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Northeast Utilities (NU - Analyst Report) announced first-quarter 2013 pro forma earnings of 73 cents per share, beating the Zacks Consensus Estimate by 8 cents and year-ago level by 30.4%.

Improvement in earnings was primarily driven by 72.6%, 13.4%, 59%, 36.2%, 31% and 194.6% year-over-year rises in Electric Transmission, Electric Distribution and Generation, Connecticut Light and Power Company, Public Service Company of New Hampshire, Western Massachusetts Electric Company and Natural Gas Distribution segments’ earnings, respectively. In addition, NSTAR Electric and NU parent and other businesses also contributed significantly.

On a GAAP basis, the company reported earnings of 72 cents per share versus 56 cents per share a year ago. The difference between GAAP and pro forma earnings was due to a penny cost associated with the NSTAR merger.

Total Revenue

The company’s revenues of $1,995 million beat the Zacks Consensus Estimate by $88 million. Quarterly revenues increased 81.4% year over year owing to favorable performance from all the segments.

First Quarter Operational Highlights

Northeast Utilities' overall retail electric sales increased 3.2% year over year to 13,796 Gigawatt hours. The company’s natural gas sales were 39,422 million cubic feet, up 21.8% year over year.

Northeast Utilities’ total operating expenses increased 78.1% year over year to $1.6 billion primarily due to higher purchased power, fuel and transmission costs, operations and maintenance costs as well as depreciation expenses. In addition, the company’s spending under its Energy Efficiency Programs was also responsible for this higher expense.

Financial Update

As of Mar 31, 2013, Northeast Utilities had cash balance of $60.8 million compared with $45.7 million as of Dec 31, 2012.

Long-term debt as of Mar 31, 2013 was $7.0 billion versus $7.2 billion as of Dec 31, 2012.

Net cash provided by operating activities during the first three months of 2013 was $473.1 million, significantly higher than $8.8 million in the year-ago comparable period.

Capital expenditures increased to $389 million from $304.3 million a year ago.

Guidance

Northeast Utilities reaffirmed its full-year 2013 earnings guidance in the range of $2.40 to $2.60 per share.

Other Utility Company Releases

Exelon Corporation (EXC - Analyst Report) announced first quarter operating earnings of 70 cents per share, beating the Zacks Consensus Estimate by 2 cents.

Entergy Corporation (ETR - Analyst Report) reported first quarter operational earnings of 94 cents per share that came at par with the Zacks Consensus Estimate.

American Electric Power Co. Inc. (AEP - Analyst Report) reported first quarter earnings of 80 cents per share that were in line with the Zacks Consensus Estimate.

Our View

In first-quarter 2013, Northeast Utilities experienced positive impacts from its recently completed NSTAR-merger. Both NSTAR Electric as well as NSTAR Gas Company performed well. We believe this merger continues to aid the company to increase its scale of operations and serve a wider customer base in the future.

In addition, the company expects its Greater Springfield Reliability project to contribute significantly in 2013 as it will be online by this year. Western Massachusetts Electric Company’s improvement in earnings primarily generated from this project as its 345 kilovolt (kV) portion energized in the first quarter.

However, over dependence on transmission and distribution businesses, and stringent regulations, may to some extent restrict the company’s 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 #2 (Buy).

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