Emera (TSX:EMA) today reported results for the fourth quarter and
the year ended December 31, 2015.
Reported Earnings (including after-tax
mark-to-market impacts) for the year
-
Reported net income in 2015 was $397.2 million (versus $406.7 million
in 2014).
-
Reported earnings per share in 2015 were $2.72 (versus $2.84 in 2014).
Adjusted Earnings (excluding after-tax
mark-to-market impacts) for the year
-
Adjusted net income(1) in 2015 was $330.0 million (versus
$319.2 million in 2014).
-
Adjusted net income(1), also excluding $52.8 million in
after-tax costs ($0.36 per common share) related to the pending
acquisition of TECO Energy Inc., was $382.8 million in 2015
(versus $319.2 million in 2014).
-
Adjusted earnings per share(1) in 2015 were $2.26 (versus
$2.23 in 2014).
-
Adjusted earnings per share(1), also excluding the
impact of acquisition costs were $2.63 in 2015 (versus $2.23 in
2014).
-
Included in adjusted net income(1) are:
-
dilution gains on Emera’s investment in Algonquin Power and
Utilities Corp (APUC) of $9.4 million after-tax ($0.06 per common
share) in 2015, and $15.5 million after-tax ($0.10 per common
share) in 2014; and,
-
an $11.5 million after-tax gain ($0.08 per common share) on the
sale of Northeast Wind Partnership II, LLC (NWP) in 2015.
2015 Highlights
-
In 2015, Emera announced two increases totaling 22.6% in its
annualized common share dividend rate, bringing the annual dividend to
$1.90.
-
On September 4, 2015, Emera announced a definitive agreement to
acquire TECO Energy for an aggregate purchase price of approximately
US$10.4 billion, including the assumption of approximately US$3.9
billion of debt.
-
The acquisition is expected to be accretive to earnings per common
share by approximately 5% in the first full year following its
completion (2017)a , growing to more than 10% by the
third full year (2019)a.
-
The acquisition provides additional support to Emera’s 8% dividend
growth target through 2019 and positions Emera to extend the
dividend growth target beyond 2019.
“2015 was another strong year for Emera, with the advancement of
important strategic initiatives and strong financial results achieved.
We built on our strong dividend growth history with a 22.6% increase in
our annual dividend, and raised our dividend growth target to 8% per
year through 2019,” said Chris Huskilson, President and CEO of Emera
Inc. “The TECO Energy acquisition is expected to generate significant
earnings and cash accretion, and provide the company with a new
strategic growth platform. The combined growth plan for Emera and TECO
drives a very positive outlook for Emera through to the end of the
decade.”
Consolidated Financial Highlights (in millions
of $CAD, except per share amounts)
|
|
Three months ended December 31
|
|
Year ended
December 31
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
Operating revenues
|
|
$
|
731.6
|
|
$
|
782.7
|
|
$
|
2,789.3
|
|
$
|
2,938.6
|
|
Operating revenues (excluding mark-to-market impacts)
|
|
$
|
716.1
|
|
$
|
653.5
|
|
$
|
2,830.3
|
|
$
|
2,776.1
|
|
Net income attributable to common shareholders
|
|
$
|
192.1
|
|
$
|
151.2
|
|
$
|
397.2
|
|
$
|
406.7
|
|
Earnings per common share - basic
|
|
$
|
1.31
|
|
$
|
1.05
|
|
$
|
2.72
|
|
$
|
2.84
|
|
|
|
|
|
|
|
|
|
|
|
After-tax mark-to-market gain (loss)
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|
$
|
105.0
|
|
$
|
72.7
|
|
$
|
67.2
|
|
$
|
87.5
|
|
Adjusted EBITDA(1)*
|
|
$
|
258.8
|
|
$
|
228.0
|
|
$
|
1,031.2
|
|
$
|
946.5
|
|
Adjusted net income attributable to common shareholders(1)*
|
|
$
|
87.1
|
|
$
|
78.5
|
|
$
|
330.0
|
|
$
|
319.2
|
|
Adjusted earnings per common share – basic(1)*
|
|
$
|
0.59
|
|
$
|
0.54
|
|
$
|
2.26
|
|
$
|
2.23
|
|
|
|
|
|
|
|
|
|
|
|
Costs related to pending acquisition of TECO Energy
|
|
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($0.21)
|
|
|
-
|
|
