NextEra Energy, Inc. (NEE) announced fourth-quarter 2014 adjusted earnings of $1.03 per share, missing the Zacks Consensus Estimate of $1.04 by just a cent. On a year-over-year basis, earnings climbed 8.4% on the heels of higher revenues across all segments.
Earnings for 2014 came in at $5.30 per share, lower than the Zacks Consensus Estimate of $5.32 per share but 6.6% ahead of 2013 earnings.
On a GAAP basis, NextEra Energy recorded fourth-quarter earnings of $2.00 per share compared with 75 cents per share a year ago. The variance between adjusted and GAAP earnings, during the quarter, was due to a 99 cent impact of unrealized mark-to-market gain from non-qualifying hedges and a 2-cent loss associated with Spain Solar projects.
Total Revenue
In the fourth quarter, NextEra Energy’s operating revenues were $4,664 million, outpacing the Zacks Consensus Estimate by 20.5%. Quarterly revenues surged 28.5% from $3,630 million a year ago.
Revenues for 2014 were reported at $17.0 billion, surpassing the Zacks Consensus Estimate of $16.4 billion by 4.8%. Revenue figure also escalated 12.5% from last year.
Segmental Results
Florida Power & Light Company (FPL): In the fourth quarter, the segment reported revenues of $2,682 million, up 5.5% from the year-ago figure. This was primarily driven by an increase in wholesale power sales due to a combination of customer growth and higher average sales price.
NextEra Energy Resources (NEER): Revenues from this segment shot up nearly 90% from the prior-year quarter to $1,880 million. The upside was attributable to higher revenues from the expanded renewable business and improvements in customer supply. The positives were, however, partially offset by lower sales from the gas infrastructure business.
Corporate and Other: The segment’s quarterly revenues were $102 million compared with $99 million a year ago.
Operational Update
In the quarter under review, NextEra Energy’s total operating expenses increased 4.8% year over year to $3,132 million. This was primarily due to higher fuel, purchased power and interchange expenses as well as depreciation and amortization expenses and impairment charges.
Total operating income more than doubled to $1,532 million from $641 million a year ago.
The company’s interest expenses in the reported quarter were $320 million as against $296 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 $577 million as of Dec 31, 2014, compared with $438 million as of Dec 31, 2013.
Long-term debts as of Dec 31, 2014, were $24.4 billion, up from $24.0 billion as of Dec 31, 2013.
NextEra Energy’s cash flow from operating activities in 2014 was $5.5 billion compared with $5.1 billion in 2013.
Business Update
FPL continues to make progress on the Port Everglades Clean Energy Center. It is expected to be operational in mid-2016. The next-generation project comprising three combined-cycle natural gas turbines is touted to bring about energy efficiency.
FPL also won the approval of the Florida Public Service Commission (PSC) for investing in long-term natural gas supplies.
In 2014, NEER expanded its renewable portfolio by 1,629 megawatts (“MW”) comprising1,364 MW of wind energy and 265 MW of solar energy.
The joint venture with EQT Corp. (EQT), which is called Mountain Valley Pipeline joint venture (JV), is in its permitting process. The project is expected to go online by the end of 2018.
Guidance
NextEra reiterated its 2015 earnings guidance inthe range of $5.40–$5.70 per share.
For 2016, the company increased its earnings guidance to the range of $5.75–$6.25 per share from an earlier projection of $5.50–$6.00 per share.
Upcoming Peer Releases
CMS Energy Corp. (CMS) is slated to release fourth-quarter and 2014 earnings results on Jan 29, before the market opens. The Zacks Consensus Estimate for the quarter is pegged at 36 cents.
American Electric Power Company Inc. (AEP) is set to release fourth-quarter and 2014 earnings before the opening bell on Jan 28. The Zacks Consensus Estimate for the quarter is 52 cents.
Our Take
Though NextEra Energy delivered impressive top-line figures it missed out on earnings for both the quarter and the full year.
The company has some projects under construction waiting to come online in the near term. NextEra’s renewable expansion initiative has particularly been impressive, which will help the company meet regulatory mandates on carbon emission. However, increasing operating expense is a matter of concern.
NextEra Energy currently has a Zacks Rank #4 (Sell).
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