MGE Energy's Q3 Net Income Jumps 14% on Strong Revenue Growth

TL;DR

**MGE Energy is powering up with strong revenue and earnings growth, but keep an eye on rising debt for future stability.**

AI Summary

MGE Energy, Inc. reported a significant increase in net income for the nine months ended September 30, 2025, reaching $112.587 million, up 14.25% from $98.547 million in the same period of 2024. Total operating revenues also grew to $554.101 million, a 9.61% increase from $505.529 million in 2024, driven by a 6.69% rise in electric revenues to $410.507 million and a substantial 18.91% increase in gas revenues to $143.594 million. Operating expenses saw a 7.49% increase, totaling $415.938 million, primarily due to a 36.07% surge in fuel for electric generation to $56.050 million and a 32.84% rise in cost of gas sold to $70.142 million. Capital expenditures for the nine months ended September 30, 2025, dramatically increased to $255.622 million from $164.064 million in 2024, reflecting significant investment in property, plant, and equipment, which grew to $2.248 billion. The company's short-term debt increased from $0 to $76.001 million, while long-term debt due within one year rose from $5.285 million to $20.395 million, indicating increased reliance on short-term financing. Earnings per share (basic) increased to $3.08 from $2.72, and dividends per share increased to $1.375 from $1.305.

Why It Matters

This strong performance by MGE Energy, Inc. signals robust operational efficiency and effective revenue generation, which is positive for investors seeking stable utility sector returns. The significant increase in capital expenditures, particularly in property, plant, and equipment, suggests strategic investments in infrastructure and potentially renewable energy projects, which could enhance long-term growth and competitive positioning against peers like WEC Energy Group. For customers, these investments could lead to improved service reliability and potentially support future rate stability. The rise in short-term debt, however, warrants attention as it could impact financial flexibility and expose the company to interest rate fluctuations, a key consideration for the broader market.

Risk Assessment

Risk Level: medium — The risk level is medium due to the substantial increase in capital expenditures to $255.622 million from $164.064 million, which, while indicative of growth, also increases financial leverage. Furthermore, short-term debt surged from $0 to $76.001 million, and long-term debt due within one year increased from $5.285 million to $20.395 million, indicating a higher reliance on debt financing which could be sensitive to interest rate changes.

Analyst Insight

Investors should consider MGE Energy's consistent dividend growth and strong earnings as a positive indicator for long-term holding. However, closely monitor the company's capital expenditure plans and debt management strategies, especially the increase in short-term debt, to ensure sustainable financial health and mitigate potential interest rate risks.

Financial Highlights

revenue

$554.101M

total Assets

$2.248B

net Income

$112.587M

eps

$3.08

revenue Growth

+9.61%

Revenue Breakdown

Key Numbers

• $112.587M — Net Income (9 months) (Increased 14.25% from $98.547M in 2024)
• $554.101M — Total Operating Revenues (9 months) (Increased 9.61% from $505.529M in 2024)
• $410.507M — Electric Revenues (9 months) (Increased 6.69% from $384.768M in 2024)
• $143.594M — Gas Revenues (9 months) (Increased 18.91% from $120.761M in 2024)
• $255.622M — Capital Expenditures (9 months) (Increased significantly from $164.064M in 2024)
• $76.001M — Short-term Debt (Increased from $0 in 2024)
• $20.395M — Long-term Debt due within one year (Increased from $5.285M in 2024)
• $3.08 — Basic Earnings Per Share (9 months) (Increased from $2.72 in 2024)
• $1.375 — Dividends Per Share (9 months) (Increased from $1.305 in 2024)
• $56.050M — Fuel for Electric Generation (9 months) (Increased 36.07% from $41.193M in 2024)

