NextEra Energy Inc
) announced third-quarter 2012 operating earnings of $1.26 per
share, 5 cents lower than the year-ago quarter. Earnings result
was also below the Zacks Consensus Estimate of $1.39 per
The earnings underperformance stemmed from low retail sales
owing to weather variations and decline in the company's energy
NextEra Energy reported GAAP earnings of 98 cents per share
for the third quarter of 2012 compared with 97 cents in the
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The difference of 28 cents between operating and GAAP earnings,
during the third quarter, was due to mark-to-market effects from
non-qualifying hedges, other than temporary impairments and after
tax loss on divestiture of certain natural gas-fired generating
NextEra Energy's total operating revenue for third-quarter 2012
was $3,843 million, down 12.3% from $4,382 million reported in
the year-ago period. This is on account of lower contribution
from Florida Power and Light as well as NextEra's Energy Resource
Quarterly revenue fell short of the Zacks Consensus Estimate of
Florida Power & Light
(FPL): Revenue recorded a 5.6% fall to $2,975 million from $3,152
million in third-quarter 2011.The lower revenue in the third
quarter was on account of a combined drop in energy sales with
industrial sales driving down by 5% and risks associated with
proposed rate settlement case filed with Florida Public Service
NextEra Energy Resources
: Total revenue for the third quarter was $808 million versus
$1,172 million in third-quarter 2011, reflecting a substantial
decline of 31.0%.The revenue downturn was caused by weak
generation from the company's Seabrook nuclear facility and
impact from increasing expenses.
Corporate and Other
: Total revenue for the third quarter was $60 million, marginally
higher year over year.
Total operating expenses during the quarter decreased by 10.8% to
$3,094 million from $3,471 million in the year-ago quarter.
Operating expenses declined as cost of fuel and power purchase
shrank by 20.1% to $1,526 million from $1,911 million in the
prior-year quarter. This was partially offset by a 3.7% rise in
operations and maintenance expenses.
Total operating income in the third quarter of 2012 was $749
million in contrast to $911 million in the year-ago quarter,
reflecting a 17.7% decrease. This was due to the extent of
revenue decline not being able to fully mitigate operating cost.
Interest expenses in the third quarter decreased to $259 million
from $265 million at the end of the third quarter 2011.
Cash and cash equivalents as of September 30, 2012, were $246
million, down from $377 million as of December 31, 2011.
Long-term debts of the company as of September 30, 2012, were
$22.7 billion versus $20.8 billion as of December 31, 2011.
For 2012, NextEra Energy reiterated its earnings expectation in
the range of $4.35−$4.65 per share. Similarly, the company upheld
its pro forma earnings estimates for 2014 in the range of
$5.05−$5.65 per share.
Teco Energy Inc.
), which competes with NextEra Energy Inc., is expected to
webcast its third quarter earnings before the market opens on
November 1, 2012. The Zacks Consensus Estimates for its third
quarter and 2012 earnings are currently pegged at 38 cents and
$1.16 per share, respectively.
NextEra Energy Inc. faltered on its third quarter financial
results with top- and bottom-line estimates lagging the Zacks
Consensus Estimates. However, we believe the future increase in
renewable usage in the U.S. market would largely benefit the
company's Energy Business.
Along with this, continued investments in high-quality projects,
effective execution of contracted renewable programs and
consistent increase in consumer footprint will act as growth
catalysts for the company.
Nonetheless, variability in power prices and possibility of
negative rate case outcome for FPL new rates settlement could
hurt NextEra's growth goals.
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 implies a
short-term Hold rating. Over the long run we have a Neutral
recommendation on the stock.