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COPEL (ELP) Swings to Earnings in Q3 on Higher Revenues
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Companhia Paranaense de Energia (ELP - Free Report) or COPEL reported net earnings of R$389.8 million ($123.4 million) in third-quarter 2017 versus net loss of R$75.1 million ($23.1 million) incurred in the year-ago quarter.
The bottom-line results were driven by higher revenues, rise in financial income and growth in operational income, partially offset by higher operating costs and expenses.
Earnings per share came in at R$1.40 or 44 cents per American Depository Receipt (ADR), significantly above loss of R$0.32 or 10 cents per ADR in the year-ago quarter.
Revenues
COPEL’s net operating revenues in the quarter were R$3,643.7 million ($1,153.1 million), reflecting year-over-year growth of 25%.
The top-line improvement was primarily driven by growth of 11.8% in electricity sales to final customers, 16.7% in electricity sales to distributors, 57.9% in sales derived from use of main distribution and transmission grid and 29.3% in revenues from telecommunications.
However, these positives were partially offset by a decline of 45.6% in construction revenues, 56.9% in fair value of assets from the indemnity for the concession, 1.1% in sales derived from distribution of piped gas and 9.9% in other operating revenues.
Electricity Sales
COPEL’s electricity sales to final customers include Copel Distribuicao’s sales in the captive market and Copel Geracao e Transmissao’s sales in the free market.
The company’s electricity sales to final customers inched up 0.8% year over year to 6,302 gigawatt hours in the quarter. The improvement was driven by 3.6% growth in Residential consumption segment, 5.1% in Rural and 2.7% in Other segment, partially by 2.2% fall in Industrial segment. Commercial segment’s sales were flat year over year.
Expenses/Income
COPEL’s operating costs and expenses in the quarter increased 15.8% year over year to R$3,159.7 million ($999.9 million). Expenses, as a percentage of revenues, were 86.7% compared with 93.6% in the year-ago quarter.
The company recorded an increase of 66.8% in costs. This was due to electricity purchased for resale, rise of 3.1% in personnel and management costs, 39.9% costs related to materials and supplies for power electricity, 21.1% in natural gas and supplies costs for the gas business, 2.2% in materials and supplies costs, 1.6% rise in depreciation and amortization and 46.8% surge in other costs and expenses.
However, the impact of higher costs and expenses was partially offset by a decline of 15.1% in charge of the main distribution and transmission grid, 12% in costs related to pension and healthcare plans, 1% in third-party services costs and 49.4% fall in construction costs.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were R$485.6 million ($153.7 million), down 25.9% year over year. Adjusted EBITDA margin was 13.3% in the quarter.
Balance Sheet & Cash Flow
Exiting the third quarter, COPEL had cash and cash equivalents of R$1,305.4 million ($413.1 million), down from R$1,423.9 million ($443.6 million) at the prior-quarter end. Loans, financing and debentures decreased 4.2% sequentially to R$6,249.3 million ($1,977.6 million).
In the first nine months of 2017, the company generated net cash of R$1,184.2 million ($373.6 million) from its operating activities, reflecting a decline of 10% from the year-ago period. Capital used for addition of property, plant and equipment totaled R$753.4 million ($237.7 million), down 19.7% year over year.
During the period, the company distributed approximately R$203.8 million ($64.3 million) as dividends and interest on equity.
Outlook
For 2017, COPEL plans to use R$2,331.3 million in capital expenditures (revised down from R$2,877 million in September). Of the total, roughly R$1,024.5 million will be used for the Generation and Transmission business, R$559.2 million for the Distribution business and R$200.3 million for the Telecommunications business. The rest will be utilized for improving other businesses.
Consolidated Edison’s earnings expectations for 2018 have improved over the past 60 days. Its earnings are predicted to grow 3% in the next three to five years.
Atlantic Power pulled off an average positive earnings surprise of 29.21% for the last four quarters. Bottom-line estimates for 2017 and 2018 have improved in the last 60 days.
DTE Energy delivered an average positive earnings surprise of 3.81% in the last four quarters. Also, earnings expectations for the stock improved for 2017 and 2018 in the last 60 days.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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COPEL (ELP) Swings to Earnings in Q3 on Higher Revenues
Companhia Paranaense de Energia (ELP - Free Report) or COPEL reported net earnings of R$389.8 million ($123.4 million) in third-quarter 2017 versus net loss of R$75.1 million ($23.1 million) incurred in the year-ago quarter.
