NextEra Energy Inc. (NEE: 52.81 -0.03 -0.06%) announced second-quarter 2010 operating earnings of $1.11 per share compared with 99 cents per share in the year-ago quarter. The results of the company outpaced the Zacks Consensus Estimate, as provided by 13 covering analysts, by 5 cents.GAAP earnings of NextEra Energy for the second quarter of 2010 were $1.01 per share compared with 91 cents per share recorded in the year-ago period. The difference of 10 cents between operating and GAAP earnings, during the second quarter, was due to mark-to-market effects of non-qualifying hedges and other than temporary impairments on certain investments, both of which relate to NextEra Energy Resources.
Total Revenue
NextEra Energy’s total operating revenue for second-quarter 2010 was $3.6 billion versus $3.8 billion reported in the year-ago period. The year-over-year decline in total revenue was due to lower revenue from Florida Power & Light. The actual results of the company fell short of the Zacks Consensus Estimate of $3.9 billion by $0.3 billion.
NextEra Energy’s total operating revenue for second-quarter 2010 was $3.6 billion versus $3.8 billion reported in the year-ago period. The year-over-year decline in total revenue was due to lower revenue from Florida Power & Light. The actual results of the company fell short of the Zacks Consensus Estimate of $3.9 billion by $0.3 billion.
Segmental Results
Florida Power & Light: Total segment revenue for second-quarter 2010 was $2.6 billion versus $2.9 billion in second-quarter 2009, reflecting a decline of 10%. Total energy sales during the current quarter were 27,815 million kilowatt/hr (KWh) compared with 26,912 million KWh in second-quarter 2009.
Despite a year-over-year increase in power sales, the revenue contribution from this business declined due to the reduction in the average unit sales price. The average price per KWh sold in the second quarter of 2010 was slashed by 1.49 cents to 9.64 cents from the second-quarter 2009 level of 11.13 cents.
NextEra Energy Resources: Total revenue for second-quarter 2010 was $965 million versus $911 million in second-quarter 2009, reflecting growth of 5.9%. The second quarter results were driven by the addition of new wind projects, improved performance of existing assets and the sale of a power plant.
Corporate and Other: Total revenue for second-quarter 2010 was $46 million versus $36 million in second-quarter 2009, increasing by a sharp 27.8%.
Total operating expenses during the reported quarter eased by 10.1% year over year. The reduction in operating expenses during the quarter was primarily owing to a 19% year-over-year decline in input costs.
At the end of the second quarter of 2010, interest expenses for NextEra shot up by $32 million year over year to $247 million, reflecting the company’s higher debt level.
Financial Update
NextEra Energy ended the second quarter 2010 with a strong cash balance of $829 million versus $238 million at the end of 2009.
Capital expenditure and other investment during the first half of 2010 were $2.6 billion compared with $2.3 billion in the comparable period a year ago.
NextEra Energy ended the second quarter of 2010 with a long-term debt of $17.2 billion compared with $16.3 billion at the end of 2009.
Outlook
NextEra Energy expects adjusted earnings per share to be in the range of $4.25 to $4.65 for 2010. For 2011, adjusted earnings are expected to remain flat year over year. NextEra expects earnings to grow at an average rate of 5% to 7% from 2009 through 2014.
Our ViewCounting among the positives for the quarter was Florida Power & Light Company’s ability to increase the average customer level by 21,000, leading to an overall 3.3% spike in KW/h sales.
NextEra Energy is going to invest $2 billion to modernize its Cape Canaveral and Riviera power plants. The new investment in these units will save customers $850 million to $950 million over the life of the plants and also improve air quality by reducing particulate emissions by an estimated 88% at these sites and improve the plants’ carbon dioxide emission rate by roughly 50%.
We also appreciate the gradual increase in green power assets of NextEra Energy. The present wind generation capacity of the company is higher by 1,460 megawatts from the prior-year level. The company has up its sleeves another 540 megawatt of wind power for 2010.
| Overall Summary: |  45%, Bullish 55%, Bearish | Trade Quality: | Upside 30%, Poor Downside 75%, Good |
| Analysts' Targets | |
| Robert W. Baird & Co. | $60 |
| Outperform | |
| Friday, July 16, 2010 | |
| Oppenheimer & Co. Inc. | $55 |
| Outperform | |
| Wednesday, June 30, 2010 | |
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