NextEra Energy Inc. (NEE) announced second-quarter 2013 operating earnings of $1.46 per share, up 15.9% from the year-ago quarter. Earnings topped the Zacks Consensus Estimate by 12.3%.
The earnings growth can be attributed to consistent customer additions and higher contribution from operational start-up of new assets.
NextEra Energy recorded GAAP earnings of $1.44 per share in the second quarter compared with $1.45 per share in the year-ago period.
The difference between operating and GAAP earnings, during the second quarter, was due to a 2 cent impact from unrealized mark-to-market loss from non-qualifying hedges.
Total Revenue
NextEra Energy’s total operating revenue for second-quarter 2013 was $3,833.0 million, up 4.5% from $3,667.0 million reported in the year-ago period. This was driven by strong retail sales from Florida Power & Light and healthy performance by NextEra Energy Resources.
Reported quarter revenue however lagged the Zacks Consensus Estimate by 2.1%.
Segment Results
Florida Power & Light (FPL): Revenue for second-quarter 2013 was $2,696.0 million versus $2,580.0 million in the prior-year quarter, reflecting a 4.5% upturn. Continued growth-centric investments and improved service quality via the commencement of modernized Cape Canaveral Next Generation Clean Energy Center were the key factors driving FPL’s returns.
NextEra Energy Resources: Revenue in the second quarter was $1,046.0 million, up 1.5% from $1,030.0 million in the year-ago quarter. Increased generation from the Seabrook Station and the Texas assets as well as encouraging wind generation fetched good returns for NextEra Energy.
Corporate and Other: Revenue for second-quarter 2013 was $91.0 million versus $57.0 million in the year-ago period, up 59.6%.
Operational Update
Total operating expenses during the quarter increased 6.9% year over year to $2,852.0 million. This was mainly attributable to a 2.1% and 49.2% escalation in fuel and purchased power expenses as well as depreciation and amortization charges, respectively.
Total operating income in the second quarter fell 2% year over year to $981.0 million. The sharper increase in costs combined with a revenue fall led to lower profits.
Interest expenses in the second quarter of 2013 were $266.0 million versus $270.0 million at the end of second quarter 2012.
Financial Update
Cash and cash equivalents as of Jun 30, 2013 were $411.0 million, increasing from $329.0 million as of Dec 31, 2012.
Long-term debts as of Jun 30, 2013 were $23.5 billion versus $23.2 billion as of Dec 31, 2012.
Cash flow from operating activities in the six months ending Jun 30, 2013 was $2,250.0 million compared with $1,928.0 million in the six months ending Jun 30, 2012.
Outlook
NextEra Energy retained its prior earnings expectation for 2013 in the range of $4.70 to $5.00 per share. The company anticipates earnings to be on the higher end of the guidance range in 2013. NextEra Energy estimates compounded annual earnings growth rate of 5% to 7% through 2016 with 2012 as the base period.
Other Utility Company Releases
Xcel Energy Inc. (XEL) is set to release its second quarter 2013 earnings on Aug 1, 2013. The Zacks Consensus Estimate for the quarter is 38 cents per share.
Dominion Resources Inc. (D) is scheduled to release its second quarter 2013 earnings on Aug 6, 2013. The Zacks Consensus Estimate for the quarter is 65 cents per share.
TECO Energy Inc. (TE) is slated to release its second quarter 2013 earnings results on Aug 1, 2013. The Zacks Consensus Estimate for the quarter is pegged at 26 cents per share.
Our View
NextEra Energy posted mixed financial results in the second quarter 2013. The company’s modernization efforts at its Port Everglades and Riviera Beach facilities will further enhance its service reliability. This will certainly lead to customer retention.
Furthermore, NextEra Energy’s lofty solar and wind contracted projects will lend substantial upside to future growth. Also, the 3.6% rise in renewable consumption in 2013 as per the Energy Information Administration will encourage the company to engage in more renewable endeavors.
However, weak electricity prices continue to pose challenges to the company’s prospects. Presently, NextEra Energy carries a Zacks Rank #3 (Hold).
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