NextEra Energy Inc. (NEE) announced first-quarter 2012 operating earnings of $1.02 per share, 8 cents lower than the year-ago quarter. Earnings results topped the Zacks Consensus Estimate by 5 cents.
The earnings growth can be attributed to increase in retail sales as well as a widening of the customer base.
NextEra Energy recorded GAAP earnings for the first quarter of 2012 of $1.11 per share compared with 64 cents per share in the year-ago period.
The difference of 9 cents between operating and GAAP earnings, during the first quarter, was due to mark-to-market gains from non-qualifying hedges.
Total Revenue
NextEra Energy’s total operating revenue for first-quarter 2012 was $3.37 billion, up 7.6% from $3.13 billion reported in the year-ago period. This is on account of higher sales performance from NextEra Energy Resources.
Reported quarter revenue also surpassed the Zacks Consensus Estimate of $3.31 billion.
Segment Results
Florida Power & Light (FPL): Total segment revenue for first-quarter 2012 was $2.22 billion versus $2.24 billion in first-quarter 2011, reflecting a marginal decline of 0.8%.
The lower revenue in the first quarter resulted from weak energy prices.
NextEra Energy Resources: Total revenue for first-quarter 2012 was $1,090.0 million versus $833.0 million in first-quarter 2011, reflecting a surge of 30.8%.
The revenue increase came on the back of increasing wind assets and expansion in gas infrastructure. Wind energy production increased to 545,000 megawatt hours. This was partially offset by reduction in production tax credits and lower energy prices.
Corporate and Other: Total revenue for first-quarter 2012 was $57 million versus $55 million in first-quarter 2011, up 3.6%.
Operational Update
Total operating expenses during the quarter decreased by 6.5% to $2,528.0 million from $2,706.0 million in the year-ago quarter. The decline in operating expenses was due to a 3.3% reduction in input costs and a 15.8% decline in fuel purchases. This was partially offset by an 11.8% rise in operation and maintenance expenses.
Total operating income in the first quarter of 2012 was $843.0 million in contrast to $428.0 million in the year-ago quarter, reflecting a 97% increase.
Interest expenses in the first quarter of 2012 swelled by 4.3% to $265 million from $254 million at the end of first quarter 2010.
Financial Update
Cash and cash equivalents as of March 31, 2012 were $275 million, down from $377 million as of December 31, 2011.
Long-term debts of the company as of March 31, 2012, were $20,582 million versus $20,810 million as of December 31, 2011.
Cash flow from operating activities as of March 31, 2012 was $835 million compared with $983 million as of March 31, 2011.
Outlook
NextEra Energy expects earnings for 2012 in the range of $4.35 to $4.65 per share. The company expects adjusted earnings per share for 2014 to be in the range of $5.05 to $5.65.
Peer Comparison
Progress Energy Inc. (PGN), which competes with NextEra Energy Inc., is expected to webcast its first quarter earnings before the market opens on May 3, 2012. The Zacks Consensus Estimates for its first quarter and fiscal 2012 earnings are currently pegged at 63 cents and $3.18 per share, respectively.
Our View
NextEra Energy Inc. kick-started the year with earnings performance edging out the Zacks estimates. The company’s revenue received a huge boost owing to NextEra Energy’s superlative performance.
Another additional factor was the descending operating costs, which lend a helping hand to the company’s earnings growth.
We believe that the company is in a well-balanced position with NextEra Energy Resources being anticipated to provide an impetus to growth through its various wind generation projects.
It is quite encouraging to see that the company continues to enhance its green power generation portfolio. In 2012, NextEra Energy plans to add approximately 1,300 megawatts of new U.S. wind assets to its portfolio in 2012 and approximately 600 megawatts in the Canadian wind project between 2012 and 2015, which if completed will enhance the company’s future earnings capability.
The company plans to invest $15 billion over a five year period in Florida Power and Light, which would act as contributing factor to NextEra’s future prospects.
However, the company’s financial position is a matter of concern with the reduction in its cash balance. Also, costs are expected to rise with the initiation of several infrastructure projects.
Based in Juno Beach, Florida, NextEra Energy Inc., through its subsidiaries, engages in the generation, transmission, distribution and sale of electric energy in Florida.
NextEra Energy currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We have a Neutral recommendation over the long term
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