Key Players & Entities

• MGE Energy, Inc. (company) — registrant and parent company
• Madison Gas and Electric Company (company) — wholly owned subsidiary of MGE Energy, Inc.
• SEC (regulator) — Securities and Exchange Commission
• $112.587 million (dollar_amount) — MGE Energy's net income for nine months ended September 30, 2025
• $98.547 million (dollar_amount) — MGE Energy's net income for nine months ended September 30, 2024
• $554.101 million (dollar_amount) — MGE Energy's total operating revenues for nine months ended September 30, 2025
• $255.622 million (dollar_amount) — MGE Energy's capital expenditures for nine months ended September 30, 2025
• $76.001 million (dollar_amount) — MGE Energy's short-term debt as of September 30, 2025
• $20.395 million (dollar_amount) — MGE Energy's long-term debt due within one year as of September 30, 2025
• WEC Energy Group, Inc. (company) — parent company of Wisconsin Electric Power Company

FAQ

Risk Factors

• Rate Regulation and Approval [high — regulatory]: The company's operations are subject to extensive regulation by the Public Service Commission of Wisconsin (PSCW) and other governmental bodies. Changes in regulations or adverse decisions on rate increase requests can significantly impact profitability and the ability to recover costs, affecting financial performance.
• Energy Commodity Price Volatility [high — market]: Fluctuations in the prices of natural gas and electricity generation fuels (coal, natural gas, oil) directly impact operating expenses. The significant 36.07% increase in fuel for electric generation to $56.050M and a 32.84% rise in cost of gas sold to $70.142M highlight this sensitivity.
• Infrastructure Reliability and Security [medium — operational]: Maintaining the reliability and security of electric and gas infrastructure is critical. Extreme weather events, cyber threats, or physical damage could lead to service disruptions, significant repair costs, and reputational damage.
• Increased Debt Financing [medium — financial]: The company has increased its reliance on debt, with short-term debt rising to $76.001M from $0 and long-term debt due within one year increasing to $20.395M. This could increase financial risk if interest rates rise or cash flow generation falters.
• Environmental Regulations and Climate Change [medium — regulatory]: Increasingly stringent environmental regulations related to emissions and climate change may require substantial capital investments in cleaner energy sources and could lead to higher operating costs or asset impairments.
• Competition and Customer Choice [low — market]: While regulated, the company may face indirect competition from alternative energy sources or evolving customer preferences for distributed generation, impacting future revenue streams.

Industry Context

MGE Energy operates in the regulated utility sector, primarily providing electricity and natural gas. The industry is characterized by stable demand but faces increasing pressure to transition to cleaner energy sources and manage volatile commodity prices. Regulatory approvals are crucial for cost recovery and investment in infrastructure upgrades.

Regulatory Implications

The company's operations are heavily influenced by the Public Service Commission of Wisconsin. Decisions on rate cases, environmental compliance, and infrastructure investments directly impact financial performance and future growth strategies. The significant increase in fuel costs highlights the need for effective hedging and efficient operations within regulatory frameworks.

What Investors Should Do

1. Monitor regulatory filings and PSCW decisions closely, as they are critical drivers of revenue and cost recovery.
2. Analyze the impact of increased capital expenditures on future rate base growth and return on equity.
3. Assess the company's strategy for managing increased short-term debt and its implications for financial flexibility.
4. Evaluate the sustainability of revenue growth, particularly the strong performance in gas revenues, against commodity price trends and regulatory allowances.
5. Consider the company's progress in its clean energy transition plans and associated capital investments.

Glossary

Consolidated Statements of Income

Financial statements that combine the income of a parent company and its subsidiaries, presenting a unified view of profitability. (Provides the reported net income of $112.587M and revenue of $554.101M for the nine-month period.)

Capital Expenditures

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, and equipment. (The significant increase to $255.622M indicates substantial investment in the company's infrastructure and future growth.)

Short-term Debt

Financial obligations that are due within one year. (The increase from $0 to $76.001M signals a shift towards more immediate financing needs or strategies.)

Long-term Debt due within one year

Portions of long-term debt that are scheduled to be repaid within the next 12 months. (The rise to $20.395M from $5.285M indicates upcoming debt maturities that need to be managed.)

