NYSE:OGE OGE Energy Q4 2023 Earnings Report $44.92 -0.29 (-0.64%) Closing price 04/25/2025 03:59 PM EasternExtended Trading$44.86 -0.06 (-0.13%) As of 04/25/2025 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast OGE Energy EPS ResultsActual EPS$0.24Consensus EPS $0.20Beat/MissBeat by +$0.04One Year Ago EPS$0.25OGE Energy Revenue ResultsActual Revenue$566.70 millionExpected Revenue$986.67 millionBeat/MissMissed by -$419.97 millionYoY Revenue Growth-20.40%OGE Energy Announcement DetailsQuarterQ4 2023Date2/20/2024TimeBefore Market OpensConference Call DateWednesday, February 21, 2024Conference Call Time9:00AM ETUpcoming EarningsOGE Energy's Q1 2025 earnings is scheduled for Wednesday, April 30, 2025, with a conference call scheduled at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (10-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by OGE Energy Q4 2023 Earnings Call TranscriptProvided by QuartrFebruary 21, 2024 ShareLink copied to clipboard.There are 15 speakers on the call. Operator00:00:00Good day, and thank you for standing by. Welcome to the OGE Energy Corp. 2023 4th Quarter Earnings and Business Update Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Operator00:00:32Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jason Bailey, Director of Investor Relations. Please go ahead. Speaker 100:00:45Thank you, Didi, and good morning, everyone, and welcome to OGE Energy Corp. Q4 2023 earnings and business call update. With me today, I have Sean Trotski, our Chairman, President and CEO and Brian Buckler, our CFO. In terms of the call today, we will first hear from Sean, followed by an explanation from Brian of financial results. And finally, as always, we will answer your questions. Speaker 100:01:12I'd like to remind you that this conference is being webcast and you may follow along at oge.com. In addition, the conference call and accompanying slide will be archived following the call on that same website. Before we begin the presentation, I'd like to direct your attention to the Safe Harbor statement regarding forward looking statements. This is an SEC requirement for financial statements and simply states that we cannot guarantee forward looking financial results, but this is our best estimate today. I will now turn the call over to Sean for his opening remarks. Speaker 100:01:44Sean? Speaker 200:01:45Thank you, Jason. Good morning, everyone. Thank you for joining us today. It's certainly great to be with you. I'm excited about our message to you this morning as our results for 2023 were top of guidance and we are updating our 5 year plan, including a consolidated earnings growth rate based on the strong fundamentals of our business. Speaker 200:02:06It's truly a great time to be here at the company. Before we get into the plan, I do want to take a moment to talk about our people here at Big Orange. In 2023, the team delivered results for our customers, our communities and shareholders by providing reliable energy at some of the lowest rates in the nation every day. Once again, our safety results were very strong with the last 8 years being the safest in our 121 year history, even as we continue to face some of the most extreme weather in the country, like winter storms Jerry and Heather in January, where our plants ran generating electricity to the grid to ensure our customers could continue to live their lives and run their businesses. Our team achieved recognition for our culture in 2023. Speaker 200:02:52I mentioned last quarter that we've been named the number 1 in state employer in Oklahoma by Forbes Magazine and later in the year we were also named the top workplace in Oklahoma following the feedback our employees gave in our annual workplace survey. And just last week, Forbes named OGE Energy the 16th best midsized employer in the country, achieving the highest rank in our sector and the highest ranking of any company in Oklahoma. These results are not happenstance. They come from a dedicated commitment to fostering a culture grounded in our values and our beliefs and operationalized with a focus to deliver safe, reliable and resilient electricity combined with outstanding customer experiences every single day. I'm so proud of everyone here at the company and it's because of them that we are discussing great financial results. Speaker 200:03:45This morning, we reported consolidated earnings at the top end of our guidance of $2.07 per share for the year, including $2.12 per share for OG and E and a holding company loss of $0.05 per share. Our sustainable business model provides opportunities to drive load growth while simultaneously investing in the grid and generation for many years to come in a way that is mindful of ensuring a smooth customer impact and delivering consistent financial returns. Last year, my message to you was we've got this. The plan we introduced to you this morning is an extension of that message and is consistent with the growth we've delivered in the past. Over the next 5 years, we expect to grow consolidated earnings per share at 5% to 7%. Speaker 200:04:33Looking back at the 10 year period before we exited our Midstream Natural Gas segment, we delivered over 6% of consolidated earnings per share growth. The difference now is that we've simplified our business mix and removed the volatility that was associated with that business segment. Our plan going forward, which Brian will detail, is based on a pure play electric model with premium fundamentals, including a strong financial base and credit metrics, excellent load and customer growth and a lower risk investment plan focused on delivering the safe, reliable, resilient electric service that our customers expect. Today, I want to talk to you a bit more about 3 key aspects of our work that drive our results reliability, growth and affordability. Our grid and weather hardening investments continue to deliver great results for our customers. Speaker 200:05:25Our grid reliability investments benefited customers in 2023, saving over 3 20 minutes of interruption for the average impact to customer. And from a SADI perspective, automated restorations saved our customers more than 7.5 minutes of SADI or 6,200,000 customer minutes of interruptions. We also built or upgraded 21 substations to serve our growing service area, and we will continue making these types of investments in the grid that directly benefit our customers. This foundation powers our growing communities and economic development engine that has delivered 11 new projects in our service area that are projected to create 1,000 of jobs and garner 1,000,000,000 of dollars in additional investment. This type of growth is not by accident. Speaker 200:06:13We set the stage for these results more than 5 years ago when we began investment and growing the local economy in cities and towns all across our service area. Our communities maintain strong unemployment rates and continue to attract expanding and new businesses that our low rates help secure. For example, just last month, Stardust Power announced its plans to build a new battery grade lithium refinery in Oklahoma, bringing hundreds of jobs to the community as well as community infrastructure development. Oklahoma's central location, access to multiple transportation routes, highly skilled workforce and low cost energy were all reasons noted for the site selection. We look forward to serving Stardust as they get up and running. Speaker 200:07:01Our load forecast for 2024 continues to keep pace with the outstanding growth we've experienced over the last 3 years and our long term load forecast remains as strong as our service area continues to grow. Turning to the regulatory front. Constructive regulatory outcomes enable us to support growth, serve customers and achieve results for our shareholders. We've released the draft IRP that will lead to RFPs later in the year for additional generation to meet the needs of our growing service area. We will be disciplined with regard to customer impact and expect a combination of gas, solar along with energy efficiency and DSM programs to meet the identified needs. Speaker 200:07:44In Oklahoma, we have filed a rate review and expect new rates to be in place by July 1. In Arkansas, we've achieved a settlement under the formula rate plan for 1.4% increase in rates effective April 1. Today's macro environment continues to macroeconomic environment continues to create pressure on our customers and we remain committed to affordability and keeping bills low. As I mentioned in our last call, we reduced the average fuel charge by $21 per month in November, which had an immediate impact on customer bills. We've doubled down on connecting customers to programs and services to help them manage their energy use and monthly bill, enrolling nearly 20% of our customers and new to them programs in 2023, including energy efficiency and home weatherization as well as connecting our customers to billing assistance when they need it. Speaker 200:08:41Additionally, our team continues to innovate energy efficiency programs that will help customers reduce their bill and increase reliability, including making low cost repairs to qualify customer homes for weatherizations, piloting solar and battery storage technology at schools and piloting managed flexible load technology. As we celebrate the impact of those programs, I want to close with a few important thoughts. We are committed to growth for our communities, for our customers and to financial growth for our shareholders and our employees. The case for OG and E is strong and I'm bullish on our future. We're leveraging the economic development engine we built that drives load growth. Speaker 200:09:24Our excellent execution is driven by fully engaged employees who are determined to reach our North Star of delivering safe, reliable and affordable electricity to our customers. We operate in constructive regulatory jurisdictions and we've created a competitive, credible, lower risk financial plan backed by a strong balance sheet, all of which leads to a long term plan where we address system growth and customer