Emera Reports 2013 Earnings

HALIFAX, Nova Scotia--()--Emera Inc. (EMA-TSX): today reported results for the fourth quarter and the year ended December 31, 2013.

Financial Highlights:

  • Operating revenues increased 8.3% to $2.2 billion in 2013 compared to $2.1 billion in 2012.
  • Net income adjusted for after-tax mark-to-market adjustments increased 12.5% to $259.4 million in 2013 (2012 - $230.5 million). Adjusted net income excludes after-tax mark-to-market losses of $41.9 million (2012 -$9.7 million). Reported net income, including mark-to-market losses was $217.5 million (2012 - $220.8 million).
  • Adjusted earnings per share increased 6.0% to $1.96 in 2013 (2012 - $1.85). Adjusted earnings per share in Q4 2013 were $0.47 (Q4 2012 - $0.46).
  • Cash flows from operations increased 41.9% to $564.2 million in 2013 (2012 – $397.6 million). 2012 cash flows include a $90 million ($58.9 million after-tax) voluntary contribution to Nova Scotia Power Inc (NSPI)’s pension plan made at the end of the year.
  • Emera’s total assets increased 17.8% to $8.88 billion in 2013 (2012 - $7.54 billion).
  • In October, 2013, Emera’s annual dividend increased to $1.45 per share (2012 - $1.40 per share).

“2013 was a year of substantial progress for Emera,” said Chris Huskilson, President and CEO of Emera Inc. “In addition to the strong financial results, most notably, the Maritime Link Project received final regulatory approval in November and Nalcor successfully completed its project financing in December. We are now working to complete the financing for the Maritime Link in the first half of 2014. Also, Emera Energy’s marketing business had a very strong year, as they were well positioned to use acquired pipeline capacity through asset management agreements or direct pipeline reservations and their market experience to serve customers in the dynamic Northeast natural gas market. As well, the recently acquired gas plant assets in New England provided a positive contribution to earnings. Our progress during the year positions us well to deliver on future growth.”

Significant Items Affecting Earnings:

Mark-to-Market Losses

After-tax mark-to-market losses increased $26.1 million to $42.0 million in Q4 2013 compared to $15.9 million in Q4 2012; and increased $32.2 million to $41.9 million for the year ended December 31, 2013 compared to $9.7 million in 2012. Increased mark-to-market losses largely resulted from increased volatility in the New England market, where the increased price differential between contracted markets is recognized under US GAAP but the offsetting change in value of the use of the related transportation capacity is not, and increased volume of business.

Algonquin Power & Utilities Corp. (Algonquin) Gains on Subscription Receipts

Emera recognized $18.1 million (or $0.14 per share) of after-tax gains in 2013 from the conversion of Algonquin subscription receipts to Algonquin common shares, compared to $22.7 million (or $0.18 per share) in 2012.

Algonquin Discontinued Operations

In Q3 2013, Emera recognized an after-tax loss of $7.0 million (or $0.05 per share) in “Income from equity investments” related to Algonquin’s $33.9 million loss from discontinued operations in Q2 2013. The majority of Algonquin’s loss was due to a write-down of its Energy from Waste facility that was deemed no longer strategic to the business. Emera currently has a 24.3% equity interest in Algonquin, which is accounted for a quarter in arrears from when Algonquin reports.

Atlantic Hydrogen Inc. (AHI) Impairment

In Q4 2013, an after-tax investment impairment charge of $7.6 million (or $0.06 per common share) was recorded to write down the Company’s investment in AHI. The Company determined an impairment charge was appropriate as AHI’s path to commercialization is less certain.

Northeast Wind Partners Supplier Settlement

In Q1, 2013, Emera received a settlement of $6.4 million (or $0.05 per share) related to all of its entitlements under various guarantee, warranty and performance obligations of one of Northeast Wind’s turbine suppliers. This settlement provides contribution toward ongoing maintenance and repair costs of these turbines.

Annual Segmented Results

Emera reports its results in six operating segments: Nova Scotia Power, Maine Utilities, Caribbean Utilities, Pipelines, Services Renewables and Other Investments, and Corporate.

Segmented Results (in millions of $CAD, except per share amounts)

                             
       

2013
Adjusted
Net
Income

 

2013
Mark-to-
market
losses

 

2013
Reported
Net
Income

 

2012
Adjusted
Net
Income

 

2012
Mark-
to- market
losses

 

2012
Reported
Net
Income

NSPI       $126.0   -   $126.0   $126.0   -   $126.0
Maine       $38.4   -   $38.4   $35.4   -   $35.4
Caribbean       $32.4   -   $32.4   $23.2   -   $23.2
Pipelines       $30.3   -   $30.3   $27.9   -   $27.9

Services,
Renewables &
Other
Investments

     


$58.6
 


$(41.9)
 


$16.7
 

 

 

$43.4

 


$(9.7)
 


$33.7
Corporate       $(26.3)   -   $(26.3)   $(25.4)   -   $(25.4)
TOTAL       $259.4   $(41.9)   $217.5   $230.5   $(9.7)   $220.8
                             
Earnings per share      

$1.96

 

$(0.32)

 

$1.64

 

$1.85

 

$(0.08)

 

$1.77

               

Quarterly Segmented Results

                             
       

Q4 2013
Adjusted
Net
Income

 

Q4 2013
Mark-to-
market
losses

 

Q4 2013
Reported

Net
Income

 

Q4 2012
Adjusted
Net
Income

 

