Northeast Utilities Beats on Earnings & Revs

Zacks

Northeast Utilities (NU) announced first-quarter 2014 adjusted earnings of 76 cents per share, surpassing the Zacks Consensus Estimate by a penny. The reported earnings edged up 4.1% year over year, primarily on the back of higher operating revenues and a decrease in depreciation expenses.

On a GAAP basis, the company posted earnings of 74 cents per share compared with 72 cents per share. The difference between GAAP and adjusted earnings was due to an integration charge of 2 cents.

Revenues

In first-quarter 2014, Northeast Utilities' operating revenues of $2,290.6 million beat the Zacks Consensus Estimate of $1,940 million by 18.1%. Quarterly revenues climbed 14.8% from $1,995 million a year ago.

Segmental Highlights

Northeast Utilities’ quarterly earnings from Natural Gas Distribution and Electric Distribution and Generation segments increased 20.3% and 12.8% year over year, respectively. This was partially offset by a decrease in earnings from the company’s NU Parent and Other Companies (down 63.9% year over year) and Electric Transmission (down 6.3% year over year) divisions.

Operational Highlights

In the quarter under review, Northeast Utilities’ total operating expenses climbed 15.7% year over year to $1,822.9 million, mainly due to a rise in purchased power, fuel and transmission costs, and higher operations and maintenance expenses.

The company’s operating income was $467.7 million, up 11.6% from $418.9 million a year ago.

In first-quarter 2014, Northeast Utilities' overall retail electricity distribution volume edged up 4% year over year to 14,348 Gigawatt hours. The company’s natural gas distribution volume was 45,550 million cubic feet, up 15.5% year over year.

Financial Position

As of Mar 31, 2014, Northeast Utilities had cash and cash equivalents of $89.2 million, up from $43.4 million as of Dec 31, 2013.

Long-term debt as of Mar 31, 2014 was $8,318.3 million versus $7,776.8 million as of Dec 31, 2013.

In the first three months of 2014, net cash flows provided by operating activities were $493.8 million versus $473.1 million in the year-ago comparable period.

Guidance

Northeast Utilities reiterated its 2014 earnings guidance in the range of $2.60 – $2.75 per share.

Other Company Releases

NiSource Inc. (NI) reported first-quarter 2014 operating net earnings of 82 cents per share, surpassing the Zacks Consensus Estimate by 5.3%.

PPL Corporation (PPL) reported its first-quarter 2014 earnings from ongoing operations of 80 cents per share, surpassing the Zacks Consensus Estimate of 68 cents by 17.6%.

Public Service Enterprise Group Inc. (PEG) reported first-quarter 2014 earnings of $1.01 per share, beating the Zacks Consensus Estimate of 97 cents by 4.1%.

Our View

Higher electricity and natural gas distribution volumes as a result of colder-than-normal temperature in winter season led to the quarterly earnings and revenues surge.

Northeast Utilities continues with its systematic investment program to expand its scale of operations. These initiatives will enable the company to meet the increasing customer demand as well as provide reliable services.

In addition, Northeast Utilities’ practice of payment of dividends at regular intervals will help it to retain investors’ attention.

Northeast Utilities currently has a Zacks Rank #3 (Hold).

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