Ameren Corporation (AEE) Earnings Call Transcript & Summary

Good day, everyone. My name is Ryan, and I will be your conference operator today. At this time, I would like to welcome you to the Ameren Corporation Second Quarter 2026 Earnings Call. [Operator Instructions] At this time, I would like to turn the call over to Andrew Kirk. Senior Director of Investor Relations and Corporate Modeling.

Thank you, and good morning. On the call with me today are Marty Lyons, our Chairman, President and Chief Executive Officer; Lenny Singh, our Executive Vice President and Chief Financial Officer; and Michael Moehn, Group President of our Ameren Utilities as well as other members of the Ameren management team, including our new Ameren Missouri President, Aaron Melda, who joined the Ameren team in June. This call contains time-sensitive data that is accurate only as of the date of today's live broadcast and redistribution of this broadcast is prohibited. We have posted a presentation on the amereninvestors.com homepage that will be referenced by our speakers. As noted on Page 2 of the presentation, comments made during this conference call may contain statements about future expectations, plans, projections, financial performance and similar matters, which are commonly referred to as forward-looking statements. Please refer to the forward-looking statements section in the news release we issued yesterday as well as our SEC filings for more information about the various factors that could cause actual results to differ materially from those anticipated. Now here's Marty, who will start on Page 4.

