NextEra Energy Inc. (NEE) announced fourth-quarter 2011 operating earnings of 93 cents per share compared with 80 cents per share in the year-ago quarter. The results of the company beat the Zacks Consensus Estimate by a penny.
NextEra Energy recorded GAAP earnings for the fourth quarter of 2010 of $1.59 per share compared with 63 cents per share in the year-ago period. The difference of 66 cents between operating and GAAP earnings, during the fourth quarter, was due to mark-to-market effects of non-qualifying hedges which relate to Energy Resources, the competitive energy business of NextEra Energy.
Operating earnings for 2011 were $4.39 per share compared with $4.30 per share reported in 2010. The results of the company were in line with the Zacks Consensus Estimate.
Total Revenue
NextEra Energy’s total operating revenue for fourth-quarter 2011 was $3.86 billion, up 13.2% from $3.41 billion reported in the year-ago period mainly due to a good performance from Energy Resources.
Reported quarter revenue also surpassed the Zacks Consensus Estimate of $3.76 billion.
NextEra Energy’s total operating revenue for 2011 was $15.34 billion versus $15.31 billion reported in the year-ago period reflecting a growth of 0.2%. The fiscal results were driven by positive contribution from NextEra Energy Resources and Corporate & Others.
Fiscal year 2011 revenue was marginally lower than the Zacks Consensus Estimate of $15.48 billion.
Segment Results
Florida Power & Light: Total segment revenue for fourth-quarter 2011 was $2.41 billion versus $2.46 billion in fourth-quarter 2010, reflecting a decline of 1.9%. Total energy sales during the current quarter were 23,806 million kilowatt/hr (KWh) compared with 24,487 million KWh in fourth-quarter 2010.
Despite a year-over-year growth in customer base by 25,000 in the reported quarter and increase in the average unit sales price at this business segment, revenue contribution failed to measure up because of an overall reduction in the volume of energy sales.
Total segment revenue for 2011 was $10.6 billion versus $10.48 billion in 2010, reflecting a growth of 1.2%. The fiscal growth was driven by the positive contribution from the investment made by the company in clean and efficient power generation.
Energy Resources: Total revenue for fourth-quarter 2011 was $1,392 million versus $897 million in fourth-quarter 2010, reflecting a significant growth of 55.2%. The fourth quarter results were driven by higher contribution from the wind generation assets compared to the prior-year quarter.
Total revenue for 2011 was $4.5 billion versus $4.63 billion in 2010, reflecting a decline of 2.9%. The fiscal results dipped due to extended unplanned outages as well as lower hedge prices at Seabrook Station and lower contribution from the customer supply and proprietary trading businesses. The downside was marginally offset by higher wind generation from existing wind assets and better contributions from the gas infrastructure business.
Corporate and Other: Total revenue for fourth-quarter 2011 was $58 million versus $55 million in fourth-quarter 2010, increasing 5.4%.
Total revenue for 2011 was $226 million versus $196 million in 2010, reflecting a growth of 15.3%.
Operational Update
Total operating expenses for the quarter eased by 7.2% year over year. The reduction in operating expenses was primarily owing to a 4.4% year-over-year decline in input costs.
Interest expenses for the quarter increased by 5.7% to $260 million from $246 million in the year-ago quarter, 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 $377 million versus $302 million as of December 31, 2010, reflecting a year-over-year growth of 24.8%.
Long-term debt of the company as of December 31, 2011, deteriorated to $20 billion versus $18.0 billion as of December 31, 2010.
The company continues to be a strong cash flow generator. Cash from operating activities at the end of fiscal 2011 was $4.07 billion versus $3.83 billion provided at the end of fiscal 2010.
Outlook
NextEra Energy expects 2012 adjusted earnings guidance in the range of $4.35 to $4.65 per share. NextEra estimates earnings growth at an average rate of 5% to 7% from 2011 through 2014, culminating in 2014 earnings in the range of $5.05 to 5.65 per share.
Our View
Overall, it has been a nice year for the company. We appreciate the initiatives employed by NextEra Energy for furthering renewable energy generation. The company added 380 megawatt (MW) of wind power in its portfolio and is working towards adding more in 2012.
Besides the wind energy assets the company has been developing its solar energy capabilities. The company will be investing heavily in its solar projects in the next few years and already has 940 MW of solar generation under contract which is expected to enter into service by 2016.
NextEra Energy currently retains a Zacks #3 Rank, which translates into a short-term Hold rating and coincides with our long-term Neutral recommendation 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. The company mainly competes with TECO Energy, Inc. (TE) and Southern Company (SO).
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