Duke Energy Corporation DUK reported first-quarter 2015 adjusted earnings of $1.24 per share that outpaced the Zacks Consensus Estimate of $1.12 by 10.7%. Quarterly earnings also increased nearly 6% year over year.
GAAP earnings came in at $1.22 per share as against a GAAP loss of 14 cents per share in the first quarter of 2014. The variance between the pro forma and GAAP numbers in the reported quarter was due to a 2 cent impact from discontinued operations.
Duke Energy benefitted from cold winter temperatures and a strong operational performance.
Total Revenue
In the first quarter, total revenues of $6,065 million lagged the Zacks Consensus Estimate of $6,374 million by 4.8%. Even on a year-over-year basis, revenues declined 3.2%.
The regulated electric unit’s revenues were $5,457 million (down 1.7%), representing approximately 90% of the company’s total revenues. Its non-regulated electric, natural gas, and other segment generated revenues of $377 million, down 23.2% year over year. Revenues from its regulated natural gas business were $231 million, up 4.1% from the year-ago level.
Operational Update
The company’s total operating expenses were $4,623 million in the first quarter, down 5.7% from the year-ago quarter. Costs declined on account of lower fuel expenses in both regulated and non-regulated businesses. Absence of any impairment charge this quarter also helped to lower overall expenses.
Operating income during the quarter climbed 6.9% year over year to $1,456 million.
Interest expense remained more or less flat at $403 million compared with $404 million in the first quarter of 2014.
Quarterly Segmental Highlights
Regulated Utilities: Segment income in the quarter was $774 million, up 5% from $737 million a year ago. The upside can be attributed to increased wholesale net margins and favourable rider adjustments.
International Energy: Income of $36 million from this segment tanked 72.3% from the year-ago level. The decline was due to unfavorable results in Latin America, particularly lower volumes and higher purchased power costs in Brazil.
Commercial Power: This segment recorded operating income of $1 million in the quarter as compared to a loss of $32 million in the year-ago period. Improved results reflect higher earnings from the Midwest coal and gas generation fleets and higher PJM capacity prices.
Other: The segment includes corporate interest expenses not allocated to the other business units, results from Duke Energy’s captive insurance company and income tax levelization adjustments.
Net expenses were $37 million, significantly down from $87 million in the year-ago quarter.
Financial Update
As of Mar 31, 2015, the company had cash & cash equivalents of $2,821 million, up from $2,036 million as of Dec 31, 2014.
Long-term debt stood at $37.17 billion (excluding current maturities) compared with $37.21 billion as of Dec 31, 2014.
Net cash from operating activities in the first quarter was $1,455 million compared with $1,373 million recorded last year. The company’s capital expenditure was $1,454 million in the first quarter, up from $1,268 million in the prior-year period.
Guidance
The company reaffirmed its 2015 adjusted earnings guidance in the range of $4.55 to $4.75 per share.
At the Peers
Xcel Energy Inc. XEL recorded operating earnings of 46 cents per share in the first quarter of 2015, missing the Zacks Consensus Estimate of 50 cents by 8%.
NextEra Energy, Inc. NEE announced first-quarter 2015 adjusted earnings of $1.41 per share, beating the Zacks Consensus Estimate of $1.28 by 10.2%.
American Electric Power Company Inc. AEP reported first-quarter 2015 operating earnings of $1.28 per share, beating the Zacks Consensus Estimate of $1.11 by 15.3%.
Zacks Rank
Duke Energy presently holds a Zacks Rank #3 (Hold).
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