NU Nu Holdings Ltd

Northeast Utilities (NYSE: NU) today reported first quarter 2013 earnings of $228.1 million, or $0.72 per share, compared with earnings of $99.3 million, or $0.56 per share, in the first quarter of 2012. Results for both years reflect costs related to the April 2012 merger of NU and NSTAR. Those costs totaled $1.8 million, or $0.01 per share, in the first quarter of 2013 and $1.1 million in the first quarter of 2012. NU’s first quarter 2013 results include earnings from NSTAR, while those from the first quarter of 2012 do not.

Thomas J. May, NU president and chief executive officer, said, “These financial results are consistent with our previously announced 2013 recurring earnings guidance of between $2.40 and $2.60 per share and represent a very good start for our first full year as a merged company.”

Electric Transmission

NU’s transmission segment earned $79.9 million in the first quarter of 2013, compared with $46.3 million in the first quarter of 2012. Higher transmission earnings reflect the inclusion of NSTAR Electric transmission earnings and a higher transmission rate base at NU’s other electric subsidiaries. On March 4, 2013, the 345 kV portion of the Greater Springfield Reliability Project (GSRP) was energized, and the entire project is expected to be complete in late 2013.

Electric Distribution and Generation

NU’s electric distribution and generation segment earned $99.5 million in the first quarter of 2013, compared with $42 million in the first quarter of 2012. Improved results primarily reflect the inclusion of NSTAR Electric earnings. Additionally, current year results benefited from colder first quarter weather in 2013 than in 2012. Retail electric sales, including NSTAR Electric for both years, rose 3.2 percent in the first quarter of 2013, compared with the first quarter of 2012, when weather was extremely mild. Retail sales were up nearly 1 percent when adjusted for the colder weather and the absence of a “leap day” in the first quarter of 2013. Economic growth was partially offset by the company’s successful energy conservation programs and the impact of a February 2013 blizzard.

Earnings of Electric Utility Subsidiaries (net of preferred dividends)

The Connecticut Light and Power Company earned $83.6 million after preferred dividends in the first quarter of 2013, compared with $52.6 million in the first quarter of 2012. Improved results were due primarily to higher transmission earnings and a 4.7 percent increase in retail sales in the first quarter of 2013, compared with the first quarter of 2012.

NSTAR Electric earned $47.6 million after preferred dividends in the first quarter of 2013.

Public Service Company of New Hampshire earned $29 million in the first quarter of 2013, compared with $21.3 million in the first quarter of 2012. Improved results reflect higher transmission and generation earnings, a 2.8 percent increase in retail sales in the first quarter of 2013, compared with the first quarter of 2012, and a change in distribution rates that took effect July 1, 2012. Those factors were offset by higher depreciation, property tax and income tax expense.

Western Massachusetts Electric Company (WMECO) earned $18.6 million in the first quarter of 2013, compared with $14.2 million in the first quarter of 2012. WMECO’s 2013 results improved largely as a result of higher transmission earnings, primarily related to GSRP, most of which is being built in the WMECO service territory.

Natural Gas Distribution

NU’s natural gas distribution segment, which includes both Yankee Gas Services Company and NSTAR Gas Company, earned $43.3 million in the first quarter of 2013, compared with $14.7 million in the first quarter of 2012, when it included only Yankee Gas. In addition to the inclusion of NSTAR Gas earnings, first quarter results reflect colder first quarter weather in 2013. Combined sales for NSTAR Gas and Yankee Gas were 21.8 percent higher in the first quarter of 2013 than they were in the first quarter of 2012. They were up nearly 4 percent when adjusted for the colder weather and absence of a “leap day” in the first quarter of 2013.

NU parent and other companies

NU parent and other companies earned $7.2 million in the first quarter of 2013, excluding $1.8 million of merger-related expenses, compared with net expenses of $2.6 million in the first quarter of 2012, excluding $1.1 million of merger-related expenses. The improvement was due to a number of factors, including the addition of earnings from NSTAR Communications, Inc. in 2013, a lower effective tax rate, and lower interest expense. The following table reconciles earnings per share for the first quarters of 2013 and 2012.

                  First Quarter 2012   Reported EPS   $0.56       Higher outstanding common shares   ($0.39 )     Higher NU legacy transmission earnings in 2013   $0.09       Higher NU legacy electric sales in 2013   $0.05       Higher NU legacy firm natural gas sales in 2013   $0.04       Lower NU legacy O&M   $0.08      

Higher generation earnings and other distribution income

 

$0.04

      NSTAR earnings in 2013   $0.21       Higher NU parent and other in 2013   $0.05       2013 merger charges   ($0.01 ) 2013   Reported EPS   $0.72      

Financial results for the first quarters of 2013 and 2012 for NU’s business segments and NU parent and other companies are noted below:

       

Three months ended:

               

(in millions, except EPS)

 

March 31, 2013

 

March 31, 2012

 

Increase/(Decrease)

