• GAAP 2021 second quarter earnings per share were $0.58 compared with $0.54 in 2020.
• Xcel Energy reaffirms 2021 EPS earnings guidance of $2.90 to $3.00.

MINNEAPOLIS--(BUSINESS WIRE)--Xcel Energy Inc. (NASDAQ: XEL) today reported 2021 second quarter GAAP and ongoing earnings of $311 million, or $0.58 per share, compared with $287 million, or $0.54 per share in the same period in 2020.

Earnings reflect higher electric and natural gas margins, which more than offset additional depreciation, operating and maintenance (O&M) expenses, interest charges and less allowance for funds used during construction (AFUDC).

“Xcel Energy had a strong second quarter, and we reaffirm our 2021 guidance range. We reached constructive rate case settlements in New Mexico, North Dakota and Wisconsin, and continue to make important strides toward our interim goal of 80% carbon-free electricity by 2030 and our ultimate goal of delivering 100% carbon-free electricity to our customers by 2050,” said Ben Fowke, chairman and CEO.

“We recently submitted an updated resource plan in Minnesota, which will allow us to reach our carbon reduction goals faster and at a lower cost to our customers. We also received commission approval on two renewable projects, including the largest solar facility in western Wisconsin and a 120-megawatt wind repowering project in Minnesota.”

At 9:00 a.m. CDT today, Xcel Energy will host a conference call to review financial results. To participate in the call, please dial in 5 to 10 minutes prior to the start and follow the operator’s instructions.

The conference call also will be simultaneously broadcast and archived on Xcel Energy’s website at www.xcelenergy.com. To access the presentation, click on Investor Relations. If you are unable to participate in the live event, the call will be available for replay from 12:00 p.m. CDT on July 29 through 12:00 p.m. CDT on August 1.

Except for the historical statements contained in this report, the matters discussed herein are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements, including the 2021 EPS guidance, long-term EPS and dividend growth rate objectives, future sales, future expenses, future tax rates, future operating performance, estimated base capital expenditures and financing plans, projected capital additions and forecasted annual revenue requirements with respect to rider filings, expected rate increases to customers, expectations and intentions regarding regulatory proceedings, and expected impact on our results of operations, financial condition and cash flows of resettlement calculations and credit losses relating to certain energy transactions, as well as assumptions and other statements are intended to be identified in this document by the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “will,” “would” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information. The following factors, in addition to those discussed in Xcel Energy’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2020 and subsequent filings with the Securities and Exchange Commission, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: uncertainty around the impacts and duration of the COVID-19 pandemic; operational safety, including our nuclear generation facilities; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices and fuel costs; qualified employee work force and third-party contractor factors; ability to recover costs, changes in regulation and subsidiaries’ ability to recover costs from customers; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including inflation rates, monetary fluctuations and their impact on capital expenditures and the ability of Xcel Energy Inc. and its subsidiaries to obtain financing on favorable terms; availability or cost of capital; our customers’ and counterparties’ ability to pay their debts to us; assumptions and costs relating to funding our employee benefit plans and health care benefits; our subsidiaries’ ability to make dividend payments; tax laws; effects of geopolitical events, including war and acts of terrorism; cyber security threats and data security breaches; seasonal weather patterns; changes in environmental laws and regulations; climate change and other weather; natural disaster and resource depletion, including compliance with any accompanying legislative and regulatory changes; and costs of potential regulatory penalties.

This information is not given in connection with any sale, offer for sale or offer to buy any security.

XCEL ENERGY INC. AND SUBSIDIARIES
Notes to Investor Relations Earnings Release (Unaudited)

Due to the seasonality of Xcel Energy’s operating results, quarterly financial results are not an appropriate base from which to project annual results.

Non-GAAP Financial Measures

The following discussion includes financial information prepared in accordance with generally accepted accounting principles (GAAP), as well as certain non-GAAP financial measures such as ongoing return on equity (ROE), electric margin, natural gas margin, ongoing earnings and ongoing diluted EPS. Generally, a non-GAAP financial measure is a measure of a company’s financial performance, financial position or cash flows that adjusts measures calculated and presented in accordance with GAAP. Xcel Energy’s management uses non-GAAP measures for financial planning and analysis, for reporting of results to the Board of Directors, in determining performance-based compensation and communicating its earnings outlook to analysts and investors. Non-GAAP financial measures are intended to supplement investors’ understanding of our performance and should not be considered alternatives for financial measures presented in accordance with GAAP. These measures are discussed in more detail below and may not be comparable to other companies’ similarly titled non-GAAP financial measures.

