Northeast Utilities (NU), currently operating as Eversource Energy (from Feb 2, 2015), reported fourth-quarter 2014 adjusted earnings of 72 cents per share, topping the Zacks Consensus Estimate of 69 cents by 4.3%. On a year-over-year basis, earnings increased 26.3% from 57 cents per share.
The Electric Transmission, Electric Distribution/Generation and Natural Gas Distribution segments reported improvement in earnings, which primarily drove bottom-line growth. This was however, partially offset by lower contribution from the Eversource Parent and Other Companies segments.
On a GAAP basis, the company’s earnings per share stood at 69 cents compared with 56 cents a year ago. The difference between adjusted and GAAP earnings was due to an after-tax integration charge of 3 cents.
For 2014, Eversource Energy posted adjusted earnings of $2.65 per share, missing the Zacks Consensus Estimate of $2.68 by 1.1%. Earnings, however, increased 4.7% from the prior-year figure of $2.53 per share.
The company’s annual GAAP earnings came in at $2.58 per share, higher than $2.49 per share a year ago.
Revenues
In the fourth quarter, Eversource Energy posted operating revenues of $1.88 billion, beating the Zacks Consensus Estimate by 31.8%. Reported revenues also jumped 5.8% year over year.
The company’s 2014 revenues of $7.74 billion surpassed the Zacks Consensus Estimate by 4.6% and increased 6% from prior-year figure.
Quarterly Operational Highlights
In the quarter under review, Eversource Energy’s sales volume for retail electricity distribution decreased 2.8% year over year to 13,004 gigawatt-hours. Over the same period, the company’s natural gas distribution volume was 27,855 million cubic feet, down 4.8% year over year. Milder weather primarily led to a decline in retail electricity and natural gas sales volume.
Total operating expenses increased 2.4% year over year to $1,450.9 million, primarily due to higher purchased power, fuel and transmission expenses, and depreciation. This was partially offset by a decline in operations and maintenance expenses.
Operating income at the end of the quarter stood at $430.3 million, up 19.3% from $360.7 million a year ago.
The company’s interest expenses increased around 2% year over year to $89.9 million.
Business Update
In 2014, Eversource Energy added over 10,600 natural gas heating customers to its business.
The company invested around $723 million at several of its electricity transmission ventures.
Guidance
Eversource Energy provided its guidance for 2015 earnings in the range of $2.75–$2.90 per share, considering the rate case outcome of The Connecticut Light and Power Company, transmission rate base growth, rise in natural gas customers and reduction in operations and maintenance expenses. The company expects earnings growth of 6%–8% through 2018 over 2014-level.
Eversource Energy plans to invest around $10.1 billion as capital expenditure between 2014 and 2018.
A Peer Release
PPL Corporation (PPL) reported fourth-quarter 2014 adjusted earnings of 58 cents per share, surpassing the Zacks Consensus Estimate of 51 cents by 13.7%.
Our View
The company’s rebranding was aimed to consolidate all of its units in order to function as a single entity – Eversource Energy. Going forward, this plan will allow the company to expand its energy delivery system as well as improve reliability and customer service, besides serving more customers. Eversource Energy will start trading on the New York Stock Exchange under the ticker symbol “ES” instead of “NU”, effective from Feb 19, 2015.
Eversource Energy is also progressing on its Access Northeast project in partnership with Spectra Energy Corp. (SE) and Spectra Energy Partners, LP (SEP). This project will allow the company to meet increasing natural gas demand in New England.
Eversource Energy currently has a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment