As OGE Energy Corp. reported an increase in net income for 2018 and a drop in earnings, leadership was calling it one of the best years in the history of the company.
Earnings per average diluted share last year was $2.12 compared with $3.10 per share in 2017.
In 2018, OG&E, a regulated electric utility, reported net income of $328 million and contributed $1.64 per diluted share, compared with $306 million, or $1.53 per diluted share in 2017.
“2018 may well be regarded as the best year in our company’s history,” said OGE Energy Chairman, President and CEO Sean Trauschke. “I’m most proud of our record-breaking safety performance. It was among the best in the industry. Not only were employees setting safety records, they were busy completing critical, complex, yet very beneficial, projects for our customers. They delivered more renewables, added state-of-the art power generation, significantly reduced our emissions footprint, improved reliability and customer satisfaction, and kept customer rates 31 percent below the national average. These are once-in-a-generation accomplishments made possible by the hard work and dedication of every member of the OGE team.”
OGE Energy Holdings, which is primarily Natural Gas Midstream Operations, received cash distributions from Enable Midstream of approximately $141 million and contributed earnings of $109 million, or $0.54 per diluted share in 2018, compared to earnings of $324 million, or $1.62 per diluted share in 2017.
The holding company posted a loss of $12 million or $0.06 per diluted share in 2018, compared to $11 million or $0.05 per diluted share in 2017. Federal tax reform legislation passed in December of 2017 increased Enable Midstream earnings by $245 million or $1.23 per diluted share and decreased earnings at the holding company $11 million or $0.05 per diluted share due to the remeasurement of deferred taxes.
For the three months ended December 31, 2018, OGE Energy reported earnings of $0.27 per diluted share compared with $1.48 per diluted share in the fourth quarter of 2017 which included $1.18 per diluted share resulting from tax reform. Excluding the impact of tax reform, the decrease is primarily due to lower earnings from the utility partially offset by higher earnings from the Enable Midstream business.
OG&E reported net income of $328 million in 2018 compared to $306 million in 2017. Gross margin was $1.378 billion in 2018, which was approximately $14 million higher than 2017. The increase in gross margin for the year was due in part from higher revenues due to favorable weather and customer growth. Offsetting higher gross margin were higher depreciation and amortization expense as a result of the March 2017 Oklahoma rate order and new assets placed into service.
OG&E is projected to earn $1.55 to $1.62 per average diluted share. in 2019. The Company projects the earnings contribution from its ownership interest in Enable Midstream to be approximately $0.52 to $0.58 per average diluted share and up to a $0.02 loss per average diluted share at the holding company.
Additionally, OGE Energyconsolidated earnings guidance for 2019 is $2.05 to $2.20 per average diluted share. The guidance assumes approximately 201 million average diluted shares outstanding and normal weather for the year. More information regarding the Company’s 2019 earnings guidance and the Company’s 2018 financial results is contained in the Company’s Form 10-K filed with the Securities and Exchange Commission.