Thank you, Andrew. Good morning, everyone, and thank you for joining us to cover our second quarter performance and progress toward achieving our 2026 strategic objectives. At Ameren, we serve 2.5 million electric and more than 900,000 natural gas customers across the 64,000 square mile territory in Missouri and Illinois. With nearly 10 gigawatts of generation and more than 110,000 miles of transmission and distribution lines across both states, our focus is always on providing safe and reliable service while keeping costs as low as possible for our customers who depend on us to power their homes, businesses and communities. On this page, we outlined some of the exciting developments from the second quarter that we will cover during this call. Overall, our operating performance has been strong year-to-date and our earnings and strategic accomplishments provide a solid foundation for strong results for 2026 and beyond. Turning to Page 5. Yesterday, we reported second quarter 2026 earnings of $1.13 per share compared to earnings of $1.01 per share in the second quarter of 2025. The year-over-year increase reflected earnings on infrastructure investments partially offset by the cost of increased tree trimming and energy center maintenance to improve system reliability and resiliency for our customers. Further, we reaffirmed our 2026 earnings per share guidance which is a range of $5.25 to $5.45, reflecting solid execution across our business during the first 6 months of the year. Our strategy, as outlined on Page 6, is grounded in delivering value to the customers and communities we have the privilege to serve. By investing in and strengthening the energy infrastructure in our communities, advocating for constructive energy policies and continuously optimizing performance to improve service quality, we are safely delivering on what matters most to our customers, reliable energy at the lowest cost possible. Turning to Page 7. Our strategy has served our customers well, improving Ameren's average reliability performance to top quartile, supporting tens of billions of dollars in annual economic impact, enhancing customer service satisfaction and keeping our average rates below national and Midwest averages. Moving to Page 8. Here, we reiterate our strategic priorities for 2026. Of course, targeted and timely infrastructure investments are key to serving our customers well. As shown on the right, we invested more than $2.6 billion in energy infrastructure during the first 6 months of the year to maintain and enhance our quality of service. Importantly, our infrastructure investments continue to perform well, reducing customer outage frequency and duration during multiple instances of severe weather in the second quarter of 2026. Turning to Page 9 for an update on our economic development pipeline. At Ameren, we're proud to provide the quality of service that is necessary to attract investment and economic growth to our region. The pipeline of economic development interest within our territory remains robust across Missouri and Illinois. In Missouri alone, we have executed 3.4 gigawatts of construction agreements, of which 2.8 gigawatts of projects now have ESAs. And there's an additional 4 gigawatts of projects in Missouri with completed interconnection studies. Further, some customers with executed ESAs have also expressed interest in expanding their footprint. And across both states, a diversified pipeline of economic development opportunities continues to expand beyond the large load growth opportunities. Our economic development teams remain focused on supporting long-term business investment and job growth in the regions we serve, earning accreditation from the International Economic Development Council as recognition of our effective leadership, responsiveness and strong community engagement, including robust partnerships with regional and local economic development organizations. That work is translating into tangible results across our service territory. During the second quarter, Google and Amazon announced projects in our Missouri service territory, representing a combined planned investment of $25 billion. These projects are part of the 2.8 gigawatts of electric service agreements signed earlier this year. The official announcements and construction groundbreaking are important milestones and no time is being wasted on the start of construction. Consistent with the requirements of Missouri Senate Bill 4, these customers will pay for 100% of the power and infrastructure costs driven by their operations. And once operational, large load customers will contribute to paying fixed costs of the energy grid, providing long-term cost benefits for our other customers. These projects are expected to create thousands of construction jobs for local contractors and small businesses and once built, will directly employ hundreds of people. In addition, the projects are expected to generate billions of dollars in local tax revenues. And Google and Amazon have committed millions of dollars through community benefit agreements to support new workforce development, energy efficiency and community-focused programs both locally and across the state. We will continue to work closely with businesses interested in locating operations in our service territory to find the right solutions that meet their needs and ultimately support economic development in the region. Turning to Page 10 for Ameren Missouri's sales growth expectations. Recall, our long-term earnings per share expectations outlined in February were based on a planning assumption of 1.2 gigawatts of additional sales by the end of 2030 or a compound annual sales growth rate of 6.2% from 2026 through 2030. As we've said before, the 2.8 gigawatts of signed ESAs represent upside to our sales and earnings forecast to the extent customer load by 2030 ramps faster than sales included in our existing planning assumptions. Those ESAs call for sales to begin materializing in the second half of 2027 and we expect to see annual electricity sales increase by 60% from 2025 levels by the end of 2029. Turning to Page 11 for an update on Ameren Missouri's generation portfolio. We are focused on maintaining a balanced mix of generation resources that meet the demands of our Missouri customers with an adequate reserve margin. Today, we are well on our way to increasing our existing generation capacity as our team executes on the generation plans outlined in our 2025 Integrated Resource Plan. This year, a total of 350 megawatts of new solar generation has been placed in service, including the 300-megawatt Split Rail Renewable Energy Center, which began providing low-cost energy for our customers in June, 1 month ahead of schedule. Another 2,250 megawatts of simple cycle gas, solar and battery storage resources have been approved by regulators are under construction and will begin serving customers in 2027 and 2028. In May, we filed CCN request for nearly 1,000 additional megawatts of new solar and storage resources to begin serving customers in 2028 and 2029. And this month, we filed a CCN request for the 2.1 gigawatt West Alton natural gas combined cycle facility, which is expected to be in service in 2031. With more than 5 gigawatts of new resources currently under development and more in the pipeline, I'm pleased to say that our teams are well positioned to deliver these projects on schedule for our customers. We have procured turbines for the 3 gas projects and have secured all critical long-lead components for all of the planned energy resources I just highlighted and detailed on this page. And we have executed gas supply contracts and awarded labor contracts for both simple cycle natural gas facilities. I should also note that we are acting on opportunities to enhance the reliability and performance of our existing energy centers, especially during peak periods, helping to keep customer costs as low as possible. Before moving on, as we gain greater clarity on the new large load customer construction time lines and ramp rates and other economic development opportunities, we are sharpening our perspective on long-term sales trends and energy resource needs and costs. We remain on track to file an update to Ameren Missouri's Integrated Resource Plan in late September, incorporating these perspectives. And we plan to update our sales, capital investment forecast, financing plans and long-term earnings growth expectations on our third quarter earnings call. As new large load electric demand evolves, our focus remains on serving all customers reliably and affordably by carefully planning and executing grid upgrades maintaining a balanced generation portfolio and ensuring cost to serve new large load customers are appropriately allocated to and paid by such customers. Moving to Page 12 for a brief transmission update. We continue making robust investments in our region's transmission infrastructure to ensure reliability and efficiency. And we expect investment levels to remain strong over time to support new large load customers and to connect the generation resources required to serve our territory reliably as regional demand grows. At the same time, we remain focused on executing our assigned and awarded long-range transmission projects from the first 2 MISO LRTP tranches. In the second quarter, MISO selected our joint proposals for the WIIL and STIW LRTP Tranche 2 competitive projects located in our Illinois service territory. We have now won the opportunity to develop all competitive long-range transmission projects in our service territory within both the Tranche 1 and Tranche 2 portfolios, reflecting our strong record of designing, building and operating high-quality transmission infrastructure at a competitive cost for our customers. We have also submitted joint bids for the 2 remaining Tranche 2.1 competitive projects each located in Iowa, and we expect the winning bids to be selected by November. Turning to Page 13. We've outlined the investment pipeline across our businesses over the next decade. These investments will support the safety, reliability and resiliency of the energy grid while positioning our system to power the quality of life for all customers in our territory. The pipeline now includes more than $71 billion of investment opportunity through 2035, including planned investment associated with the competitive LRTP projects recently won and is subject to change later this year as we update guidance on our third quarter call following our Missouri Integrated Resource Plan filing. Turning to Page 14. We expect effective execution of our strategy will continue to drive strong total shareholder return. In February, we updated our 5-year growth plan, which included our expectation to deliver annual earnings per share growth consistently near the upper end of our 6% to 8% compound annual earnings growth rate from 2026 through 2030. We expect this earnings growth will be primarily driven by strong compound annual rate base growth of 10.6%, reflecting strategic capital allocation across our constructive regulatory frameworks and conservative sales growth assumptions. I'm excited by the milestones achieved year-to-date, consistent with our 2026 objectives outlined in February, and we remain well positioned to update our long-term growth expectations on our third quarter call in November. In the meantime, I'm confident in our team's ability to effectively execute our investment plans and other elements of our strategy across all 4 of our business segments in a way that benefits our customers, communities and shareholders. Again, thank you all for joining us today. I will now turn the call over to Lenny.

