Emera Reports Q3 2013 Earnings

(TSX:EMA): today reported results for the third quarter of 2013.

Highlights:

• Operating revenues increased 3.1% to $491.2 million in Q3 2013 compared to $476.4 million in Q3 2012.
• Net income adjusted for after-tax mark-to-market adjustments decreased 12.3% to $38.4 million or $0.29 per share in Q3 2013 compared to $43.8 million or $0.35 per share in Q3 2012.
• Adjusted net income for the nine months ended September 30, 2013 increased 14.3% to $196.4 million or $1.48 per share, compared to $171.9 million or $1.38 per share for the same period in 2012.
• Cash flows from operations increased 2.6% to $435.5 million for the nine months ending September 30^th 2013 (2012 – $424.5 million).
• Emera’s total assets increased 7.1% to $8.1 billion in Q3 2013 (2012 - $7.5 billion).
• In October, Emera's Board of Directors approved an increase in the quarterly common share dividend from an annualized rate of $1.40 to $1.45.

Consolidated Results

When adjusted for mark to market impacts, Emera reported adjusted net income of $38.4 million ($0.29 per share) for the third quarter of 2013, compared to $43.8 million ($0.35 per share) for the same quarter last year. Excluding these mark to market impacts, Emera reported net income of $28.8 million ($0.22 per share) compared to $44.7 million ($0.36 per share) last year.

For the nine months ended September 30th, 2013, Emera reported adjusted net income of $196.4 million ($1.48 per share), compared to $171.9 million ($1.38 per share) for the same quarter last year. Excluding these mark to market impacts, Emera reported net income of $196.5 million ($1.49 per share) compared to $178.1 million ($1.43 per share) last year.

Items Impacting the Quarter

Algonquin Discontinued Operations

In Q3 2013, Emera recognized an after-tax loss of $7.0 million ($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 has a 24.4% equity interest in Algonquin, which is accounted for a quarter in arrears from when Algonquin reports.

Algonquin Gains on Subscription Receipts

Emera recognized $2.7 million (or $0.02 per share) of after-tax gains in Q3 2012 from the conversion of Algonquin subscription receipts to Algonquin common shares. No such gains were recognized in Q3 2013.

“In addition to the continued strong financial results, we were very busy this quarter executing on our growth strategy,” said Chris Huskilson, President and CEO of Emera Inc. “In August, we agreed to purchase three combined-cycle gas-fired electricity generating facilities in New England, which fit well into our focused portfolio of operations in this market. More recently, in October, we filed the Maritime Link Compliance Filing with the Nova Scotia Utility and Review Board. We believe that the agreement reached between Nalcor, Emera and Nova Scotia Power provides the Board with the assurance they were seeking on the availability of market priced energy and thus meets the condition established by the UARB. The UARB is expected to rule on this filing in this quarter”

Segmented Results

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

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

Segment Summary

Nova Scotia Power Inc.’s net income was $14.4 million in Q3 2013 (Q3 2012 - $22.6 million). The lower net income this quarter was primarily due to the impacts on AFUDC and tax expense from a reduced capital spending program in 2013, and the comparative impact of the reversal of a $5.0 million receivable allowance in 2012. NSPI’s net income for the year to date of $96.1 million compared to $99.0 million last year. NSPI’s rate base and earnings for the full year are expected to remain consistent with those of 2012.

Maine Utility Operations’ net income was $9.2 million in Q3 2013 (Q3 2012 - $11.0 million). The lower net income is primarily due to the impact of a $1.5 million (after tax) provision for the expected Federal Energy Regulatory Commission 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’ net income was $11.4 million in Q3 2013 (Q3 2012 - $7.2 million). The higher net income was primarily due to increased cost savings at Grand Bahama Power Corporation and increased regulatory deferrals.

Pipelines’ contributed $8.2 million to consolidated net income in Q3 2013 (Q3 2012 - $6.8 million). The higher net income is due to decreased interest expense.

Emera’s Services Renewables and Other investments (SRO)’s adjusted net income, was $2.3 million in Q3 2013 (Q3 2012 Adjusted Net Income - $7.3 million). The decrease was primarily due to the above noted $7.0 million after-tax impact from Algonquin’s loss from discontinued operations, and the impact of $2.7 million of after-tax gains recognized in Q3 2012 on the conversion of Algonquin subscription receipts into Algonquin common shares. These effects were partially offset by improved earnings from Emera’s equity earnings in Algonquin (excluding the impact of the discontinued operations) and Bear Swamp.

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 4:00 pm Atlantic time today (3:00 pm Toronto/Montreal/New York; 1:00 pm Winnipeg; 12:00 pm Vancouver) to discuss the Q3 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 1-647-427-3413. 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 (available until midnight, November 22, 2013).

About Emera

Emera Inc. is an energy and services company with $8.0 billion in assets and 2012 revenues of $2.1 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 three Caribbean countries. More than 80% of the company's earnings come 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.