Emera Reports 2020 First Quarter Financial Results

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by ahnationtalk on May 13, 202063 Views


HALIFAX, Nova Scotia—- Today Emera (TSX: EMA) announced financial results for the first quarter of 2020.

Q1 2020 Highlights:

Reported Net Income

  • Q1 2020 reported net income was $523 million, or $2.14 per common share, compared with net income of $312 million, or $1.32 per common share, in Q1 2019.

Adjusted Net Income (1)

  • Q1 2020 adjusted net income was $193 million, or $0.79 per common share, compared with $224 million, or $0.95 per common share, in Q1 2019.

Significant Items Affecting Reported and Adjusted Net Income

  • Q1 2020 reported earnings included $321 million, net of tax and transaction costs, of earnings related to the gain on sale of the Emera Maine business.
  • Q1 2019 adjusted earnings included $24 million from the New England Gas Generation (“NEGG”) and Bayside generation facilities which were sold in Q1 2019 and a $10 million gain on sale of property in Florida.
  • Q1 2020 adjusted earnings were reduced by $14 million from the revaluation of Corporate, NSPI and Emera Energy net deferred income tax assets and liabilities due to the reduction in the Nova Scotia provincial corporate income tax rate.
  • Q1 2020 adjusted earnings included $10 million from the recognition of corporate income tax recovery deferred as a regulatory liability at BLPC.

Cash Flow

  • Q1 2020 cash flow, before changes in working capital, increased by $84 million to $502 million, compared with $418 million in Q1 2019.

(1) See “Non-GAAP Measures” noted below.

“I am proud of our employees who remain focused on the health and safety of their colleagues, communities and customers as they deliver the essential energy services we all rely on during this global pandemic. On behalf of the team at Emera, our thoughts are with those affected by COVID-19 and we are pleased to do our part to assist the most vulnerable in our communities,” says Scott Balfour, President and Chief Executive Officer of Emera Inc. “While Emera will experience some short-term impacts to our business, our long-term outlook is positive and we are well positioned to continue to serve our customers and communities, and create value for our shareholders.”

For the

Three months ended

millions of Canadian dollars (except per share amounts)

March 31

2020

2019

Net income attributable to common shareholders

$

523

$

312

Gain on sale and impairment charges, net of tax

$

298

After-tax mark-to-market gain

32

88

Adjusted net income attributable to common shareholders (1)(2)

$

193

$

224

Earnings per common share – basic

$

2.14

$

1.32

Adjusted earnings per common share – basic (1)(2)

$

0.79

$

0.95

Weighted average shares of common stock outstanding – basic (millions of shares)

245

236

(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, gain on sale and impairment charges

After-tax mark-to-market gains decreased $56 million to $32 million in 2020 compared to $88 million in 2019, mainly due higher amortization of gas transportation assets in 2020 and larger reversal of mark-to-market losses in 2019, partially offset by changes in existing positions on gas contracts in Emera Energy. The decrease is also due to mark-to-market losses related to foreign exchange cash flow hedges entered in Q1 2020 to manage foreign exchange earnings exposure.

In Q1 2020 Emera completed the sale of Emera Maine and recorded a gain on sale of $586 million ($321 million after tax), net of transaction costs. In addition, impairment charges of $22 million ($23 million after tax) were recognized on certain other assets in Q1 2020.

Weakening of the CAD exchange rates increased earnings by $5 million and adjusted earnings by $1 million in Q1 2020 compared to Q1 2019.

Consolidated Financial Review:

The following table highlights significant changes in adjusted net income from Q1 2019 to 2020 in the first quarter.

For the

Three months ended

millions of Canadian dollars

March 31

Adjusted net income – 2019 (1)(2)

$

224

Florida Electric Utility – increased earnings due to favourable weather, customer growth and higher contribution from solar projects

18

Recognition of corporate income tax recovery deferred as a regulatory liability in 2018 at BLPC

10

Decreased earnings at Emera Energy Services

(9)

2019 gain on sale of property in Florida

(10)

Revaluation of Corporate, NSPI and Emera Energy net deferred income tax assets and liabilities due to the Q1 2020 reduction in the Nova Scotia provincial corporate income tax rate

(14)

Decreased earnings from Emera Energy Generation due to the sale of New England Gas Generating Facilities (“NEGG”) and Bayside generation facilities in Q1 2019

(24)

Other variances

(2)

Adjusted net income – 2020 (1)(2)

$

193

(1) See “Non-GAAP Measures” noted below

(2) Excludes the effect of mark-to-market adjustments, gain on sale and impairment charges, net of tax

For the

Three months ended

March 31

millions of Canadian dollars (except per share amounts)

2020

2019

Adjusted net income(1)

Florida Electric Utility

$

79

$

61

Canadian Electric Utilities

92

96

Other Electric Utilities(2)

20

16

Gas Utilities and Infrastructure

70

67

Other (2)

(68)

(16)

Adjusted net income (1)

$

193

$

224

Gain on sale and impairment charges, net of tax

298

After-tax mark-to-market gain

32

88

Net income attributable to common shareholders

$

523

$

312

EPS (basic)

$

2.14

$

1.32

Adjusted EPS (basic) (1)(2)

$

0.79

$

0.95

(1) See “Non-GAAP Measures” noted below.

(2) Excludes the effect of mark-to-market adjustments, gain on sale and impairment charges, net of tax

Florida Electric Utility’s CAD net income increased by $18 million to $79 million in Q1 2020, compared to $61 million in Q1 2019 due to higher base revenues as a result of favourable weather, customer growth and the in-service of solar generation projects. This increase was partially offset by higher depreciation expense and higher interest expense as the result of higher capital investments.

Canadian Electric Utilities’ net income decreased by $4 million to $92 million, compared to $96 million in Q1 2019 due to lower contribution from NSPI. This decrease was mainly due to higher OM&G costs and lower sales volumes, primarily due to weather partially offset by regulatory deferral timing.

Other Electric Utilities’ CAD net income, adjusted to exclude mark-to-market, increased by $4 million to $20 million in Q1 2020, compared to $16 million in Q1 2019 due to the recognition of a previously deferred corporate income tax recovery related to the enactment of a lower corporate income tax rate in December 2018 at BLPC. Emera Maine contribution decreased due to unseasonably warm weather and lower regional transmission revenues.

Gas Utilities and Infrastructure’s CAD net income increased by $3 million to $70 million in Q1 2020, compared to $67 million in Q1 2019. Earnings from PGS and NMGC were consistent quarter-over-quarter as customer growth, higher return on investment in Cast Iron/Bare Steel replacement rider at PGS and lower NMGC depreciation rates were offset by warmer weather at NMGC, higher OM&G expenses, and higher depreciation at PGS.

Other’s net loss, adjusted to exclude mark-to-market, gain on sale and impairment charges, net of tax increased by $52 million to $68 million in Q1 2020, compared to $16 million in Q1 2020, due to the impact of the sale of NEGG and Bayside Power in Q1 2019, decreased marketing and trading margin, revaluation of net deferred income tax assets resulting from the enactment of a lower Nova Scotia provincial corporate income tax rate in Q1 2020, the 2019 sale of property in Florida and increased OM&G in Corporate. These were partially offset by lower income taxes due to lower earnings and the impact of effective state tax rates.

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.

 

Investor Relations:
Ken McOnie, VP, Investor Relations and Treasurer
902-428-6945
ken.mconie@emera.com

Scott Hastings, Senior Director, Capital Markets
902-474-4787
scott.hastings@emera.com

Media:
902-222-2683
media@emera.com

NT4

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