Xcel profits rise over 7%, beating estimates

Xcel Energy posted a solid second quarter, its profits rising 7.4 %, besting Wall Street's forecast.

Minneapolis-based Xcel, Minnesota's largest utility, Thursday announced second-quarter earnings of $311 million, or 58 cents per share, up more than 7% from the same period a year ago.

Stock analysts' average earnings estimate was 54 cents for 2021's second quarter.

"Xcel Energy had a strong second quarter, and we reaffirm our 2021 guidance range," Ben Fowke, Xcel's CEO, said in a statement. "We reached constructive rate case settlements in New Mexico, North Dakota and Wisconsin."

Xcel also operates in Texas and a small slice of Michigan's Upper Peninsula. Its largest markets are Minnesota and Colorado, and the latter anchored its profit increases during the second quarter.

Xcel posted second-quarter revenue of $3.1 billion, up 18% over a year ago and topping analysts' estimates of $2.69 billion. In the second quarter of 2020, Xcel's sales were depressed as COVID-19 socked the economy, including electricity demand.

The bounce back in Xcel's commercial and industrial sales were not as "brisk" as expected, said Michael Doyle, a stock analyst at Edward Jones. "But I am confident that they will improve down the road."

Aside from stronger sales, increases in income from higher rates and nonfuel riders (effectively surcharges) buoyed Xcel's second-quarter profits.

During a conference call with analysts Thursday, Xcel executives were asked about rising inflation, which has surfaced in many companies' supply chains in recent months. Xcel is a sizable buyer of components for renewable-energy plants.

The company's chief financial officer, Brian Van Abel, said inflation for materials and labor is "transitory," the effect of a rapid economic recovery from last year's pandemic effects. He told analysts that Xcel's long-term inflation expectations are still around 2%.

Thursday's earnings marked the last for Fowke as CEO. He will retire in mid-August after 10 years in Xcel's top job, though he will remain executive chairman.

"It's really hard to retire from a role I really enjoy, but I am leaving the company in good hands," Fowke told analysts.