Emera Announces Q2 2018 Earnings, Increases Dividend and Updates Dividend Growth Guidance

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Emera Announces Q2 2018 Earnings, Increases Dividend and Updates Dividend Growth Guidance

by pmnationtalk on August 10, 201824 Views

August 09, 2018

HALIFAX, Nova Scotia– Today Emera (TSX: EMA) announced financial results for the second quarter ended June 30, 2018, and increased the annual common share dividend to $2.35.

Q2 2018 and Year-to-Date Highlights:

Reported Net Income

  • Q2 2018 reported net income was $90 million, or $0.38 per common share, compared with net income of $101 million, or $0.47 per common share, in Q2 2017.
  • Year-to-date reported net income was $361 million, or $1.56 per common share, compared with net income of $413 million, or $1.95 per common share, in the 2017 period.

Adjusted Net Income (1)

  • Q2 2018 adjusted net income was $111 million, or $0.48 per common share, compared with $117 million, or $0.55 per common share, in Q2 2017.
  • Year-to-date adjusted net income was $313 million, or $1.35 per common share, compared with net income of $269 million, or $1.27 per common share, in the 2017 period.

Cash Flow

  • Year-to-date operating cash flow, before changes in working capital, increased $64 million, or 9 per cent, to $767 million, compared with $703 million in the 2017 period.

(1)

See “Non-GAAP Measures” noted below.

“While timing, weather and foreign exchange rates negatively impacted results for the quarter, we are nonetheless on track with where we expected to be for the first half of the year, and we continue to expect solid full year EPS growth in 2018,” said Scott Balfour, President and CEO of Emera Inc. “During the quarter we made significant progress on our strategic growth initiatives in Florida and announced that we will be proceeding with an $850 million USD investment to modernize our Big Bend Power Station. We are excited by the growth opportunities we see in Florida and we look forward to commissioning the first tranche of our solar projects in September.”

Dividends:

Emera’s Board of Directors has approved an increase in the annual common share dividend to $2.35 per common share from $2.26 per common share and has revised its annual dividend growth rate target to a range of four to five per cent through 2021. The first quarterly payment of $0.5875 per common share is expected to be payable to common shareholders on and after November 15, 2018. Including this increase, Emera’s compound annual dividend growth rate over the past four years is 11 per cent.

“Emera has significant regulated rate base investment opportunities, including $1.7 billion USD of investment at Tampa Electric in 600 MW of new solar generation and a modernization of the Big Bend station,” said Scott Balfour. “These projects will drive both significant value for customers and strong investment returns for shareholders. We believe that it is prudent to incorporate a higher component of internally generated funds in the capital plans to fund these accretive investments and as a result have modified our annual dividend growth target. Emera’s average EPS growth is expected to exceed dividend growth over the guidance period.”

Financial Highlights:

For the Three months ended Six months ended
millions of Canadian dollars (except per share amounts) June 30 June 30
2018 2017 2018 2017
Net income attributable to common shareholders $ 90 $ 101 $ 361 $ 413
After-tax mark-to-market gain (loss) (21) (16) 48 144
Adjusted net income attributable to common shareholders(1)(2) $ 111 $ 117 $ 313 $ 269
Earnings per common share – basic $ 0.38 $ 0.47 $ 1.56 $ 1.95
Adjusted earnings per common share – basic (1)(2) $ 0.48 $ 0.55 $ 1.35 $ 1.27
Weighted average shares of common stock outstanding – basic (millions of shares) 233 213 232 212

(1)

See “Non-GAAP Measures” noted below.

(2)

Adjusted net income and Adjusted earnings per common share exclude the effect of mark-to-market adjustments.

After-tax mark-to-market losses increased $5 million to $21 million in Q2 2018 compared to $16 million in Q2 2017. Year-to-date, after-tax mark-to-market gains decreased $96 million to a $48 million gain in 2018 compared to a $144 million gain for the same period in 2017. This decrease is mainly due to changes in existing positions on long-term natural gas contracts in the first quarter of 2017 and a larger reversal of mark-to-market losses in the first quarter of 2017 compared to 2018, partially offset by lower amortization of gas transportation assets in 2018.

The strengthening of the CAD decreased earnings by $3 million and adjusted earnings by $4 million in Q2 2018 compared to Q2 2017. The strengthening of the CAD decreased earnings by $13 million and adjusted earnings by $11 million year-to-date in 2018 compared to the same period in 2017.

Consolidated Financial Review:

The following table highlights significant changes in adjusted net income from 2017 to 2018 in the second quarter and year-to-date periods.

For the Three months ended Six months ended
millions of Canadian dollars June 30 June 30
Adjusted net income – 2017 (1)(2) $ 117 $ 269
Emera Energy 13 58
NSPML and LIL equity earnings 7 16
NSPI (6) (11)
Emera Florida and New Mexico (6) 5
Emera Maine (6) (9)
Other (8) (15)
Adjusted net income – 2018 (1)(2) $ 111 $ 313

(1)

See “Non-GAAP Measures” noted below.

(2)

Excludes the effect of mark-to-market adjustments.

