Electricity and natural gas company Xcel Energy Inc. (XEL) posted 2010 first-quarter results before the opening bell on Thursday. The company recorded adjusted earnings of 42 cents per share, beating the Zacks Consensus Estimate of 41 cents as well as last year’s adjusted earnings of 38 cents per share.
Earnings improvement in the quarter was primarily driven by higher electric and gas margins rates, favorable rate case outcome coupled with increased rates to residential markets in Colorado and Texas. However, overall performance was partially offset by higher operating and maintenance expenses, and increased property taxes.
Total operating revenues during the quarter grew by 4.2% to $2.8 billion from $2.7 billion in the year-ago period. In terms of segments, electric revenues rose by 5.8% year-over-year to $2.0 billion, while natural gas revenues remained essentially flat at $790.2 million.
Operating and maintenance expenses increased 1.9% year-over-year to $481.0 million mainly due to higher plant generation and insurance costs, partially offset by lower employee benefit costs. Conservation and demand side management (DSM) program expenses increased by 28.0% to $58.0 million primarily due to expansion of programs and regulatory commitments.
However, growth in top-line more than offset the increase in operating expenses. Consequently, operating income grew by 8.9% to $403.7 million, while operating margin improved by 60 basis points to 14.4%.
Xcel ended the quarter with a total debt of $8.9 billion and a total debt to capitalization of 54%, compared to $8.6 billion of total debt in the year-ago period. During 2010, the company and its subsidiaries plan to raise $1.4 billion of long-term debt and $475 million of equity.
Concurrent with the earnings release, Xcel also reaffirmed its ongoing earnings guidance of $1.55 to $1.65 per share for 2010, which is in line with the Zacks Consensus Estimate of $1.61 per share derived from 13 covering analysts. The guidance assumes revenue to increase in 2010 due to the full year impact of 2009 electric rate increases in Colorado, Texas and New Mexico, along with the 2010 electric rate increase in Colorado.
However, Xcel continues to expect operating and maintenance expenses in 2010 to increase in the $115-$135 million range. Depreciation expenses are now expected to increase by $35 million to $45 million, compared to the earlier guidance of $40 million to $50 million.
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