needs, which are the center of our decisions. Next week, OG and E turns 122 years old. And as we celebrate that milestone, we look ahead to the future where our deep diverse set of investment opportunities allows us to meet customer expectations and achieve investor commitments. Keeping customer bill impact in mind, we will invest alongside growth in our communities to keep the momentum going for many, many years to come. Speaker 200:10:20Thank you. I'll turn it over to Brian. Brian? Speaker 300:10:23Thank you, Sean. Thank you, Jason, and good morning, everyone. I am pleased to review our 2023 results with you and provide our 2024 outlook as well as details on our long term consolidated EPS guidance. Let's start on Slide 6 and discuss full year 2023 results. On a consolidated basis, 2023 net income was $417,000,000 or $2.07 per diluted share compared to $666,000,000 or $3.32 per share in 2022. Speaker 300:10:53Earnings for last year included $1.16 per share from natural gas midstream operations, which we fully exited in 2022 through the sale of our energy transfer units. We had a great year of execution. OG and E Energy's 2023 consolidated earnings reflect results at the high end of our original and revised guidance. In our core business, the electric company exceeded expectations, achieving net income of $426,000,000 or $2.12 per diluted share compared to 440,000,000 dollars or $2.19 per share in 2022. The year over year decrease in electric company net income was primarily due to milder weather compared to the prior year. Speaker 300:11:38As you may recall, Oklahoma and Arkansas experienced an exceptionally hot summer in 2022. Milder weather in 2023 was partially offset by the benefits of strong load growth of 2.7% during the year. Other drivers of current year results compared to the prior year were depreciation and interest expense related to our capital investments, increased operation and maintenance expense, higher revenues from recovery of capital investments and allowance for equity funds used during construction related to our 2023 capital investments. Other operations including our honing company reported a loss of $10,000,000 or 0 point 5 dollars per diluted share in 2023 compared to a loss of $5,000,000 or 0 point expense related to increased short term debt and Q4 results included an approximate $0.02 tax benefit related to our former natural gas midstream business. As I mentioned, 2023 weather normalized load growth came in at 2.7% led by the commercial sector which grew electricity usage by remarkable 11%. Speaker 300:12:46We have now experienced back to back to back annual total retail load growth of 2.4% or greater. As you will see in a moment, we expect 2024 load to continue this enviable trend, which highlights the economic vibrancy of Oklahoma and Arkansas enhanced by our low rates. Please see the appendix for more information regarding Q4 2023 results. Turning to Slide 7. For 2024 on a consolidated basis, we are forecasting earnings of $2.12 per share with a range of $2.06 to $2.18 per share. Speaker 300:13:21This represents a consolidated growth rate of 6% from our original 2023 guidance of $2 per share. And as I'll discuss in a moment, we expect consolidated EPS to continue to grow 5% to 7% throughout our 5 year forecast period. 2024 consolidated EPS expectations incorporate electric company earnings of $2.22 per share. The electric company has consistently delivered results in line with our commitments. Its earnings growth profile has the foundation of strong load growth in 2024 that looks similar to the past 3 years, as well as an investment plan that is focused on our ability to serve our growing customer base with a reliable, resilient and safe power system. Speaker 300:14:04At the holding company in 2024, we are forecasting a loss of $0.10 per share consistent with the expectations I shared with you on prior calls. Let's now move to Slide 8. As Sean mentioned, today we are introducing a long term and annual consolidated EPS growth rate guidance of 5% to 7% based off of our 2024 consolidated earnings midpoint estimate of $2.12 per share. We believe OG and E Energy has one of the most credible 5 year financial plans in the entire industry. It starts with the service area with favorable business prospects. Speaker 300:14:38In fact, we project load growth of 3% to 5% in 2024 and expect 2025 to be well above our historic 1% load growth with emerging trends that indicate continued strength in years beyond 2025. Our balance sheet is one of the strongest in the industry supporting the $6,000,000,000 5 year capital investments you see in today's materials. Consolidated FFO to debt is forecasted to remain strong throughout the 5 year forecast period with no big dips and instead a consistent performance of approximately 17% each year. We continue to target a dividend payout ratio of 65% to 70% and expect earnings per share growth to exceed dividend growth over the 5 year period. In short, we believe our 5 year plan is tremendous and it will be implemented by a proven team with a track record of operational excellence. Speaker 300:15:31Now let me take a moment to discuss our future investment plans. Our growing operations will require a substantial level of infrastructure to support the reliability of our transmission and distribution system. Our future plans will be flexible and annual level of capital spending in our T and D system could vary depending on the amount and timing of potential new generation capacity investments. Our deployed capital will address our customers' requirements for a safe and reliable power system, while maintaining our competitive advantage of low rates and delivering on our commitments to shareholders in a lower risk fashion. In essence, this is all a continuation of execution of our sustainable business model. Speaker 300:16:11Before I hand the call back to Sean, let me summarize today's message. Our team has once again delivered exceptional results in 2023 at the high end of our original and increased EPS guidance range. Looking ahead, we have developed an operational and financial plan spending 5 years aiming to bring substantial value to customers and OG and E's power system, supporting economic development in our communities and providing a compelling investment thesis for our shareholders. Our future outlook is based on this lower risk investment strategy backed by exceptional load growth, a solid financial position, constructive regulatory jurisdictions and consistent executions from our employees. With that, we will open the line for your questions. Operator00:17:01Thank And our first question comes from Shar Pourreza of Guggenheim Partners. Speaker 200:17:20Hey guys, good morning. Hey, good morning Shar. Speaker 400:17:23Good morning. Good morning. Congrats Sean on the results. Speaker 200:17:28Thank you and congrats on the pronunciation of your name. They did down the street. Speaker 400:17:32It's taking years, but it's getting there. Speaker 200:17:35I'm still working on mine. There you go. Speaker 400:17:39Charles, maybe just starting off on the recently filed IRP update, there's obviously over a gigawatt capacity that's within the 5 year timeframe. It's not in plan. I guess, how quickly would you look to update that portion of the CapEx needs after the IRP? So what's the cadence of updates? And could that incremental spending kind of crowd out some of the base spending as you manage customer rates? Speaker 400:18:04Thanks. Speaker 200:18:05Yes. I think that's a great question. And so we'll handle this process just like we did with the last one. And so what we'll do is we'll finalize that RFP. We'll go through the RFP process where we go through an extensive review. Speaker 200:18:23There's a lot of stakeholder discussions. We follow all of the commission rules. And then we'll negotiate some agreements. And we'll file that at the commissions. And once we get approval, then we'll layer that into our forecast. Operator00:18:41Couple of Speaker 200:18:41points about that. I think your point there with that crowd out, I'd probably use a different word than crowd. But what I would say to that, Shar, is that we have a lot of flexibility around our investments and we can move some things around. So yes, we will be very flexible and move some things around and really smooth that impact out to customers as much as we can. And then I've said repeatedly, our preference, our very strong preference is to really smooth these generation additions out over a number of years. Speaker 200:19:18And so not to create a situation where we have a very large asset going into service over a couple of years. Speaker 500:19:26Does that help? Perfect. Speaker 600:19:27Yes, totally. Speaker 400:19:28And then just lastly, just a balance sheet question. I mean, obviously, there's incremental spending is one of the key things on the call today, right? As you're getting to that 17% FFO to debt metric, would you look at further equity support in line with the OpCo authorized cap structure of roughly fifty-fifty or something different or not at all actually? Speaker 200:19:52Yes. Thanks for that. And what I would say, Shar, is I think Brian was very clear. There's really no equity needs in our plan. I think what I would offer for you though is that we're managing this business for the long term. Speaker 200:20:09And when we have the opportunity with our investments and our growth down the road and we need to issue the equity, we'll issue it. Got it. Perfect. Got it. Okay. Speaker 200:20:25Thanks, Shar. Speaker 300:20:26Yes. Appreciate it guys. Thank you. And it's good to Speaker 400:20:29see Brian working very hard for you. Thanks, guys. Speaker 200:20:31Yes. He's working hard. Thanks, Shar. Have a good day, buddy. Operator00:20:35Thank you. One moment for the next question. And our next question comes from Nicholas Campanella of Barclays. Speaker 700:20:49Hey, good morning everyone. Thanks for taking the question. Speaker 800:20:52Good morning, Nick. Speaker 700:20:54Good morning. So yes, thanks for the increase in the CapEx plan and all the details there. I