Group 1 - The analyst has over 14 years of experience in stock analysis and writing, with a focus on both long and short positions in an unbiased manner [1] - The primary focus of the analyst's coverage is on the energy sector, specifically the oilfield equipment services sector, for the past 7 years [1] - The analyst also covers the Industrial Supply industry and occasionally collaborates with another contributor [1]

Financial Data and Key Metrics Changes - The company reported second quarter 2025 earnings of $1.01 per share, an increase from $0.97 per share in 2024, with expectations for 2025 diluted earnings per share to be in the range of $4.85 to $5.05 [8][19] - Total normalized retail sales in Missouri increased approximately 1% over the trailing twelve months through June, with industrial sales up more than 2.5% [20][21] Business Line Data and Key Metrics Changes - The company invested over $2 billion in critical infrastructure during the first half of the year, focusing on strengthening the energy grid and enhancing operational performance [5][17] - The company has signed construction agreements with data center developers representing approximately 2.3 gigawatts of future demand, expected to ramp up in late 2026 and beyond [9][42] Market Data and Key Metrics Changes - The company anticipates approximately 5.5% compound annual sales growth in Missouri from 2025 through 2029, primarily driven by increased data center demand [8][9] - The industrial sector's growth is supported by ongoing manufacturing expansions and the growth of new digital and communication services firms [21] Company Strategy and Development Direction - The company's strategy is built on three pillars: prudent investments in rate-regulated energy infrastructure, advocating for responsible energy policies, and optimizing operations for long-term sustainable value [4] - The company has a robust pipeline of investment opportunities exceeding $63 billion, aimed at strengthening the energy grid and powering economic growth [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute the investment plan and strategy across all business segments, expecting strong long-term earnings and dividend growth [17][29] - The company remains focused on building a resilient energy grid, with ongoing investments in upgraded substations and smart technologies to enhance outage detection and recovery [7][12] Other Important Information - The company plans to issue approximately $600 million of common equity each year through 2029 to support its investment plan [24] - Federal energy-related tax credits are expected to provide approximately $1.5 billion in cost savings for customers from 2025 through 2029 [25][26] Q&A Session Summary Question: Data center load and economic development outlook - Management highlighted strong interest and momentum from data center developers, with a robust pipeline of signed construction agreements totaling 2.3 gigawatts [34][36] Question: Turbine slot queue and growth derisking - Management confirmed they are actively securing turbine slots and are confident in meeting service dates for upcoming projects [44][46] Question: Access to gas for plans - Management stated they feel good about their current gas transmission position and the ability to meet future needs with existing infrastructure [49][51] Question: MISO awards and regulatory challenges - Management acknowledged the recent complaint regarding MISO's tranche 2.1 projects but expressed support for the need for transmission investments [68][70] Question: Impact of potential changes in federal renewable policies - Management emphasized their advocacy for business certainty regarding tax credits and expressed confidence in the current legislative framework [74][76]

Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of $0.38 for Q2 2025, up from $0.33 in Q2 2024, reflecting a year-over-year growth of approximately 15% [15][16] - Year-to-date EPS increased to $2.24 from $2.19 compared to the same period last year, driven by successful regulatory strategies and favorable weather conditions [17][18] - The company reaffirmed its full-year earnings guidance range of $4 to $4.2 per share, indicating a 5% growth rate at the midpoint over 2024 EPS [11][21] Business Line Data and Key Metrics Changes - New margins contributed $0.22 per share, including $0.17 from new rates and rider recovery, which offset higher operating expenses and financing costs [16] - The company experienced a positive weather impact of $0.03 per share compared to Q2 2024, although weather drove $0.04 per share of unfavorability during Q2 2025 [16][17] Market Data and Key Metrics Changes - Wyoming Electric recorded four all-time peak loads in the first half of the year, with the latest peak of 379 megawatts representing a 21% increase over 2024 [9] - The company is witnessing growing demand from data center and blockchain customers, contributing solid earnings growth [9][12] Company Strategy and Development Direction - The company is focused on a $1 billion capital plan to support key projects and regulatory initiatives, aiming for top quartile reliability and above-industry-average safety performance [6][8] - The long-term growth strategy includes a $4.7 billion capital plan, with significant investments in infrastructure to enhance system resiliency and support growing demand [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the upper half of the long-term EPS growth target of 4% to 6% starting in 2026, driven by new rates, customer growth, and data center demand [21][53] - The company is actively engaging with potential data center customers, indicating a robust pipeline of demand that will drive future growth [14][21] Other Important Information - The company has established an emergency public safety power shutoff program to mitigate wildfire risks, reflecting a commitment to customer safety [10][30] - The company maintains a strong balance sheet with a focus on credit quality, targeting a funds from operations (FFO) to debt ratio of 14% to 15% [18][19] Q&A Session Summary Question: What is the outlook for industrial growth, particularly in digital sectors? - Management noted that while significant growth was observed, it is not expected to be strictly linear, with varying ramp rates depending on the type of data center and blockchain load [35][38] Question: Are the new announcements for Wyoming part of the existing pipeline? - Management confirmed that the new announcements are incremental to the existing pipeline and will be included in future load forecasts once agreements are executed [39][40] Question: What is driving the confidence in achieving the upper half of the growth range? - Management highlighted several drivers, including significant capital projects, ongoing customer growth, and the ramp-up of data center loads, which are expected to contribute positively [49][53] Question: Can you provide details on the unplanned outages and their impact? - Management stated that all generation is currently online and operational, and while there were some impacts from outages, they have been mitigated, resulting in an immaterial financial impact [54][56][58]

Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of $0.38 for Q2 2025, up from $0.33 in Q2 2024, reflecting a year-over-year growth of approximately 15% [14] - Year-to-date EPS increased to $2.24 from $2.19 compared to the same period last year, driven by successful execution of regulatory strategies [16] - The company reaffirmed its full-year earnings guidance range of $4 to $4.2 per share, indicating a 5% growth rate at the midpoint over 2024 EPS [10][20] Business Line Data and Key Metrics Changes - New margins contributed $0.22 per share, including $0.17 from new rates and rider recovery, which offset higher operating expenses and financing costs [15] - The company experienced a positive weather impact of $0.03 per share compared to Q2 2024, although weather drove $0.04 per share of unfavorability during Q2 2025 [15] Market Data and Key Metrics Changes - Wyoming Electric recorded four distinct all-time peak loads during the first half of the year, with the latest peak of 379 megawatts in June representing a 21% increase over the peak recorded in 2024 [7] - The company noted strong customer growth driven by demand from data centers and blockchain customers, contributing solid earnings [6] Company Strategy and Development Direction - The company is focused on delivering financial commitments, executing regulatory and growth initiatives, and providing excellent operational performance [5] - A $1 billion capital plan is in place to support key projects that address the growing needs of customers [5] - The company is on track to achieve its long-term EPS growth target of 4% to 6% starting in 2026, supported by a $4.7 billion capital plan [10][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the upper half of the long-term EPS growth target, driven by new rates, regulatory efforts, and customer growth [20] - The company is actively engaging with potential data center customers, indicating a robust pipeline of demand that will further drive revenue growth [13] Other Important Information - The company has established an emergency public safety power shutoff program to mitigate wildfire risk across its electric utilities [8][30] - The company maintains a strong balance sheet with a focus on sustaining credit quality and liquidity, with over $600 million available under its revolving credit facility [18] Q&A Session Summary Question: Industrial growth for the quarter was 19%. What is the outlook for digital growth? - Management indicated that while significant growth is expected from data centers and blockchain, it may not be strictly linear due to varying ramp rates [35][38] Question: Was the new announcement for Wyoming part of the existing pipeline? - Management confirmed that the new announcement is incremental to the existing pipeline and will be included in future load forecasts once agreements are executed [39][40] Question: What is driving the expectation for upper half growth in the 4% to 6% range? - Management highlighted several drivers, including capital projects, regulatory efforts, and customer growth, particularly from data centers [55] Question: Can you provide details on unplanned outages and their impact? - Management confirmed that all generation is currently online and operational, and the financial impact of unplanned outages is considered immaterial [58][60]