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($0.36)
|
|
|
-
|
|
Adjusted earnings per common share(1)
excluding TECO acquisition costs
|
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$
|
0.80
|
|
|
|
$
|
2.63
|
|
|
|
|
|
|
|
|
|
|
|
|
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Other items affecting earnings per common share – basic:
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|
|
|
|
|
|
|
|
|
Gain on dilution of APUC Equity Investment
|
|
$
|
0.06
|
|
$
|
0.04
|
|
$
|
0.06
|
|
$
|
0.10
|
|
Gain on sale of Northeast Wind Partnership II, LLC investment
|
|
|
-
|
|
|
-
|
|
$
|
0.08
|
|
|
-
|
|
Barbados Light & Power Company Limited Restructuring Costs
|
|
|
-
|
|
|
-
|
|
|
($0.04)
|
|
|
-
|
|
Effect of Foreign Currency Translation (adjusted earnings per
share(1))i
|
|
$
|
0.05
|
|
$
|
0.02
|
|
$
|
0.18
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
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Dividends per common share declared
|
|
|
-
|
|
|
-
|
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$
|
1.6625
|
|
$
|
1.4750
|
|
Total Assets (as at December 31)
|
|
$
|
12,011.3
|
|
$
|
9,853.4
|
|
|
|
Weighted average shares of common stock outstanding - basic
(millions of shares for the three months ended December 31)
|
|
|
146.8
|
|
|
144.2
|
|
|
|
(1)See “Non-GAAP Measures” noted below.
*Adjusted
EBITDA(1), Adjusted net income(1)
and Adjusted earnings per common share(1)
exclude the effect of mark-to-market adjustments.
iEffect
of foreign currency translation compared quarter-over-quarter and
year-over-year.
Items Affecting Earnings:
2015
Acquisition-Related Costs
Emera incurred acquisition and
financing costs of $30.3 million after-tax ($0.21 per common share) in
Q4 2015, and $52.8 million after-tax ($0.36 per common share) for the
year ended December 31, 2015, related to the pending acquisition of TECO
Energy.
Gain on Dilution of APUC Equity Investment
In December 2015,
APUC closed a 14.355 million common share offering at a price per share
greater than Emera’s book value per share. Emera did not participate in
this financing. This financing was completed at a price per share
greater than Emera’s book value per share; as a result, Emera recorded a
gain of $9.4 million in after-tax earnings ($0.06 per common share).
BLPC Restructuring Costs
In Q2 2015, BLPC recorded severance
costs relating to corporate restructuring. The after-tax effect on
Emera’s Consolidated Net Income was $5.4 million ($0.04 per common
share).
Sale of NWP Equity Investment
In Q1 2015, Emera completed
the sale of its 49 per cent interest in NWP for $282.3 million. This
sale resulted in an after-tax gain of $11.5 million ($0.08 per common
share).
2014
Gain on Dilution of APUC Equity Investment
In Q3 and Q4
2014, APUC closed two common share offerings (16.86 million shares and
10.05 million shares). In Q3 2015, an over-allotment option of 2.52
million common shares was exercised. Emera did not participate in these
financings. These financings were all completed at a price per share
greater than Emera’s book value per share; as a result, Emera recorded
gains of $15.5 million in after-tax earnings ($0.10 per common share).
Consolidated Highlights
Operating revenues, adjusted to exclude mark-to-market
impacts, increased 2.0% in 2015 to $2,830.3 million compared to 2014.
The increase was primarily due to the effect of a strengthening USD,
increased revenues at Nova Scotia Power Inc. (NSPI) due to the
collection of prior years’ fuel costs and increased revenues at the New
England Gas Generating Facilities (NEGG). The increase was partially
offset by decreased revenues at Emera Caribbean due to lower fuel
revenues and a decrease in revenues at Emera Energy Services. In Q4
2015, operating revenues adjusted to exclude mark-to-market impacts
increased 9.6% to $716.1 million compared to Q4 2014.
