NextEra Posts Impressive Q1 Earnings Beat

Zacks

NextEra Energy Inc. (NEE) announced first-quarter 2014 operating earnings of $1.26 per share, up 12.5% from the year-ago quarter. Reported earnings also outstripped the Zacks Consensus Estimate by 17 cents.

The encouraging results are attributable to robust operational performance, steady customer additions on the back of a recovering Florida economy and effective execution of renewable contracted projects.

NextEra Energy recorded GAAP earnings of 98 cents per share in the first quarter compared with 64 cents per share in the year-ago period.

The difference between operating and GAAP earnings, during the quarter, was due to a 28 cent impact from unrealized mark-to-market loss from non-qualifying hedges, a 3 cent gain associated with Maine fossil assets and a 3 cent loss from Spain Solar projects.

Total Revenue

NextEra Energy’s total operating revenue for first-quarter 2014 was $3,674 million, up 12.0% from the year-ago period. This was driven by an 8.7% rise in Florida Power & Light’s (FPL) total energy sales volume.

Reported quarter revenue also surpassed the Zacks Consensus Estimate by 1.4%.

Segment Results

FPL: Revenue for first-quarter 2014 was $2,535 million, up 15.9% from the year-ago period. This was driven by a 4.4% increase in retail sales from the prior-year quarter resulting from a combination of customer growth and higher average sales price.

NextEra Energy Resources: Revenue was $1,034 million, up 1.8% from the year-ago quarter. This was due to growth in renewable contracted programs and favorable contributions from wind assets, partially offset by volatile market conditions.

Corporate and Other: Revenue was $105 million, up 40% from $75 million in the year-ago period.

Operational Update

Total operating expenses increased 3.2% year over year to $2,936 million. This was mainly due to a 31.2% jump in fuel purchased and power cost.

Total operating income in the first quarter shot up 70% year over year to $738 million. The sharp rise in revenue more than offset the cost increase leading NextEra Energy to book substantial profit.

Interest expenses in the first quarter of 2014 were ($319) million versus ($272) million at the end of first quarter 2013.

Financial Update

Cash and cash equivalents as of Mar 31, 2014 were $488 million, increasing from $438 million as of Dec 31, 2013.

Long-term debts as of Mar 31, 2014 were $23,824 million versus $23,969 million as of Dec 31, 2013.

Cash flow from operating activities during the quarter was $1,017 million compared with $1,082 million in the year-ago quarter.

Outlook

NextEra Energy maintained its 2014 earnings guidance range of $5.05 to $5.45 per share. For 2016, it projects earnings in the range of $5.50 to $6.00 per share.

Other Company Releases

NRG Energy Inc. (NRG) is slated to release its first quarter earnings on May 6, 2014. The Zacks Consensus Estimate is pegged at a loss of 12 cents.

Calpine Corp. (CPN) is slated to release its first quarter earnings on May 1, 2014. The Zacks Consensus Estimate stands at a loss of 7 cents per share.

Wisconsin Energy Corp. (WEC) reported first quarter 2014 earnings of 91 cents per share, beating the Zacks Consensus Estimate by 9.6%.

Our View

NextEra Energy reported both earnings and revenue beat in the first quarter backed by a gradual improvement in the Florida economy. The coming quarters will see the company gaining from the operational start-up of its Riviera Beach Next Generation Clean Energy Center and the Cape Canaveral facilities.

Moreover, NextEra Energy’s unrelenting expansion of its renewable generation portfolio will bode well for future growth. Currently, NextEra Energy carries a Zacks Rank #3 (Hold).

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