OGE Energy Corp. Q3 FY2025 earnings call

• Delivered strong third quarter results with consolidated earnings of $1.14 per share, electric company at $1.20 per share and holding company loss of $0.06 per share.
• Confident in delivering top half of 2025 earnings guidance range.
• Regulatory progress: Preapproval request in Oklahoma expected to be resolved in a few weeks, allowing construction of 450 megawatts of natural gas generation by 2029. Approximately 550 megawatts of combustion turbines under construction will be operational next year on time and on budget.
• Load growth: Weather-normalized load growth was 6.5% through the third quarter, expecting total retail normalized load growth of approximately 7.5% in 2025.
• Economic development: Diversified business growth including commercial and industrial, with grand opening of a plastics manufacturer expansion adding 4.5 megawatts of load and jobs.
• Rate reduction: Oklahoma customers will see a decrease in monthly bill starting November 1, with average residential customer bill $6.75 lower per month.

For the third quarter, consolidated net income was $231 million or $1.14 per diluted share. The electric company achieved net income of $243 million or $1.20 per diluted share. The holding company reported a loss of $12 million or $0.06 per diluted share. The electric company's strong performance contributed significantly to the overall results, with its earnings driving the consolidated outcome.

• Remain confident in delivering top half of 2025 earnings guidance range.
• Expect consolidated earnings growth rate of 5% to 7% based on the midpoint of 2025 guidance.
• Updated capital plan includes the $250 million Fort Smith to Muskogee transmission line planned to go into service in 3 phases from 2027 to 2029.
• If preapproval in Oklahoma is approved, will shift rate review from end of 2025 to second half of 2026.

No specific detailed risks discussed, but potential regulatory uncertainties in relation to approvals for generation projects and timing of rate filings could pose operational challenges.

Q: Starting off on CapEx needs, how quickly do elements like the $250 million update and RFP process start rolling into plan?

A: Sean Trauschke mentioned they anticipate approval for the Oklahoma preapproval in a couple of weeks and will layer in elements, with additional filings from the last RFP and commencing new RFPs as approvals are received.

Q: On the impact of new regulatory constructs on ROE lag and inclusion in '26 planning assumptions?

A: Chuck Walworth stated they have a good track record on minimizing ROE lag, with impacts disclosed in the 10-Q and will lay out details in 2026 guidance.

Q: Regarding 2026 load growth and if it will be higher than planning assumptions?

A: Chuck Walworth said they'll bring a full update in February but don't see changes in fundamentals driving results in the service area.

Q: On meeting 850-megawatt shortfall by 2030, whether getting capacity from current RFP and timing of new RFP?

A: Sean Trauschke said they believe there are capacity opportunities in the current RFP, will file a new RFP, and expect the second RFP to move along at a quicker pace.

Q: On dividend growth rate in line with EPS CAGR?

A: Chuck Walworth said they've been intentional about dividend growth relative to investment opportunities, targeting a 65%-70% payout ratio and will reassess capital allocation once at the target.

Q: On cadence of rate filings if pushed to second half of '26?

A: Chuck Walworth said philosophy remains the same, and the shift is per the settlement agreement terms but will continue with same operating philosophy going forward.

Q: On CapEx increase to plan, rough rule of thumb for $250 million?

A: Chuck Walworth said the plan remains the same, with the project rolled in now but biggest increase still pending, and financing plans will be communicated in Q4 update.

Q: On data center discussions stage and interplay with tariff filing and capacity needs?

A: Sean Trauschke said they are in very serious negotiations, expect to announce something soon, there would be a filing with the commission, and they feel confident in meeting capacity needs as per IRP provisions.