Crude Oil ( ) Brent Crude ( ) Natural Gas ( ) S&P 500 ( ) PHLX Oil ( )
 November 13, 2015 - 5:18 PM EST
Print Email Article Font Down Font Up
Emera Reports Earnings for Q3 2015

Emera (TSX: EMA) today reported results for the third quarter of 2015.

Reported Earnings (including after-tax mark-to-market impacts)

  • Reported net income in Q3 2015 was $35.0 million (versus $28.2 million in Q3 2014).
  • Reported earnings per share in Q3 2015 were $0.24 (versus $0.20 in Q3 2014).
  • Excluding mark-to-market impacts, the impact of acquisition costs in 2015 and a dilution gain in 2014, adjusted earnings per share(1) were $0.30 in Q3 2015 versus $0.28 in Q3 2014.

Adjusted Earnings (excluding after-tax mark-to-market impacts)

  • Adjusted net income(1) in Q3 2015 was $23.3 million (versus $49.9 million in Q3 2014).
    • Q3 2015 adjusted net income(1) included $20.1 million after-tax in acquisition costs related to the pending acquisition of TECO Energy Inc. (TECO Energy).
    • Q3 2014 adjusted net income(1) included a $9.1 million after-tax gain on dilution of Emera’s equity investment in Algonquin Power & Utilities Corp. (APUC).
    • Excluding these items, Q3 2015 adjusted net income(1) was $43.4 million versus $40.8 million in Q3 2014.
  • Excluding mark-to-market impacts, adjusted earnings per share(1) in Q3 2015 were $0.16 (versus $0.35 in Q3 2014).

Q3 Highlights

  • On September 4, 2015 Emera announced a definitive agreement to acquire TECO Energy for an aggregate purchase price of approximately US$10.4 billion, including the consolidation of approximately US$3.9 billion of debt.
    • Expected to be significantly accretive to earnings per common share by approximately 5% in the first full year of operations (2017)a and growing to more than 10% by the third full year (2019)a.
    • The acquisition provides additional support to Emera’s 8% dividend growth target through 2019 and positions Emera to extend the dividend growth target beyond 2019.

“While the quarter was, as expected, impacted by costs relating to the acquisition of TECO Energy, the underlying performance of the business remains strong and on track with our expectations,” said Chris Huskilson, President and CEO of Emera Inc. “The acquisition of TECO Energy advances a number of Emera’s short and long-term objectives. The earnings and cash accretion resulting from this acquisition, combined with the visible earnings growth for the merged businesses, provides strong growth well into the next decade.”

a Within a stable currency exchange environment; for additional assumptions, see “Forward Looking Information” noted below. (1)See “Non-GAAP Measures” noted below.


Consolidated Financial Highlights (in millions of $CAD, except per share amounts)

   

Three months ended
September 30

 

Nine months ended
September 30

    2015     2014   2015     2014
Operating revenues $ 654.0 $ 562.4 $ 2,091.3 $ 2,179.3
Net income attributable to common shareholders $ 35.0 $ 28.2 $ 205.1 $ 255.5
Earnings per common share - basic $ 0.24 $ 0.20 $ 1.41 $ 1.79
         
After-tax mark-to-market gain (loss) $ 11.7   ($21.7)   ($37.8) $ 14.8
Adjusted EBITDA(1)* $ 182.3 $ 202.3 $ 772.4 $ 718.5
Adjusted net income attributable to common shareholders(1)* $ 23.3 $ 49.9 $ 242.9 $ 240.7
Adjusted earnings per common share – basic(1)* $ 0.16 $ 0.35 $ 1.67 $ 1.68
         
Other items affecting earnings per common share – basic:        
Costs related to pending acquisition of TECO Energy   ($0.14)   -   ($0.14)   -

Gain on dilution of APUC Equity Investment

  - $ 0.06   - $ 0.06

Gain on sale of Northeast Wind Partnership II, LLC investment

  -   - $ 0.08   -
Barbados Light & Power Company Limited Restructuring Costs   -   -   ($0.04)   -
Effect of Foreign Currency Translation (adjusted earnings per share(1))i $ 0.03 $ 0.01 $ 0.13 $ 0.07
         
Dividends per common share declared $ 0.8750 $ 0.7500 $ 1.6625 $ 1.4750
Total Assets (as at September 30) $ 10,973.0 $9,407.0
Weighted average shares of common stock outstanding - basic (millions of shares for the three months ended September 30)   146.0 143.6

(1)See “Non-GAAP Measures” noted below.

