MGE Energy(MGEE) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Presents MGE Energy and MGE's unaudited Q1 2025 consolidated financial statements, including income, cash flow, and balance sheets MGE Energy, Inc. - Consolidated Statements of Income MGE Energy, Inc. - Q1 2025 vs Q1 2024 Income Statement Highlights | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Total Operating Revenues | $218,970 | $191,336 | +14.4% | | Operating Income | $52,865 | $40,745 | +29.7% | | Net Income | $41,592 | $33,814 | +23.0% | | Diluted EPS | $1.14 | $0.93 | +22.6% | | Dividends per share | $0.450 | $0.428 | +5.1% | MGE Energy, Inc. - Consolidated Statements of Cash Flows MGE Energy, Inc. - Q1 2025 vs Q1 2024 Cash Flow Summary | Activity (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Cash Provided by Operating Activities | $77,862 | $65,815 | | Cash Used for Investing Activities | ($50,592) | ($46,426) | | Cash Used for Financing Activities | ($15,107) | ($14,288) | | Change in cash, cash equivalents, and restricted cash | $12,163 | $5,101 | MGE Energy, Inc. - Consolidated Balance Sheets MGE Energy, Inc. - Balance Sheet Highlights | Metric (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $2,841,377 | $2,827,959 | | Total Liabilities | $820,000 | $834,124 | | Total Common Shareholders' Equity | $1,258,913 | $1,230,138 | | Total Liabilities and Capitalization | $2,841,377 | $2,827,959 | Madison Gas and Electric Company - Consolidated Statements of Income MGE - Q1 2025 vs Q1 2024 Income Statement Highlights | Metric (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Operating Revenues | $218,970 | $191,336 | | Operating Income | $53,162 | $41,159 | | Net Income | $39,803 | $32,200 | | Net Income Attributable to MGE | $34,204 | $26,603 | Notes to Consolidated Financial Statements - MGE Transco's equity earnings from its investment in American Transmission Company (ATC) were $3.0 million in Q1 2025, up from $2.7 million in Q1 2024. Dividends received from ATC also increased to $3.3 million from $2.1 million year-over-year[53] - MGE Energy's effective income tax rate was 13.1% for Q1 2025, compared to 7.7% for Q1 2024. The increase was primarily due to a smaller benefit from the amortization of excess deferred taxes related to the 2017 Tax Cut and Jobs Act[55] - In Q1 2025, MGE Energy issued approximately 35,774 shares of common stock under its Direct Stock Purchase and Dividend Reinvestment Plan, raising net proceeds of about $3.3 million[61] - The EPA finalized new environmental rules in May 2024, including the Effluent Limitations Guidelines (ELG) and Greenhouse Gas (GHG) performance standards, which will impact coal-fired power plants. MGE is evaluating compliance options for its Elm Road Units and expects to meet requirements for other units through planned retirements and fuel switching[69][71] Approved and Proposed Rate Changes | Period | Utility | Rate Increase | Authorized ROE | Effective Date | | :--- | :--- | :--- | :--- | :--- | | 2025 | Electric | 2.63% | 9.7% | 1/1/2025 | | 2025 | Gas | 1.32% | 9.7% | 1/1/2025 | | 2026 (Proposed) | Electric | 4.89% | 10.0% | 1/1/2026 | | 2026 (Proposed) | Gas | 2.33% | 10.0% | 1/1/2026 | | 2027 (Proposed) | Electric | 4.33% | 10.0% | 1/1/2027 | | 2027 (Proposed) | Gas | 2.16% | 10.0% | 1/1/2027 | Joint Plant Construction Project Ownership (as of March 31, 2025) | Project | Ownership Interest | Share of Generation | Estimated Costs (in millions) | Costs Incurred (in millions) | Est. Commercial Operation | | :--- | :--- | :--- | :--- | :--- | :--- | | Paris | 10% | 11 MW Battery | $25 million | $22.9 million | 2025 Battery | | Darien | 10% | 25 MW Solar/7.5 MW Battery | $63 million | $47.1 million | 2025 Solar / 2026 Battery | | Koshkonong | 10% | 30 MW Solar/16.5 MW Battery | $104 million | $20.0 million | 2026 Solar / 2027 Battery | | High Noon | 10% | 30 MW Solar/16.5 MW Battery | $99 million | $1.1 million | 2027 | MGE Energy Segment Net Income (Q1 2025 vs Q1 