NextEra Energy Inc. (NEE) announced fourth-quarter 2010 operating earnings of 80 cents per share compared with 79 cents per share in the year-ago quarter. The results of the company fell below the Zacks Consensus Estimate, as provided by 16 coverings analysts, by 7 cents.
The 2010 operating earnings of the company were $4.30 per share compared with $4.05 per share reported in 2009. The results of the company lagged behind the Zacks Consensus Estimate by 4 cents.
NextEra Energy recorded GAAP earnings for the fourth quarter of 2010 of 63 cents per share compared with 85 cents per share in the year-ago period. The difference of 17 cents between operating and GAAP earnings, during the fourth 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 fourth-quarter 2010 was $3.4 billion versus $3.6 billion reported in the year-ago period reflecting a decline of 6.6%. The year-over-year decrease in total revenue was due to lower contribution from Florida Power & Light.
Reported quarter revenue also missed the Zacks Consensus Estimate of $4.1 billion by $0.7 billion.
NextEra Energy’s total operating revenue for 2010 was $15.3 billion versus $15.6 billion reported in the year-ago period reflecting a decline of 2.1%. Despite a positive contribution from NextEra Energy Resources and Corporate & Others segments, the year-over-year top-line decline was primarily due to lower contributions from Florida Power & Light.
Fiscal year 2010 revenue fell $1.1 billion short of the Zacks Consensus Estimate of $16.4 billion.
Quarterly Highlights
Segment Results
Florida Power & Light: Total segment revenue for fourth-quarter 2010 was $2.5 billion versus $2.7 billion in fourth-quarter 2009, reflecting a decline of 10.6%. Total energy sales during the current quarter were 24,487 million kilowatt/hr (KWh) compared with 25,146 million KWh in fourth-quarter 2009.
Despite a year-over-year growth in customer base by 27,000, the revenue contribution from this business segment failed to measure up because of a reduction in the average unit sales price as well as a fall in overall consumption during the quarter. The average price per KWh sold in the fourth quarter of 2010 was slashed by 1.55 cents to 9.72 cents from the fourth-quarter 2009 level of 11.27 cents.
NextEra Energy Resources: Total revenue for fourth-quarter 2010 was $897 million versus $862 million in fourth-quarter 2009, reflecting a growth of 4.1%. The fourth quarter results were driven by higher production at the Seabrook and Point Beach nuclear plants and approximately 510,000 additional megawatt hours of generation from the company’s existing wind fleet due to a stronger wind resource.
Corporate and Other: Total revenue for fourth-quarter 2010 was $55 million versus $41 million in fourth-quarter 2009, increasing 34.1%.
Yearly Highlights
Segment Results
Florida Power & Light: Total segment revenue for 2010 was $10.5 billion versus $11.5 billion in 2009, reflecting a decline of 8.8%. Total energy sales during the year were 107,978 million kilowatt/hr (KWh) compared with 105,414 million KWh in 2009.
Despite a year-over-year growth in customer base by 21,000, and the resultant increase in the sale of energy for the year, the revenue contribution from this business segment declined due to the reduction in the average unit sales price. The average price per KWh sold in 2010 was 9.34 cents, down from the 2009 level of 11.19 cents.
NextEra Energy Resources: Total revenue for 2010 was $4.6 billion versus $3.99 billion in 2009, reflecting a growth of 16.0%. The year-over-year growth was driven by contribution from new wind projects and higher productivity from nuclear plants and existing wind projects, added to gains from the gas infrastructure business.
Corporate and Other: Total revenue for 2010 was $196 million versus $155 million in 2009, reflecting a growth of 26.5%.
Operational Update
Total operating expenses for the year eased by 7.5% year over year. The reduction in operating expenses was primarily owing to a 15.7% year-over-year decline in input costs, while other operation and maintenance cost experienced a year-over-year growth of 8.6%. Depreciation and amortization expenses increased by 2.4%.
The interest expenses for the year increased by $130 million to $979 million from $849 million in fiscal 2009, sparked off by a higher debt level.
Financial Update
The company ended the year with a strong cash balance. Cash and cash equivalents as of December 31, 2010, were $302 million versus $238 million as of December 31, 2009, reflecting a year-over-year growth of 26.9%.
Long-term debt of the company as of December 31, 2010, aggravated to $18 billion versus $16.3 billion as of December 31, 2009.
Outlook
NextEra Energy reaffirmed its 2011 adjusted earnings guidance 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
We appreciate the initiatives employed by NextEra Energy for furthering renewable energy generation. In December 2010, the company decided to buy four solar photovoltaic (PV) projects in Ontario, Canada from First Solar Inc. (FSLR), which will enhance its total generation capacity by 40 megawatts.
Apart from the solar energy assets the company has developed its wind energy capabilities. At the end of 2010, the wind generation capacity of the company was 8,298 megawatts. The company added 754 megawatts of wind generation in 2010 of which 70 megawatts were through acquisitions.
NextEra Energy currently retains a Zacks #4 Rank (short-term Sell 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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