Executive Summary / Key Takeaways

• Ameren is executing a robust, multi-billion dollar infrastructure investment plan ($27.4B 2025-2029) across its regulated utility segments, driving expected rate base growth of 9.2% CAGR (2024-2029) and supporting a long-term EPS growth target of 6-8% (2025-2029).
• Recent regulatory and legislative wins in Missouri, including the enactment of Senate Bill 4 (expanding PISA, allowing CWIP for new generation, modifying IRP) and a constructive electric rate order ($355M increase effective June 2025), enhance regulatory certainty and support timely cost recovery for significant planned investments.
• Emerging economic development opportunities, particularly substantial data center interest (2.3 GW signed agreements), represent a significant tailwind for load growth (5.5% CAGR expected in Missouri) that necessitates accelerated generation and infrastructure investment, further bolstering the investment thesis.
• The company's strategic focus on a balanced energy mix, including significant planned additions of natural gas, renewables, battery storage, and future nuclear, aims to ensure reliability and meet clean energy targets while supporting growing demand.
• While facing risks such as regulatory appeals, environmental compliance costs, and capital market volatility, Ameren's strong balance sheet, proactive financing strategy (including annual equity issuances), and disciplined cost management position it to navigate challenges and deliver on its growth objectives.

The Foundation of Power: Strategy, Structure, and Competitive Positioning

Ameren Corporation, established in 1881, operates as a public utility holding company with a strategic footprint primarily across Missouri and Illinois. Its structure comprises distinct, rate-regulated subsidiaries: Ameren Missouri (vertically integrated electric and natural gas), Ameren Illinois (electric transmission and distribution, natural gas distribution), and ATXI (FERC-regulated electric transmission). This model dictates that Ameren's financial health and ability to return capital to shareholders are intrinsically linked to the performance and regulatory frameworks governing these subsidiaries.

For over a decade, Ameren's strategic compass has pointed towards three core pillars: investing in rate-regulated energy infrastructure, enhancing regulatory frameworks and advocating for responsible energy policy, and optimizing operating performance. This approach has been foundational to delivering value, focusing on grid modernization, reliability enhancements, and the complex transition to cleaner energy sources. The retirement of the Rush Island Energy Center in October 2024, following years of litigation and regulatory processes, exemplifies the ongoing operational and regulatory challenges inherent in this sector, yet also highlights the company's ability to navigate complex issues and secure recovery mechanisms like securitization.

In the competitive landscape, Ameren operates within the regulated utility sector, where direct competition for service territory is limited by geographic monopolies. However, it competes for capital, talent, and the ability to serve evolving customer needs against peers like AES Corporation (AES), Public Service Enterprise Group (PEG), Duke Energy Corporation (DUK), and The Southern Company (SO). While precise, directly comparable market share figures for all niche competitors are not publicly detailed, Ameren holds an estimated 2-4% aggregate market share in the U.S. regulated electric utility sector.

Compared to peers, Ameren exhibits solid financial stability, often demonstrating better net margins (TTM 15.31% vs. AES 14%, PEG 17%, DUK 15%, SO 16%) and a competitive P/E ratio (TTM 21.37x). Its regulated model in the Midwest provides a degree of revenue predictability. However, Ameren has historically lagged some peers, like AES and PEG, in the scale and speed of renewable energy adoption and certain technological efficiencies in grid operations. For instance, AES's renewable portfolio is proportionally larger, and some peers demonstrate slightly better operational metrics in areas like energy loss rates or project deployment speed. This highlights a vulnerability where competitors with more advanced renewable integration or operational efficiencies could potentially gain a competitive edge in attracting environmentally conscious load or influencing regional energy planning discussions.

Ameren's competitive advantages lie significantly in its established regulatory relationships and the specific frameworks in its service territories, such as Missouri's PISA and Illinois's MYRP. These mechanisms are designed to mitigate regulatory lag and support investment recovery, providing a more stable financial foundation compared to utilities in less favorable regulatory environments.

Central to Ameren's strategy and competitive positioning is its investment in technology. While not possessing a single, proprietary hardware technology like some manufacturers, Ameren's technological differentiation lies in the application of advanced grid technologies and operational systems. This includes:

• Grid Modernization & Automation: Investments in smart grid technologies, including automated switches, are enhancing reliability and resiliency. In the first half of 2024, these technologies prevented over 33,000 customer outages and avoided over 6.4 million minutes of customer outages across Missouri and Illinois during storms. This quantifiable operational improvement directly benefits customers and enhances service quality.
• Clean Energy Technologies: The company is actively integrating utility-scale solar (e.g., 400 MW under development, including Vandalia, Bowling Green, Split Rail), battery storage, and planning for dispatchable natural gas (800 MW Castle Bluff) and future nuclear (1500 MW by 2040). While specific performance metrics for these planned assets are not detailed, the strategic intent is to build a balanced portfolio that ensures reliability during the clean energy transition. R&D initiatives are focused on next-generation technologies like carbon capture, hydrogen fuel, and long-cycle battery storage, with the stated goal of supporting net-zero targets by 2045 and maintaining affordability.
• Operational Optimization: Investments in automation, standardization, and optimization across the business are aimed at driving sustainable cost savings and improving efficiency. Management expects O&M expenses to grow at only around a 1% CAGR over the five-year plan, reflecting the impact of these efforts.