Thanks, Marty, and good morning, everyone. Turning now to Page 16 of our presentation. Yesterday, we reported second quarter 2026 earnings of $1.13 per share compared to earnings of $1.01 per share for the second quarter of 2025. As Marty discussed, our ongoing infrastructure investments to strengthen the energy grid and expand generation resources continue to be the primary drivers of earnings growth across the company. In addition, we continue to experience solid customer growth at Ameren Missouri, where total normalized retail sales over the trailing 12 months through June increased approximately 1%, primarily driven by the commercial customer class. Partially offsetting positive earnings drivers this year, we have increased our reliability-focused tree trimming and energy center maintenance efforts, which are reflected in the higher O&M expense at Ameren Missouri. Moving to Page 17 for select considerations for the remainder of the year. We remain confident in our 2026 earnings per share guidance range of $5.25 to $5.45. As we sit here today, our results through June are right where we expect them to be. We will continue to make reliability improvements, such as increasing tree trimming and energy center maintenance over the balance of the year that strengthens service for our customers. And through continued execution of our strategy, we remain focused on delivering 2026 earnings at or above the midpoint of our guidance range. Turning to Page 18. I'll provide an update on the Missouri electric rate review we filed with the Missouri PSC in late June. Our request for a $343 million revenue increase is designed to recover the cost of significant system reliability and resiliency investments. In addition to incorporating meaningful infrastructure improvements for our customers, this request also includes savings from projected data center revenues for our retail customers and establishes a new income-eligible discount rate to supplement our financial assistance programs already in place. If approved, as requested, the discount would offset the proposed rate adjustment for our most vulnerable customers, while customers' rates overall will remain below the national and Midwest averages. Moving to Page 19. We expand upon the customer value reflected in our Missouri rate review. Since our last rate review in 2024, we have continued to invest in our electric infrastructure to strengthen the energy grid, including constructing new and enhanced existing power lines, poles and substations, upgrading and adding new generation resources and rebuilding sections of the grid after catastrophic storms blew through the states. Notably, we've utilized Missouri-based suppliers and contractors to help deliver these projects, supporting local jobs and economic growth. And as we've made these investments, we've maintained a strong focus on disciplined cost management throughout the business, allowing us to keep Ameren Missouri's residential rate growth less than inflation since 2017. This combination of our focus on affordability and the quality of our critical infrastructure has allowed us to provide top quartile reliability for our customers at rates approximately 25% below the national average. These factors have also contributed to Missouri's ability to attract new businesses to the region. Importantly, while Ameren Missouri is not currently serving any large load data center customers, the ESA signed earlier this year with large load customers reflect no discounts for these new customers, but rather a rate that is higher than our standard industrial rates. Revenues from new large load customers are expected to lower residential customer bills from what they otherwise would have been in this rate review. Specifically, we estimate Ameren Missouri's customers will realize approximately $21 million in projected base rate savings over the 2 years following the rate review compared to what they otherwise would have paid. We expect a Missouri PSC order by May of 2027 with new rates effective by June 2027. Moving to Page 20 for an update on Ameren Illinois regulatory matters. Earlier this month, we updated our request for a revenue adjustment as part of the annual performance base rate reconciliation under the electric multiyear rate plan. The $31 million adjustment we are requesting reflects 2025 actual cost, actual year-end rate base and the allowed return on equity and common equity ratio established in the multiyear rate plan. It also aligns with the ICC staff's recommendation. An ICC decision is expected in December, with rates reflecting the approved reconciliation adjustment effective in January 2027. In addition, stakeholder engagement is ongoing with respect to the $2.75 billion electric distribution grid investment plan we have proposed for the 2028 through 2031 period. In July, staff and other intervenors filed testimony with individual proposed adjustments to prospective infrastructure projects ranging from $50 million to $220 million. We expect an ICC decision on the proposed investment plan by December with an associated rate review filing to follow in the first quarter of 2027. Turning to Page 21, where we provide a financing update. We continue to feel good about our financial position. As we fund our robust infrastructure plan, we remain focused on maintaining a strong balance sheet and supporting our credit ratings. To that end, we continue to make progress towards addressing our expected equity needs of approximately $4 billion from 2026 through 2030. To satisfy our 2026 equity needs, in 2025 we sold forward approximately $600 million of equity, representing approximately 6.4 million shares, which we expect to issue near the end of this year. So far this year, to address a portion of our prospective equity needs, we have sold forward approximately $1.2 billion of common stock under our at-the-market program. We will continue to be thoughtful about our approach to executing our equity plan. This spring, we're pleased that S&P and Moody's reaffirmed our stable outlook and BBB+ and Baa1 credit ratings, respectively. As we've said before, we value our current ratings, and we remain committed to maintaining a strong balance sheet and strong credit metrics as we execute our growth plan. In summary, turning to Page 22. We're making strong progress toward our strategic objectives in 2026, which we expect will continue to drive consistent superior value for our customers, communities and shareholders. Our financial outlook remains strong, supported by robust yet conservative sales growth assumption, solid rate base growth, disciplined cost management and a strong pipeline of customer value-driven investment opportunities. We're excited about the future because the opportunities before us are grounded in providing strong service to our customers. By investing in our system, maintaining a sharp focus on affordability and supporting economic growth across Missouri and Illinois, we believe we are creating lasting value for the customers and communities that depend on us every day. As a result, we remain confident in our ability to deliver strong earnings and dividend growth and attractive long-term returns for our shareholders. That concludes my prepared remarks. We now invite your questions.

