Emera Inc. (“Emera”) (TSX: EMA) reported financial results for the third quarter and year-to-date 2024.
Highlights
- Increase in Adjusted Earnings Per Share1 (“Adjusted EPS”): Adjusted EPS increased by 8% or $0.06 to $0.81 compared to adjusted EPS of $0.75 in Q3 2023.
- Customer growth at both Florida utilities, and new base rates at Peoples Gas (“PGS”) resulted in higher contributions;
- Corporate costs were lower, primarily due to the timing difference in the valuation of long-term incentive expense and related hedges;
- These increases were partially offset by lower contributions from Canadian Electric Utilities driven by the sale of the Labrador Island Link (“LIL”) in June 2024 and lower contributions from Nova Scotia Power (“NSPI”) driven by an increase in reliability and customer experience-related operating costs.
- Decrease in Reported Earnings Per Share (“EPS”): Reported EPS decreased by $0.36 to $0.01 in Q3 2024, compared to $0.37 in Q3 2023. This decrease was primarily driven by charges related to the pending sale of New Mexico Gas Company (“NMGC”).
- Strengthened Financial Position: In late September, NSPI finalized a $500 million federal loan guarantee with the Government of Canada and the Government of Nova Scotia. This guarantee provides important cost relief to electricity customers in Nova Scotia and protects the overall financial health of the utility by way of a $500 million debt reduction. This builds on the Q3 announcement of the US$1.252 billion pending sale of NMGC.
- Investing for the Future: Emera remains on track to fully deploy its $2.9 billion capital plan in 2024, with two-thirds of new rate base investments committed to date. The investment plan remains focused on reliability and resiliency, grid modernization, renewable energy integration, technology innovations focused on cost efficiency and customer experience, and customer growth driven infrastructure expansion.
“Emera’s third quarter results were strong, with an 8 per cent increase in adjusted earnings per share over Q3 2023, principally driven by solid operational performance across the portfolio and particularly strong financial performance from our Florida utilities,” said Scott Balfour, President and CEO of Emera Inc. “The successful storm response following the recent back-to-back hurricanes in Florida is a testament to our local teams’ expertise, and the resilience of our electric and gas infrastructure. The PGS gas system experienced minimal impacts from both Helene and Milton, while grid restoration efforts for Tampa Electric were completed in record time given the severity of the events.”
Q3 2024 Financial Results
Q3 2024 reported net income was $4 million, or $0.01 per common share, compared with reported net income of $101 million, or $0.37 per common share, in Q3 2023. Reported net income for the quarter included $225 million in charges related to the pending sale of NMGC, after tax and a $7 million MTM loss, after-tax, primarily at Emera Energy Services (“EES”) compared to a $103 million loss, after-tax, in Q3 2023.
Q3 2024 adjusted net income(1) was $236 million, or $0.81 per common share, compared with $204 million, or $0.75 per common share, in Q3 2023. The increase in adjusted net income was primarily due to increased earnings at TEC, PGS, NSPI and NMGC; and lower Corporate operating, maintenance and general expenses (“OM&G”) largely due to the timing difference in the valuation of long-term incentive expense and related hedges. These were partially offset by decreased earnings at Emera Energy; lower equity earnings as a result of the sale of Emera’s LIL equity interest; lower Corporate income tax recovery due to decreased losses before provision for income taxes; increased Corporate interest expense due to increased interest rates and increased total debt; and increased Corporate preferred share dividends.
Year-to-date Financial Results
Year-to-date reported net income was $340 million or $1.18 per common share, compared with reported net income of $689 million or $2.53 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 was unfavourably impacted by the $225 million charges, after-tax, related to the pending sale of NMGC, and the $145 million MTM losses, after-tax, primarily at EES, compared to a $55 million gain, after-tax, in 2023.
Year-to-date adjusted net income(1) was $603 million or $2.10 per common share, compared with $634 million or $2.33 per common share year-to-date in 2023.
The year-to-date decrease in adjusted net income was primarily due to decreased earnings at NMGC, Emera Energy, and NSPI; lower equity earnings as a result of the sale of Emera’s LIL equity interest; increased Corporate interest expense due to increased interest rates and increased total debt; and increased Corporate preferred share dividends. These were partially offset by increased earnings at PGS and TEC; decreased Corporate OM&G due to the timing difference in the valuation of long-term incentive expense and related hedges; and higher income tax recovery due to increased loss before provision for income taxes.
The translation impact of a weaker CAD on US denominated earnings increased net income by $7 million in Q3 2024 compared to the same period in 2023. Year-to-date 2024, the impact of a weaker CAD on US denominated earnings was more than offset by the realized and unrealized losses on FX hedges used to mitigate the translation risk of USD earnings, resulting in a $6 million decrease to net income compared to the same period in 2023. Weakening of the CAD increased adjusted net income by $2 million in Q3 2024 and $3 million year-to-date compared to the same periods in 2023. Impacts of the changes in the translation of the CAD include the impacts of Corporate FX hedges used to mitigate translation risk of USD earnings in the Other segment.