Earnings Per Share (EPS)

The portion of a company's profit allocated to each outstanding share of common stock. (The increase to $3.08 from $2.72 reflects improved profitability on a per-share basis for investors.)

Dividends Per Share

The total amount of dividends paid out by a company for each share of its stock. (The increase to $1.375 from $1.305 shows a commitment to returning value to shareholders.)

Year-Over-Year Comparison

MGE Energy reported a strong increase in net income (14.25%) and revenues (9.61%) for the nine months ended September 30, 2025, compared to the prior year. This growth was fueled by both electric and significantly by gas revenues. However, operating expenses also rose, particularly fuel costs, by over 30%. A notable shift is the substantial increase in capital expenditures and a significant rise in short-term debt, indicating aggressive investment and a change in financing strategy.

Key Financial Figures

• $1 — nge on which registered Common Stock, $1 Par Value Per Share MGEE The NASDAQ
• $1.00 — 2025 MGE Energy, Inc. Common stock, $1.00 par value, 36,541,849 shares outstandin

Filing Documents

• mgee-20250930.htm (10-Q) — 5891KB
• mgee-ex31_1.htm (EX-31.1) — 15KB
• mgee-ex31_2.htm (EX-31.2) — 15KB
• mgee-ex31_3.htm (EX-31.3) — 15KB
• mgee-ex31_4.htm (EX-31.4) — 15KB
• mgee-ex32_1.htm (EX-32.1) — 9KB
• mgee-ex32_2.htm (EX-32.2) — 9KB
• mgee-ex32_3.htm (EX-32.3) — 9KB
• mgee-ex32_4.htm (EX-32.4) — 9KB
• 0001193125-25-266253.txt ( ) — 22333KB
• mgee-20250930.xsd (EX-101.SCH) — 1718KB
• mgee-20250930_htm.xml (XML) — 6233KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 3 Filing Format 3

Forward-Looking Statements

Forward-Looking Statements 3 Where to Find More Information 3 Definitions, Abbreviations, and Acronyms Used in the Text and Notes of this Report 4

Financial Statements

Item 1. Financial Statements. 6 MGE Energy, Inc. 6 Consolidated Statements of Income (unaudited) 6 Consolidated Statements of Cash Flows (unaudited) 7 Consolidated Balance Sheets (unaudited) 8 Consolidated Statements of Common Equity (unaudited) 9 Madison Gas and Electric Company 10 Consolidated Statements of Income (unaudited) 10 Consolidated Statements of Cash Flows (unaudited) 11 Consolidated Balance Sheets (unaudited) 12 Consolidated Statements of Equity (unaudited) 13 MGE Energy, Inc., and Madison Gas and Electric Company - Notes to Consolidated Financial Statements (unaudited) 14 1. Summary of Significant Accounting Policies. 14 2. New Accounting Standards. 15 3. Investment in ATC and ATC Holdco. 15 4. Taxes. 16 5. Pension and Other Postretirement Plans. 17 6. Equity and Financing Arrangements. 18 7. Share-Based Compensation. 18 8. Commitments and Contingencies. 18 9. Rate Matters. 22 10. Derivative and Hedging Instruments. 23 11. Fair Value of Financial Instruments. 25 12. Joint Plant Construction Project Ownership. 27 13. Revenue. 28 14. Segment Information. 28

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 32

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk. 48

Controls and Procedures

Item 4. Controls and Procedures. 48

OTHER INFORMATION

PART II. OTHER INFORMATION. 50

Legal Proceedings

Item 1. Legal Proceedings. 50

Risk Factors

Item 1A. Risk Factors. 50

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 50

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities. 50

Mine Safety Disclosures

Item 4. Mine Safety Disclosures. 50

Other Information

Item 5. Other Information. 50

Exhibits

Item 6. Exhibits. 51 Signatures - MGE Energy, Inc. 52 Signatures - Madison Gas and Electric Company . 53 2

