NextEra Energy Q2 Profit Up 46%, Results Beat View

(RTTNews) - Electric utility NextEra Energy, Inc. (NEE) on Monday reported a 46 percent surge in profit for the second quarter from last year on higher earnings at both its segments. Both revenue and adjusted earnings for the quarter beat analysts' estimates.

Looking ahead, NextEra Energy affirmed its earnings outlook for fiscal 2015 and also raised its earnings forecast for fiscal 2016. The company's subsidiary, NextEra Energy Partners LP (NEP), said it has agreed to buy privately-held NET Midstream for $2.1 billion, noting that the acquisition will add a portfolio of seven long-term contracted natural gas pipelines in Texas.

Second-quarter net income attributable to NextEra Energy was $716 million or $1.59 per share, up from $492 million or $1.12 per share in the year-ago period.

Excluding items, adjusted earnings for the quarter were $1.56 per share, compared to $1.43 per share in the prior-year quarter. On average, 14 analysts polled by Thomson Reuters expected the company to earn $1.50 per share. Analysts' estimates typically exclude special items.

Operating revenues for the quarter rose 8 percent to $4.36 billion from $4.03 billion in the year-ago period. Analysts had a consensus revenue estimate of $4.24 billion.

NextEra Energy's principal rate-regulated electric utility subsidiary, Florida Power & Light Co. or FPL, reported net income of $435 million or $0.97 per share for the quarter, up from $423 million or $0.96 per share in the prior-year quarter.

FPL averaged about 66,000 more customer accounts during the quarter than in the prior-year quarter. Retail sales growth was 7.6 percent compared to last year, which included about 6.1 percent usage growth due to weather.

NextEra Energy's competitive energy business, NextEra Energy Resources, reported a contribution to the net income attributable to NextEra Energy of $273 million or $0.61 per share, up sharply from $81 million or $0.18 per share in the prior-year quarter. The segment's results benefited from new wind and solar additions.

Looking ahead to fiscal 2015, NextEra Energy affirmed its outlook for adjusted earnings of $5.40 to $5.70 per share. The Street expects the company to report earnings of $5.63 per share for the year.

After 2015, NextEra Energy now expects to grow adjusted earnings per share at a compound annual growth rate of 6 to 8 percent per year through 2018, off a 2014 base.

The company expects now adjusted earnings of $5.85 to $6.35 per share for fiscal 2016 and $6.60 to $7.10 per share for fiscal 2018. Earlier, the company forecast fiscal 2016 adjusted earnings of $5.75 to $6.25 per share. Analysts expect earnings of $6.07 per share for 2016.

NextEra Energy's board of directors declared a regular quarterly common stock dividend of $0.77 per share, payable on September 15, 2015, to shareholders of record on August 28.

The board also approved a new dividend policy, expressed relative to adjusted earnings per share, of a 65 percent payout ratio by 2018. This is expected to translate to a growth rate in dividends per share of 12 percent to 14 percent per year through at least 2018, off a 2015 base of $3.08 per share.

NextEra Energy Partners' $2.1 billion deal to acquire NET Midstream includes initial consideration of $1.8 billion, which the company expects to be financed partly by about $600 million of non-amortizing debt secured by the acquired assets. A future expansion investment of about $300 million in 2016 is expected by the company to be financed primarily with debt.

Overall, NextEra Energy Partners expects permanent financing to consist of about $1.2 billion of equity and $900 million of debt. The company expects to close the transaction within 75 days.

The combined acquisition portfolio includes 3 billion cubic feet or Bcf per day of ship-or-pay contracts, with on average investment-grade counterparty credit. The three largest pipelines in the portfolio have planned growth and expansion projects that, on completion, are expected to provide an additional 1 Bcf per day of contracted volumes.

NEE is trading at $108.53, up $3.33 or 3.17 percent on a volume of 1.49 million shares. NEP is trading at $31.85, down $3.83 or 10.73 percent on a volume of 337,749 shares.