The "so what" for investors is that Ameren's technology strategy, particularly in grid modernization and operational efficiency, translates into tangible benefits like improved reliability and cost control, which are crucial for earning allowed returns within regulated frameworks. While it may not lead the pack in every single technology area compared to specialized firms or larger peers, its integrated approach across generation, transmission, and distribution, supported by regulatory mechanisms, provides a stable platform for investment and growth. The ability to effectively deploy and integrate these technologies is key to capturing future load growth and executing the energy transition plan affordably.

Performance Reflecting Strategy and Opportunity

Ameren's recent financial performance underscores the impact of its strategic focus on infrastructure investment and operational execution, set against a backdrop of supportive regulatory developments and emerging growth opportunities. In the first quarter of 2025, net income attributable to Ameren common shareholders rose to $289 million, or $1.07 per diluted share, an increase of $28 million ($0.09 per diluted share) compared to $261 million, or $0.98 per diluted share, in the prior-year period.

This earnings growth was primarily fueled by increased infrastructure investments across Ameren Missouri, Ameren Transmission, and Ameren Illinois Electric Distribution. Ameren Missouri saw a significant boost from increased retail electric sales volumes, estimated at $0.06 per share, largely attributable to colder winter temperatures in 2025. The absence of a $15 million charge related to the Rush Island Energy Center litigation settlement in 2025 also favorably impacted O&M expenses, contributing positively to earnings, although partially offset by higher storm costs. Ameren Transmission's earnings benefited from a higher allowance for equity funds used during construction, reflecting increased construction work in progress balances.

Segment-level performance highlights the drivers:

• Ameren Missouri: Electric revenues surged by $179 million (+25%) in Q1 2025, propelled by higher off-system sales, capacity, transmission, and FAC revenues (+$165 million), primarily due to higher spring MISO capacity prices ($667/MW-day for Summer 2025 vs $30/MW-day for Summer 2024). Weather added an estimated $38 million to revenues. Natural gas revenues also saw a modest increase of $3 million (+5%) due to colder weather. Net income for the segment increased by $17 million. Capital expenditures were robust at $658 million, a $192 million increase, driven by natural gas and renewable generation investments.
• Ameren Illinois Electric Distribution: Revenues grew by $66 million (+13%), supported by base rate increases (+$22 million), recovery of purchased power costs (+$20 million), and higher bad debt cost recovery (+$13 million). Net income increased by $7 million. Capital expenditures were $167 million.
• Ameren Illinois Natural Gas: Revenues increased by $20 million (+5%), largely due to higher recovery of previously deferred natural gas costs under the PGA. Net income saw a $2 million increase. Capital expenditures were $59 million.
• Ameren Transmission: Revenues increased by $15 million (+10%), driven by higher recoverable expenses (+$19 million) and increased capital investment (+$4 million). Net income saw a significant increase of $17 million. Capital expenditures were $173 million.

Financing costs presented a headwind, increasing by $21 million primarily due to higher short-term debt balances at the parent level and increased debt at the subsidiaries. This underscores the sensitivity to interest rate fluctuations and the need for proactive financing management.

Liquidity remains adequate, with $1.3 billion in net available liquidity as of March 31, 2025. The company is in compliance with its credit agreement covenants, and its credit metrics are expected to support solid investment-grade ratings. Cash flow from operations decreased in Q1 2025 compared to the prior year, influenced by factors like increased interest payments, timing of tax payments, and storm restoration costs, partially offset by strong customer collections. Cash used in investing activities increased significantly due to higher capital expenditures, reflecting the acceleration of the investment plan. Financing activities provided substantial cash, primarily through long-term debt issuances ($1.10 billion) and net commercial paper issuances ($108 million), used to fund capital expenditures and manage debt maturities.

Overall, the Q1 2025 results demonstrate Ameren's ability to translate strategic investments and favorable weather into earnings growth, while managing operational costs and navigating financing pressures. The performance across segments highlights the diversified drivers of growth, with Ameren Missouri benefiting from weather and capacity prices, Ameren Illinois segments from rate adjustments and cost recovery, and Transmission from ongoing investment.

Outlook and the Path Forward: Investment, Growth, and Policy

Ameren's outlook is anchored by its robust capital plan and the expectation of continued constructive regulatory and legislative support. The company has affirmed its 2025 diluted earnings per share guidance range of $4.85 to $5.05, with a focus on achieving the midpoint or higher. This guidance reflects the anticipated benefits from new electric service rates in Missouri effective June 2025 (expected to contribute approximately $100 million year-over-year), higher PISA-eligible investments, and projected increases in weather-normalized retail sales, particularly in the commercial (+1%) and industrial (+2%) sectors in Missouri. These gains are expected to be partially offset by higher interest expenses and the impact of increased weighted-average common shares outstanding.

