Release date- 09082016 - HALIFAX, Nova Scotia - Emera (TSX: EMA) today reported results for the second quarter of 2016.
Reported Net Income
Reported net income in Q2 2016 was $207.8 million (versus $10.0 million in Q2 2015)
Reported earnings per share in Q2 2016 were $1.39 (versus $0.07 in Q2 2015)
Adjusted Net Income (excluding after-tax mark-to-market impacts):
Adjusted net income increased to $237.5 million ($1.59 per common share) in Q2 2016 (versus $48.0 million or $0.33 per common share in Q2 2015).
Further adjusted to exclude TECO Energy acquisition costs of $42.0 million after tax ($0.28 per common share), adjusted net income was $279.5 million ($1.87 per common share) in Q2 2016 (versus $48.0 million or $0.33 per common share in Q2 2015).
Included in Q2 2016 adjusted net income(1) was $242.0 million in after-tax gains ($1.61 per common share) as follows: $145.5 million after-tax gain ($0.97 per common share) on the sale of Algonquin Power & Utilities Corp. (APUC) common shares, $53.1 million after-tax gain ($0.35 per common share) on the conversion of APUC subscription receipts and dividend equivalents into common shares, and a $43.4 million after-tax gain ($0.29 per common share) on Barbados Light & Power Company Limited (BLPC) Self Insurance Fund (SIF) regulatory liability reduction.
Also included in Q2 2016 adjusted net income(1) was an Emera Energy charge of $11.8 million after-tax ($0.08 per common share) to recognize state fuel taxes from November 2013 through March 2016, of which $2.1 million after-tax related to Q1 2016.
Emera announced a 10% increase in its annual common share dividend to $2.09 from $1.90.
Emera extended its 8% annual dividend growth target through to 2020 (from 2019).
'The TECO Energy acquisition closed on July 1st and is a transformative transaction that is expected to be materially accretive to earnings and cash in 2017 and beyond,' said Chris Huskilson, President and CEO of Emera Inc. 'We are on track for a very positive 2016 and with our announced dividend increase, we expect to remain within our target dividend payout ratio range for the year.'
Consolidated Financial Review
Adjusted net income(1) increased to $237.5 million in Q2 2016 (versus $48.0 million in Q2 2015), primarily due to a gain from the sale of APUC common shares, conversion of APUC subscription receipts and dividend equivalents into common shares and the gain on BLPC SIF regulatory liability reduction. The increase was partially offset by the TECO acquisition costs and recognition of fuel taxes at Emera Energy.
Nova Scotia Power Inc.'s net income was $28.4 million in Q2 2016, an increase of $11.5 million from the $16.9 million in Q2 2015. The increase was primarily due to the timing of regulatory deferrals, decreased OM&G, and lower regulatory amortization, partially offset by DSM program costs that are no longer deferred. NSPI's net income year-to-date was $80.9 million compared to $84.9 million for the same period last year.
Emera Maine's net income was $9.7 million Q2 2016, a decrease of $4.0 million compared to Q2 2015 net income of $13.7 million. The lower net income was primarily due to the amortization of transmission revenue adjustments. Emera Maine's net income year-to-date was $19.0 million compared to $25.2 million for the same period last year.
Emera Caribbean's net income of $58.1 million in Q2 2016 represents an increase of $53.3 million compared to Q2 2015 income of $4.8 million. The increase was primarily due to the gain realized from the BLPC SIF as a result of the reduction in the regulatory liability and a decrease in OM&G, partially offset by increased income tax expense. Emera Caribbean's net income year-to-date was $67.9 million compared to $13.6 million for the same period last year.
Pipelines' net income, adjusted to exclude mark-to-market changes, was $8.3 million in Q2 2016, a decrease of $1.0 million from Q2 2015. Pipeline's adjusted net income year-to-date was $18.0 million compared to $19.2 million for the same period last year.
Emera Energy's net loss, adjusted to exclude mark-to-market changes, was ($28.7) million in Q2 2016 compared to a net income of $3.4 million in the same quarter last year. The decrease was primarily due to the recognition of state fuel taxes at the New England gas generating facilities from November 2013 to March 2016, and lower marketing and trading margin reflecting a $12.6 million increase in margin from gas sales, which was more than offset by an increase in short-term fixed cost commitments for transportation and storage. Emera Energy's adjusted net income year-to-date was $19.2 million compared to $79.8 million for the same period last year.
Corporate & Other's net income, adjusted to exclude mark-to-market changes, was $161.7 million in Q2 2016 compared to a net loss of $0.1 million in Q2 2015. The increase was primarily due to the gain on the sale of APUC common shares and conversion of subscription receipts and dividend equivalents into common shares, and increased income from equity investments partially offset by TECO Energy related acquisition costs. Corporate & Other's adjusted net income was $152.7 million year-to-date compared to a loss of $3.1 million for the same period last year.
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.
Emera Inc. is a geographically diverse energy and services company headquartered in Halifax, Nova Scotia with approximately $27.5 billion in assets and 2015 pro-forma revenues of $6.3 billion. The company invests in electricity generation, transmission and distribution, gas transmission and distribution, and utility energy services with a strategic focus on transformation from high carbon to low carbon energy sources. Emera has investments throughout North America, and in four Caribbean countries. Emera continues to target having 75-85% of its adjusted earnings come from rate-regulated businesses.