guess just simplistically, what is rate based growth on this new plan as you see it? Speaker 300:21:06Brian, you want to cover that one? Sure, sure. Good morning, Nick. And in the appendix, we've given our best current estimate of our 5 year capital expenditures and we've also provided our starting rate base number as filed in our recent rate case filing as well as an annual depreciation expense trend line here in the 5 years. So maybe I'll punt to Jason maybe after the call to help with kind of the annual rate base number across the 5 year plan. Speaker 300:21:35But from a 5 year CAGR perspective, it's roughly 7.5%. Speaker 700:21:407.5%, that's helpful. Okay. And then I guess just holdco was $0.05 in $0.23 You have another $0.05 to drag in 0.24 from probably just new debt issuances. Just how do you kind of see your HoldCo drag progressing through the plan here? Does it remain consistent at that $0.10 or does it grow through 2025 and beyond? Speaker 300:22:04Yes. Hey Nick, it's Brian again. As I've spoken to the last few quarters, the utility and holding company are lining up very well for 2024 and beyond. You've heard us speak to the many tailwinds at utility and we spoke about a lot of them today, namely the very strong load growth and a host of incremental infrastructure investment needs. And so we're expecting utility to grow very meaningfully during the 5 year period. Speaker 300:22:30And the holding company really is there to help to finance the business as we go along the way. So you have the capital plan numbers and today we're providing this consolidated view of OG and E Energy Corp and we have a lot of confidence in achieving that 5% to 7% consolidated EPS growth rate throughout the 5 year period, Nick. So we're looking at it as a consolidated view and certainly you'll see the holding company tick up a little bit each year. But in total, when you look at the whole package, we feel very confident and strongly about our ability to deliver that 5% to 7% consolidated CAGR and annual growth rate. Speaker 700:23:11All right. Hey, I appreciate the time. Thanks. Speaker 900:23:13Thanks, Nick. Thank you, Nick. Operator00:23:15Thank you. One moment for our next question. And our next question comes from Durgesh Chopra of Evercore ISI. Speaker 800:23:34Hey, good morning to you and happy hey Sean. Speaker 200:23:39Hey, good morning. Speaker 800:23:40Good morning. Happy 120 2nd birthday in advance. Speaker 1000:23:45Thank you. Thank you. It'll be a big day. Speaker 800:23:49It sure is. Hey, just maybe can you help us bridge obviously a very steep increase in capital plan and it's nice to see low growth is supporting a lot of that. But just can you help us bridge what big projects, big generation projects are in the plan now? Obviously, I think Horseshoe Lake is in the plan now. Just any big projects that you can call out, which helps us bridge going from $4,750,000,000 to $6,000,000,000 please? Speaker 200:24:18Yes. Really, Horseshoe Lake is the single big project in the 5 year capital plan. Really what is driving a lot of that is load growth. We are investing a lot in connecting new customers and building infrastructure to support them, all the while improving the reliability and resiliency of our assets. But other than Horseshoe Lake, there's not a big project in there that's really driving that. Speaker 800:24:48Got it. Excellent. Okay. That's what I was expecting. Speaker 400:24:51I just wanted to check. Speaker 800:24:52Okay. That's perfect. And then maybe just any updates on the Oklahoma rate case here, any feedback or initial feedback from stakeholders or discussions with regulators and others that you can share with us? Speaker 200:25:07Not at this time. I mean it's still early in the process and testimony hasn't been filed for all the parties yet. And so we'll go through that and we'll get this resolved and continue executing on our business. Speaker 800:25:24Okay. Perfect. I appreciate the time. Good luck guys. Thanks. Speaker 200:25:28Thanks, Durgesh. Take care, Durgesh. Operator00:25:31Thank you. One moment for next question. And our next question comes from Julien Dumoulin Smith of Bank of America. Speaker 1100:25:45[SPEAKER JULIEN DUMOULIN SMITH:] Speaker 500:25:46Hey, good morning, team. Very nicely done on holding the line on that 5% to 7%. So kudos to the whole team there on that front. Appreciate it. Speaker 200:25:54Thanks, Julien. Good morning. Good to hear from you. Speaker 500:25:58Yes, absolutely, guys. All right. Well, maybe just let me kick it off on this front. You talked about, look, being open to issuing equity, you obviously have a variety of further incremental generation projects potentially coming into the picture. Maybe over the next year or so, you can define that. Speaker 500:26:13How do you think about like what the moderator or governor is when it comes to raising that CapEx? You kind of talked about maybe not call it crowding out, but then the element of like sort of you're trying to tailor a program that's palatable to customers and palatable to your balance sheet. Is there some more specific metric you'd like to offer? I mean, is there some kind of FFO metric or inflationary metric? Or how do you think about boxing that in, if you will, a little bit more? Speaker 500:26:39Start to reask a little differently. Speaker 200:26:42Yes. Great question. And I think all of those points you raised are important points for us to consider. I think the credit metrics and the FFO to debt, that's very important to us. And we're going to manage our balance sheet that way. Speaker 200:26:59As we think about the customer impact, inflation, that is a key indicator that we would look at. But I think more importantly to that is we really forecast this load growth to continue for many, many years. And we play a big role in facilitating that continuation, that growth. And so what we want to do is make sure that our service area does not see any large increases in rates, thereby mitigating or slowing down that growth. Does that help? Speaker 500:27:38Yes, fair enough indeed. And then if I can follow-up a little bit on some of the specifics there. Just from an authorized equity ratio perspective though, to the extent to which that would deviate here in the rate case, could that drive equity needs here? Again, I know that there's kind of a tilde 17% here. Speaker 200:27:58Yes. Julien, just to be perfectly clear, we have no needs and no plans to issue equity over this 5 year horizon. Excellent. Speaker 500:28:11It's not in the different parameters of equity ratio. All right, wonderful. And then just moving on, if I can, just to come pivot back to Durgesh's point from earlier. I mean, given the protracted nature of process last year, I mean, wouldn't it be appropriate to think about pursuing settlement in the right time and place in as much as that could help expedite what is otherwise a busy schedule here this year? Speaker 200:28:39Sure, sure. And we pursued those and executed those settlements in the past, and we did that during our Horseshoe Lake proceedings, and we'd hope to do that again this time. Speaker 500:28:52Wonderful. Excellent. And sorry to clarify this one more time. 17% through the period here, in terms of seeing that the cadence through that, that's 2017 through the whole period, it's not necessarily fading at the end of that period or what have you, right? Speaker 200:29:08Yes. I think Brian was very clear to say there's no dips. Speaker 500:29:15Exactly. Bingo. Excellent, guys. Thank you so much. Speaker 300:29:20Take care, Joanne. Operator00:29:22Thank you. One moment for our next question. And our next question comes from Anthony Kraudel of Mizuho. Speaker 200:29:38Hey, good morning, Sean. Good morning, Brian. Speaker 300:29:41Hey, good morning. Good morning, Anthony. Speaker 400:29:44Hey, if I could follow-up on Julian's questionnaire on the 17% FFO to debt target. I believe and I may have it wrong, I thought your Moody's downgrade threshold was 18%. It seems like you're if that is accurate, are you guys comfortable operating below the threshold? Speaker 300:30:06Yes. Brian, you want to tackle that? Sure, sure. And Anthony, previously, we were projecting more in the neighborhood of 18%. And now that we've updated the capital investment plan and made other updates to the plan including this load growth which just continues to shine and grow. Speaker 300:30:28We now see our FFO numbers coming in around 17% each year 2024 through 2028. With respect to Moody's, we have discussed these plans with them. We did that back in December. And I believe they really appreciate our track record. The lower risk way we deploy capital, the constructive nature of regulation in Oklahoma and Arkansas. Speaker 300:30:50And so my hope and belief is that our financial plans to continue to support our current credit ratings. Great. Speaker 400:30:57And then if I could just high level question on the 5% to 7% EPS growth rate. Does the company have a bias either way or are you guys targeting the midpoint? And then also, attached to that, just, is it going to be linear the whole forecast period? Speaker 200:31:16Yes. Thanks, Anthony. I think you should expect it to be linear. We have every expectation to do what we say we're going to do. And there's not a particular bias to the upside or the low side, but the bias is to do what we say we're going to do and achieve the 5% to 7% on an annual basis. Speaker 400:31:37Great. Congrats on a great quarter. Thanks for taking my questions. Speaker 200:31:40Thanks, Anthony. Take care. Thank you, Anthony. Operator00:31:43Thank you. One moment for our next question. And our next question comes from Paul Fremont of Ladenburg Thalmann and Company. Speaker 1100:31:59Thanks and congratulations on a great quarter. Speaker 200:32:03Hi, good morning, Paul. Speaker 1100:32:05Good morning. I'm just trying to reconcile some of your comments. So I'm assuming that well, the current CapEx plan, equity sort of get you to that 17% FFO to debt level? Or can you do more CapEx and still get 17%? Speaker 200:32:34Brian, you want to tackle that one? Speaker 