[Operator Instructions] Your first question comes from the line of Julien Dumoulin-Smith with Jefferies.

Hopefully you can hear me okay. Let me just kick it off here with the 4 gigawatt number that you guys threw out there. I mean, continued nice progress here. Just wanted to [ see here ], what does progress look like in terms of translating that back into a more formalized data point here. I mean, obviously, very strong momentum anecdotally from your customers, from your adjacent utilities. I mean -- just wanted to kind of ask you to elaborate a little bit on timing and also what some of the critical milestones might be in terms of transposing some of that incremental 4 gigawatts here. I feel like I'd be remiss to start anywhere else.

Yes, Julien, this is Marty. Thanks for the question. Yes, as it relates to the energy services agreements that we're signing, we feel like we're making really good progress and very much in line with where we had hoped to be at this time. We -- last quarter, we had talked about the expectation of soon signing additional gigawatts of ESAs. And in fact, signed 600 gigawatts of ESAs shortly after our last call. So we're up to 2.8 gigawatts of signed ESAs. As you note, we have 4 gigawatts of projects with completed interconnection studies beyond that. And we also have incremental about 600 gigawatts of construction agreements which haven't been converted yet to ESA. So there's greater potential out there. I'll tell you, we're really excited about the progress we're seeing on the 2.8 gigawatts, though that we talked about. Some of the things we mentioned on this quarter, we saw both Google and Amazon have groundbreaking ceremonies and actually begin construction on large data center projects here in our service territory. So we're seeing some great milestones there, and we're excited about that. And on this call, as we talked about we're expecting that to generate sales increases here in just the next few years. So very excited about that progress. When I talk about those 2.8 gigawatts of ESAs we've signed, some of the counterparties associated with those have certainly been expressing interest in expanding beyond the growth that we're already experiencing. And we're excited that there are 4 gigawatts of additional sites out there. potential projects that have completed interconnection studies. And I'll tell you that we have other land, et cetera, that's available for additional development. So look, Julien, we know right now as it relates to data center growth, it's about land availability and speed to power. We think in our part of Missouri, we do have additional land as evidenced by some of these sites that have interconnection studies completed. And our team is working very hard to bring greater energy generation resources into our portfolio which I think is demonstrated by the great work our team has done this year and is outlined on Slide 11.