Adjusted net income(1) increased 3.4% to $330.0
million in 2015 (2014: $319.2 million), primarily due to increased
electric margin at NEGG, the strengthening USD and improved results at
Emera Caribbean. The increase was partially offset by acquisition
related costs on the pending TECO Energy acquisition. In Q4 2015,
adjusted net income increased $8.6 million to $87.1 million, compared to
$78.5 million for the same period last year. The quarter-over-quarter
increase was primarily due to improved trading and marketing margin at
Emera Energy Services, increased electricity margin at NEGG, a stronger
USD and improved results at NSPI. The increase in the quarter was
partially offset by acquisition related costs on the pending TECO Energy
acquisition.
After-tax mark-to-market adjustments positively affected net
income by $67.2 million or $0.46 per common share in 2015. The
year-over-year decrease in after-tax mark-to-market gains is primarily
due to the reversal of 2013 mark-to-market losses in 2014 in Emera
Energy. In Q4 2015, mark-to-market adjustments positively affected net
income by $105.0 million or $0.72 per common share. The increased
mark-to-market gains in the quarter are primarily due to the $100.5
million effect of foreign currency translation on USD-denominated
currency and foreign currency forward contracts related to the pending
TECO Energy acquisition, partially offset by changes in gas and power
contract positions and amortization of transportation assets in Emera
Energy.
Cash from operations before changes in working capital increased
by $62.0 million in 2015 primarily due to higher margins at NEGG, the
effect of the strengthening USD, and increased fuel electric revenues at
NSPI. These increases were partially offset by lower trading and
marketing margin at Emera Energy Services, payment of acquisition costs
related to the pending TECO Energy acquisition and the deferral of
demand side management program costs at NSPI.
Cash flow from operations decreased $88.3 million to $674.2
million for the year ended December 31, 2015 compared to the same period
last year. The decrease was primarily due to lower trading and marketing
margin and payment of acquisition costs. The decrease was partially
offset by higher margins at NEGG.
Segmented Results
Emera reports its results in six operating segments: Nova Scotia Power
Inc., Emera Maine, Emera Caribbean, Pipelines, Emera Energy, and
Corporate & Other.
Quarterly Segmented Results (in millions of
$CAD, except per share amounts)
|
|
Adjusted Net Income(1)
|
|
|
|
Q4 2015
|
|
Q4 2014
|
|
|
|
|
2015
|
|
|
2014
|
|
Nova Scotia Power Inc.
|
|
$
|
40.1
|
|
$
|
30.1
|
|
|
$
|
129.9
|
|
$
|
124.9
|
|
Emera Maine
|
|
$
|
5.2
|
|
$
|
11.7
|
|
|
$
|
45.1
|
|
$
|
42.4
|
|
Emera Caribbean
|
|
$
|
13.3
|
|
$
|
6.1
|
|
|
$
|
40.5
|
|
$
|
28.7
|
|
Pipelines*
|
|
$
|
10.1
|
|
$
|
8.5
|
|
|
$
|
39.6
|
|
$
|
32.7
|
|
Emera Energy*
|
|
$
|
35.4
|
|
$
|
21.3
|
|
|
$
|
130.1
|
|
$
|
98.2
|
|
Corporate & Other*
|
|
$
|
(17.0)
|
|
$
|
0.8
|
|
|
$
|
(55.2)
|
|
$
|
(7.7)
|
|
TOTAL
|
|
$
|
87.1
|
|
$
|
78.5
|
|
|
$
|
330.0
|
|
$
|
319.2
|
|
Adjusted EPS (basic)(1)
|
|
$
|
0.59
|
|
$
|
0.54
|
|
|
$
|
2.26
|
|
$
|
2.23
|
|
*Adjusted net income(1) excludes after-tax
mark-to-market gain in Pipelines, Emera Energy and Corporate & Other of
$105.0 million in Q4 2015 (Q4 2014, after-tax mark-to-market gain of
$72.7 million). 2015 Adjusted net income(1)
excludes after-tax mark-to-market gain of $67.2 million (2014, after-tax
mark-to-market gain of $87.5 million)
Nova Scotia Power Inc.’s net income was $129.9 million in 2015;
an increase of 4.0% from 2014. This increase is primarily due to
increased electricity sales due to weather. NSPI’s net income for Q4
2015 was $40.1 million (Q4 2014: $30.1 million). The increased net
income in the quarter was primarily due to timing of regulatory
deferrals and reduced OM&G expense.