Financial Data and Key Metrics Changes - GAAP earnings for Q2 2025 were $0.46 per share, compared to $0.08 in Q2 2024 [6] - Core earnings were $0.52 per share for the quarter, up from $0.51 in the same quarter last year, indicating a strong performance [7][22] - Year-to-date core earnings reached $1.19 per share, reflecting a 19% increase compared to 2024 [23] - Consolidated return on equity was 9.7%, aligning with the targeted range of 9.5% to 10% [23] Business Line Data and Key Metrics Changes - The distribution and integrated businesses showed meaningful increases due to the execution of regulated strategies and higher customer demand [23] - Operating expenses were approximately 4% below plan, contributing to favorable financial performance [51] - Capital investments for 2025 are on track with over $1.4 billion deployed in Q2 and more than $2.5 billion in the first half of the year, which is 29% ahead of the same period in 2024 [25] Market Data and Key Metrics Changes - The data center pipeline has increased over 80% to 11.1 gigawatts since February, with contracted data center load rising approximately 25% to 2.7 gigawatts [12] - Requests for large load studies greater than 500 megawatts have surged, with over 95 gigawatts requested since the beginning of 2024 [13] Company Strategy and Development Direction - The company is focused on a $28 billion capital investment plan through 2029 to enhance system resiliency and reliability [9][20] - Significant investments in Pennsylvania are planned, with $15 billion expected through 2029, including $4.3 billion in distribution and $5.5 billion in transmission capital investments [11] - The company aims to be recognized as a premier electric utility, targeting a compound annual growth rate of 6% to 8% through 2029 [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving core earnings in the upper half of the guidance range of $2.4 to $2.6 per share for 2025 [19] - The leadership team is focused on optimizing performance and financial strength, with a commitment to delivering stable growth [19][29] - Management highlighted the need for new dispatchable generation in West Virginia and is prepared to invest accordingly [40] Other Important Information - The company successfully sold its minority ownership in the Signal Peak coal mine for $47.5 million, eliminating any remaining financial or operational liabilities [29] - The company is committed to maintaining a strong balance sheet and investment-grade metrics, targeting a funds from operations to debt ratio of 14% plus through 2029 [28] Q&A Session Summary Question: Clarification on transmission CapEx upside - The company indicated that the 20% increase in CapEx is gross and includes approximately $2.3 billion to $4 billion identified for shareholders [34][35] Question: Balance sheet capacity and equity considerations - Management stated they are keeping all options open regarding balance sheet capacity and would consider equity if necessary, but are not currently concerned [36][37] Question: Data center pipeline and negotiations - The pace of negotiations is driven by customer demand, with legitimate developers willing to sign contracts [43] Question: Incremental generation needs in West Virginia - The company anticipates needing to add about 1,000 megawatts of dispatchable gas combined cycle generation over the next ten years [45] Question: Ohio regulatory strategy post-rate case - Future regulatory strategy will depend on the outcomes of the current rate case, with plans to file under the new framework as soon as practicable [91][92]

Demand & Growth Drivers - Energy infrastructure sees continued momentum with strong orders in both the first and second half of the year [2] - Data center growth, driven by artificial intelligence, is fueling demand for distributed power generation, particularly for Nova LT turbines (12 MW, 16 MW, and multi-fuel flexible turbines) [2] - The company anticipates accelerating the achievement of $15 billion (15,000 million) in orders within three years [3] - Data center demand represents a significant opportunity for industrial energy technology and synergies with oil field services and equipment, including carbon capture sequestration (CCS) [4] Oil & Gas Market Dynamics - North America activity is impacted by rig efficiency, digital solutions usage, and incremental supply from OPEC plus, leading to rangebound prices [5] - Underlying demand for oil service and equipment is softening due to OPEC adding barrels and US activity slowing [6] - Baker Hughes is focused on margin accretion in the oilfield services and equipment sector [6] International Opportunities - Mexico has an important role to play in energy infrastructure, both from a Mexican and global perspective [8] - Baker Hughes had productive discussions with Mexico regarding how its energy technology can assist in expanding and securing energy, including gas from the United States [8]

Financial Data and Key Metrics Changes - The company reported a 7% increase in sales for the fourth quarter, driven primarily by growth in the Climate Solutions segment [21] - Adjusted EBITDA increased by 32% or $25 million, with an adjusted EBITDA margin of 16.1%, representing a 300 basis point improvement from the prior year [22] - Full year adjusted EBITDA margin ended at 15.2%, which is 210 basis points above fiscal 2024 [23] Business Line Data and Key Metrics Changes - Climate Solutions segment reported a 30% increase in revenues and a 45% increase in adjusted EBITDA, resulting in a 220 basis point improvement in adjusted EBITDA margins to 21% [7][15] - Performance Technologies segment achieved a 15% adjusted EBITDA margin in the fourth quarter, with a 200 basis point year-over-year improvement [11][20] - Data center sales grew by $69 million or 80% from the prior year, driven by higher North American sales and the Scott Springfield acquisition [15] Market Data and Key Metrics Changes - North America showed strong demand for chillers, with data center sales significantly contributing to revenue growth [8][15] - The European market is experiencing some downturn, with customers adjusting their spending plans [52] Company Strategy and Development Direction - The company is focusing on expanding its Climate Solutions segment and has made significant investments to drive growth [5][10] - A new modular data center cooling solution is being launched to meet market demands for high-density compute infrastructure [9] - The Performance Technologies segment is being reorganized into two product groups to better focus on key end markets and customers [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the data center market, with visibility of customer plans extending up to five years [38] - The company anticipates total sales growth of 2% to 10% for fiscal 2026, with Climate Solutions expected to grow by 12% to 20% [27] - Performance Technologies is expected to see sales decline by 2% to 12% due to depressed end markets [28] Other Important Information - The company generated $27 million of free cash flow in the fourth quarter, with full year free cash flow at $129 million [24] - A $100 million stock buyback program was announced, with $18 million of share repurchases completed [25] Q&A Session Summary Question: Can you discuss data center visibility and customer build schedules? - Management indicated strong confidence in data center opportunities, with visibility extending up to five years for some customers [36][38] Question: Is there anything sourced from China that is hard to find elsewhere? - The company has significantly reduced dependency on China and feels comfortable with its local supply chain strategy [40] Question: What is the outlook for Performance Technologies? - The largest uncertainty is the rate of market recovery, particularly in Performance Technologies, while Climate Solutions is expected to grow steadily [41] Question: Can you clarify the split in data center revenue between the US and Europe? - The split is approximately 75% North America and 25% Europe [64] Question: How will data center revenue ramp up in fiscal 2026? - The first quarter is expected to be the softest, with ramp-up occurring throughout the year as capacity increases [66] Question: What is the growth outlook for Climate Solutions? - Data center revenue is expected to grow by at least 30%, while other areas may see flat or low double-digit growth [70] Question: What are the plans for divestitures in the Performance Technologies segment? - Currently, no divestitures are built into the guidance, but the company is focused on exiting non-strategic businesses [78]

