OGE Energy 2026 Q3 Earnings Call

Please go ahead. Thank you, Lisa, and good morning everyone, and welcome to our call.

With me today, I have Sean Trauschke, our Chairman, President, and CEO, and Chuck Walworth, our CFO. In terms of the call today, we will first hear from Sean, followed by an explanation from Chuck of financial results. Finally, as always, we will answer your questions. I would 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 slides will be archived following the call on that same website. Before we begin the presentation, I would 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 to date.

I will now turn the call over to Sean for his opening remarks.

Sean? Thank you, Casey. Good morning, everyone.

Thank you for joining us today. This morning, we reported consolidated earnings of $1.52 per share. Before Chuck provides more detail on our third quarter results, I will highlight the team's outstanding performance during an unusually hot summer and outline the key milestones we anticipate over the coming quarters. This summer underscored the importance of a reliable, resilient electric grid. Our service area experienced more than 45 days of triple-digit temperatures compared with just one last year. Through the prolonged heat, our system performed exceptionally well, and our team safely delivered the power customers depend on. For context, we hit a new peak load four times this summer, with 15 days exceeding our 2024 peak record. At no time were there calls for the public to conserve energy. Our system's just built to withstand these extremes. A note that's important. While our residential price per kW hour was actually 7% lower in August and September than a year ago, extended air conditioning use drove higher electricity consumption.

Weather impacts tend to balance out over time, and this summer's elevated cooling demand followed several quarters of milder temperatures and lower weather-driven usage. Our reliability focus shapes the Oklahoma rate review. This is our first since December of 2023. The filing reflects investments to strengthen our system, support growth, and meet evolving requirements while expanding assistance and payment flexibility for our customers. The review includes the following expanded assistance and payment options to help customers manage their bills. We are expanding both the senior discount and low-income assistance program. We are launching an innovative pilot program to help customers with past due balances get back on track with payments.

We are offering new Choose My Due Date prepayment options that give customers more flexibility to manage their household budgets. As the regulatory process moves forward, we remain focused on balancing reliability and affordability and considering the impacts of inflation and interest rates and creating long-term value for customers and shareholders. Looking ahead, we are advancing additional generation resources to serve growing demand and maintain reliability. We filed yesterday with the Oklahoma Corporation Commission seeking pre-approval to construct a new 755 MW combined cycle plant at our Horseshoe Lake site, and we will file in the coming weeks with the Arkansas Public Service Commission. We are finalizing evaluations and negotiations from our competitive request for proposals and expect to submit projects to both commissions as agreements are completed. We remain committed to delivering capacity customers need responsibly and cost effectively, and we anticipate submitting additional pre-approval filings before year-end.

Meanwhile, that broader generation strategy is taking shape. Horseshoe Lake units 11 to 12 were completed ahead of schedule and $12 million under budget. Bringing the units online early allowed us to avoid up to $16 million in capacity purchase this winter. These units add approximately 448 MW of flexible generation capacity, bringing the total additions this year to 544 MW. Units 13 to 14 are under construction and will add another 440 MW, and the Horseshoe Lake projects build on more than a 100-year legacy at that site while supporting reliable, efficient generation for the future. As we build and invest in our system, we are also strengthening support for our communities. We refreshed our Lend a Hand bill assistance program with a broader network of trusted nonprofit partners and a financial commitment from the OGE Energy Corporation Foundation to match customer donations.

We will continue to support our vulnerable customers and assist communities as we deliver reliable electricity at low cost for everyone. As we move forward, we will continue our disciplined approach to securing generation resources needed to serve growing demand, advancing projects through the regulatory process, and delivering investments that maintain our competitive low rate advantage. Our progress to date positions us for several milestones over the coming quarters. On our fourth quarter earnings call, we will provide an update on the SPP NTCs that we accept. On the first quarter call, we will provide an update on the Oklahoma rate review and the Horseshoe Lake 15 pre-approval case. On our second quarter call, we will provide an update on the regulatory approval for the additional generation filings we are making in this year.

Together, these regulatory generation and community initiatives position the company for long-term success while preserving the reliable, low-cost service our customers enjoy. In doing so, they established the foundation for the investments needed to meet growing demand across our service area. With that, thank you, and I'll turn the call over to Chuck.

Chuck? Thank you, Sean, and thank you, Casey.

Good morning, everyone. I'm pleased to review 2026's third quarter results with you today. Let's start on slide 5. Consolidated net income was approximately $316 million or $1.52 per diluted share compared to $231 million or $1.14 per share in the same period of 2025. In our core business, the electric company achieved net income of approximately $321 million or $1.54 per diluted share, compared to $243 million or $1.20 per share in the same period of 2025. The increase in net income was primarily driven by significantly warmer third-quarter weather, partially offset by increased income tax expense. The holding company reported a loss of approximately $5 million or $0.02 per diluted share compared to a loss of $12 million or $0.06 per share in the same period of 2025.

These results were driven by higher income from energy-related investments and lower interest expense. Turning to our 2026 outlook, weather through the third quarter was significantly warmer than normal, with summer temperatures reaching levels we haven't experienced in 15 years. As a result, we are raising our 2026 consolidated earnings guidance range to $2.62 to $2.68 per share. This updated range assumes normal weather for the remainder of the year and reflects opportunities to execute work planned for future years. Demand across our service area remains healthy, with both customer growth and weather-normalized load growth at approximately 1%. The variance on load is largely timing related, reflecting customer ramps as well as maintenance outages that have reduced usage among some of our larger customers. Customer commitments remain firmly in place, giving us continued confidence in the stronger, longer-term growth ahead.