Emera Reports Q1 2014 Earnings

Emera Inc. (TSX:EMA): today reported results for the first quarter of 2014.

Financial Highlights:

• Operating revenues increased 65% to $1.05 billion, compared to $638.1 million in Q1 2013.
• Adjusted net income⁽¹⁾ increased 27% to $146.6 million in Q1 2014 compared to $115.4 million in Q1 2013. Adjusted net income⁽¹⁾ excludes after-tax mark-to-market gains of $56.2 million (Q1 2013 – $7.4 million). Reported net income, including mark-to-market gains, was $202.8 million (Q1 2013 - $122.8 million).
• Adjusted earnings per share⁽¹⁾ increased 17% to $1.03 in Q1 2014 (Q1 2013 - $0.88). Basic earnings per share, including mark-to-market gains, were $1.43 (Q1 2013 - $0.93).
• Cash flows from operations increased 59.1% to $146.4 million (Q1 2013 – $92.0 million).
• Emera’s total assets increased 4.6% to $9.29 billion in Q1 2014 (2013 - $8.88 billion).

“Emera had a strong start to 2014, with improvement in both earnings and cash flow,” said Chris Huskilson, President and CEO of Emera Inc. “Emera Energy integrated the New England gas plants into their operations. Also, we reached an important milestone on our Maritime Link Project, securing $1.3 billion of debt financing at 3.50% with the backing of the Federal Loan Guarantee saving Nova Scotia customers approximately $325 million over the life of the project. Our strong results and progress so far this year position us well to deliver on future growth.”

Consolidated Financial Highlights (in millions of $CAD, except per share amounts)

Operating revenues increased $412.2 million, primarily due to:

• 2013 acquisitions of the New England Gas Generating facilities, Brooklyn Energy Center, and 41.8% indirect controlling interest in Domlec, providing $224 million in additional revenues;
• Increased revenues of $76 million from Emera Energy’s marketing and trading operations, generation activities, and
• Mark-to-market and foreign exchange translation impacts of $108.6 million.

Adjusted net income⁽¹⁾ increased $31.2 million, primarily due to increased contributions from Emera Energy’s marketing and trading activities and New England Gas Plants, which more than offset the comparative impacts within Corporate and Other of:

• an $18.1 million (or $0.14 per common share) after-tax gain in Q1 2013 from the conversion of Algonquin subscription receipts into Algonquin common shares (Q1 2014 – nil), and
• Emera’s $6.8 million (or $0.05 per common share) after-tax gain in a Q1 2013 settlement by Northeast Wind Partners’ pursuant to various guarantee, warranty and performance obligations of one of Northeast Wind’s turbine suppliers (Q1 2014 – nil).

After-tax mark-to-market gains increased $48.8 million to $56.2 million ($0.40 per common share) in Q1 2014 compared to $7.4 million in Q1 2013. Increased mark-to-market gains largely resulted from the reversal of Q4 2013 mark-to-market losses.

Segmented Results

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

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

*Adjusted net income⁽¹⁾ excludes after-tax mark-to-market gains in Emera Energy of $56.2 million (Q1 2013 – $7.4 million).

Emera Energy’s net income, adjusted to exclude mark to market impacts, was $61.0 million in Q1 2014 (Q1 2013 Adjusted Net Income - $23.3 million). The increase in adjusted net income(1) is primarily due to increased trading and marketing margin, which increased $62.3 million to $82.3 million in Q1 2014 compared to Q1 2013. Q1 2014 saw significant weather and natural gas pricing volatility in several of Emera Energy's markets. The increase in trading and marketing margin reflects growth in the volume of business and Emera Energy’s success in utilizing its market knowledge and access to transportation capacity.

Nova Scotia Power Inc.’s net income was $66.8 million in Q1 2014 (Q1 2013 - $63.2 million). The higher net income was primarily a result of increased residential sales, decreased income tax expense due to higher pension contributions in 2014 and decreased regulatory amortization which also reduced the utilization of NSPI’s rate stabilization deferral.

Emera Maine’s net income was $10.4 million in Q1 2014 (Q1 2013 - $8.9 million). The higher net income was primarily due to increased operating revenues and the stronger US dollar quarter-over-quarter.

Pipelines’ contributed $7.2 million to consolidated net income in Q1 2014 (Q1 2013 - $7.2 million).

Emera Caribbean’s net income was $6.6 million in Q1 2014 (Q1 2013 - $4.4 million).The increased net income was primarily due to decreased operating, maintenance and general expenses, the stronger US dollar quarter-over quarter and higher electric margin.

⁽¹⁾ 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.

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 3:00 pm Atlantic time today (2:00 pm Toronto/Montreal/New York; 1:00 pm Winnipeg; 11:00 am Vancouver) to discuss the Q1 2014 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 (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. The Conference ID is 27134310 (available until midnight, May 21, 2014).The teleconference will also be web cast live at emera.com and available for playback for one year.

About Emera

Emera Inc. is a geographically diverse energy and services company headquartered in Halifax, Nova Scotia with $9.29 billion in assets and 2013 revenues of $2.2 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 four Caribbean countries. Approximately 80% of the company's reported net income in 2013 came 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 at sedar.com.