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NextEra Energy Inc. (NEE - Analyst Report) announced third-quarter 2013 operating earnings of $1.43 per share, up 13.5% from the year-ago quarter. Reported earnings also breezed past the Zacks Consensus Estimate by 3 cents.

The encouraging results were due to the company’s effective execution of development projects, continual customer additions and service start-up of renewable contracted projects.

NextEra Energy recorded GAAP earnings of $1.64 per share in the third quarter compared with 98 cents per share in the year-ago period.

The difference between operating and GAAP earnings, during the quarter, was due to an 18 cent impact from unrealized mark-to-market loss from non-qualifying hedges and 3 cents gain from operating results of the Spain solar project.

Total Revenue

NextEra Energy’s total operating revenue for third-quarter 2013 was $4,394.0 million, up 14.3% from $3,843.0 million reported in the year-ago period. This was driven by a rise in total energy sales volume and increased production from its natural gas infrastructure.

Reported quarter revenue however lagged the Zacks Consensus Estimate by $17.0 million.

Segment Results

Florida Power & Light (FPL): Revenue for third-quarter 2013 was $3,020.0 million versus $2,975.0 million in the prior-year quarter, reflecting an increase of 1.5%. Continued growth-centric investments and steady economic backdrop in Florida were the key factors driving FPL’s returns.

However, decline in retail sales owing to mild weather and low power prices partially offset the above positives.

NextEra Energy Resources: Revenue in the third quarter was $1,281.0 million, up 58.5% from $808.0 million in the year-ago quarter. The substantial upswing stemmed from a 125 MW Canadian wind project which came online during the quarter.  

Corporate and Other: Revenue for third-quarter 2013 was $93.0 million, up 55% from $60.0 million in the year-ago period.

Operational Update

Total operating expenses during the quarter increased 3.5% year over year to $3,209.0 million. This was mainly due to 5.4% and 29.6% jump in operations and maintenance expenses as well as depreciation and amortization charges, respectively.

Total operating income in the third quarter climbed 59.7% year over year to $1,185.0 million. The sharper rise in revenue more than offset the cost increase leading NextEra Energy to book substantial profit.

Interest expenses in the third quarter of 2013 were $288.0 million versus $259.0 million at the end of third quarter 2012.

Financial Update

Cash and cash equivalents as of Sep 30, 2013 were $558.0 million, increasing from $329.0 million as of Dec 31, 2012.

Long-term debts as of Sep 30, 2013 were $23,862.0 million versus $23,177.0 million as of Dec 31, 2012.

Cash flow from operating activities in the nine months ending Sep 30, 2013 was $3,390.0 million compared with $3,157.0 million in the nine months ending Sep 30, 2012.


NextEra Energy anticipates 2013 earnings to be in the upper half of its guidance range of $4.70 to $5.00 per share. For 2014, the company expects 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.

Other Utility Company Releases

Xcel Energy Inc. (XEL - Analyst Report) posted earnings per share of 77 cents, exceeding the Zacks Consensus Estimate by a penny.

Wisconsin Energy Corp. (WEC - Analyst Report) reported third quarter 2013 earnings of 60 cents per share, beating the Zacks Consensus Estimate by 4 cents.

Our View

NextEra Energy posted favorable earnings result in the third quarter of 2013, outpacing our expectation while revenue was a drag. The visible recovery of the Florida economy will continue to offer potential sales growth.

The recent agreement to purchase the 250 megawatt Silver State South Project from First Solar Inc. (FSLR - Analyst Report) will further expand the company’s already premier renewable asset base. In addition, NextEra Energy’s lofty investments in developing its natural gas infrastructure will draw lucrative returns for the company.

However, commodity price sensitivities might act as a deterrent to the company’s growth. Currently, NextEra Energy carries a Zacks Rank #3 (Hold).

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