300:32:36Sure. And Paul, our FFO estimates of 17% throughout the forecast period are predicated really on all the assumptions we've put into materials today. So that $6,000,000,000 capital investment plan, the load growth we're projecting in 2024, I mentioned that we expect 2025 and beyond to be well north of 1%. So, strong load results throughout the 5 year period. Staying on top of our regulatory recovery for investments. Speaker 300:33:08So think of that as kind of a annual type of rate case cadence. And so all those assumptions you see in the materials today are what's embedded in that estimate. Speaker 1100:33:20Great. So then when Sean says that there's no that he doesn't expect equity in the 5 year plan, does that imply that the plan likely the planned capital spending is likely to remain roughly than where it is today as opposed to some of these new projects being additive? Speaker 200:33:47Yes. Paul, this is Sean. I think that's accurate where we sit today, right? And I think as Brian mentioned, as we see other projects come in, we have a lot of latitude, a lot of flexibility to move things around in our investment profile. And we're going to be very cognizant of the previous question in terms of managing our balance sheet and our credit metrics and the impact to customers so as not to slow down this tremendous load growth that we see continuing for many years. Speaker 1100:34:24Great. And then last question for me. Can you guys be more specific in terms of your 5% to 7% EPS growth plan and telling us what load growth is embedded in that 5% to 7% because you've said above 1%, but that's a pretty wide potential range? Speaker 300:34:49Yes. That's right, Paul. To give you some guardrails maybe, our draft IRP which is out there in public, you can see some of the energy usage numbers that are based on our conversations with customers and their plans. Obviously, we stay very close with our large customers understand their needs and expected usage. So, I might point you to that. Speaker 300:35:13And just know we're more conservative in our financial planning than what you'll see in that draft IRP. We've given you the load growth expectations for 2024. 2025 and beyond and IRP have some really large growth numbers. We're not going all the way that far, but it's a net 2% plus area. Speaker 1100:35:37The 2% plus being what's embedded in your current forecast that you could Correct. Speaker 300:35:43That's right. Speaker 1100:35:44Great. Thank you so much. Speaker 200:35:48Thanks, Paul. Take care. Operator00:36:00And our next question comes from Travis Miller of Morningstar. Speaker 1200:36:05Good morning, everyone. Thank you. Speaker 200:36:07Good morning, Travis. Speaker 300:36:08Good morning. Speaker 1200:36:10You answered most of my questions, but one clarification around how you're bucketing the load growth. Obviously, commercial, the big one up in the data. How does that relate to some of these larger projects you've talked about, the manufacturing projects, some of the commodity production ex oil and gas projects. Would those go into or are they in that commercial bucket or would they then switch over to the industrial? Would you expect more industrial growth? Speaker 300:36:41Hey, Travis, it's Brian. Good morning. We're seeing nice load growth prospects across a lot of different industries. Western Arkansas is very manufacturing heavy. So that's going to show up in the industrial sector over the next 5 years. Speaker 300:36:59In Oklahoma, you see a lot of different the defense industry, food and beverage distribution, data centers is a big driver. And as I mentioned in the past that data center load is fast to come on. It's kind of a lower margin type of sector, but it's turned out to be pretty at least so far very sustainable and it's more trending to generative AI data centers as opposed to the old Bitcoin mining. So does that give you a feel for what we're looking at? Speaker 1200:37:35Yes. Are those flowing through those commercial numbers and look great? Speaker 300:37:40Yes. And that's going through the commercial sector. That's right. Speaker 1200:37:43Okay. So we shouldn't see a huge shift from commercial to industrial is just continued pretty much in commercial growth and then also some industrial growth. Speaker 300:37:53Yes. You're going to see our biggest increases in the commercial sector in the next 5 years. We do believe there's going to be a nice pickup in the industrial sector compared to what we've seen in the last couple of years, but it will be modest compared to what you'll see in the commercial sector. Speaker 1200:38:06Okay, perfect. Sorry to drill down so much on the house. But the and then kind of along those lines, when these big customers come on either manufacturing or like you mentioned the data centers, what concerns you the most or what investment is needed the most to serve those customers in particular? Is it generation or is it more of the wires parts, the substations, the transmission? Speaker 300:38:32Well, on the transmission side, the data centers work with us and they do look to place their infrastructure where we have the load capacity on our transmission lines. So the need to invest on that front is pretty minimal. And as I mentioned earlier, our IRP has some pretty substantial growth numbers already included in it. The draft one I'm speaking to has assumed some of these large loads that we were speaking to today coming to fruition in the next 5 years and they're very likely to come to fruition. So, yes, that gets embedded into the generation capacity planning including our DSM energy efficiency programs, load reductions type services. Speaker 300:39:21So it may or may not have an impact on our generation depending on how successful we are with energy efficiency load reduction and DSM. Speaker 1200:39:30Okay. Okay, great. That's very helpful. Thanks so much. Speaker 300:39:34Thank you. Have a great day. Operator00:39:37Thank you. One moment for our next question. And our next question comes from Ajita Gandhi of Wolfe Research. Speaker 1300:39:50Good morning, Sean, Brian and Jason. Can you hear me? Speaker 200:39:53Yes, we can. Good morning. Speaker 300:39:54Good morning. Speaker 1300:39:55Good morning. Brian, I just wanted to go back to Nick's question on HoldCo leverage. Could you give a little bit more color around Holdco debt issuance needs beyond 2024? And you've mentioned the 5% to 7% consolidated annual and you've reiterated confidence in achieving it. Just how should we kind of think about where you're tracking within that range beyond 24? Speaker 300:40:30Aditya, I'll maybe go back to some of my messaging in previous quarters. I think the one thing that's changed from a year ago is our capital investment plan has been updated. Our messaging has been very consistent. We've been speaking to all the investments that Sean alluded to earlier. And so when you think about our consolidated entity and maintaining the appropriate cap structure at utility and the dividend payout ratio we've spoken to. Speaker 300:40:58I believe what I've referenced in the past is the holding company debt increasing somewhere in the neighborhood of $200,000,000 to $300,000,000 per year. That number gets smaller as the 5 year period goes on. So I wouldn't necessarily think the $0.05 increase you're seeing this year is necessarily going to be $0.05 each year. That should decline a little bit as time goes by. But again, this is all part of the consolidated EPS package. Speaker 300:41:27And don't forget about the great tailwinds Speaker 400:41:31that we're seeing at the utility and Speaker 300:41:31the overall growth we're seeing in our core operations. Speaker 1300:41:36Okay. Okay. That makes sense. Thank you for that. And then just on the Oklahoma rate case, I know it's still early testimonies yet to be filed, but can you speak to how you feel about the case, given that the lower fuel factors were sort of passed through to customers late last year? Speaker 1300:41:53And what would the time for a potential settlement be? Speaker 200:42:02Aditya, it will be an ongoing discussion. I think the first step in all of that is you need testimony to be filed, and then we'll begin those discussions. But I think that would be in the Q2. Speaker 1300:42:17Okay. Okay. That's helpful. Thanks for taking my questions. Speaker 200:42:20Thanks. Have a great day. See you. Operator00:42:23Thank you. And our next question comes from Greg Orrill of UBS. Speaker 600:42:44Yes, thank you. Congratulations. Speaker 200:42:46Hey, good morning, Gregg. Speaker 300:42:47Good morning. Speaker 1200:42:48Good morning, Sean, Brian. The only thing I have left is just guidance on the tax rate for Speaker 1400:42:5624 through the plan. Speaker 300:43:01Brian? All right. Well, hey, Greg, good morning. The effective tax rate we're estimating for 2024 is 16%. And what we when you think about our effective tax rate reconciliation, one of the larger items is the flowback of excess deferred income taxes, which lowers that effective tax rate compared to the statutory rate. Speaker 300:43:28So, while you may see the ETR tick up a bit as time goes on, that's just because we've returned state ITCs and then the federal excess deferred income taxes. So the net income impact should be negligible from a ETR changing over time point of view. Speaker 200:43:49Great. Thanks. Speaker 300:43:51Thank you. Have a good one, Greg. Operator00:43:54Thank you. I'm showing no further questions at this time. I would now like to turn it back to Sean Trosky for closing remarks. Speaker 1000:44:03Thank you, Didi, and Speaker 200:44:04thank you, everyone, for joining us today. Thank you for your interest in OG Energy and for being on the call, and have a great day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallOGE Energy Q4 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Annual report(10-K) OGE Energy Earnings HeadlinesBank of America Securities Keeps Their Hold Rating on OGE Energy (OGE)April 25 at 8:58 PM | markets.businessinsider.comPositive Outlook for OGE Energy: Strategic Investments and Growth Catalysts Justify Buy RatingApril 21, 2025 | tipranks.comTrump purposefully forcing markets to crash…Whether you agree with the plan or not doesn’t matter. It’s happening. The only question is – are you ready for it?April 26, 2025 | Porter & Company (Ad)Over 1,200 people without power in Crawford CountyApril 18, 2025 | msn.comOGE Energy Corp. (NYSE:OGE) Receives $46.00 Consensus Price Target from BrokeragesApril 18, 2025 | americanbankingnews.comOGE Energy upgraded to Buy from Hold at ArgusApril 12, 2025 | markets.businessinsider.comSee More OGE Energy Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like OGE Energy? Sign up for Earnings360's daily newsletter to receive timely earnings updates on OGE Energy and other key companies, straight to your email. Email Address About OGE EnergyOGE Energy (NYSE:OGE), together with its subsidiaries, operates as an energy services provider in the United States. The company generates, transmits, distributes, and sells electric energy. In addition, it provides retail electric service to approximately 896,000 customers, which covers a service area of approximately 30,000 square miles in Oklahoma and western Arkansas; and owns and operates coal-fired, natural gas-fired, wind-powered, and solar-powered generating assets. 