Segmented Results:

Emera reports its results in six operating segments: Emera Florida and New Mexico, Nova Scotia Power Inc. (“NSPI”), Emera Maine, Emera Caribbean, Emera Energy, and Corporate & Other.

Three months ended Six months ended
For the June 30 June 30
millions of Canadian dollars (except per share amounts) 2018 2017 2018 2017
Adjusted net income
Emera Florida and New Mexico $ 97 $ 103 $ 187 $ 182
NSPI 23 29 88 99
Emera Maine 6 12 16 25
Emera Caribbean (2) 12 11 17 18
Emera Energy (2) 2 (11) 57 (1)
Corporate & Other (2) (29) (27) (52) (54)
Adjusted net income (1) $ 111 $ 117 $ 313 $ 269
After-tax mark-to-market gain (loss) (21) (16) 48 144
Net income attributable to common shareholders $ 90 $ 101 $ 361 $ 413
EPS (basic) $ 0.38 $ 0.47 $ 1.56 $ 1.95
Adjusted EPS (basic) (1)(2) $ 0.48 $ 0.55 $ 1.35 $ 1.27

(1)

See “Non-GAAP Measures” noted below.

(2)

Excludes the effect of mark-to-market adjustments.

Emera Florida and New Mexico’s net income was $97 million in Q2 2018 compared to $103 million in Q2 2017. The decrease is primarily due to the impact of less favourable weather and a stronger Canadian dollar partially offset by customer load growth. Year-to-date, Emera Florida and New Mexico’s net income increased $5 million to $187 million from $182 million in 2017. The increase is primarily due to higher sales volumes as the result of customer load growth and favourable Q1 2018 weather partially offset by a stronger Canadian dollar.

NSPI’s net income was $23 million in Q2 2018 compared to $29 million in Q2 2017. NSPI’s net income year-to-date was $88 million compared to $99 million for the same period in 2017. NSPI’s net income decreased in Q2 2018 and year-to-date due to increased depreciation primarily as a result of information technology investments, legislated increases in demand-side management costs and increased interest costs due to a higher FAM liability and increased short term interest rates, partially offset by residential load growth. The year-to-date decrease is also due to an increase in storm costs in the first quarter. The year-to-date shortfall versus prior year is expected to reverse over the balance of the year.

Emera Maine’s net income was $6 million in Q2 2018 compared to net income of $12 million in Q2 2017. Emera Maine’s net income year-to-date was $16 million compared to $25 million for the same period in 2017. Results for the quarter and year-to-date were driven by reduced transmission revenues and increased OM&G and depreciation and amortization partially offset by lower income tax expense. The increase in OM&G for the quarter and year-to-date was due to lower capitalized overheads as a result of lower capital spending and adjustments related to the distribution rate case. The year-to-date increase is also due to higher storm costs in the first quarter. The year-to-date shortfall versus prior year is expected to reverse over the balance of the year.

Emera Caribbean’s net income, adjusted to exclude mark-to-market losses, of $12 million in Q2 2018 was consistent with Q2 2017 net income of $11 million. Emera Caribbean’s net income year-to-date, adjusted to exclude mark-to-market losses, was $17 million in 2018 compared to $18 million for the same period last year.

Emera Energy’s net income, adjusted to exclude mark-to-market losses, was $2 million in Q2 2018 compared to an $11 million loss in Q2 2017. This increase is primarily attributable to higher capacity prices in Q2 2018 in the New England electricity market, and an unplanned outage at the Bridgeport facility in Q2 2017. Emera Energy’s net income year-to-date, adjusted to exclude mark-to-market gains, was $57 million compared to a $1 million loss for the same period in 2017. In addition to the items noted for the quarter, the year-to-date increase is also as a result of the favourable impact of cold weather in early 2018 in several of Emera Energy Services key market areas.

Corporate & Other’s net loss, adjusted to exclude mark-to-market, was $29 million in Q2 2018 compared to $27 million in Q2 2017. The increased loss was primarily due to decreased income tax recovery and increased interest expense partially offset by higher equity earnings from NSP Maritime Link (“NSPML”) and Labrador Island Link (“LIL”). Corporate & Other’s net loss year-to-date, adjusted to exclude mark-to-market, was $52 million compared to $54 million for the same period in 2017 for the same reasons as noted in the quarter.

The Maritime Link went into service on January 15, 2018. Cash earnings from NSPML were $15 million in Q2 2018 and $30 million for the year-to-date compared to AFUDC earnings of $9 million in Q2 2017 and $16 million for the year-to-date period.

Non-GAAP Measures

Emera uses financial measures that do not have standardized meaning under USGAAP and may not be comparable to similar measures presented by other entities. Emera calculates the non-GAAP measures by adjusting certain GAAP and non-GAAP measures for specific items the Company believes are significant, but not reflective of underlying operations in the period. Refer to the Non-GAAP Financial Measures section of our Management’s Discussion and Analysis (“MD&A”) for further discussion of these items.

Emera Inc.
Investor Relations:
Ken McOnie, 902-428-6945
ken.mconie@emera.com
or
Erin Power, 902-428-6760
erin.power@emera.com
Media:
902-222-2683
media@emera.com

NT4

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