NextEra Energy Inc. (NEE) announced third-quarter 2010 operating earnings of $1.45 per share compared with $1.38 per share in the year-ago quarter. The results of the company outstripped the Zacks Consensus Estimate, as provided by 14 coverings analysts, by 2 cents.
NextEra Energy recorded GAAP earnings for the third quarter of 2010 of $1.74 per share compared with $1.31 per share in the year-ago period. The difference of 29 cents between operating and GAAP earnings, during the third quarter, was due to mark-to-market effects of non-qualifying hedges and other than temporary impairments on certain investments, both of which relate to NextEra Energy Resources.
Total Revenue
NextEra Energy’s total operating revenue for third-quarter 2010 was $4.7 billion versus $4.4 billion reported in the year-ago period reflecting a growth of 4.9%. The year-over-year increase in total revenue was due to higher contribution from NextEra Energy Resources.
The actual results of the company surpassed the Zacks Consensus Estimate of $4.4 billion by $0.3 billion.
Segmental Results
FloridaPower & Light: Total segment revenue for third-quarter 2010 was $3.1 billion versus $3.3 billion in third-quarter 2009, reflecting a decline of 5.6%. Total energy sales during the current quarter were 31, 817 million kilowatt/hr (KWh) compared with 30,750 million KWh in third-quarter 2009.
Despite a year-over-year increase in power sales, the revenue contribution from this business declined due to the reduction in the average unit sales price. The average price per KWh sold in the third quarter of 2010 was slashed by 1.38 cents to 9.74 cents from the third-quarter 2009 level of 11.12 cents.
NextEra Energy Resources: Total revenue for third-quarter 2010 was $1,528 million versus $1,136 million in third-quarter 2009, reflecting a growth of 34.5%. The third quarter results were driven by the addition of new wind projects, improved performance of existing assets and gains from the gas infrastructure business.
Corporate and Other: Total revenue for third-quarter 2010 was $47 million versus $36 million in third-quarter 2009, increasing 30.6%.
Operational Update
Total operating expenses during the reported quarter eased by 1.6% year over year. The reduction in operating expenses was primarily owing to an 8% year-over-year decline in input costs.
At the end of the third quarter of 2010, interest expenses for NextEra declined by $37 million year over year to $91 million.
Financial Update
The company ended the quarter with a strong cash balance. Cash and cash equivalents as of September 30, 2010, were $791 million versus $164 million as of September 30, 2009.
Long-term debt of the company as of September 30, 2010, was $17.7 billion versus $16.3 billion as of December 31, 2009.
Outlook
NextEra Energy maintained its earnings guidance of $4.25 to $4.65 per share for 2010, but expects earnings to come in on the lower end. For 2011, adjusted earnings are expected to remain in the range of $4.25 to $4.55 per share. NextEra expects earnings to grow at an average rate of 5% to 7% from 2009 through 2014.
Our View
Counting among the positives, for the quarter, was Florida Power & Light Company’s ability to increase the average customer level by 27,000, leading to an overall 3% spike in KW/h sales.
We also appreciate the gradual increase in green power assets of NextEra Energy. The company added 1,260 megawatt (MW) of new wind generation capacity to its portfolio over the last twelve months.
The company is expected to add between 700 to 1,000 MW of new wind generation in 2011 and also received necessary regulatory approval to go ahead with its 250 MW Genesis solar project.
NextEra Energy currently retains a Zacks #3 Rank (short-term Hold rating). We maintain our long-term Neutral rating on the stock.
Based in Juno Beach, Florida, NextEra Energy Inc., through its subsidiaries, engages in the generation, transmission, distribution and sale of electric energy in Florida.
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