Julian, it's Michael. The only thing I might add to that is, I think it sort of manifests itself through the IRP process as well, right? So I think as we kind of march through time, we've indicated we're going to file this IRP in the October time frame. It's one of the things you obviously do through this process is a bunch of scenario planning, trying to really understand, look at the demand, put some greater probability around that. And so I think it feeds into that process and hopefully give greater clarity in the fall.

Awesome. Just turning to some of the more details real quickly. First, just on the CPCN, there was talk about self-perform just more of a reflection of the state of the E&C market and EPC availability and the cost there in. Can you speak to that briefly here? I think it was also CPCN. And what risks are you effectively taking on versus are you effectively going to subcontract over time here, too? Just to elaborate a little bit on that one.

Julien, this is Michael again. Yes, I'll touch on that and others can chime in as well. Look, we feel good about where we sit today with respect to that 2.1 combined cycle plant that we just filed the CCN for. I think, as Marty indicated in his prepared remarks, we secured the long lead time material, the turbines. We've had great discussions with the OEM there. I feel good about the delivery dates working through the gas procurement piece of that because obviously, that's a big part of it, just given the overall size of that plant itself. In terms of the labor piece, again, working through a lot of details here. We'll have more to share in the fall as we wrap up these final negotiations. But look, it will be a great partnership, local-based manufacturers, suppliers, developers, names that you will know that have worked on large industrial projects combined with an owner engineer that has developed several of these combined cycle plants. So we feel good about the combination of resources that we're putting together, spending a great deal of time just working through workforce issues, making sure we have the right skilled craft needed over that time frame. But I think it's an exciting partnership. It's Missouri-based resources, building Missouri-based power. And so obviously, the structure is not a traditional EPC. But honestly, given where the market is today, it's difficult to get those. And so, there'll be appropriate risk sharing in there, but we feel good about where we are through the negotiations at this point, and we'll certainly share more of those details as we get to the final disclosure here in the fall.

Sorry, [indiscernible] quick intake. On the IRP process in Illinois, you don't really expect much resource development there on your side, right? Just I want to circle back to that. I know it's a novel process there. I just want to set expectations. Sorry, last question.

It's Michael again. I'll touch on it. Yes. Look, we feel good about the process, the fact that it's ongoing, correct? I mean I think we were excited to see the elements of this in Senate Bill 25. I think there's been some good resource adequacy studies, shining a light on some of the issues that we've talked about in the past just in terms of where the resource additions are versus where the demand is. So I think it's working through the process, having some good meaningful conversations. Obviously, as you know, we just talked about them, we have a robust IRP process in Missouri. We're lending resources where appropriate to just have conversations with the Illinois folks just to make sure they understand it because it's been a long time since we've done it in Illinois. But the fact that we're having the conversations and shining a light on what we need to do for the future so we continue to put, I think, the state in the most competitive position is exciting from my perspective. So we'll see where the ultimate process takes us.

Your next question will come from the line of Shar Pourreza with Wells Fargo.

It's Andrew Kadavy on for Shar. Can you give us a little more color on the nature of the $0.08 of investments in innovative energy technology? And can we expect this kind of tailwind to earnings to persist throughout the year?

Andrew, this is Marty. Yes, these are investments we've made over time, equity investments in innovative infrastructure funds and had an unrealized gain this year, which was beneficial in the first half. It's not something that we expect to be recurring in nature.

Okay. Great. And then just on the $21 million of savings for customers prior to data center loads being served. Can you walk me through the mechanics of how -- where that $21 million comes from? And will that number increase as the loads actually ramp?

Yes, this is Michael. Yes, I mean it's associated with those data center revenues that are ramping -- beginning to ramp modestly there in the first half of '27. So it's really trying to capture that piece of it. And then it certainly would continue to grow as we continue to ramp those projects throughout '28 and '29, depending on where you are in the overall rate review process.

Your next question comes from the line of Carly Davenport with Goldman Sachs.

Maybe to start, you highlighted in the materials, the potential to update the EPS growth guidance on the third quarter call. I guess, one, could you help us sort of frame potential range of outcomes and perhaps if there's any milestones that you need to see between now and then to govern a larger potential step-up in the outlook? And then the follow-up would just be anything you can share on whether you would look to differentiate a long-term growth rate versus that over a 5-year planning period?