Emera Maine’s net income increased 6.4% to $45.1 million in 2015.
The higher net income year-over-year was primarily due to the impact of
a stronger USD. Emera Maine contributed $5.2 million to consolidated net
income in Q4 2015 (Q4 2014, $11.7 million). The decrease in net income
in the quarter was primarily due to the timing of transmission revenue
adjustments negatively impacting Q4 2015 and positively impacting Q4
2014 and increased OM&G expenses.
Emera Caribbean’s net income increased 41.1% to $40.5 million in
2015 (2014: $28.7 million) and was $13.3 million in Q4 2015 (Q4 2014,
$6.1 million). The higher net income in the quarter and year-over-year
was primarily due to the impact of a stronger USD, decreased OM&G and
increased electric margin primarily due to weather.
Pipelines’ net income, adjusted to exclude mark-to-market
changes, increased 21.1% to $39.6 million in 2015 (2014: $32.7 million),
and was $10.1 million in Q4 2015 (Q4 2014: $8.5 million). The increased
net income in the quarter and year-over-year was primarily due to higher
equity earnings from Maritimes & Northeast Pipeline, the impact of a
stronger USD and decreased interest expense.
Emera Energy’s net income, adjusted to exclude mark-to-market
impacts, increased 32.5% to $130.1 million in 2015. The increase in
adjusted net income(1) reflects increased margin at the NEGG,
a strengthening USD, the gain on the sale of NWP and increased income
from equity investments primarily due to increased sales at Bear Swamp.
Emera Energy’s adjusted net income(1) was $35.4 million in Q4
2015 (Q4 2014: $21.3 million). The increase in the quarter is primarily
due to increased trading and marketing margin, increased margin at the
NEGG and a strengthening USD.
Corporate and Other’s contribution to consolidated net income,
adjusted to exclude mark-to-market changes, was a loss of $55.2 million
in 2015 (2014: $7.7 million loss), and a loss of $17.0 million in Q4
2015 (Q4 2014: $0.8 million gain). The increase in the quarter and
year-over-year losses were primarily due to acquisition costs related to
the pending TECO Energy acquisition, partially offset by increased
income tax recovery and increased income from equity investments.
(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 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.sedar.com.
Teleconference Call
The company will be hosting a teleconference Tuesday, February 16, 2016
at 11:00am Atlantic time (10:00am Toronto/Montreal/New York; 9:00am
Winnipeg; 8:00am Calgary; 7:00am Vancouver) to discuss the Q4 2015
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 30669537 (available until midnight,
March 4, 2016).
The teleconference will also be web cast live at emera.com
and available for playback for one year.
Annual General Meeting
Emera’s Annual General Meeting is scheduled to be held May 17, 2016 at
the Design Exchange, 234 Bay St, Toronto, Ontario.
About Emera
Emera Inc. is geographically diverse energy and services company
headquartered in Halifax, Nova Scotia with approximately $12 billion in
assets and 2015 revenues of $2.79 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’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, and EMA.PR.F and
instalment receipts are listed and trade under the symbol EMA.IR.
Depositary receipts representing common shares of Emera are listed on
the Barbados Stock Exchange under the symbol EMABDR. Additional
Information can be accessed at www.emera.com
or at www.sedar.com.
a Assuming a USD/CDN exchange rate consistent with that at
the time of announcement; for additional assumptions, see “Forward
Looking Information” noted below. (1)See “Non-GAAP Measures”
noted below.
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