By Tom Kleckner
NextEra Energy boosted its adjusted earnings by 5% in the fourth quarter and 11% for all of 2016, despite falling short of investor expectations on both measures.
The Florida-based company Friday reported fourth-quarter adjusted earnings of $566 million ($1.21/share) and full-year adjusted earnings of $2.88 billion ($6.19/share), missing the Zacks consensus estimates of $1.29/share and $6.22/share, respectively.
Investors rewarded the company with a $2.07 increase in its stock price, from $119.30/share to $121.37/share.
Adjusted earnings exclude the mark-to-market effects of some hedging, non-temporary impairments, operating results from a solar project in Spain and expenses related to its proposed acquisition of Texas-based Oncor. Also excluded from the 2016 results were gains from the sale of natural gas generation facilities.
Subsidiary NextEra Energy Resources’ investments provided much of the growth. It commissioned about 2,500 MW of new wind and solar projects — the most wind and solar megawatts ever added by a single company in North America, NextEra said. It has signed contracts for another 540 MW of wind and 100 MW of solar energy since its third-quarter call.
“I remain as enthusiastic as ever about our future,” NextEra CEO Jim Robo told financial analysists during a conference call. He said the company’s performance reinforces “the overall strength and diversity of our growth prospects.”
Central to NextEra’s future is completing its $21 billion acquisition of Oncor, the largest transmission and distribution provider in Texas. The deal has FERC’s approval, but it next faces a Public Utility Commission of Texas review scheduled for Feb. 21-24. (See FERC OK in Hand, NextEra Faces More Questions on Oncor Deal.)
The PUC has until April 29 to act on the acquisition or it will be automatically approved.
“We see an opportunity to make two already great companies even stronger,” Robo said. “We believe we have the ability to bring real value to Oncor stakeholders, and in turn find attractive investment opportunities to create long-term shareholder value.”
Robo reminded analysts that NextEra will use its A– credit rating and balance sheet — “One of the strongest in the sector,” Robo said — to save Oncor customers “hundreds of millions of dollars by removing the debt that hangs over Oncor right now.”
He said intervenors have raised questions that could result in NextEra being immediately downgraded once Oncor’s debt is moved by either prohibiting the company from appointing a majority of the Oncor board or placing restrictions on dividends and approval of budgets.
“We are unwilling to compromise our A- corporate credit rating as a result of any transaction,” Robo said. “We need to address these issues in order to avoid being downgraded, so we can close the transaction.”
