Emera Reports Q3 2014 Earnings

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

Financial Highlights:

• Operating revenues increased 14.5% to $562.4 million in Q3 2014 compared to Q3 2013.
• Adjusted net income⁽¹⁾ (before after-tax mark-to-market impacts), increased 29.9% to $49.9 million in Q3 2014 compared to Q3 2013. Reported net income, including mark-to-market losses, was $28.2 million in Q3 2014 (Q3 2013, $28.8 million).
• Adjusted earnings per share⁽¹⁾ increased 20.7% to $0.35 in Q3 2014 compared to $0.29 in Q3 2013. Year-to-date adjusted earnings per share⁽¹⁾ of $1.68 is a 13.5% increase over the nine months ending September 30, 2013.
• Cash flow from operations increased 34.4% to $585.3 million for the nine months ending September 30^th 2014 (YTD 2013, $435.5 million). The increase was primarily due to the positive impacts of Emera Energy’s higher earnings, particularly within the marketing and trading operations, and improved cash recovery in the regulated businesses.

• Emera’s Board of Directors increased the quarterly common share dividend 6.9% from an annualized rate of $1.45 to $1.55.
• Emera established an annual dividend growth target of 6% through the next five years in September.

“Emera continued its solid financial performance this year,” said Chris Huskilson, President and CEO of Emera Inc. “The ongoing opportunity and demand for transmission infrastructure to deliver clean energy to market, and the steady progress of our key development initiatives, drive a positive outlook for Emera.”

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

*Adjusted EBITDA⁽¹⁾, Adjusted net income⁽¹⁾ and Adjusted earnings per common share⁽¹⁾ excludes the effect of mark-to-market adjustments.

Operating revenues increased 14.5% to $562.4 million in Q3 2014 compared to the same quarter last year. The increase was primarily due to the 2013 acquisition of New England, gas generating facilities, partially offset by mark-to-market losses in Emera Energy’s trading and marketing business. Year-to-date operating revenues increased 33.2% to $2,179.3 million compared to the nine months ended September 30, 2013.

Adjusted net income⁽¹⁾ increased $11.5 million to $49.9 million in Q3 2014 compared to Q3 2013. Q3 2014 results include a gain on dilution of Emera’s investment in Algonquin (TSX:AQN) and $9.7 million of incremental preferred stock dividends as a result of the timing of dividend declarations and new preferred share issuance. Q3 2013 results also included a loss on discontinued operations for Algonquin. For the nine months ended September 30^th, 2014, Emera reported adjusted net income of $240.7 million, compared to $196.4 million for the same period last year, with the year over year increase largely from the strong results in the first half of 2014 within the marketing and trading operations within Emera Energy. 2013 year-to-date results included an $18.1 million after-tax gain on the conversion of subscription receipts into common shares of Algonquin Power.

After-tax mark-to-market adjustments reduced net income by $21.7 million or $0.15 per common share in Q3 2014, primarily due to changes in gas and power contract positions. Year-to-date after-tax mark-to-market adjustments increased net income by $14.8 million or $0.10 per common share.

Items Impacting the Quarter

Gain on Dilution of Algonquin Equity Investment
In September 2014, Algonquin closed a 16.86 million common share offering. In addition, an over-allotment option of 2.52 million common shares was exercised. As a result, Emera’s interest in Algonquin decreased from 24.1 percent to 22.0 percent and a gain on this dilution of $10.8 million (after-tax earnings of $9.1 million or $0.06 per common share) was recorded in “Income from equity investments”.

Algonquin Discontinued Operations
In Q3 2013, Emera recorded a loss from discontinued operations for Algonquin due to a write down of its’ Energy From Waste facility. Emera recognized a loss of $8.3 million before tax (after-tax loss of $7.0 million or $0.05 per common share). No such losses were recognized in Q3 2014.

Segmented Results

Emera now reports its results in six operating segments: Nova Scotia Power, Emera Maine, Emera Caribbean, Pipelines, Emera Energy, 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 loss in Emera Energy of $21.7 million (Q3 2013, after-tax mark-to-market loss of $9.6 million).YTD Adjusted net income⁽¹⁾ excludes after-tax mark-to-market gain of $14.8 million (YTD 2013, after-tax mark-to-market gain of $0.1 million).

Nova Scotia Power Inc.’s net income was $10.9 million in Q3 2014 compared to Q3 2013 net income of $14.4 million. The decrease is primarily due to the timing of regulatory deferral impacts and increased OM&G costs due to storm activity. NSPI’s net income for the year to date was $94.8 million compared to $96.1 million for the same period last year. NSPI’s rate base and earnings for the full year are expected to be similar to 2013.

Emera Maine contributed $13.3 million to consolidated net income in Q3 2014, an increase of $4.1 million compared to Q3 2013 net income of $9.2 million. The higher net income was primarily from increased revenues due to the settlement of the company’s distribution rate case. For the nine months ended September 30^th, 2014 Emera Maine’s net income was $30.7 million compared to $27.0 million for the same period last year.

Emera Caribbean’s net income was $8.2 million in Q3 2014 compared to Q3 2013 net income of $11.4 million. The lower net income was primarily due to restructuring costs in Light and Power Holdings Ltd and a planned outage at Grand Bahama Power Company. Emera Caribbean’s net income year to date was $22.6 million compared to $23.8 million for the same period last year.

Pipelines contributed $8.7 million to consolidated net income in Q3 2014, an increase of 6.1% compared to $8.2 million in Q3 2013. The Pipelines net income for the nine months ended September 30^th, 2014 was $24.2 million, an increase of $2.0 million over the same period last year.

Emera Energy’s net income, adjusted to exclude mark to market impacts, increased $6.6 million to $10.7 million in Q3 2014 compared to $4.1 million in the same quarter last year. The $6.6 million increase in adjusted net income⁽¹⁾ was primarily due to the acquisition of New England gas generating facilities and higher contributions from Bear Swamp. Emera Energy’s adjusted net income increased to $76.9 million for the nine months ending September 30^th 2014 (2013 - $26.0 million).

Corporate and Other’s net income was a loss of $1.9 million in Q3 2014 compared to a loss of $8.9 million in Q3 2013. The improved results were primarily due to a gain on dilution of Emera’s investment in Algonquin and a loss recorded from discontinued operations for Algonquin in Q3 2013. The results were partially offset by $9.7 million of incremental preferred stock dividends of which $5.6 million is a result of the timing of dividend declarations; the fourth quarter dividends were declared in Q3 2014, whereas the same dividends, last year, were declared in Q4 2013 and $4.1 million from a new preferred share issuance. Corporate and Other recorded a loss of $8.5 million year-to-date compared to a contribution of $1.3 million for the same period last year.

⁽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 Friday, November 7, 2014 at 5:00pm Atlantic time (4:00pm Toronto/Montreal/New York; 3:00pm Winnipeg; 2:00pm Calgary; 1:00pm Vancouver) to discuss the Q3 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 14569934 (available until midnight, November 25, 2014).

The teleconference will also be web cast live at emera.com and available for playback for one year.

About Emera

Emera Inc. is geographically diverse energy and services company headquartered in Halifax, Nova Scotia with $9.41 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. Emera continues to target having 75-85% of its adjusted earnings come from rate-regulated businesses. 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, EMA.PR.E, and EMA.PR.F. Additional Information can be accessed at www.emera.com or at www.sedar.com.