The cornerstone of Ameren's long-term growth story is its significantly expanded capital expenditure plan, totaling up to $27.4 billion from 2025 through 2029. This plan, which represents a substantial increase from prior forecasts, is designed to support a compound annual rate base growth of 9.2% from 2024 through 2029. The investment is strategically allocated across Ameren Missouri (up to $17.5B), Ameren Illinois (up to $7.0B), and ATXI (up to $2.9B), targeting electric and natural gas utility infrastructure improvements, grid modernization, and the clean energy transition.

A major catalyst for this accelerated investment is the burgeoning economic development pipeline, particularly the demand from data centers. Ameren Missouri has signed construction agreements representing a maximum of 2.3 gigawatts of future data center load, driving an expected 5.5% compound annual sales growth in Missouri from 2025-2029. To serve this growth, the 2025 Change to the 2023 Preferred Resource Plan outlines significant generation additions, including 1600 MW of simple-cycle natural gas by 2030 (including the 800 MW Castle Bluff project), 2100 MW of combined-cycle gas by 2035, 3200 MW of renewables by 2030 (including 400 MW solar projects underway), 1000 MW of battery storage by 2030, and 1500 MW of nuclear by 2040, alongside the retirement of coal and older gas plants. The company expects to file a modified rate structure for large primary service customers in Missouri in Q2 2025 to support these opportunities.

Recent regulatory and legislative successes provide a more favorable backdrop for executing this plan. The enactment of Missouri Senate Bill 4 is particularly impactful, expanding PISA eligibility to new natural gas generation, allowing construction work in progress (CWIP) in rate base for new generation (subject to MoPSC approval), modifying the IRP process to streamline project review, and extending PISA's sunset date. This legislation, coupled with the MoPSC's approval of a $355 million electric rate increase effective June 2025, enhances the predictability and timeliness of cost recovery, mitigating regulatory lag. In Illinois, while facing appeals on the MYRP orders, the company is pursuing reconciliation adjustments and a natural gas rate review, aiming to align rates with investment needs. MISO's long-range transmission planning (Tranche 2.1, 2.2) also presents significant future investment opportunities, with Ameren actively seeking FERC rate incentives for assigned projects.

The financing plan supports this ambitious capital program, with Ameren planning to issue approximately $600 million of equity annually from 2025 to 2029, including through its ATM program and forward sale agreements (5.8 million shares outstanding as of March 31, 2025, expected to settle for $530 million by year-end). This equity strategy, combined with debt issuances and operating cash flow, is designed to maintain a strong balance sheet and support credit ratings.

Despite the positive momentum, risks persist. Regulatory outcomes, particularly the appeals in Illinois and the final decisions in pending rate cases, could impact allowed returns and cost recovery. Environmental compliance, especially regarding evolving EPA regulations on CO2 and MATS, may require significant capital expenditures ($900M-$1B estimated 2025-2029), subject to prudence review and potential regulatory lag. Capital market conditions, supply chain disruptions, and geopolitical events could affect the cost and availability of financing and project execution. The realization of the significant data center load growth is also dependent on customer decisions and regulatory approvals for rate structures.

Ameren's strategic positioning, however, leverages its regulated asset base and constructive regulatory relationships to navigate these challenges. Its focus on operational efficiency, technological deployment (smart grid, automation), and a diversified energy mix aims to ensure reliability and affordability, which are critical for gaining regulatory support and managing customer impacts. The company's commitment to a 55-65% dividend payout ratio reflects confidence in its ability to generate sustainable earnings growth to support shareholder returns.

Conclusion

Ameren Corporation is executing a clear and compelling investment thesis centered on significant, rate-regulated infrastructure investment driven by the fundamental need to enhance grid reliability, facilitate the clean energy transition, and capitalize on robust economic growth opportunities, particularly from the burgeoning data center sector. Recent legislative and regulatory successes in Missouri, coupled with a strong Q1 2025 financial performance, underscore the positive momentum and reinforce confidence in the company's ability to achieve its ambitious capital plan and long-term earnings growth targets.

While challenges such as regulatory uncertainties, environmental compliance costs, and capital market dynamics remain inherent to the utility sector, Ameren's proactive strategic management, disciplined cost controls, and thoughtful financing approach position it favorably. The company's commitment to leveraging technology for operational efficiency and grid resilience, alongside its strategic pursuit of a balanced and cleaner energy portfolio, provides a solid foundation for future value creation. For investors, Ameren offers a compelling total return story, combining a strong growth trajectory, supported by tangible investment opportunities and regulatory alignment, with an attractive and growing dividend. The successful realization of the significant load growth pipeline and continued execution of the capital plan will be key factors to monitor as Ameren powers forward.