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There are 15 speakers on the call. Operator00:00:00Good day, and thank you for standing by. Welcome to the OGE Energy Corp. 2023 4th Quarter Earnings and Business Update Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Operator00:00:32Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jason Bailey, Director of Investor Relations. Please go ahead. Speaker 100:00:45Thank you, Didi, and good morning, everyone, and welcome to OGE Energy Corp. Q4 2023 earnings and business call update. With me today, I have Sean Trotski, our Chairman, President and CEO and Brian Buckler, our CFO. In terms of the call today, we will first hear from Sean, followed by an explanation from Brian of financial results. And finally, as always, we will answer your questions. Speaker 100:01:12I'd like to remind you that this conference is being webcast and you may follow along at oge.com. In addition, the conference call and accompanying slide will be archived following the call on that same website. Before we begin the presentation, I'd like to direct your attention to the Safe Harbor statement regarding forward looking statements. This is an SEC requirement for financial statements and simply states that we cannot guarantee forward looking financial results, but this is our best estimate today. I will now turn the call over to Sean for his opening remarks. Speaker 100:01:44Sean? Speaker 200:01:45Thank you, Jason. Good morning, everyone. Thank you for joining us today. It's certainly great to be with you. I'm excited about our message to you this morning as our results for 2023 were top of guidance and we are updating our 5 year plan, including a consolidated earnings growth rate based on the strong fundamentals of our business. Speaker 200:02:06It's truly a great time to be here at the company. Before we get into the plan, I do want to take a moment to talk about our people here at Big Orange. In 2023, the team delivered results for our customers, our communities and shareholders by providing reliable energy at some of the lowest rates in the nation every day. Once again, our safety results were very strong with the last 8 years being the safest in our 121 year history, even as we continue to face some of the most extreme weather in the country, like winter storms Jerry and Heather in January, where our plants ran generating electricity to the grid to ensure our customers could continue to live their lives and run their businesses. Our team achieved recognition for our culture in 2023. Speaker 200:02:52I mentioned last quarter that we've been named the number 1 in state employer in Oklahoma by Forbes Magazine and later in the year we were also named the top workplace in Oklahoma following the feedback our employees gave in our annual workplace survey. And just last week, Forbes named OGE Energy the 16th best midsized employer in the country, achieving the highest rank in our sector and the highest ranking of any company in Oklahoma. These results are not happenstance. They come from a dedicated commitment to fostering a culture grounded in our values and our beliefs and operationalized with a focus to deliver safe, reliable and resilient electricity combined with outstanding customer experiences every single day. I'm so proud of everyone here at the company and it's because of them that we are discussing great financial results. Speaker 200:03:45This morning, we reported consolidated earnings at the top end of our guidance of $2.07 per share for the year, including $2.12 per share for OG and E and a holding company loss of $0.05 per share. Our sustainable business model provides opportunities to drive load growth while simultaneously investing in the grid and generation for many years to come in a way that is mindful of ensuring a smooth customer impact and delivering consistent financial returns. Last year, my message to you was we've got this. The plan we introduced to you this morning is an extension of that message and is consistent with the growth we've delivered in the past. Over the next 5 years, we expect to grow consolidated earnings per share at 5% to 7%. Speaker 200:04:33Looking back at the 10 year period before we exited our Midstream Natural Gas segment, we delivered over 6% of consolidated earnings per share growth. The difference now is that we've simplified our business mix and removed the volatility that was associated with that business segment. Our plan going forward, which Brian will detail, is based on a pure play electric model with premium fundamentals, including a strong financial base and credit metrics, excellent load and customer growth and a lower risk investment plan focused on delivering the safe, reliable, resilient electric service that our customers expect. Today, I want to talk to you a bit more about 3 key aspects of our work that drive our results reliability, growth and affordability. Our grid and weather hardening investments continue to deliver great results for our customers. Speaker 200:05:25Our grid reliability investments benefited customers in 2023, saving over 3 20 minutes of interruption for the average impact to customer. And from a SADI perspective, automated restorations saved our customers more than 7.5 minutes of SADI or 6,200,000 customer minutes of interruptions. We also built or upgraded 21 substations to serve our growing service area, and we will continue making these types of investments in the grid that directly benefit our customers. This foundation powers our growing communities and economic development engine that has delivered 11 new projects in our service area that are projected to create 1,000 of jobs and garner 1,000,000,000 of dollars in additional investment. This type of growth is not by accident. Speaker 200:06:13We set the stage for these results more than 5 years ago when we began investment and growing the local economy in cities and towns all across our service area. Our communities maintain strong unemployment rates and continue to attract expanding and new businesses that our low rates help secure. For example, just last month, Stardust Power announced its plans to build a new battery grade lithium refinery in Oklahoma, bringing hundreds of jobs to the community as well as community infrastructure development. Oklahoma's central location, access to multiple transportation routes, highly skilled workforce and low cost energy were all reasons noted for the site selection. We look forward to serving Stardust as they get up and running. Speaker 200:07:01Our load forecast for 2024 continues to keep pace with the outstanding growth we've experienced over the last 3 years and our long term load forecast remains as strong as our service area continues to grow. Turning to the regulatory front. Constructive regulatory outcomes enable us to support growth, serve customers and achieve results for our shareholders. We've released the draft IRP that will lead to RFPs later in the year for additional generation to meet the needs of our growing service area. We will be disciplined with regard to customer impact and expect a combination of gas, solar along with energy efficiency and DSM programs to meet the identified needs. Speaker 200:07:44In Oklahoma, we have filed a rate review and expect new rates to be in place by July 1. In Arkansas, we've achieved a settlement under the formula rate plan for 1.4% increase in rates effective April 1. Today's macro environment continues to macroeconomic environment continues to create pressure on our customers and we remain committed to affordability and keeping bills low. As I mentioned in our last call, we reduced the average fuel charge by $21 per month in November, which had an immediate impact on customer bills. We've doubled down on connecting customers to programs and services to help them manage their energy use and monthly bill, enrolling nearly 20% of our customers and new to them programs in 2023, including energy efficiency and home weatherization as well as connecting our customers to billing assistance when they need it. Speaker 200:08:41Additionally, our team continues to innovate energy efficiency programs that will help customers reduce their bill and increase reliability, including making low cost repairs to qualify customer homes for weatherizations, piloting solar and battery storage technology at schools and piloting managed flexible load technology. As we celebrate the impact of those programs, I want to close with a few important thoughts. We are committed to growth for our communities, for our customers and to financial growth for our shareholders and our employees. The case for OG and E is strong and I'm bullish on our future. We're leveraging the economic development engine we built that drives load growth. Speaker 200:09:24Our excellent execution is driven by fully engaged employees who