*Adjusted EBITDA(1), Adjusted net income(1) and Adjusted earnings per common share(1) excludes the effect of mark-to-market adjustments.

iEffect of foreign currency translation compared quarter-over-quarter and year to date-over-year to date.

Items Affecting Earnings in the Quarter

Acquisition-Related Costs
In Q3 2015, Emera incurred acquisition and financing costs of $20.1 million after-tax ($0.14 per common share) related to the pending acquisition of TECO Energy.

Gain on Dilution of APUC Equity Investment
In Q3 2014, APUC closed a 16.86 million common share offering. In addition, an over-allotment option of 2.52 million common shares was exercised. As a result, Emera recorded a gain of $9.1 million in after-tax earnings ($0.06 per common share).

Consolidated Highlights

Operating revenues increased 16.3% to $654.0 million in Q3 2015 compared to the same period last year. The increase was primarily due to mark-to-market changes, the strengthening of the USD and increased revenue at Emera Energy’s New England Gas Generating Facilities and collection of prior year fuel costs at Nova Scotia Power Inc. (NSPI). The increase was partially offset by decreased revenues at Barbados Light & Power Company Limited (BLPC) due to lower fuel revenues as a result of lower commodity fuel prices.

Adjusted net income(1) decreased to $23.3 million in Q3 2015 (Q3 2014: $49.9 million), primarily due to acquisition related costs on the pending TECO Energy acquisition, a dilution gain in 2014 from Emera’s equity investment in APUC, and timing at NSPI. The decrease was partially offset by the strengthening USD and the increased electricity sales at the New England Gas Generating Facilities. For the nine months ended September 30th, 2015, adjusted net income increased $2.2 million to $242.9 million, compared to $240.7 million for the same period last year, with the year-over-year increase primarily due to the performance of the New England Gas Generating Facilities, a stronger USD, a gain on the sale of Emera’s interest in Northeast Wind Partnership and increased equity earnings from Bear Swamp. These increases were partially offset by acquisition related costs, decreased trading and marketing margins relative to the strong results in 2014 at Emera Energy, and restructuring cost impacts at BLPC.

After-tax mark-to-market adjustments positively affected net income by $11.7 million or $0.08 per common share in Q3 2015, primarily due to favorable changes in gas and power contract positions. Year-to-date after-tax mark-to-market adjustments decreased net income by $37.8 million or $0.26 per common share.

Cash flow from operations decreased $1.5 million to $583.8 million for the nine months ending September 30th 2015 compared to the same period last year. The decrease was primarily due to lower trading and marketing margin at Emera Energy Services, payment of acquisition related costs on the pending TECO Energy acquisition and demand side management costs deferred at NSPI. This was partially offset by the performance of the New England Gas Generating Facilities and collection of prior year fuel costs at NSPI.

Segmented Results

Emera reports its results in six operating segments: Nova Scotia Power Inc., Emera Maine, Emera Caribbean, Pipelines, Emera Energy, and Corporate & Other.

Quarterly Segmented Results (in millions of $CAD, except per share amounts)

    Adjusted Net Income(1)
  Q3 2015   Q3 2014   YTD 2015   YTD 2014
Nova Scotia Power Inc. $4.9 $10.9 $89.8 $94.8
Emera Maine $14.7 $13.3 $39.9 $30.7
Emera Caribbean $13.6 $8.2 $27.2 $22.6
Pipelines* $10.3 $8.7 $29.5 $24.2
Emera Energy* $14.9 $10.7 $94.7 $76.9
Corporate & Other $(35.1) $(1.9) $(38.2) $(8.5)
TOTAL $23.3 $49.9 $242.9 $240.7
Adjusted EPS (basic)(1) $0.16 $0.35 $1.67 $1.68

*Adjusted net income(1) excludes after-tax mark-to-market gain in Emera Energy and Pipelines of $11.7 million in Q3 2015 (Q3 2014, after-tax mark-to-market loss of $21.7 million). YTD 2015 Adjusted net income(1) excludes after-tax mark-to-market loss of $37.8 million (YTD 2014, after-tax mark-to-market gain of $14.8 million)

Nova Scotia Power Inc.’s net income was $4.9 million in Q3 2015, a decrease of $6.0 million from $10.9 million in Q3 2014. The decrease is primarily due to timing; NSPI’s earnings for the full year are expected to grow modestly compared to 2014. NSPI’s net income for year-to-date was $89.8 million compared to $94.8 million for the same period last year.

Emera Maine contributed $14.7 million to consolidated net income in Q3 2015, an increase of $1.4 million compared to Q3 2014 net income of $13.3 million. The higher net income was primarily due to the impact of a stronger USD. For the nine months ended September 30th, 2015 Emera Maine’s net income was $39.9 million compared to $30.7 million for the same period last year.

