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NV Energy Beats Earnings and Sales

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Diversified utility NV Energy Inc.’s (NVE) second quarter 2013 operating earnings per share were 31 cents, 24% higher than the Zacks Consensus Estimate of 25 cents and up 6.9% from the comparable year-ago figure of 29 cents.

The year-over-year improvement in earnings was driven by increase in usage, growth in the customer base and a decline in interest expenses.

GAAP earnings in the quarter were 27 cents compared with 29 cents in the comparable year-ago period. The difference between operating and GAAP earnings was due to a one-time merger related cost of 4 cents.


Operating revenues were $731.6 million, beating the Zacks Consensus Estimate of $693 million by 5.6%. However, revenues fell short of the year-ago quarter figure by 1.2%.

Operational Highlights

Total operating expenses increased 0.4% year over year to $562 million primarily owing to an increase in the cost of fuel used for power generation.

The decline in revenues and increase in expenses impacted the operating margins of the company. Operating margin in the reported quarter declined 125 basis points year over year.

Financial Update

As of Jun 30, 2013, NV Energy had a cash balance of $261.1 million compared with $298.3 million as of Dec 31, 2012.

Long-term debt as of Jun 30, 2013 was $4.5 billion versus $4.7 billion as of Dec 31, 2012.

The company continues to generate cash. Free cash flow at the end of first half 2013 was $36.5 million, up 17.3% from the year-ago period.


NV Energy reiterated its full-year 2013 earnings in the range of $1.25 to $1.35 per share.

Other Company Releases

American Electric Power Co. Inc. (AEP) reported second quarter earnings of 73 cents per share, missing the Zacks Consensus Estimate by 5.19%.

DTE Energy Company (DTE) reported second quarter 2013 earnings per share of 62 cents, missing the Zacks Consensus Estimate of 79 cents by 21.5%.

Our View

NV Energy continues to perform well and its strategic investments are strengthening its generation and transmission capacities. The company registered positive earnings surprises in five out of the last six quarters.

During the second quarter the company entered into a definite agreement with MidAmerican Energy Holdings Company, a subsidiary of Berkshire Hathaway Inc. (BRK.A). Per the agreement, the Berkshire Hathaway unit will take over NV Energy – the transaction already being approved by the Board of Directors of both companies. This merger will lend NV Energy additional resources and the financial strength to expand its operations. The transaction is expected to close in the first quarter of 2014, subject to the approval of NV Energy’s shareholders and other regulatory go-aheads.

The company was able to register a 1.2% year-over-year increase in the customer base in the reported quarter. This was accompanied by an improvement in sales volume. NV Energy’s solid performance allows it to generate ample free cash flow, which could be utilized to expand its operation, along with payment of increased dividends to its shareholders.

Las Vegas, Nev.-based NV Energy and its subsidiaries engage in the generation, transmission, distribution and sale of electric energy in Nevada. The company currently has a Zacks Rank #3 (Hold).

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