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Xcel Energy Inc. (XEL - Analyst Report) recorded operating earnings in the first quarter 2013 of 52 cents per share, up 26.8% from the year-ago quarter. Earnings also beat the Zacks Consensus Estimate by 20.9%.

Earnings outperformed on the back of higher electric and gas margins owing to a severe winter, lower interest expense and constructive rate cases in Colorado, South Dakota and Wisconsin.

GAAP earnings were 48 cents per share compared with 38 cents per share in the year-ago period. The disparity between GAAP and pro forma earnings can be attributed to a net loss of 4 cents from miscellaneous costs.

Total Revenue

Revenue increased 8% year over year to $2,782.8 million in the reported quarter. The sharp year-over-year upswing was due to encouraging sales from the Natural Gas and Electric segments.

Quarterly revenue marginally surpassed the Zacks Consensus Estimate of $2,754.0 million.

Segment Revenue

Electric: Revenue from this segment went up 8% year over year to $2,092.2 million.

Natural Gas: Revenue from gas business also registered an increase of 7.8% to $669.6 million.

Other: Segment revenue in the reported quarter was $21.1 million versus $20.3 million in the year-ago period.

Quarterly Highlights

Total operating expenses climbed 5.9% to $2,328.2 million from the year-ago quarter. Cost accelerated on account of a 7.1% rise in electric fuel and purchased costs compounded by a 5.1% escalation in natural gas sold and transported.  

Operating income on the other hand received a 19.6% boost year over year to $454.6 million due to the greater upturn in revenue overshadowing the cost accretion.

Total interest charges after Allowance for funds used during construction ("AFUDC") plunged 9.9% at the end of the first quarter 2013 to $130.9 million.

Financial Update

Long-term debts as of Mar 31, 2013 were $10.6 billion. As of Apr 30, 2013, Xcel Energy had available liquidity of $2.0 billion.

The company in Mar 2013 issued $250 million worth first mortgage bonds carrying a 2.5% interest due Mar 15, 2023 and $250 million, 3.95% bonds due Mar 15, 2043. Xcel Energy informed the trustees of its plans to redeem $400 million, 7.6% notes on May 31, 2013.

Xcel Energy intends to issue $500 million first mortgage bonds and $400 million unsecured bonds in the first half of 2013.

Guidance

Xcel Energy expects earnings in the range of $1.85 to $1.95 per share in 2013. Operating and maintenance expenses are estimated to increase 4% to 5%, while depreciation expense is projected to increase in the range of $75 million to $85 million over 2012 levels.

Interest expenses are forecast in the range $30.0 million to $35.0 million approximately from 2012.

Other Utility Company Releases

CMS Energy Corp. (CMS - Analyst Report) posted adjusted earnings of 53 cents in the first quarter, higher than the Zacks Consensus Estimate of 46 cents per share.

TECO Energy Inc. (TE - Analyst Report) reported first quarter 2013 earnings of 19 cents per share surpassing the Zacks Consensus Estimate by 11.8%.

NextEra Energy Inc. (NEE - Analyst Report) reported pro forma earnings of $1.12 per share beating the Zacks Consensus Estimate by 10.9%.

Our View

Xcel Energy continued with its good run reporting yet another earnings surprise in the first quarter 2013. The company is expected to do well in the summer months, which normally witness a rise in power sales.

Moreover, the premier CapX2020 midstream project as well as the high-end renewable additions to its generation portfolio is expected to be the major highlight in 2013. Xcel’s modernization activities will also contribute to improved service quality and hence lead to customer retention.

Xcel Energy currently retains a Zacks Rank #2 (Buy). Based in Minneapolis, Xcel Energy is a U.S. electricity and natural gas company, with operations in eight Western and Midwestern states.

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