NextEra Energy, Inc. (NEE) announced third-quarter 2014 adjusted earnings of $1.55 per share, surpassing the Zacks Consensus Estimate of $1.54 by just a cent. On a year-over-year basis, earnings climbed 8.4%, primarily due to higher revenue from Florida Power & Light Company.
On a GAAP basis, NextEra Energy recorded earnings of $1.50 per share compared with $1.64 per share a year ago. The variance between the adjusted and GAAP earnings, during the quarter, was due to 2 cent impact of unrealized mark-to-market loss from non-qualifying hedges, other than temporary impairments on certain investments and a 3-cent loss associated with Spain Solar projects.
Total Revenue
In the third quarter, NextEra Energy’s operating revenue was $4,654 million, beating the Zacks Consensus Estimate by 6.4%. Quarterly revenues increased 5.9% from $4,394 million a year ago.
Segmental Results
Florida Power & Light Company (FPL): In the third quarter, the segment reported revenues of $3,315 million, up 9.8% from the year-ago figure. This was primarily driven by an increase in retail sales due to a combination of customer growth and higher average sales price.
NextEra Energy Resources (NEER): Segmental revenues were $1,242 million, down 3.0% year over year. The downside was primarily due to lower sales from the gas infrastructure business, partially offset by higher revenues from the expanded renewable business.
Corporate and Other: The segment’s quarterly revenues were $97 million compared with $93 million a year ago.
Operational Update
In the quarter under review, NextEra Energy’s total operating expenses shot up 8.8% year over year to $3,491 million. This was primarily due to higher fuel, purchased power and interchange expenses as well as depreciation and amortization expenses.
Total operating income decreased around 1.9% to $1,163 million from $1,185 million a year ago.
The company’s interest expenses in the reported quarter were $316 million versus $288 million in the prior-year quarter primarily due to a rise in long-term debt.
Financial Update
NextEra Energy had cash and cash equivalents of $485 million as of Sep 30, 2014 compared with $438 million as of Dec 31, 2013.
Long-term debts as of Sep 30, 2014 were $25.0 billion versus around $24.0 billion as of Dec 31, 2013.
NextEra Energy’s cash flow from operating activities during the first nine months of 2014 was $3.97 billion compared with $3.39 billion in the year-ago period.
Business Update
FPL continues making progress on the Port Everglades Clean Energy Center. It is expected to be operational in mid-2016. It is one of the three combined-cycle natural gas generation modernization projects.
NEER got contracts for 445 megawatts (MW) of renewable projects.
The company has entered into a joint venture with EQT Corp. (EQT), which is called Mountain Valley Pipeline joint venture (JV). The JV will own the Mountain Valley Pipeline and will be responsible for its construction.
Guidance
NextEra Energy has maintained its 2014 adjusted earnings projection in the range of $5.15–$5.35 per share.
In 2015, the company expects earnings to be in the range of $5.40-$5.70 per share.
For 2016, the company reiterated its earnings guidance in the range of $5.50–$6.00 per share.
Other Peer Releases
CMS Energy Corp. (CMS) reported third-quarter 2014 earnings per share of 37 cents on an adjusted basis lagging the Zacks Consensus Estimate of 41 cents by 9.8%.
American Electric Power Company Inc. (AEP) reported third-quarter 2014 operating earnings of $1.01 per share, missing the Zacks Consensus Estimate of $1.03 by 1.9%.
Our Take
NextEra Energy delivered an upbeat performance in the reported quarter. Both earnings and revenues beat the estimates. Moreover, the company has strong financials. It has also profited from its strategy of expanding its renewable portfolio and will witness a boost in its revenues going forward.
NextEra Energy currently has a Zacks Rank #3 (Hold).
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