Today Emera Inc. (“Emera”) (TSX: EMA) reported financial results
for the second quarter and year-to-date 2024.
Highlights
- Growth in Reported Net Income Per Share (“EPS”)(1):
Reported EPS saw a substantial increase of $0.35 to $0.45 in Q2
2024, compared to $0.10 in Q2 2023. This improvement was driven by
a gain on the strategic sale of the Labrador Island Link
(“LIL”).
- Decrease in Adjusted EPS: Adjusted EPS decreased $0.07
to $0.53 compared to adjusted EPS of $0.60 in Q2 2023. The decline
was primarily driven by:
- Higher corporate costs resulting from increased interest
expenses, and unrealized foreign exchange (“FX”) losses on the
translation of short-term debt balances;
- A decrease in earnings at Nova Scotia Power (“NSPI”) resulting
from higher investment in reliability and customer experience
initiatives impacting operating costs;
- A decrease in earnings at New Mexico Gas Company (“NMGC”) due
to higher operating costs.
- Strong Performance in Florida Businesses: Tampa Electric
(“TEC”) and Peoples Gas (“PGS”) reported higher earnings due to
robust customer growth and new base rates, affirming the
significant potential of our Florida operations.
- Strengthening the Balance Sheet: We took definitive
measures to enhance our financial position, improving our balance
sheet and key credit metrics. The strategic sale of Emera’s
interest in the LIL reduced holding company debt by $957 million
and the replacement of US $500 million of holding company debt with
hybrid capital, further optimized the capital structure and
improved credit metrics. The announced sale of NMGC to Bernhard
Capital Partners for an enterprise value of US$1.252 billion will
additionally strengthen the balance sheet when closed in late 2025.
These actions demonstrate our commitment to financial strength and
flexibility.
- Capital Deployment on Track: Emera is on course to
deploy $2.9 billion in capital in 2024, with $1.4 billion already
invested in the first half of the year.
“While our adjusted earnings were lower for the quarter and for
the year to date, we expect stronger results for the balance of the
year. We saw strong operational performance and customer growth in
our utilities, particularly Tampa Electric and Peoples Gas, which
underscores the significance of our Florida operations and
reinforces the strategic decision to reallocate capital to invest
in our strongest businesses” said Scott Balfour, President and CEO
of Emera Inc. “Our commitment to deploying $2.9 billion in capital
this year, as part of our three-year $8.8 billion capital
investment plan, not only highlights our dedication to enhancing
infrastructure and delivering reliable energy to our customers but
is also expected to deliver strong results for shareholders.”
Q2 2024 Financial Results
Q2 2024 reported net income was $129 million, or $0.45 per
common share, compared with net income of $28 million, or $0.10 per
common share, in Q2 2023, driven by the LIL gain on sale, higher
earnings in Tampa Electric and Peoples Gas, both of which
benefitted from customer growth and new base rates.
Reported net income for the quarter included a $107 million
gain, after tax and transaction costs, on the sale of Emera’s LIL
equity interest, and a $129 million mark-to-market (“MTM”)
after-tax loss, primarily at Emera Energy Services (“EES”) compared
to a $134 million MTM after-tax loss in Q2 2023. The recently
announced sale of New Mexico Gas Company will result in a non-cash
impairment of goodwill in subsequent periods.
Q2 2024 adjusted net income(1) was $151 million, or $0.53 per
common share, compared with $162 million, or $0.60 per common
share, in Q2 2023. The decrease was primarily due to decreased
earnings at NMGC and NSPI, higher Corporate interest expense and
unrealized FX losses on translation of USD short term debt
balances. These were partially offset by increased earnings at PGS
and TEC and increased Corporate income tax recovery due to
increased losses before provision for income taxes.
Year-to-date Financial Results
Year-to-date reported net income was $336 million or $1.17 per
common share, compared with net income of $588 million or $2.17 per
common share year-to-date in 2023. Year-to-date reported net income
included a $107 million gain, after tax and transaction costs, on
the sale of Emera’s LIL equity interest and a $138 million MTM
loss, after-tax, compared to a $158 million MTM gain, after-tax,
primarily at EES in 2023.
