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Northeast Utilities (NU - Analyst Report) announced second-quarter 2013 pro forma earnings of 55 cents per share, beating the Zacks Consensus Estimate by 4 cents and year-ago level by 10 cents.

The improvement in earnings was primarily driven by year-over-year rises in Electric Transmission, Electric Distribution and Generation, Connecticut Light and Power Company, NSTAR Electric, Public Service Company of New Hampshire, Western Massachusetts Electric Company, Natural Gas Distribution, and NU parent and other businesses' earnings.

On a GAAP basis, the company reported earnings of 54 cents per share versus 15 cents per share a year ago. The difference between GAAP and pro forma earnings was due to a penny cost associated with the impact of NSTAR merger.

Total Revenue

Northeast Utilities' revenues of $1,636 million beat the Zacks Consensus Estimate by $22 million and prior-year results by 0.4% primarily due to favorable performance from all the segments.

Operational Highlights

Northeast Utilities' overall retail electric sales increased 0.6% year over year to 12,911 Gigawatt hours. The company’s natural gas sales were 15,238 million cubic feet, up 12.9% year over year.

Northeast Utilities’ total operating expenses decreased 12.5% year over year to $1.3 billion primarily due to lower purchased power, fuel and transmission costs, and operations and maintenance expenses. In addition, decline in the amortization of rate reduction bonds was also responsible for the lower expense.

Financial Update

As of Jun 30, 2013, Northeast Utilities had cash balance of $36.1 million compared with $45.7 million as of Dec 31, 2012.

Long-term debt as of Jun 30, 2013 was $7.7 billion versus $7.2 billion as of Dec 31, 2012.

Net cash flows provided by operating activities during the first six months of 2013 were $769 million, significantly higher than $320.4 million reported in the year-ago comparable period.

In the first half of 2013, capital expenditures increased to $700.3 million from $690.4 million a year ago.

Guidance

Northeast Utilities narrowed its full-year 2013 earnings guidance in the range of $2.45 to $2.60 per share from the prior guidance of $2.40 and $2.60 per share.

Other Company Releases

American Electric Power Co. Inc. (AEP - Analyst Report) reported second-quarter pro forma earnings of 73 cents per share that missed the Zacks Consensus Estimate by 4 cents.

Entergy Corporation (ETR - Analyst Report) is slated to release its second-quarter earnings on Jul 30. The Zacks Consensus Estimate is $1.02.

Exelon Corporation (EXC - Analyst Report) is slated to release its second-quarter earnings on Jul 31. The Zacks Consensus Estimate is 55 cents.

Our View

In second-quarter 2013, Northeast Utilities experienced positive impacts from the NSTAR-merger. Both NSTAR Electric and NSTAR Gas Company performed well. We believe this merger will continue to support the company to increase its scale of operations, which will subsequently help to serve a wider customer base.

In addition, Northeast Utilities expects the Greater Springfield Reliability project to contribute significantly in 2013 as it will be online by this year.

However, stringent regulations and over dependence on transmission and distribution businesses, may to some extent, restrict Northeast Utilities’ future performance.

Hartford, Conn. and Boston, Mass.-based Northeast Utilities provides energy delivery services to residential, commercial and industrial customers in Connecticut, New Hampshire and Massachusetts. The company currently has a Zacks Rank #3 (Hold).

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