Diversified energy company Northeast Utilities (NU) said Monday that third-quarter profit declined from last year, impacted largely by weak economic conditions, mild summer weather and the absence of last year's one-time benefits. The Berlin, Connecticut-based company reaffirmed its earnings outlook for 2009 and initiated a guidance for 2010.
Net income attributable to controlling interest for the quarter declined to $64.8 million from $72.7 million in the same period last year, reflecting, among others, the absence of the benefits to third-quarter 2008 earnings of both the resolution of various income tax matters and mark-to-market gains in its competitive businesses.
Earnings per share declined to $0.37 from $0.47 per share in the year-ago quarter, and came in below the $0.38 per share projection of twelve analysts polled by Thomson Reuters. Analysts' estimates typically exclude special items.
Operating revenues declined to $1.31 billion from $1.51 billion in the same period last year. Four Street analysts expected the company to report earnings of $1.46 billion for the quarter.
Northeast Utilities is principally engaged in energy delivery business for residential, commercial, and industrial customers in Connecticut, New Hampshire, and Western Massachusetts
Third quarter earnings from its transmission segment rose to $42.8 million from $35.9 million in the year-ago period, helped by higher level of investment in transmission facilities. Distribution and generation segment earnings declined to $22.5 million from $35.5 million in the same period last year.
Charles Shivery, NU's chairman, president and chief executive officer said, "Our electric distribution segment has been the part of our company most impacted by the economy and volatile financial markets, which have caused sales declines and rising uncollectible receivable balances and pension expense."
NU Enterprises, Inc., the holding company for NU's competitive businesses, posted earnings of $0.3 million, a sharp decline from $4.6 million in the third quarter of 2008. NU parent and other companies had net expenses of $0.8 million in the third quarter of 2009, compared with $3.3 million in the third quarter of 2008.
Among peers, Boston, Massachusetts-based energy delivery company NSTAR (NST) reported an increase in net income for the third quarter to $87.64 million or $0.82 per share from $85.82 million or $0.80 per share in the year-ago quarter. Operating revenues declined 13.5% to $771.47 million from $892.21 million in the same period last year.
For the nine-month period, Northeast Utilities' earnings rose to $245.3 million or $1.43 per share from $188.9 million or $1.21 per share in the corresponding period last year. Operating revenues declined to $4.124 billion from $4.352 billion in the same period last year.
Looking ahead, Northeast Utilities reaffirmed its 2009 consolidated earnings guidance. While announcing the financial results for the second quarter, the company narrowed its projected 2009 earnings guidance to a range of between $1.80 and $1.90 per share from the previous guidance of the lower end of a range of $1.80 per share to $2.00 per share. For 2009, analysts currently expect the company to report earnings of $1.84 per share for the quarter. Capital expenditure is projected to be about $960 million in 2009.
Northeast Utilities initiated 2010 earnings guidance of between $1.80 and $2.00 per share. Currently, analysts expect the company to report earnings of $1.94 per share for 2010.
The company's estimate reflects the projected 2010 distribution and generation segment earnings of between $0.95 and $1.05 per share; transmission segment earnings of between $0.90 and $0.95 per share; competitive business segment earnings of between $0.00 and $0.05 per share; and NU parent and other expenses of about $0.05 per share.
Northeast Utilities said that it expects to incur capital expenditures of about $6.4 billion from 2010 through 2014, including about $1.1 billion in 2010.
The projected capital expenditures include spending about $1.35 billion from 2010 through 2014 to complete the company's $1.49 billion share of the New England East-West Solutions family of transmission projects, about $675 million for the company's share of a new $900 million proposed high-voltage direct current transmission line from Quebec to southern New Hampshire, $41 million to install 6 megawatts of solar generation in western Massachusetts, and about $300 million to complete a wet scrubber in Bow, New Hampshire.
Cash flows from operations are projected to rise from about $700 million in 2009 and 2010 to $1.1 billion in 2014. The company projects only a single public common share offering of about $300 million over the next five years. That offering is expected to occur no earlier than 2012.
Northeast Utilities expects to achieve compounded average annual earnings per share growth of between 6% and 9% for the five-year period of 2010 through 2014, compared with earnings per share growth at the lower end of an 8% to 11% range, using the $1.59 per share NU earned in 2007 as the base level.
NU is currently down $0.33 or 1.43% and trades at $22.72. The stock has traded between $19.01 and $25.31 during the past year.
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