Year-to-date adjusted net income(1) was $367 million or $1.28
per common share, compared with $430 million or $1.58 per common
share year-to-date in 2023.
Year-to-date adjusted net income decreased primarily due to
decreased earnings at NMGC, NSPI, TEC and EES, increased Corporate
interest expense, higher operating, maintenance and general
expenses (“OM&G”) in the Corporate segment due to the timing of
long-term compensation hedges and realized FX losses. These were
partially offset by increased earnings at PGS and increased
Corporate income tax recovery.
The translation impact of a weaker Canadian dollar on US
denominated earnings was more than offset by the losses on FX
hedges used to mitigate translation risk of US dollar earnings
which, combined, decreased net income by $11 million in Q2 2024 and
$13 million year-to-date, compared to the same periods in 2023.
Weakening of the Canadian dollar increased adjusted net income by
$2 million in Q2 2024 and $1 million year-to-date compared to the
same period in 2023.
(1) See “Non-GAAP Financial Measures and Ratios” noted below and
“Segment Results and Non-GAAP Reconciliation” below for
reconciliation to nearest USGAAP measure.
Segment Results and Non-GAAP Reconciliation
For the
Three months ended
June 30
Six Months ended
June 30
millions of Canadian dollars (except per
share amounts)
2024
2023
2024
2023
Adjusted net income 1,2
Florida Electric Utility
$
187
$
177
272
284
Canadian Electric Utilities
42
49
129
141
Gas Utilities and Infrastructure
44
38
142
132
Other Electric Utilities
8
10
17
14
Other 3
(130)
(112)
(193)
(141)
Adjusted net income1,2
$
151
$
162
367
430
Gain on sale, after-tax and transaction
costs4
107
-
107
-
MTM (loss) gain, after-tax5
(129)
(134)
(138)
158
Net income attributable to common
shareholders
$
129
$
28
336
588
EPS (basic)
$
0.45
$
0.10
1.17
2.17
Adjusted EPS (basic) 1,2
$
0.53
$
0.60
1.28
1.58
1 See “Non-GAAP Financial Measures and Ratios” noted below. 2
Excludes the gain on sale, after tax and transaction costs of
Emera’s LIL equity interest and the effect of after-tax MTM
adjustments. 3 Lower earnings quarter-over-quarter, primarily due
to increased interest expense, realized FX loss on translation of
foreign currency bank balances, partially offset by increased
income tax recovery. Year-over-year change primarily due to
increased interest expense and operating expense and lower
contributions from EES. 4 Net of income tax expense of $75 million
for the three and six months ended June 30, 2024 (2023 – nil). 5
Net of income tax recovery of $52 million for the three months
ended June 30, 2024 (2023 – $55 million recovery) and $56 million
income tax recovery for the six months ended June 30, 2024 (2023 –
$64 million expense).
Consolidated Financial Review
The following table highlights significant changes in adjusted
net income attributable to common shareholders from 2023 to
2024.
For the
Three months ended
Six months ended
millions of Canadian dollars
June 30
June 30
Adjusted net income – 2023 1,2
$
162
$
430
Operating Unit Performance
Decreased earnings at NMGC due to
increased OM&G and higher interest, partially offset by lower
income tax expense. Year-over-year earnings also decreased due to
lower asset optimization revenues
(5)
(19)
Decreased earnings at NSPI due to
increased OM&G primarily due to investment in reliability
initiatives and increased income tax expense, partially offset by
higher revenues due to higher residential sales volumes
(5)
(16)
Decreased earnings at EES year-over-year
due to less favourable market conditions
-
(10)
Increased earnings at PGS due to higher
revenue from new base rates, customer growth, and favourable
weather, partially offset by higher interest expense, OM&G and
depreciation expense
11
32
Increased earnings quarter-over-quarter at
TEC due to higher revenues as a result of customer growth and new
base rates, and lower income tax expense, partially offset by
higher OM&G due to higher generation and transmission and
distribution costs, and higher depreciation. Year-over-year
earnings decreased due to higher OM&G and depreciation, and
unfavourable weather, partially offset by higher revenue from
customer growth and new base rates, and lower income tax
expense
10
(12)
Corporate
Increased interest expense, pre-tax, due
to increased interest rates and increased average total debt
(14)
(23)
FX losses on the translation of USD
short-term debt balances
(6)
(5)
Increased income tax recovery, primarily
due to increased losses before provision for income taxes
7
15
Decreased/(increased) OM&G pre-tax,
primarily due to the timing of long-term compensation hedges
2
(17)
Other Variances
(11)
(8)
Adjusted net income – 2024 1,2
$
151
$
367
1 See “Non-GAAP Financial Measures and Ratios” noted below and
“Segment Results and Non-GAAP Reconciliation" for reconciliation to
nearest GAAP measure. 2 Excludes gain on sale, after-tax and
transaction costs of Emera’s LIL equity interest and the effect of
MTM adjustments, after- tax.
