and load growth, alongside lower operation and maintenance expenses, while reaffirming its 2025 consolidated earnings guidance and noting Moody's revision of its ratings outlook to negative due to capital expenditure plans and higher debt levels - OGE Energy's Q1 2025 net income increased to $62.7 million ($0.31/share) from $18.6 million ($0.09/share) in Q1 2024. The increase was primarily driven by a $45.8 million rise in net income at OG&E due to higher revenues from capital recovery and load growth, and lower O&M expenses[127] - The company's 2025 consolidated earnings guidance remains unchanged at $447 million to $471 million, or $2.21 to $2.33 per average diluted share[128] Drivers of OG&E Operating Revenue Increase (Q1 2025 vs Q1 2024) | Driver | Change (In millions) | | :--- | :--- | | Fuel, purchased power and direct transmission expense (recoverable) | $91.8 | | Price variance (includes weather) | $37.1 | | Quantity impacts (includes weather) | $11.6 | | Non-residential demand and related revenues | $5.4 | | New customer growth | $4.2 | | Total Change in Operating Revenues | $150.9 | - On April 14, 2025, Moody's Investors Service revised its ratings outlook on both OGE Energy and OG&E from stable to negative, citing pressure from OG&E's capital expenditure plan and higher debt levels at the holding company[160] - OG&E estimates the cost of compliance with the EPA's Good Neighbor FIP could be approximately $2.4 billion to $2.8 billion in total, though the rule is currently stayed and subject to litigation and reconsideration by the EPA[171] Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no significant changes in the market risks affecting the Registrants since the disclosures made in their 2024 Form 10-K - There have been no significant changes in the market risks affecting the Registrants from those discussed in the 2024 Form 10-K[194] Controls and Procedures Management, including the CEO and CFO, concluded that the Registrants' disclosure controls and procedures were effective as of the end of the period covered by this report, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO have concluded that the Registrants' disclosure controls and procedures are effective as of March 31, 2025[195][196] - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[197] Part II - OTHER INFORMATION Legal Proceedings This section reports no new significant legal cases against the Registrants and no material changes in previously reported proceedings, referencing the details provided in Notes 12 and 13 of the financial statements - There are no new significant legal cases to report, and no material changes have occurred in previously reported proceedings[198] Risk Factors The company states that there have been no significant changes to its risk factors from those disclosed in its 2024 Form 10-K - There have been no significant changes in the Registrants' risk factors from those discussed in the 2024 Form 10-K[199] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None reported[200] Other Information The company disclosed that no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the first quarter of 2025 - No director or officer of the Registrants adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[201] Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO and interactive data files (XBRL) - Lists exhibits filed with the report, including Sarbanes-Oxley certifications and XBRL data files[202]