2024) | Segment (in thousands) | Q1 2025 Net Income (in thousands) | Q1 2024 Net Income (in thousands) | | :--- | :--- | :--- | | Electric Utility | $20,195 | $15,764 | | Gas Utility | $13,585 | $10,613 | | Non-Regulated Energy | $6,023 | $5,823 | | Transmission Investment | $2,314 | $1,996 | | All Others | ($525) | ($382) | | Consolidated Total | $41,592 | $33,814 | Management's Discussion and Analysis of Financial Condition and Results of Operations MGE Energy's Q1 2025 net income rose from utility segment growth, driven by rate adjustments and weather, supporting renewable investments MGE Energy Net Income by Business Segment (in millions) | Business Segment | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Electric Utility | $20.2 | $15.8 | | Gas Utility | $13.6 | $10.6 | | Nonregulated Energy | $6.0 | $5.8 | | Transmission Investments | $2.3 | $2.0 | | All Other | ($0.5) | ($0.4) | | Total Net Income | $41.6 | $33.8 | - Electric utility earnings increased due to higher investments included in the 2025 rate case and favorable weather that boosted residential sales[119] - Gas utility earnings increased due to a 19% rise in gas retail sales, driven by a 13% increase in heating degree days compared to Q1 2024[120] - MGE is advancing its goal of 80% carbon reduction by 2030 by transitioning coal plants (Columbia and Elm Road) to natural gas and investing in new renewable generation, including approximately 178 MW of solar and 18 MW of wind projects[130][131] - The company is monitoring potential solar project cost increases and delays due to the Uyghur Forced Labor Protection Act (UFLPA) and new U.S. tariffs on solar cells and modules[132][172][174] MGE Energy Capitalization Ratios | Component | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Common shareholders' equity | 62.1% | 61.5% | | Long-term debt | 37.9% | 38.5% | | Short-term debt | 0.0% | 0.0% | Quantitative and Qualitative Disclosures About Market Risk No material changes were reported to the market risks disclosed in the 2024 Annual Report on Form 10-K - There were no material changes to the market risks disclosed in the 2024 Annual Report on Form 10-K[177] Controls and Procedures Management concluded the company's disclosure controls were effective as of March 31, 2025, with no material changes to internal controls - As of March 31, 2025, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[179] - No changes in internal controls over financial reporting occurred during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[180] PART II. OTHER INFORMATION Legal Proceedings The company is involved in ordinary course legal proceedings not expected to materially affect financial condition or operations - MGE Energy and its subsidiaries are involved in various legal proceedings handled in the ordinary course of business, which are not expected to be material[181] Risk Factors No material changes were reported from the risk factors disclosed in the 2024 Annual Report on Form 10-K - No material changes were reported from the risk factors disclosed in the 2024 Annual Report on Form 10-K[182] Unregistered Sales of Equity Securities and Use of Proceeds MGE Energy issued new common stock in Q1 2025 via its Direct Stock Purchase Plan, shifting to open market purchases from May 2025 - In Q1 2025, MGE Energy issued new common stock shares to participants in its Direct Stock Purchase and Dividend Reinvestment Plan. The company plans to switch to open market purchases for the plan starting in May 2025[183] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[184] Mine Safety Disclosures This item is not applicable to MGE Energy and MGE - Not applicable[185] Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q1 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q1 2025[186] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data files - The report includes required certifications from the CEO and CFO under Sarbanes-Oxley Act rules, as well as XBRL data files[187]