are determined to reach our North Star of delivering safe, reliable and affordable electricity to our customers. We operate in constructive regulatory jurisdictions and we've created a competitive, credible, lower risk financial plan backed by a strong balance sheet, all of which leads to a long term plan where we address system growth and customer needs, which are the center of our decisions. Next week, OG and E turns 122 years old. And as we celebrate that milestone, we look ahead to the future where our deep diverse set of investment opportunities allows us to meet customer expectations and achieve investor commitments. Keeping customer bill impact in mind, we will invest alongside growth in our communities to keep the momentum going for many, many years to come. Speaker 200:10:20Thank you. I'll turn it over to Brian. Brian? Speaker 300:10:23Thank you, Sean. Thank you, Jason, and good morning, everyone. I am pleased to review our 2023 results with you and provide our 2024 outlook as well as details on our long term consolidated EPS guidance. Let's start on Slide 6 and discuss full year 2023 results. On a consolidated basis, 2023 net income was $417,000,000 or $2.07 per diluted share compared to $666,000,000 or $3.32 per share in 2022. Speaker 300:10:53Earnings for last year included $1.16 per share from natural gas midstream operations, which we fully exited in 2022 through the sale of our energy transfer units. We had a great year of execution. OG and E Energy's 2023 consolidated earnings reflect results at the high end of our original and revised guidance. In our core business, the electric company exceeded expectations, achieving net income of $426,000,000 or $2.12 per diluted share compared to 440,000,000 dollars or $2.19 per share in 2022. The year over year decrease in electric company net income was primarily due to milder weather compared to the prior year. Speaker 300:11:38As you may recall, Oklahoma and Arkansas experienced an exceptionally hot summer in 2022. Milder weather in 2023 was partially offset by the benefits of strong load growth of 2.7% during the year. Other drivers of current year results compared to the prior year were depreciation and interest expense related to our capital investments, increased operation and maintenance expense, higher revenues from recovery of capital investments and allowance for equity funds used during construction related to our 2023 capital investments. Other operations including our honing company reported a loss of $10,000,000 or 0 point 5 dollars per diluted share in 2023 compared to a loss of $5,000,000 or 0 point expense related to increased short term debt and Q4 results included an approximate $0.02 tax benefit related to our former natural gas midstream business. As I mentioned, 2023 weather normalized load growth came in at 2.7% led by the commercial sector which grew electricity usage by remarkable 11%. Speaker 300:12:46We have now experienced back to back to back annual total retail load growth of 2.4% or greater. As you will see in a moment, we expect 2024 load to continue this enviable trend, which highlights the economic vibrancy of Oklahoma and Arkansas enhanced by our low rates. Please see the appendix for more information regarding Q4 2023 results. Turning to Slide 7. For 2024 on a consolidated basis, we are forecasting earnings of $2.12 per share with a range of $2.06 to $2.18 per share. Speaker 300:13:21This represents a consolidated growth rate of 6% from our original 2023 guidance of $2 per share. And as I'll discuss in a moment, we expect consolidated EPS to continue to grow 5% to 7% throughout our 5 year forecast period. 2024 consolidated EPS expectations incorporate electric company earnings of $2.22 per share. The electric company has consistently delivered results in line with our commitments. Its earnings growth profile has the foundation of strong load growth in 2024 that looks similar to the past 3 years, as well as an investment plan that is focused on our ability to serve our growing customer base with a reliable, resilient and safe power system. Speaker 300:14:04At the holding company in 2024, we are forecasting a loss of $0.10 per share consistent with the expectations I shared with you on prior calls. Let's now move to Slide 8. As Sean mentioned, today we are introducing a long term and annual consolidated EPS growth rate guidance of 5% to 7% based off of our 2024 consolidated earnings midpoint estimate of $2.12 per share. We believe OG and E Energy has one of the most credible 5 year financial plans in the entire industry. It starts with the service area with favorable business prospects. Speaker 300:14:38In fact, we project load growth of 3% to 5% in 2024 and expect 2025 to be well above our historic 1% load growth with emerging trends that indicate continued strength in years beyond 2025. Our balance sheet is one of the strongest in the industry supporting the $6,000,000,000 5 year capital investments you see in today's materials. Consolidated FFO to debt is forecasted to remain strong throughout the 5 year forecast period with no big dips and instead a consistent performance of approximately 17% each year. We continue to target a dividend payout ratio of 65% to 70% and expect earnings per share growth to exceed dividend growth over the 5 year period. In short, we believe our 5 year plan is tremendous and it will be implemented by a proven team with a track record of operational excellence. Speaker 300:15:31Now let me take a moment to discuss our future investment plans. Our growing operations will require a substantial level of infrastructure to support the reliability of our transmission and distribution system. Our future plans will be flexible and annual level of capital spending in our T and D system could vary depending on the amount and timing of potential new generation capacity investments. Our deployed capital will address our customers' requirements for a safe and reliable power system, while maintaining our competitive advantage of low rates and delivering on our commitments to shareholders in a lower risk fashion. In essence, this is all a continuation of execution of our sustainable business model. Speaker 300:16:11Before I hand the call back to Sean, let me summarize today's message. Our team has once again delivered exceptional results in 2023 at the high end of our original and increased EPS guidance range. Looking ahead, we have developed an operational and financial plan spending 5 years aiming to bring substantial value to customers and OG and E's power system, supporting economic development in our communities and providing a compelling investment thesis for our shareholders. Our future outlook is based on this lower risk investment strategy backed by exceptional load growth, a solid financial position, constructive regulatory jurisdictions and consistent executions from our employees. With that, we will open the line for your questions. Operator00:17:01Thank And our first question comes from Shar Pourreza of Guggenheim Partners. Speaker 200:17:20Hey guys, good morning. Hey, good morning Shar. Speaker 400:17:23Good morning. Good morning. Congrats Sean on the results. Speaker 200:17:28Thank you and congrats on the pronunciation of your name. They did down the street. Speaker 400:17:32It's taking years, but it's getting there. Speaker 200:17:35I'm still working on mine. There you go. Speaker 400:17:39Charles, maybe just starting off on the recently filed IRP update, there's obviously over a gigawatt capacity that's within the 5 year timeframe. It's not in plan. I guess, how quickly would you look to update that portion of the CapEx needs after the IRP? So what's the cadence of updates? And could that incremental spending kind of crowd out some of the base spending as you manage customer rates? Speaker 400:18:04Thanks. Speaker 200:18:05Yes. I think that's a great question. And so we'll handle this process just like we did with the last one. And so what we'll do is we'll finalize that RFP. We'll go through the RFP process where we go through an extensive review. Speaker 200:18:23There's a lot of stakeholder discussions. We follow all of the commission rules. And then we'll negotiate some agreements. And we'll file that at the commissions. And once we get approval, then we'll layer that into our forecast. Operator00:18:41Couple of Speaker 200:18:41points about that. I think your point there with that crowd out, I'd probably use a different word than crowd. But what I would say to that, Shar, is that we have a lot of flexibility around our investments and we can move some things around. So yes, we will be very flexible and move some things around and really smooth that impact out to customers as much as we can. And then I've said repeatedly, our preference, our very strong preference is to really smooth these generation additions out over a number of years. Speaker 200:19:18And so not to create a situation where we have a very large asset going into service over a couple of years. Speaker 500:19:26Does that help? Perfect. Speaker 600:19:27Yes, totally. Speaker 400:19:28And then just lastly, just a balance sheet question. I mean, obviously, there's incremental spending is one of the key things on the call today, right? As you're getting to that 17% FFO to debt metric, would you look at further equity support in line with the OpCo authorized cap structure of roughly fifty-fifty or something different or not at all actually? Speaker 200:19:52Yes. Thanks for that. And what I would say, Shar, is I think Brian was very clear. There's really no equity needs in our plan. I think what I would offer for you though is that we're managing this business for the long term. Speaker 200:20:09And when we have the opportunity with our investments and our growth down the road and we need to issue the equity, we'll issue it. Got it. Perfect. Got it. Okay. Speaker 200:20:25Thanks, Shar. Speaker 300:20:26Yes. Appreciate it guys. Thank you. And it's good to Speaker 400:20:29see Brian working very hard for you. Thanks, guys. Speaker 200:20:31Yes. He's working hard. Thanks, Shar. Have a good