Financial Data and Key Metrics Changes - The company is reaffirming its 2025 earnings guidance range of $4 to $4.2, representing a 5% growth rate at the midpoint over 2024 EPS [9][10] - Year-over-year earnings drivers for Q1 2025 included $0.29 per share of new margins, with $0.26 from new rates and rider recovery, and $0.03 from customer growth and usage [13][14] - O&M expenses increased by $0.24 per share, primarily due to higher employee costs, outside services, and insurance costs [15][16] Business Line Data and Key Metrics Changes - The company has successfully implemented new rates through five rate reviews since early 2024, recovering over $1.3 billion in new system investments [6][8] - The data center demand is projected to reach approximately 500 megawatts by the end of 2029, with expectations for EPS contribution from data centers to double to over 10% of total EPS by 2028 [12][21] Market Data and Key Metrics Changes - The company reported strong customer growth, with two new all-time customer peak loads at Wyoming Electric, reflecting nearly a 10% increase over the previous peak in January 2024 [7][8] - The company is experiencing favorable business and regulatory climates, which are contributing to ongoing growth opportunities [8][10] Company Strategy and Development Direction - Key objectives for the year include achieving 5% year-over-year earnings growth, executing regulatory initiatives, and a $1 billion capital plan [5][6] - The company is strategically expanding its infrastructure to serve growing customer demands, particularly in data centers and blockchain operations [8][12] - The capital plan prioritizes safety, system integrity projects, and infrastructure expansion to support growing demands [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the 2025 guidance and long-term EPS growth targets of 4% to 6% [10][31] - The company is well-positioned to maximize growth opportunities while mitigating risks, such as through wildfire legislation in Wyoming [8][29] - Management noted that the future of the Inflation Reduction Act is uncertain, but the company's strategic exposure is minimal [10][11] Other Important Information - The company has a strong liquidity position with nearly $700 million available under its revolving credit facility [17][18] - The company has a history of 55 consecutive years of dividend payments, targeting a payout ratio of 55% to 65% [18][19] Q&A Session Summary Question: Can you elaborate on the electric rate case and the request for rehearing? - Management confirmed an increase in new annual revenue of about half a million and is reviewing the decision for potential next steps [33][34][36] Question: What is the outlook for the franchise agreement in Pueblo? - Management expressed satisfaction with the recent vote to keep the franchise agreement and emphasized the importance of affordability and economic development in the area [37][39][40] Question: Can you discuss the timing of equity needs and the lower levels expected in the future? - Management clarified that equity issuance is based on timing of capital projects and maintaining credit metrics, with expectations for lower equity needs in 2026 and beyond [42][45] Question: What is the status of wildfire mitigation efforts in Colorado and South Dakota? - Management anticipates similar outcomes in Colorado and South Dakota as seen in Wyoming, with ongoing legislative efforts [48][49] Question: Is there interest in capital light strategies in South Dakota? - Management noted continued interest from large customers in Colorado and South Dakota, with potential for customized tariffs based on customer needs [56][57] Question: How are insurance costs being handled in Colorado? - Management indicated that insurance cost recovery will be rolled into rate reviews in Colorado, similar to the approach taken in Wyoming [62]

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