The bottom-line results were driven by higher revenues, rise in financial income and growth in operational income, partially offset by higher operating costs and expenses.
Earnings per share came in at R$1.40 or 44 cents per American Depository Receipt (ADR), significantly above loss of R$0.32 or 10 cents per ADR in the year-ago quarter.
Revenues
COPEL’s net operating revenues in the quarter were R$3,643.7 million ($1,153.1 million), reflecting year-over-year growth of 25%.
The top-line improvement was primarily driven by growth of 11.8% in electricity sales to final customers, 16.7% in electricity sales to distributors, 57.9% in sales derived from use of main distribution and transmission grid and 29.3% in revenues from telecommunications.
However, these positives were partially offset by a decline of 45.6% in construction revenues, 56.9% in fair value of assets from the indemnity for the concession, 1.1% in sales derived from distribution of piped gas and 9.9% in other operating revenues.
Electricity Sales
COPEL’s electricity sales to final customers include Copel Distribuicao’s sales in the captive market and Copel Geracao e Transmissao’s sales in the free market.
The company’s electricity sales to final customers inched up 0.8% year over year to 6,302 gigawatt hours in the quarter. The improvement was driven by 3.6% growth in Residential consumption segment, 5.1% in Rural and 2.7% in Other segment, partially by 2.2% fall in Industrial segment. Commercial segment’s sales were flat year over year.
Expenses/Income
COPEL’s operating costs and expenses in the quarter increased 15.8% year over year to R$3,159.7 million ($999.9 million). Expenses, as a percentage of revenues, were 86.7% compared with 93.6% in the year-ago quarter.
The company recorded an increase of 66.8% in costs. This was due to electricity purchased for resale, rise of 3.1% in personnel and management costs, 39.9% costs related to materials and supplies for power electricity, 21.1% in natural gas and supplies costs for the gas business, 2.2% in materials and supplies costs, 1.6% rise in depreciation and amortization and 46.8% surge in other costs and expenses.
However, the impact of higher costs and expenses was partially offset by a decline of 15.1% in charge of the main distribution and transmission grid, 12% in costs related to pension and healthcare plans, 1% in third-party services costs and 49.4% fall in construction costs.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were R$485.6 million ($153.7 million), down 25.9% year over year. Adjusted EBITDA margin was 13.3% in the quarter.
Balance Sheet & Cash Flow
Exiting the third quarter, COPEL had cash and cash equivalents of R$1,305.4 million ($413.1 million), down from R$1,423.9 million ($443.6 million) at the prior-quarter end. Loans, financing and debentures decreased 4.2% sequentially to R$6,249.3 million ($1,977.6 million).
In the first nine months of 2017, the company generated net cash of R$1,184.2 million ($373.6 million) from its operating activities, reflecting a decline of 10% from the year-ago period. Capital used for addition of property, plant and equipment totaled R$753.4 million ($237.7 million), down 19.7% year over year.
During the period, the company distributed approximately R$203.8 million ($64.3 million) as dividends and interest on equity.
Outlook
For 2017, COPEL plans to use R$2,331.3 million in capital expenditures (revised down from R$2,877 million in September). Of the total, roughly R$1,024.5 million will be used for the Generation and Transmission business, R$559.2 million for the Distribution business and R$200.3 million for the Telecommunications business. The rest will be utilized for improving other businesses.
Companhia Paranaense de Energia (COPEL) Price
Companhia Paranaense de Energia (COPEL) Price | Companhia Paranaense de Energia (COPEL) Quote
Market Capitalization & Key Picks
COPEL currently has a $1.9 billion market capitalization. Some major players in the industry are Consolidated Edison Inc. (ED - Free Report) , Atlantic Power Corporation and DTE Energy Company (DTE - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Consolidated Edison’s earnings expectations for 2018 have improved over the past 60 days. Its earnings are predicted to grow 3% in the next three to five years.
Atlantic Power pulled off an average positive earnings surprise of 29.21% for the last four quarters. Bottom-line estimates for 2017 and 2018 have improved in the last 60 days.
DTE Energy delivered an average positive earnings surprise of 3.81% in the last four quarters. Also, earnings expectations for the stock improved for 2017 and 2018 in the last 60 days.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>