day, buddy. Operator00:20:35Thank you. One moment for the next question. And our next question comes from Nicholas Campanella of Barclays. Speaker 700:20:49Hey, good morning everyone. Thanks for taking the question. Speaker 800:20:52Good morning, Nick. Speaker 700:20:54Good morning. So yes, thanks for the increase in the CapEx plan and all the details there. I guess just simplistically, what is rate based growth on this new plan as you see it? Speaker 300:21:06Brian, you want to cover that one? Sure, sure. Good morning, Nick. And in the appendix, we've given our best current estimate of our 5 year capital expenditures and we've also provided our starting rate base number as filed in our recent rate case filing as well as an annual depreciation expense trend line here in the 5 years. So maybe I'll punt to Jason maybe after the call to help with kind of the annual rate base number across the 5 year plan. Speaker 300:21:35But from a 5 year CAGR perspective, it's roughly 7.5%. Speaker 700:21:407.5%, that's helpful. Okay. And then I guess just holdco was $0.05 in $0.23 You have another $0.05 to drag in 0.24 from probably just new debt issuances. Just how do you kind of see your HoldCo drag progressing through the plan here? Does it remain consistent at that $0.10 or does it grow through 2025 and beyond? Speaker 300:22:04Yes. Hey Nick, it's Brian again. As I've spoken to the last few quarters, the utility and holding company are lining up very well for 2024 and beyond. You've heard us speak to the many tailwinds at utility and we spoke about a lot of them today, namely the very strong load growth and a host of incremental infrastructure investment needs. And so we're expecting utility to grow very meaningfully during the 5 year period. Speaker 300:22:30And the holding company really is there to help to finance the business as we go along the way. So you have the capital plan numbers and today we're providing this consolidated view of OG and E Energy Corp and we have a lot of confidence in achieving that 5% to 7% consolidated EPS growth rate throughout the 5 year period, Nick. So we're looking at it as a consolidated view and certainly you'll see the holding company tick up a little bit each year. But in total, when you look at the whole package, we feel very confident and strongly about our ability to deliver that 5% to 7% consolidated CAGR and annual growth rate. Speaker 700:23:11All right. Hey, I appreciate the time. Thanks. Speaker 900:23:13Thanks, Nick. Thank you, Nick. Operator00:23:15Thank you. One moment for our next question. And our next question comes from Durgesh Chopra of Evercore ISI. Speaker 800:23:34Hey, good morning to you and happy hey Sean. Speaker 200:23:39Hey, good morning. Speaker 800:23:40Good morning. Happy 120 2nd birthday in advance. Speaker 1000:23:45Thank you. Thank you. It'll be a big day. Speaker 800:23:49It sure is. Hey, just maybe can you help us bridge obviously a very steep increase in capital plan and it's nice to see low growth is supporting a lot of that. But just can you help us bridge what big projects, big generation projects are in the plan now? Obviously, I think Horseshoe Lake is in the plan now. Just any big projects that you can call out, which helps us bridge going from $4,750,000,000 to $6,000,000,000 please? Speaker 200:24:18Yes. Really, Horseshoe Lake is the single big project in the 5 year capital plan. Really what is driving a lot of that is load growth. We are investing a lot in connecting new customers and building infrastructure to support them, all the while improving the reliability and resiliency of our assets. But other than Horseshoe Lake, there's not a big project in there that's really driving that. Speaker 800:24:48Got it. Excellent. Okay. That's what I was expecting. Speaker 400:24:51I just wanted to check. Speaker 800:24:52Okay. That's perfect. And then maybe just any updates on the Oklahoma rate case here, any feedback or initial feedback from stakeholders or discussions with regulators and others that you can share with us? Speaker 200:25:07Not at this time. I mean it's still early in the process and testimony hasn't been filed for all the parties yet. And so we'll go through that and we'll get this resolved and continue executing on our business. Speaker 800:25:24Okay. Perfect. I appreciate the time. Good luck guys. Thanks. Speaker 200:25:28Thanks, Durgesh. Take care, Durgesh. Operator00:25:31Thank you. One moment for next question. And our next question comes from Julien Dumoulin Smith of Bank of America. Speaker 1100:25:45[SPEAKER JULIEN DUMOULIN SMITH:] Speaker 500:25:46Hey, good morning, team. Very nicely done on holding the line on that 5% to 7%. So kudos to the whole team there on that front. Appreciate it. Speaker 200:25:54Thanks, Julien. Good morning. Good to hear from you. Speaker 500:25:58Yes, absolutely, guys. All right. Well, maybe just let me kick it off on this front. You talked about, look, being open to issuing equity, you obviously have a variety of further incremental generation projects potentially coming into the picture. Maybe over the next year or so, you can define that. Speaker 500:26:13How do you think about like what the moderator or governor is when it comes to raising that CapEx? You kind of talked about maybe not call it crowding out, but then the element of like sort of you're trying to tailor a program that's palatable to customers and palatable to your balance sheet. Is there some more specific metric you'd like to offer? I mean, is there some kind of FFO metric or inflationary metric? Or how do you think about boxing that in, if you will, a little bit more? Speaker 500:26:39Start to reask a little differently. Speaker 200:26:42Yes. Great question. And I think all of those points you raised are important points for us to consider. I think the credit metrics and the FFO to debt, that's very important to us. And we're going to manage our balance sheet that way. Speaker 200:26:59As we think about the customer impact, inflation, that is a key indicator that we would look at. But I think more importantly to that is we really forecast this load growth to continue for many, many years. And we play a big role in facilitating that continuation, that growth. And so what we want to do is make sure that our service area does not see any large increases in rates, thereby mitigating or slowing down that growth. Does that help? Speaker 500:27:38Yes, fair enough indeed. And then if I can follow-up a little bit on some of the specifics there. Just from an authorized equity ratio perspective though, to the extent to which that would deviate here in the rate case, could that drive equity needs here? Again, I know that there's kind of a tilde 17% here. Speaker 200:27:58Yes. Julien, just to be perfectly clear, we have no needs and no plans to issue equity over this 5 year horizon. Excellent. Speaker 500:28:11It's not in the different parameters of equity ratio. All right, wonderful. And then just moving on, if I can, just to come pivot back to Durgesh's point from earlier. I mean, given the protracted nature of process last year, I mean, wouldn't it be appropriate to think about pursuing settlement in the right time and place in as much as that could help expedite what is otherwise a busy schedule here this year? Speaker 200:28:39Sure, sure. And we pursued those and executed those settlements in the past, and we did that during our Horseshoe Lake proceedings, and we'd hope to do that again this time. Speaker 500:28:52Wonderful. Excellent. And sorry to clarify this one more time. 17% through the period here, in terms of seeing that the cadence through that, that's 2017 through the whole period, it's not necessarily fading at the end of that period or what have you, right? Speaker 200:29:08Yes. I think Brian was very clear to say there's no dips. Speaker 500:29:15Exactly. Bingo. Excellent, guys. Thank you so much. Speaker 300:29:20Take care, Joanne. Operator00:29:22Thank you. One moment for our next question. And our next question comes from Anthony Kraudel of Mizuho. Speaker 200:29:38Hey, good morning, Sean. Good morning, Brian. Speaker 300:29:41Hey, good morning. Good morning, Anthony. Speaker 400:29:44Hey, if I could follow-up on Julian's questionnaire on the 17% FFO to debt target. I believe and I may have it wrong, I thought your Moody's downgrade threshold was 18%. It seems like you're if that is accurate, are you guys comfortable operating below the threshold? Speaker 300:30:06Yes. Brian, you want to tackle that? Sure, sure. And Anthony, previously, we were projecting more in the neighborhood of 18%. And now that we've updated the capital investment plan and made other updates to the plan including this load growth which just continues to shine and grow. Speaker 300:30:28We now see our FFO numbers coming in around 17% each year 2024 through 2028. With respect to Moody's, we have discussed these plans with them. We did that back in December. And I believe they really appreciate our track record. The lower risk way we deploy capital, the constructive nature of regulation in Oklahoma and Arkansas. Speaker 300:30:50And so my hope and belief is that our financial plans to continue to support our current credit ratings. Great. Speaker 400:30:57And then if I could just high level question on the 5% to 7% EPS growth rate. Does the company have a bias either way or are you guys targeting the midpoint? And then also, attached to that, just, is it going to be linear the whole forecast period? Speaker 200:31:16Yes. Thanks, Anthony. I think you should expect it to be linear. We have every expectation to do what we say we're going to do. And there's not a particular bias to the upside or the low side, but the bias is to do what we say we're going to do and achieve the 5% to 7% on an annual basis. Speaker 400:31:37Great. Congrats on a great quarter. Thanks for taking my questions. Speaker 200:31:40Thanks, Anthony. Take care. Thank you, Anthony. Operator00:31:43Thank you. One moment for our next question. And our next question comes from Paul Fremont of Ladenburg Thalmann and Company. Speaker 1100:31:59Thanks and congratulations on a