1 Non-GAAP Financial Measures and Ratios
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
and ratios by adjusting certain GAAP measures for specific items.
Management believes excluding these items better distinguishes the
ongoing operations of the business. For further information on the
non-GAAP financial measure, adjusted net income, and the non-GAAP
ratio, adjusted EPS – basic, refer to the "Non-GAAP Financial
Measures and Ratios" section of the Emera’s Q2 2024 MD&A which
is incorporated herein by reference and can be found on SEDAR+ at
www.sedarplus.ca. Reconciliation to the nearest GAAP measure is
included in “Segment Results and Non-GAAP Reconciliation”
above.
Forward-Looking Information
This news release contains forward-looking information within
the meaning of applicable securities laws. By its nature,
forward-looking information requires Emera to make assumptions and
is subject to inherent risks and uncertainties. These statements
reflect Emera management’s current beliefs and are based on
information currently available to Emera management. There is a
risk that predictions, forecasts, conclusions and projections that
constitute forward-looking information will not prove to be
accurate, that Emera’s assumptions may not be correct and that
actual results may differ materially from such forward-looking
information. Additional detailed information about these
assumptions, risks and uncertainties is included in Emera’s
securities regulatory filings, including under the heading
“Business Risks and Risk Management” in Emera’s annual Management’s
Discussion and Analysis, and under the heading “Principal Risks and
Uncertainties” in the notes to Emera’s annual and interim financial
statements, which can be found on SEDAR+ at www.sedarplus.ca.
Teleconference Call
The company will be hosting a teleconference today, Friday,
August 9, at 9:30 a.m. Atlantic (8:30 a.m. Eastern) to discuss the
Q2 2024 financial results.
Analysts and other interested parties in North America are
invited to participate by dialing 1-800-717-1738. International
parties are invited to participate by dialing 1-289-514-5100.
Participants should dial in at least 10 minutes prior to the start
of the call. No pass code is required.
A live and archived audio webcast of the teleconference will be
available on the Company's website, www.emera.com. A replay of the
teleconference will be available on the Company’s website two hours
after the conclusion of the call.
About Emera
Emera is a geographically diverse energy and services company
headquartered in Halifax, Nova Scotia with approximately $40
billion in assets and 2023 revenues of $7.6 billion. The company
primarily invests in regulated electricity generation and
electricity and gas transmission and distribution, with a strategic
focus on transformation from high carbon to low carbon energy
sources. Emera has investments in Canada, the United States and the
Caribbean. Emera’s common and preferred shares are listed on the
Toronto Stock Exchange and trade respectively under the symbol EMA,
EMA.PR.A, EMA.PR.B, EMA.PR.C, EMA.PR.E, EMA.PR.F, EMA.PR.H,
EMA.PR.J and EMA.PR.L. Depositary receipts representing common
shares of Emera are listed on the Barbados Stock Exchange under the
symbol EMABDR and on The Bahamas International Securities Exchange
under the symbol EMAB. Additional information can be accessed at
www.emera.com or at www.sedarplus.ca.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240809526501/en/
Emera Inc. Investor Relations Dave Bezanson, VP,
Investor Relations & Pensions 902-474-2126
dave.bezanson@emera.com
Media 902-222-2683 media@emera.com
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