MGE Energy, Inc. (MGEE) Cash Flow Statement

OCF has remained consistently above $60M in most quarters, with the exception of 2025Q4's $34.5M, which appears tied to seasonal working capital timing. The stability of OCF relative to net income (which fluctuates with AFUDC and seasonal earnings) suggests that cash conversion from regulated operations is predictable, supporting the company's ability to fund fixed obligations.

The CAPEX-to-depreciation ratio has climbed from roughly 1.7x in 2024 to over 3.8x in 2026Q2, indicating that MGEE is investing far beyond its current depreciation run-rate. This is consistent with the accelerated Columbia coal retirement and renewable build-out, but it also implies that the company is relying heavily on external financing to bridge the gap between internal cash generation and investment needs.

The cumulative FCF deficit over the last four quarters is approximately -$124M, yet MGEE has issued $74.9M in equity in 2026Q2 alone, suggesting that management is proactively managing the balance sheet to avoid excessive debt. The low debt-to-capital ratio (implied by the 0.72% debt/equity figure) provides ample headroom for additional debt issuance, but the equity issuance signals a preference for maintaining a conservative capital structure.

Despite the negative FCF, dividends are well-covered by operating cash flow, with coverage averaging 4.0x over the past year. The company's history of annual dividend increases appears sustainable given the stable OCF, but investors should monitor whether the accelerating CAPEX cycle forces a slowdown in dividend growth to preserve liquidity.

The gap between net income and OCF (which is positive) suggests that non-cash items like AFUDC are inflating reported earnings, but the actual cash generation is still strong. However, the equity income from ATC, which is not part of OCF, provides a stable non-operating cash stream that supports the dividend. Investors should adjust for these items to assess true cash-generating ability.