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NextEra Earnings Beat, Sales Lag

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NextEra Energy Inc. (NEE - Free Report) announced first-quarter 2013 operating earnings of $1.12 per share, up 9.8% from the year-ago quarter. Earnings topped the Zacks Consensus Estimate by 10.9%.

The earnings growth can be attributed to consistent customer expansion, favorable returns from investments and timely execution of utility scale projects.

NextEra Energy recorded GAAP earnings of 64 cents per share in the first quarter compared with $1.11 per share in the year-ago period.

The difference of 48 cents between operating and GAAP earnings, during the first quarter, was due to a 44 cent gain from discontinued operations, a penny gain from other than temporary impairments, an 81 cent impairment charge and valuation allowance as well as a 12 cent loss associated with mark-to-market non-qualifying hedges.

Total Revenue

NextEra Energy’s total operating revenue for first-quarter 2013 was $3,279.0 million, down 2.7% from $3,371.0 million reported in the year-ago period. This was on account of a weak merchant generation business in the Energy Service segment.

Reported quarter revenue also trailed the Zacks Consensus Estimate by 8.6%.

Segment Results

Florida Power & Light (FPL): Revenue for first-quarter 2013 was $2,188.0 million versus $2,224.0 million in the prior-year quarter, reflecting a marginal decline of 1.6%. The lower revenue in the first quarter resulted from moderate energy prices.

NextEra Energy Resources: Revenue in the first quarter was $1,016.0 million, down by 6.8% from $1,090.0 million in the year-ago quarter. This was due to lower contribution from the wind generation business.

Corporate and Other: Revenue for first-quarter 2013 was $75.0 million versus $57.0 million in the year-ago period, up 31.6%.

Operational Update

Total operating expenses during the quarter increased 10.8% year over year to $2,845.0 million.

Total operating income in the first quarter declined 46% year over year to $434.0 million. The sharper increase in costs combined with a revenue fall led to plummeting profits.

Interest expenses in the first quarter of 2013 were $272.0 million versus $265.0 million at the end of first quarter 2012.

Financial Update

Cash and cash equivalents as of Mar 31, 2013 were $215.0 million, down from $329.0 million as of Dec 31, 2012.

Long-term debts as of Mar 31, 2013 were $22.9 billion versus $23.2 billion as of Dec 31, 2012.

Cash flow from operating activities as of Mar 31, 2013 was $1,082.0 million compared with $835.0 million as of Mar 31, 2012.


NextEra Energy retained its prior earnings expectation for 2013 in the range of $4.70 to $5.00 per share. The company estimates compounded annual earnings growth rate of 5% to 7% through 2016 with 2012 as the base period.

Other Utility Company Releases

Dominion Resources Inc. (D - Free Report) reported operating earnings of 83 cents per share in the first quarter 2013, lower than the Zacks Consensus Estimate of 89 cents per share.

CMS Energy Corp. (CMS - Free Report) posted adjusted earnings of 53 cents, higher than the Zacks Consensus Estimate of 46 cents per share.

TECO Energy Inc. is slated to release its first quarter 2013 earnings results on May 1. The Zacks Consensus Estimate for the quarter is pegged at 17 cents per share.

Our View

NextEra Energy reported mixed financial results in the first quarter 2013. The company’s massive modernization efforts which are expected to boost its power service reliability will ensure a solid customer base.

NextEra’s Cape Canaveral Next Generation Clean Energy Center came online at the end of Apr 2013 which is likely to accentuate returns in the upcoming quarters. Its renewable business will also gain traction driven by the company’s plans to add greater wind and solar capacity.

However, tighter pro-environment regulations might pose challenges to the company’s growth prospects. Presently, NextEra Energy carries a Zacks Rank #3 (Hold).

Based in Juno Beach, FL, NextEra Energy Inc., through its subsidiaries, engages in the generation, transmission, distribution and sale of electric energy in Florida.

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