Ongoing ROE

Ongoing ROE is calculated by dividing the net income or loss of Xcel Energy or each subsidiary, adjusted for certain nonrecurring items, by each entity’s average stockholder’s equity. We use these non-GAAP financial measures to evaluate and provide details of earnings results.

Electric and Natural Gas Margins

Electric margin is presented as electric revenues less electric fuel and purchased power expenses. Natural gas margin is presented as natural gas revenues less the cost of natural gas sold and transported. Expenses incurred for electric fuel and purchased power and the cost of natural gas are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are generally offset in operating revenues. Management believes electric and natural gas margins provide the most meaningful basis for evaluating our operations because they exclude the revenue impact of fluctuations in these expenses. These margins can be reconciled to operating income, a GAAP measure, by including other operating revenues, cost of sales - other, O&M expenses, conservation and demand side management (DSM) expenses, depreciation and amortization and taxes (other than income taxes).

Earnings Adjusted for Certain Items (Ongoing Earnings and Ongoing Diluted EPS)

GAAP diluted EPS reflects the potential dilution that could occur if securities or other agreements to issue common stock (i.e., common stock equivalents) were settled. The weighted average number of potentially dilutive shares outstanding used to calculate Xcel Energy Inc.’s diluted EPS is calculated using the treasury stock method. Ongoing earnings reflect adjustments to GAAP earnings (net income) for certain items. Ongoing diluted EPS for Xcel Energy is calculated by dividing net income or loss, adjusted for certain items, by the weighted average fully diluted Xcel Energy Inc. common shares outstanding for the period. Ongoing diluted EPS for each subsidiary is calculated by dividing the net income or loss for such subsidiary, adjusted for certain items, by the weighted average fully diluted Xcel Energy Inc. common shares outstanding for the period.

We use these non-GAAP financial measures to evaluate and provide details of Xcel Energy’s core earnings and underlying performance. We believe these measurements are useful to investors to evaluate the actual and projected financial performance and contribution of our subsidiaries. For the three and six months ended June 30, 2021 and 2020, there were no such adjustments to GAAP earnings and therefore GAAP earnings equal ongoing earnings for these periods.

Note 1. Earnings Per Share Summary

Xcel Energy’s 2021 second quarter earnings were $0.58 per share compared to $0.54 per share in 2020, primarily reflecting higher electric and natural gas margins (driven by capital investment recovery, regulatory outcomes and weather-normalized sales growth as compared to 2020, which was more adversely impacted by COVID-19). These drivers were partially offset by higher depreciation, O&M expenses, interest charges and lower AFUDC.

Summarized diluted EPS for Xcel Energy:

^(a) Amounts may not add due to rounding.

PSCo — Earnings increased $0.04 per share for the second quarter of 2021 and $0.11 per share year-to-date. The increase in year-to-date earnings reflects higher natural gas and electric margins (primarily capital investment recovery and regulatory outcomes), partially offset by additional depreciation and other taxes (other than income taxes).

NSP-Minnesota — Earnings decreased $0.01 per share for the second quarter of 2021 and increased $0.02 per share year-to-date. The increase in year-to-date earnings reflects higher electric margin (primarily capital investment recovery), partially offset by increased depreciation and O&M expenses.

SPS — Earnings decreased $0.01 per share for the second quarter of 2021 and increased $0.01 per share year-to-date. The increase in year-to-date earnings reflects higher electric margin (capital investment recovery and regulatory outcomes), partially offset by increased depreciation and O&M expenses.

NSP-Wisconsin — Earnings increased $0.01 per share for the second quarter of 2021 and were flat year-to-date.

Xcel Energy Inc. and Other — Primarily includes financing costs at the holding company and earnings from Energy Impact Partners (EIP) funds equity method investments.

Components significantly contributing to changes in 2021 EPS compared to 2020:

^(a) Includes production tax credits (PTCs) and plant regulatory amounts, which are primarily offset in electric margin.

Note 2. Regulated Utility Results

Estimated Impact of Temperature Changes on Regulated Earnings — Unusually hot summers or cold winters increase electric and natural gas sales, while mild weather reduces electric and natural gas sales. The estimated impact of weather on earnings is based on the number of customers, temperature variances, the amount of natural gas or electricity historically used per degree of temperature and excludes any incremental related operating expenses that could result due to storm activity or vegetation management requirements. As a result, weather deviations from normal levels can affect Xcel Energy’s financial performance. However, sales true-up and decoupling mechanisms in Minnesota and Colorado predominately mitigate the positive and adverse impacts of weather.