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION . Filing Format This combined Form 10-Q is being filed separately by MGE Energy, Inc. (MGE Energy) and Madison Gas and Electric Company (MGE). MGE is a wholly owned subsidiary of MGE Energy and represents a majority of its assets, liabilities, revenues, expenses, and operations. Thus, all information contained in this report relates to, and is filed by, MGE Energy. Information that is specifically identified in this report as relating solely to MGE Energy, such as its financial statements and information relating to its nonregulated business, does not relate to, and is not filed by, MGE. MGE makes no representation as to that information. The terms "we" and "our," as used in this report, refer to MGE Energy and its consolidated subsidiaries, unless otherwise indicated.

Forward-Looking Statements

Forward-Looking Statements Certain matters discussed in this report include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements that are not statements of historical facts are, or may be deemed to be, forward-looking statements. Such forward-looking statements are based on historical performance and current expectations, estimates, forecasts and projections about our future financial results, goals, plans, commitments, strategies and objectives, particularly related to future load growth, revenues, expenses, capital expenditures and rate recovery, financial resources, regulatory matters, and the scope and expense associated with future environmental regulation. Such statements involve inherent risks, assumptions and uncertainties, known or unknown, including internal or external factors that could delay, divert or change any of them, that are difficult to predict, may be beyond our control and could cause our future financial results, goals, plans and objectives to differ materially from those expressed in, or implied by, the statements. Words such as "believe," "expect," "anticipate," "estimate," "could," "should," "intend," "will," "commit," "target," "plan," and other similar words, and words relating to goals, targets and projections, generally identify forward-looking statements. Both MGE Energy and MGE caution investors that these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from those projected, expressed, or implied. The factors that could cause actual results to differ materially from the forward-looking statements made by a registrant include (a) those factors discussed in the following sections of the registrants' 2024 Annual Report on Form 10-K : Item 1A. Risk Factors; Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, as updated by Part I, Item 2. Man

Financi al Statements

Item 1. Financi al Statements. MGE E nergy, Inc. Consolidated Statements of Income (unaudited) (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2025 2024 2025 2024 Operating Revenues: Electric revenues $ 155,491 $ 148,004 $ 410,507 $ 384,768 Gas revenues 20,188 20,476 143,594 120,761 Total Operating Revenues 175,679 168,480 554,101 505,529 Operating Expenses: Fuel for electric generation 22,189 17,252 56,050 41,193 Purchased power 4,289 8,127 14,229 26,419 Cost of gas sold 4,865 4,628 70,142 52,798 Other operations and maintenance 58,325 57,129 172,661 167,833 Depreciation and amortization 28,816 27,104 84,848 80,636 Other general taxes 6,120 6,100 18,008 18,030 Total Operating Expenses 124,604 120,340 415,938 386,909 Operating Income 51,075 48,140 138,163 118,620 Other income, net 9,888 4,839 16,199 12,576 Interest expense, net ( 8,677 ) ( 8,396 ) ( 24,715 ) ( 24,725 ) Income before income taxes 52,286 44,583 129,647 106,471 Income tax provision ( 7,789 ) ( 3,644 ) ( 17,060 ) ( 7,924 ) Net Income $ 44,497 $ 40,939 $ 112,587 $ 98,547 Earnings Per Share of Common Stock Basic $ 1.22 $ 1.13 $ 3.08 $ 2.72 Diluted $ 1.22 $ 1.13 $ 3.08 $ 2.72 Dividends per share of common stock $ 0.475 $ 0.450 $ 1.375 $ 1.305 Weighted Average Shares Outstanding Basic 36,542 36,181 36,531 36,176 Diluted 36,576 36,211 36,565 36,202 The accompanying notes are an integral part of the above unaudited consolidated financial statements. 6 MGE Energy, Inc. Consolidated Statements of Cash Flows (unaudited) (In thousands) Nine Months Ended September 30, 2025 2024 Operating Activities: Net income $ 112,587 $ 98,547 Items

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