Q4 2012
Mark-to-
market
losses

 

Q4 2012
Reported

Net
Income

NSPI       $29.9   -   $29.9   $27.0   -   $27.0
Maine       $11.4   -   $11.4   $8.6   -   $8.6
Caribbean       $9.2   -   $9.2   $6.7   -   $6.7
Pipelines       $8.1   -   $8.1   $7.0   -   $7.0

Services,
Renewables &
Other
Investments

     


$11.5
 


$(42.0)
 

 

 

$(30.5)

 


$13.5
 

 

 

$(15.9)

 


$(2.4)
Corporate       $(7.1)   -   $(7.1)   $(4.2)   -   $(4.2)
TOTAL       $63.0   $(42.0)   $21.0   $58.6   $(15.9)   $42.7
                             
Earnings per share      

$0.47

 

$(0.31)

 

$0.16

 

$0.46

 

$(0.12)

 

$0.34

               

NSPI’s net income was $126 million in both 2013 and 2012. NSPI contributed $29.9 million to consolidated net income in Q4 2013 (Q4 2012 - $27.0 million). The higher net income in the quarter was primarily driven by increased residential and commercial sales, in part due to weather impacts. Income tax expense was higher resulting from lower pension contributions and thus lower tax deductions.

Maine Utility Operations’ (Maine) contributed $38.4 million to consolidated net income in 2013 (2012 - $35.4 million), and $11.4 million to consolidated net income in Q4 2013 (Q4 2012 - $8.6 million). The increased net income in the quarter and year-over-year is primarily a result of higher electric revenues and higher capitalized construction overheads due to higher capital spending in 2013. 2013 results include a $1.5 million (after tax) provision for the expected Federal Energy Regulatory Commission (FERC) transmission return on equity rate review, in regards to an expected refund period from October 2011 to December 2012. This provision reflects the impact if the recommendation of the Administrative Law Judge in regards to the retroactive refund period is fully adopted by the FERC. The FERC has not yet announced a decision on this rate review, for either the retroactive or prospective period.

Caribbean Utility Operations (the Caribbean) contributed $32.4 million to consolidated net income in 2013 (2012 - $23.2 million). The increased net income year-over-year is primarily due to increased electric margin as a result of Grand Bahama Power Company’s (GBPC)’s rate structure changes effective July 1, 2012 and the acquisition of a controlling interest in Domlec. The Caribbean contributed $9.2 million to consolidated net income in Q4 2013 (Q4 2012 - $6.7 million).The increased net income in the quarter was primarily due to increased sales volumes at GBPC, and decreased maintenance costs and increased investment earnings at Light & Power Holdings.

Pipelines’ contributed $30.3 million to consolidated net income in 2013 (2012 - $27.9 million), and $8.1 million to consolidated net income in Q4 2013 (Q4 2012 - $7.0 million). The increased net income in the quarter and year-over-year is primarily due to lower interest expense as a result of refinancing.

Emera’s Services Renewables and Other investments (SRO)’s net income, adjusted to exclude mark to market impacts, was $58.6 million in 2013 (2012 Adjusted Net Income - $43.4 million). The increase in net income is primarily due to increased trading and marketing margin as a result of strong New England market conditions, as well as due to increased income from equity investments. Excluding the effect of the mark-to-market accounting adjustments, SRO contributed $11.5 million to consolidated net income in Q4 2013 (Q4 2012 - $13.5 million.) The decreased net income in the quarter is primarily due to recognizing $8.4 million of after-tax gains on the conversion of Algonquin subscription receipts in Q4 2012. There were no such gains recognized in Q4 2013.

Forward Looking Information

This news release contains forward looking information. Actual future results may differ materially. Additional information related to Emera, including the company’s Annual Information Form, can be found on SEDAR at www.sedar.com.

Teleconference Call

The company will be hosting a teleconference at 10:00 am Atlantic time today (9:00 am Toronto/Montreal/New York; 8:00 pm Winnipeg; 6:00 am Vancouver) to discuss the 2013 financial results.

Analysts and other interested parties in North America wanting to participate in the call should dial 1 (888) 241-0394 at least 10 minutes prior to the start of the call. International participants wanting to participate should dial (647) 427-3413. No pass code is required. The teleconference will be recorded. If you are unable to join the teleconference live, you can dial for playback, toll-free at 1-855-859-2056. The Conference ID is 35789841 (available until midnight, February 24, 2014).

The teleconference will also be web cast live and available for playback for one year at the following link: http://www.snwebcastcenter.com/webcast/emera/2013q4/.

About Emera

Emera Inc. is an energy and services company with $8.88 billion in assets and 2013 revenues of $2.2 billion. The company invests in electricity generation, transmission and distribution, as well as gas transmission and utility energy services. Emera's strategy is focused on the transformation of the electricity industry to cleaner generation and the delivery of that clean energy to market. Emera has investments throughout northeastern North America, and in four Caribbean countries. Approximately 90% of the company's reported net income in 2013 came from regulated investments. Emera common and preferred shares are listed on the Toronto Stock Exchange and trade respectively under the symbol EMA, EMA.PR.A., EMA.PR.C., and EMA.PR.E. Additional information can be accessed at emera.com, or on sedar.com.

Contacts

Emera Inc.
Jill Hennigar, CA, 902-428-6486
Manager, Investor Relations

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Contacts

Emera Inc.
Jill Hennigar, CA, 902-428-6486
Manager, Investor Relations