Emera Caribbean’s net income of $13.6 million in Q3 2015 represents an increase of $5.4 million compared to Q3 2014 income of $8.2 million. The increase was primarily due to a decrease in OM&G at Grand Bahama Power Company Limited (GBPC), reduced maintenance costs and payroll savings at BLPC, and the strengthening foreign currencies. In Q3 2014, OM&G was affected by a planned outage at GBPC. Emera Caribbean’s net income year-to-date was $27.2 million compared to $22.6 million for the same period last year.

Pipelines’ net income, adjusted to exclude mark-to-market changes, was $10.3 million in Q3 2015, an increase of $1.6 million over Q3 2014. The increase was primarily due to lower interest expense and increased transmission revenue from M&NP and the impact of a stronger USD. Pipelines’ adjusted net income for the nine months ended September 30th, 2015 was $ 29.5 million, an increase of $5.3 million over the same period last year.

Emera Energy’s net income, adjusted to exclude mark-to-market changes, was $14.9 million in Q3 2015 compared to $10.7 million in the same quarter last year. The $4.2 million increase was primarily due to increased electricity sales quarter over quarter, and lower income tax expense. In Q3 2014, Bridgeport Energy was offline to complete a major outage and upgrade. This increase was partially offset by a decrease in trading and marketing margin and increased interest expense as a result of higher interest rates. Emera Energy’s adjusted net income increased to $94.7 million for the nine months ending September 30th, 2015 (YTD 2014: $76.9 million).

Corporate & Other’s net loss was $35.1 million in Q3 2015 compared to a loss of $1.9 million in Q3 2014. The higher loss was primarily due to $29.2 million in items affecting earnings quarter-over-quarter attributable to $20.1 million (after-tax) of acquisition related costs on the pending acquisition of TECO Energy and a $9.1 million after-tax gain on dilution of Emera’s equity investment in APUC recorded in Q3 2014.The quarter-over-quarter variance was also due to higher deferred compensation partially affected by Emera’s higher share price. Corporate and Other recorded a loss of $38.2 million year-to-date compared to a loss of $8.5 million for the same period last year.

(1) Non-GAAP Measures

Emera uses financial measures that do not have standardized meaning under USGAAP and may not be comparable to similar measures presented by other entities. Emera calculates the non-GAAP measures by adjusting certain GAAP and non-GAAP measures for specific items the Company believes are significant, but not reflective of underlying operations in the period. Refer to the Non-GAAP Financial Measures section of our Management's Discussion and Analysis ("MD&A") for further discussion of these items.

Forward Looking Information

This news release contains forward looking information. Actual future results may differ materially. Additional information related to Emera, including the company’s Annual Information Form, can be found on SEDAR at www.sedar.com.

Teleconference Call

The company will be hosting a teleconference Monday, November 16, 2015 at 12:00pm Atlantic time (11:00am Toronto/Montreal/New York; 10:00am Winnipeg; 9:00am Calgary; 8:00am Vancouver) to discuss the Q3 2015 financial results.

Analysts and other interested parties in North America wanting to participate in the call should dial 1 (888) 241-0394 at least 10 minutes prior to the start of the call. International participants wanting to participate should dial (647) 427-3413. No pass code is required. The teleconference will be recorded. If you are unable to join the teleconference live, you can dial for playback, toll-free at 1-855-859-2056. The Conference ID is 56514308 (available until midnight, December 4, 2015).

The teleconference will also be web cast live at emera.com and available for playback for one year.

About Emera

Emera Inc. is geographically diverse energy and services company headquartered in Halifax, Nova Scotia with approximately $11 billion in assets and 2014 revenues of $2.97 billion. The company invests in electricity generation, transmission and distribution, as well as gas transmission and utility energy services. Emera's strategy is focused on the transformation of the electricity industry to cleaner generation and the delivery of that clean energy to market. Emera has investments throughout northeastern North America, and in four Caribbean countries. Emera continues to target having 75-85% of its adjusted earnings come from rate-regulated businesses. Emera common and preferred shares are listed on the Toronto Stock Exchange and trade respectively under the symbol EMA, EMA.PR.A, EMA.PR.B, EMA.PR.C, EMA.PR.E, and EMA.PR.F and the instalment receipts are listed and trade under the symbol EMA.IR. Additional Information can be accessed at www.emera.com or at www.sedar.com.

Emera
Scott LaFleur, 902-428-6375
Manager, Investor Relations


Source: Business Wire (November 13, 2015 - 5:18 PM EST)

News by QuoteMedia
www.quotemedia.com