Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Emera Inc (EMRAF, Financial) announced a $500 million US hybrid offering and the sale of its interest in the Labrador-Island link, providing approximately $2 billion in liquidity.
- The company reduced holding company debt by approximately $1.3 billion, improving its debt metrics significantly.
- Emera Inc (EMRAF) has a strong capital plan, with $8.8 billion in investments over three years, focusing on reliability, storm hardening, and grid modernization.
- The sale of New Mexico Gas will further reduce holding company debt by approximately $1 billion and improve credit metrics.
- Tampa Electric and Peoples Gas showed strong customer growth and new base rates, contributing positively to the company's earnings.
Negative Points
- Adjusted earnings per share decreased from $0.60 in Q2 2023 to $0.53 in Q2 2024, and year-to-date adjusted earnings per share decreased from $1.58 to $1.28.
- Higher operating costs, largely due to increased interest expenses, negatively impacted the company's results.
- Corporate costs increased by $15 million in the quarter, driven by higher interest expenses and unfavorable currency translations.
- Nova Scotia Power faced higher operating costs and income tax expenses, which negatively impacted earnings.
- Emera Energy's year-to-date results were down $13 million compared to the previous year, reflecting weaker performance in the natural gas market.
Q & A Highlights
Q: With the New Mexico sale and the LIL sale announced, how do you think about your funding plan in '24 and '25 and '26 versus your prior commentary? And specifically, once New Mexico is closed, could we see the ATM ceased?
A: (Gregory Blunden, CFO) I wouldn't anticipate any material change in our approach to funding over the balance of this year. But certainly, with the incremental sale of New Mexico Gas to complement LIL, that does provide some flexibility in the future. We would expect to have less reliance on the ATM over the coming years.
Q: Where are we in terms of the securitization of the remaining fuel costs in Nova Scotia? And based on your commentary, is it fair to assume that discussions or the relationship with the government in Nova Scotia is moving in the right direction?
A: (Peter Gregg, NS Power President and CEO) We have a very productive working relationship with the government here in Nova Scotia. We are having good productive discussions with the federal government and do see the potential for that securitization.
Q: For the 11 range, can you help us bridge what gets you this 50 basis points to 12%? And do you still foresee improving this metric 50 basis points annually after you've reached 12%?
A: (Gregory Blunden, CFO) The 50 basis point range is intended to reflect normal volatility in cash flow. We are still committed to improving our credit metrics every year and aim to have at least a 100 basis point cushion on our threshold metrics.
Q: Is the pathway to get that 100 basis points cushion mostly through customer rates or something else?
A: (Gregory Blunden, CFO) A lot of it will be the normal growth from our business supported by rates needed for customer investments. All of our utilities will be in for rates over the next couple of years.
Q: Your thoughts on whether or not a similar outcome to Duke's settlement could emerge for Tampa Electric?
A: (Scott Balfour, CEO) We are always open to a settlement, but at this point, the window is closing rapidly. All signs are pointing towards conducting the litigated hearing the week of the 26th of August.
Q: Were there any particular items within the pre-hearing that were a bigger hurdle to meet for both sides?
A: (Gregory Blunden, CFO) No, the pre-hearing was standard fare, reviewing open issues. The relationship with all intervening parties has been professional and cordial.
Q: Can you confirm the payout ratio being approximately 80% by '27 given the NMGC potential sale?
A: (Gregory Blunden, CFO) No change to the reference made in June. We expect the payout ratio to get very close to 80% within the guidance period and continue to reduce in the years that follow.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
