Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Emera Inc (EMRAF, Financial) reported an 8% increase in adjusted earnings per share for Q3 2024 compared to the previous year, driven by strong performance in its Florida businesses.
- The company has successfully managed to recover approximately $650 million of deferred fuel and storm costs at Tampa Electric over a 21-month period, demonstrating effective regulatory mechanisms.
- Emera Inc (EMRAF) announced its 18th consecutive year of dividend increases, reflecting confidence in its asset portfolio and financial management.
- The company's investments in storm protection have resulted in improved reliability, with Tampa Electric experiencing its best-ever reliability in 2023.
- Emera Inc (EMRAF) has strengthened its balance sheet through strategic actions, including asset sales and a $500 million federal loan guarantee for Nova Scotia Power, enhancing financial stability.
Negative Points
- Emera Inc (EMRAF) faced significant restoration costs due to hurricanes Helene and Milton, with estimated costs ranging from $365 to $425 million, impacting financial resources.
- The company experienced a goodwill impairment loss related to the sale of New Mexico Gas, affecting reported earnings for the quarter.
- Higher interest costs and lower contributions from Canadian utilities and Emera Energy negatively impacted cash flow and earnings.
- The sale of the Labrador Island link reduced contributions from Canadian equity investments, impacting earnings from Canadian electric utilities.
- Emera Inc (EMRAF) is facing challenges in Nova Scotia with potential political changes and discussions around rate increases, which could impact future financial performance.
Q & A Highlights
Q: Can you provide more details on the recovery of storm costs and how it might affect customer rates, especially considering current gas prices?
A: Archie Collins, President and CEO of Tampa Electric, explained that the total storm costs, including replenishment of the storm reserve, are estimated to be between $404 and $425 million. The company plans to file an application with the Florida Public Service Commission in December. They are considering the balance between timely recovery and customer rate impacts, aided by favorable fuel costs. Greg Blunden, CFO, added that the costs will not significantly impact credit metrics in 2024 or 2025 due to the timing of payments and recoveries.
Q: With the upcoming election in Nova Scotia, how does Emera plan to handle potential changes in rate caps and their impact on rate base growth?
A: Peter Gregg, President and CEO of Nova Scotia Power, stated that while they are aware of the election and potential policy changes, they maintain a constructive relationship with the provincial government. They focus on affordability and reliability for customers and do not anticipate significant changes to their approach or rate base growth strategy.
Q: How are you addressing the potential impact of U.S. corporate tax cuts on your financials and credit ratios?
A: Greg Blunden, CFO, noted that any potential tax cuts would likely have a smaller impact compared to previous cuts in 2017. The previous settlement agreement clause requiring rate adjustments for tax changes expires at the end of this year, reducing potential impacts.
Q: Are there any plans to accelerate storm hardening investments in light of recent hurricanes?
A: Archie Collins, President and CEO of Tampa Electric, mentioned that the grid held up well during recent storms, but they are considering accelerating some storm protection programs. They plan to propose new or accelerated programs to improve grid resiliency, particularly focusing on undergrounding assets.
Q: Have there been any recent discussions with credit rating agencies regarding the impact of recent events on Emera's outlook?
A: Greg Blunden, CFO, confirmed ongoing discussions with S&P and Moody's. The steps taken, such as asset sales and securitizations, are viewed positively. The storm costs are manageable, and they are focused on the outcome of the Tampa Electric rate case and the sale of New Mexico Gas.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
