NextEra Miss Q4 Earnings by a Penny

Zacks

NextEra Energy Inc. (NEE) announced fourth-quarter 2013 operating earnings of 95 cents per share, missing the Zacks Consensus Estimate by a penny. The quarterly figure also lagged 7.8% from the year-ago profit of $1.03.

NextEra Energy recorded GAAP earnings of 75 cents in the fourth quarter compared with $1.02 per share in the year-ago period.

NextEra Energy anticipated its 2013 earnings to be in the upper half of its guidance range of $4.70 to $5.00 per share. The earnings for the year came in at $4.97 per share, on the higher end of the guidance range. The bottom line was 0.4% higher than the Zacks Consensus Estimate of $4.95 and 8.7% higher than the prior year.

A strong finish of the financial year is attributed to the company's effective execution of development projects, continual customer additions and service start-up of renewable contracted projects.

GAAP earnings for 2013 were $4.47 versus $4.56 in the previous year. The difference between operating and GAAP earnings, during the year, was due to a 13 cents impact from unrealized mark-to-market loss from non-qualifying hedges, 80 cents impact from impairment, 1 cent loss of Spain solar project and 44 cents gain from discontinued operations.

Total Revenue

NextEra Energy's total operating revenue for fourth-quarter 2013 was $3.63 billion, up 7.6% from $3.37 billion reported in the year-ago period. Reported quarter revenue lagged the Zacks Consensus Estimate of $3.88 million by 6.5%.

Total revenue of $15.1 billion in 2013 missed the Zacks Consensus Estimate of $15.56 billion by 2.7%. However, the topline was 6.2% higher than the year-ago figure of $14.2 billion.

Highlights of the Quarter

Total operating expenses during the quarter increased 13.1% year over year to $2.98 billion. This was mainly due to 5.9% and 15.3% increase in other operations and maintenance expenses as well as taxes other than incomes taxes, respectively.

The increasing expenses had a negative impact on operating income of the company.

Total operating income in the quarter decreased 12.4% year over year to $0.64 billion.

Interest expenses in the fourth quarter of 2013 were $0.29 billion increasing 21.8% from $0.24 billion from the year ago period. The increase in the interest expense was due to the increase in the debt level of the company compared to previous year.

Net earnings in the quarter were $0.41 billion versus $0.43 billion in year ago quarter.

Segment Results

Florida Power & Light (:FPL): Revenue for fourth-quarter 2013 was $2.54 billion versus $2.33 billion in the prior-year quarter, reflecting an increase of 9%.

Net earnings for the quarter were 57 cents versus 61 cents in the year ago quarter. The 6.5% year over year decline was primarily due to transition costs associated with Project Momentum. This initiative was taken to improve productivity.

NextEra Energy Resources: Revenue in the fourth quarter was $0.99 billion, up 2.5% from $0.96 billion in the year-ago quarter.

Net Earnings for the quarter were 40 cents versus 42 cents in the year ago quarter. The 4.8% year over year decline was primarily due to higher corporate general and administrative expenses, partly offset by greater contributions from new investments.

Corporate and Other: Revenue for fourth-quarter 2013 was $99.0 million, up 35.6% from $73.0 million in the year-ago period.

In the reported quarter this segment negatively impacted earnings per share by 2 cents, compared to no impact in the comparable quarter of the prior year.

Financial Update

Cash and cash equivalents as of Dec 31, 2013 were $438.0 million, increasing from $329.0 million as of Dec 31, 2012.

Long-term debts as of Dec 31, 2013 were $23.96 billion versus $23.17 billion as of Dec 31, 2012.

Cash flow from operating activities in the 2013 was $5.09 billion increasing 27.7% compared with $3.99 billion in 2012. Free cash flow in 2013 was $2.41 billion, which we believe will help the company to distribute regular dividends.

Guidance

NextEra Energy anticipates 2014, earnings to be in the range of $5.05-$5.45 per share.

NextEra Energy continues to project compounded annual earnings growth rate of 5% to 7% through 2016 with 2012 as the base period.

The company presently has a backlog of nearly 785 Megawatt (MW) of solar projects in U.S., which it intends to complete within 2016.

NextEra also has a backlog of 466 MW wind project in Canada, which it aims to brings online with 2015.

Other Upcoming Releases

Xcel Energy Inc. (XEL) is expected to release its fourth quarter 2013 financial results on Jan 30, 2014. The Zacks Consensus Estimate is 29 cents.
    
Wisconsin Energy Corp. (WEC) is expected to release its fourth quarter 2013 financial results on Feb 6, 2014. The Zacks Consensus Estimate is 57 cents.

Exelon Corp. (EXC) is expected to release its fourth quarter 2013 financial results on Feb 6, 2014. The Zacks Consensus Estimate is 53 cents.

Our View

NextEra Energy missed fourth quarter results by a penny but surpassed 2013 estimates by two cents. Even though the company missed fourth quarter earnings estimates, we expect the initiatives taken by NextEra to improve efficiency will benefit the company as we move forward.

The strong positives for NextEra are its ability to complete development projects with in scheduled time, improving Florida economy and increase in customer base which are likely to act as its tailwind going forward.  

NextEra Energy currently has a Zacks Rank #3 (Hold).

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