Normal weather conditions are defined as either the 10, 20 or 30-year average of actual historical weather conditions. The historical period of time used in the calculation of normal weather differs by jurisdiction, based on regulatory practice. To calculate the impact of weather on demand, a demand factor is applied to the weather impact on sales. Extreme weather variations, windchill and cloud cover may not be reflected in weather-normalized estimates.

Weather — Estimated impact of temperature variations on EPS compared with normal weather conditions:

Sales — Sales growth (decline) for actual and weather-normalized sales in 2021 compared to 2020:

Weather-normalized and leap-year adjusted electric sales growth (decline) — year-to-date (excluding leap day)

Weather-adjusted sales results for each of our utility subsidiaries in 2021 reflect improving economies as the adverse effects of COVID-19 lessen. The recovery reflects increased sales in the C&I sector as businesses return to a more normal level. Residential sales remain elevated on a year-to-date basis as individuals working from home have just begun returning to the office.

• PSCo — Residential sales rose based on an increase in the number of customers combined with higher use per customer. The growth in large C&I sales was primarily led by the service, agriculture, food and energy sectors, partially offset by a decrease in the manufacturing sector.
• NSP-Minnesota — Residential sales growth reflects an increase in the number of customers combined with higher use per customer. The growth in C&I sales was due to customer growth and slightly higher use per customer, primarily in the manufacturing sector.
• SPS — Residential sales rose based on an increase in the number of customers combined with higher use per customer. C&I sales increased due to higher use per customer and growth attributable to the food sector, partially offset by losses within the energy sector.
• NSP-Wisconsin — Residential sales growth was attributable to customer additions and higher use per customer. The growth in C&I sales was primarily led by increases in the services, agriculture, food and energy sectors, partially offset by a decrease in the manufacturing sector.

Weather-normalized and leap-year adjusted natural gas sales growth (decline) — year-to-date (excluding leap day)

• Natural gas sales primarily reflect an increase in the number of customers combined with slightly higher customer use.

Electric Margin — Electric revenues and fuel and purchased power expenses are impacted by fluctuations in the price of natural gas, coal and uranium. However, these price fluctuations have minimal impact on electric margin due to fuel recovery mechanisms that recover fuel expenses. In addition, electric customers receive a credit for PTCs generated, which reduce electric revenue and margin. See Note 5 for discussion of Winter Storm Uri.

Electric revenues and margin:

Changes in electric margin:

^(a) Sales excludes weather impact, net of decoupling/sales true-up, and demand is net of sales true-up.

Natural Gas Margin — Natural gas expense varies with changing sales and the cost of natural gas. However, fluctuations in the cost of natural gas has minimal impact on natural gas margin due to cost recovery mechanisms. See Note 5 for discussion of Winter Storm Uri.

Natural gas revenues and margin:

Changes in natural gas margin:

O&M Expenses — O&M expenses increased $50 million, or 9.1%, for the second quarter and $55 million, or 4.9% year-to-date. Significant changes are summarized as follows:

The increase was primarily due to expenses associated with new wind farms, software infrastructure and security costs, natural gas damage prevention, and timing of distribution expenses, partially offset by continuous improvement initiatives. Quarterly timing impacts also occurred throughout 2020 due to cost control initiatives to mitigate the adverse impact of COVID-19 on sales.

Depreciation and Amortization — Depreciation and amortization increased $55 million, or 11.6%, for the second quarter and $113 million, or 12.1% year-to-date. The increase was primarily driven by several wind farms going into service, as well as normal system expansion. In addition, 2021 depreciation expense increased as a result of implementation of new depreciation rates in various states.

Other Income (Expense) — Other income (expense) decreased $2 million for the second quarter and increased $15 million year-to-date, which was largely related to rabbi trust performance primarily offset in O&M expenses (compensation).

AFUDC, Equity and Debt — AFUDC decreased $25 million for the second quarter of 2021 and $40 million year-to-date. The decrease was primarily driven by completion of various wind projects.

Paul Johnson, Vice President - Treasurer & Investor Relations, (612) 215-4535

For news media inquiries only, please call Xcel Energy Media Relations, (612) 215-5300

Xcel Energy website address: www.xcelenergy.com