Please ensure Javascript is enabled for purposes of website accessibility

WEC Energy Group's Earnings Show Its Recent Acquisition Is Really Paying Off

By Tyler Crowe - May 3, 2016 at 1:39PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Now that Integrys is fully part of the fold, WEC Energy Group's first-quarter earnings was another solid financial performance.

Image source: WEC Energy Group.

Last year, WEC Energy Group (WEC 2.43%) made a transformative acquisition when it purchased natural gas utility Integrys. Over the past few quarters, the company was working out the kinks that come with such a large acquisition. This past quarter, though, the company really shined as it posted strong earnings results.

Let's take a quick look at WEC Energy Group's most recent quarter and what investors should be looking for in the coming quarters. 

WEC Energy Group's earnings: The raw numbers

Results (in millions, except per share data) Q1 2016 Q4 2015 Q1 2015
Revenue $2,194 $1,848 $1,387
Operating income $589.3 $380.2 $358.8
Earnings per share $1.09 $0.57 $0.86

Data source: WEC Energy Group earnings release.

This was the first quarter since WEC acquired Integrys last year when there were no acquisition-related expenses for the company. With those out of the way, the company was able to deliver a fairly solid quarter. 

What happened with WEC Energy Group this past quarter?

  • WEC's Wisconsin utilities increased its electricity and natural gas customer bases by 8,000 and 11,000, respectively. Its natural gas customer base in its non-Wisconsin segments increased by 16,000 as well.
  • Retail electricity sales across all of its segments -- with the exemption of iron ore mines in Michigan's upper peninsula -- decreased 1.6%.
  • In January, WEC Energy Group's management and board of directors approved an 8.2% increase in its dividend payment to $0.495 per quarter
  • On January 28th, the company announced that current CEO Gale Klappa will be stepping down, and Allan Leverett, current president of its WE Energies segment, will take over in his place. Leverett became the full-time CEO effective May 1.

What management had to say
With Allan Leverett now in his first few days as CEO, he didn't have much to say in the company's earnings release aside from the cut-and-dried statements most CEOs make in these press releases: the typical "we did well despite a tough operating environment; we're focusing on effective cost management and capital allocation" sorts of things. Then again, the company's annual meeting is on May 5th, so perhaps Leverett is trying not to unveil too much before the meeting.

Looking forward
WEC Energy Group's earnings were quite solid considering the milder winter in regions where it supplies electricity and natural gas, and it's pretty apparent the Integrys acquisition is paying off. The big question going forward for WEC Energy Group will be addressing the company's power generation fleet and meeting the recent regulations related to the Clean Power Act. WEC Energy's generation fleet is 53% coal today, and the company will need to reduce its total CO2 emissions by 41% to meet regulations, with two-thirds of those reductions being completed by 2022. This could present some issues for WEC in the coming years. Luckily, though, its electricity transmission and natural gas businesses should help keep it chugging along while it works through these issues.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

WEC Energy Group, Inc. Stock Quote
WEC Energy Group, Inc.
WEC
$101.26 (2.43%) $2.40

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
323%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.