great quarter. Speaker 200:32:03Hi, good morning, Paul. Speaker 1100:32:05Good morning. I'm just trying to reconcile some of your comments. So I'm assuming that well, the current CapEx plan, equity sort of get you to that 17% FFO to debt level? Or can you do more CapEx and still get 17%? Speaker 200:32:34Brian, you want to tackle that one? Speaker 300:32:36Sure. And Paul, our FFO estimates of 17% throughout the forecast period are predicated really on all the assumptions we've put into materials today. So that $6,000,000,000 capital investment plan, the load growth we're projecting in 2024, I mentioned that we expect 2025 and beyond to be well north of 1%. So, strong load results throughout the 5 year period. Staying on top of our regulatory recovery for investments. Speaker 300:33:08So think of that as kind of a annual type of rate case cadence. And so all those assumptions you see in the materials today are what's embedded in that estimate. Speaker 1100:33:20Great. So then when Sean says that there's no that he doesn't expect equity in the 5 year plan, does that imply that the plan likely the planned capital spending is likely to remain roughly than where it is today as opposed to some of these new projects being additive? Speaker 200:33:47Yes. Paul, this is Sean. I think that's accurate where we sit today, right? And I think as Brian mentioned, as we see other projects come in, we have a lot of latitude, a lot of flexibility to move things around in our investment profile. And we're going to be very cognizant of the previous question in terms of managing our balance sheet and our credit metrics and the impact to customers so as not to slow down this tremendous load growth that we see continuing for many years. Speaker 1100:34:24Great. And then last question for me. Can you guys be more specific in terms of your 5% to 7% EPS growth plan and telling us what load growth is embedded in that 5% to 7% because you've said above 1%, but that's a pretty wide potential range? Speaker 300:34:49Yes. That's right, Paul. To give you some guardrails maybe, our draft IRP which is out there in public, you can see some of the energy usage numbers that are based on our conversations with customers and their plans. Obviously, we stay very close with our large customers understand their needs and expected usage. So, I might point you to that. Speaker 300:35:13And just know we're more conservative in our financial planning than what you'll see in that draft IRP. We've given you the load growth expectations for 2024. 2025 and beyond and IRP have some really large growth numbers. We're not going all the way that far, but it's a net 2% plus area. Speaker 1100:35:37The 2% plus being what's embedded in your current forecast that you could Correct. Speaker 300:35:43That's right. Speaker 1100:35:44Great. Thank you so much. Speaker 200:35:48Thanks, Paul. Take care. Operator00:36:00And our next question comes from Travis Miller of Morningstar. Speaker 1200:36:05Good morning, everyone. Thank you. Speaker 200:36:07Good morning, Travis. Speaker 300:36:08Good morning. Speaker 1200:36:10You answered most of my questions, but one clarification around how you're bucketing the load growth. Obviously, commercial, the big one up in the data. How does that relate to some of these larger projects you've talked about, the manufacturing projects, some of the commodity production ex oil and gas projects. Would those go into or are they in that commercial bucket or would they then switch over to the industrial? Would you expect more industrial growth? Speaker 300:36:41Hey, Travis, it's Brian. Good morning. We're seeing nice load growth prospects across a lot of different industries. Western Arkansas is very manufacturing heavy. So that's going to show up in the industrial sector over the next 5 years. Speaker 300:36:59In Oklahoma, you see a lot of different the defense industry, food and beverage distribution, data centers is a big driver. And as I mentioned in the past that data center load is fast to come on. It's kind of a lower margin type of sector, but it's turned out to be pretty at least so far very sustainable and it's more trending to generative AI data centers as opposed to the old Bitcoin mining. So does that give you a feel for what we're looking at? Speaker 1200:37:35Yes. Are those flowing through those commercial numbers and look great? Speaker 300:37:40Yes. And that's going through the commercial sector. That's right. Speaker 1200:37:43Okay. So we shouldn't see a huge shift from commercial to industrial is just continued pretty much in commercial growth and then also some industrial growth. Speaker 300:37:53Yes. You're going to see our biggest increases in the commercial sector in the next 5 years. We do believe there's going to be a nice pickup in the industrial sector compared to what we've seen in the last couple of years, but it will be modest compared to what you'll see in the commercial sector. Speaker 1200:38:06Okay, perfect. Sorry to drill down so much on the house. But the and then kind of along those lines, when these big customers come on either manufacturing or like you mentioned the data centers, what concerns you the most or what investment is needed the most to serve those customers in particular? Is it generation or is it more of the wires parts, the substations, the transmission? Speaker 300:38:32Well, on the transmission side, the data centers work with us and they do look to place their infrastructure where we have the load capacity on our transmission lines. So the need to invest on that front is pretty minimal. And as I mentioned earlier, our IRP has some pretty substantial growth numbers already included in it. The draft one I'm speaking to has assumed some of these large loads that we were speaking to today coming to fruition in the next 5 years and they're very likely to come to fruition. So, yes, that gets embedded into the generation capacity planning including our DSM energy efficiency programs, load reductions type services. Speaker 300:39:21So it may or may not have an impact on our generation depending on how successful we are with energy efficiency load reduction and DSM. Speaker 1200:39:30Okay. Okay, great. That's very helpful. Thanks so much. Speaker 300:39:34Thank you. Have a great day. Operator00:39:37Thank you. One moment for our next question. And our next question comes from Ajita Gandhi of Wolfe Research. Speaker 1300:39:50Good morning, Sean, Brian and Jason. Can you hear me? Speaker 200:39:53Yes, we can. Good morning. Speaker 300:39:54Good morning. Speaker 1300:39:55Good morning. Brian, I just wanted to go back to Nick's question on HoldCo leverage. Could you give a little bit more color around Holdco debt issuance needs beyond 2024? And you've mentioned the 5% to 7% consolidated annual and you've reiterated confidence in achieving it. Just how should we kind of think about where you're tracking within that range beyond 24? Speaker 300:40:30Aditya, I'll maybe go back to some of my messaging in previous quarters. I think the one thing that's changed from a year ago is our capital investment plan has been updated. Our messaging has been very consistent. We've been speaking to all the investments that Sean alluded to earlier. And so when you think about our consolidated entity and maintaining the appropriate cap structure at utility and the dividend payout ratio we've spoken to. Speaker 300:40:58I believe what I've referenced in the past is the holding company debt increasing somewhere in the neighborhood of $200,000,000 to $300,000,000 per year. That number gets smaller as the 5 year period goes on. So I wouldn't necessarily think the $0.05 increase you're seeing this year is necessarily going to be $0.05 each year. That should decline a little bit as time goes by. But again, this is all part of the consolidated EPS package. Speaker 300:41:27And don't forget about the great tailwinds Speaker 400:41:31that we're seeing at the utility and Speaker 300:41:31the overall growth we're seeing in our core operations. Speaker 1300:41:36Okay. Okay. That makes sense. Thank you for that. And then just on the Oklahoma rate case, I know it's still early testimonies yet to be filed, but can you speak to how you feel about the case, given that the lower fuel factors were sort of passed through to customers late last year? Speaker 1300:41:53And what would the time for a potential settlement be? Speaker 200:42:02Aditya, it will be an ongoing discussion. I think the first step in all of that is you need testimony to be filed, and then we'll begin those discussions. But I think that would be in the Q2. Speaker 1300:42:17Okay. Okay. That's helpful. Thanks for taking my questions. Speaker 200:42:20Thanks. Have a great day. See you. Operator00:42:23Thank you. And our next question comes from Greg Orrill of UBS. Speaker 600:42:44Yes, thank you. Congratulations. Speaker 200:42:46Hey, good morning, Gregg. Speaker 300:42:47Good morning. Speaker 1200:42:48Good morning, Sean, Brian. The only thing I have left is just guidance on the tax rate for Speaker 1400:42:5624 through the plan. Speaker 300:43:01Brian? All right. Well, hey, Greg, good morning. The effective tax rate we're estimating for 2024 is 16%. And what we when you think about our effective tax rate reconciliation, one of the larger items is the flowback of excess deferred income taxes, which lowers that effective tax rate compared to the statutory rate. Speaker 300:43:28So, while you may see the ETR tick up a bit as time goes on, that's just because we've returned state ITCs and then the federal excess deferred income taxes. So the net income impact should be negligible from a ETR changing over time point of view. Speaker 200:43:49Great. Thanks. Speaker 300:43:51Thank you. Have a good one, Greg. Operator00:43:54Thank you. I'm showing no further questions at this time. I would now like to turn it back to Sean Trosky for closing remarks. Speaker 1000:44:03Thank you, Didi, and Speaker 200:44:04thank you, everyone, for joining us today. Thank you for your interest in OG Energy and for being on the call, and have a great day.Read morePowered by