 

2013 EPS1

Electric Distribution/Generation   $99.5     $42.0     $57.5     $0.32   Natural Gas Distribution   $43.3     $14.7     $28.6     $0.14   Electric Transmission   $79.9     $46.3     $33.6     $0.25  

NU Parent and Other Companies, ex. merger expenses

 

$7.2

   

($2.6

)

 

$9.8

   

$0.02

  Earnings, ex. merger impacts   $229.9     $100.4     $129.5     $0.73   Merger impacts   ($1.8 )   ($1.1 )   ($0.7 )   ($0.01 ) Reported Earnings   $228.1     $99.3     $128.8     $0.72          

Retail sales data:

           

 

 

March 31, 2013

 

March 31, 2012

 

% ChangeActual

Electric distribution             Gwh for three months ended*   13,796   13,365   3.2               Natural Gas Distribution            

Firm volumes in mmcf for three months ended**

 

39,422

 

32,377

 

21.8

 

* Pre-merger sales data for NSTAR Electric are included for illustrative purposes.** Pre-merger sales data for NSTAR Gas are included for illustrative purposes.

NU has approximately 315 million common shares outstanding. It operates New England’s largest energy delivery system, serving approximately 3.6 million customers in Connecticut, Massachusetts and New Hampshire.

Note: NU will webcast a conference call with senior management on May 2, 2013, beginning at 9 a.m. Eastern Time. The webcast can be accessed through NU’s website at www.nu.com.

1 All per share amounts in this news release are reported on a diluted basis. The only common equity securities that are publicly traded are common shares of NU parent. The earnings and EPS of each business do not represent a direct legal interest in the assets and liabilities allocated to such business, but rather represent a direct interest in NU's assets and liabilities as a whole. EPS by business is a non-GAAP (not determined using generally accepted accounting principles) measure that is calculated by dividing the net income or loss attributable to controlling interests of each business by the weighted average diluted NU parent common shares outstanding for the period. In addition, first quarter 2013 and 2012 earnings and EPS excluding certain charges related to the April 10, 2012 closing of the merger between NU and NSTAR are non-GAAP financial measures. Management uses these non-GAAP financial measures to evaluate earnings results and to provide details of earnings results by business and to more fully compare and explain our first quarter 2013 and 2012 results without including the impact of the non-recurring merger-related costs. Management believes that this measurement is useful to investors to evaluate the actual and projected financial performance and contribution of NU’s businesses. Non-GAAP financial measures should not be considered as alternatives to NU consolidated net income attributable to controlling interests or EPS determined in accordance with GAAP as indicators of NU’s operating performance.

This news release includes statements concerning NU’s expectations, beliefs, plans, objectives, goals, strategies, assumptions of future events, future financial performance or growth and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, readers can identify these forward-looking statements through the use of words or phrases such as “estimate, “expect,” “anticipate,” “intend,” “plan,” “project,” “believe,” “forecast,” “should,” “could,” and other similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results or outcomes to differ materially from those included in the forward-looking statements. Factors that may cause actual results to differ materially from those included in the forward-looking statements include, but are not limited to, the possibility that expected merger synergies will not be realized or will not be realized within the expected time period; cyber breaches, acts of war or terrorism, or grid disturbances; actions or inaction of local, state and federal regulatory and taxing bodies; changes in business and economic conditions, including their impact on interest rates, bad debt expense and demand for NU’s products and services; changes in weather patterns; changes in laws, regulations or regulatory policy; changes in levels or timing of capital expenditures; disruptions in the capital markets or other events that make NU’s access to necessary capital more difficult or costly; developments in legal or public policy doctrines; technological developments; changes in accounting standards and financial reporting regulations; actions of rating agencies; and other presently unknown or unforeseen factors. Other risk factors are detailed from time to time in NU’s reports filed with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which such statement is made, and NU undertakes no obligation to update the information contained in any forward-looking statements to reflect developments or circumstances occurring after the statement is made or to reflect the occurrence of unanticipated events.

  NORTHEAST UTILITIES AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)       March 31, December 31, (Thousands of Dollars)   2013   2012  

ASSETS

  Current Assets: Cash and Cash Equivalents $ 60,817 $ 45,748 Receivables, Net 832,989 792,822 Unbilled Revenues 195,870 216,040 Fuel, Materials and Supplies 239,226 267,713 Regulatory Assets 625,542 705,025 Marketable Securities 99,115 91,975 Prepayments and Other Current Assets   104,452   107,972 Total Current Assets   2,158,011   2,227,295   Property, Plant and Equipment, Net   16,737,549   16,605,010   Deferred Debits and Other Assets: Regulatory Assets 5,015,108 5,132,411 Goodwill 3,519,401 3,519,401 Marketable Securities 492,003 400,329 Derivative Assets 94,970 90,612 Other Long-Term Assets   311,619   327,766 Total Deferred Debits and Other Assets   9,433,101   9,470,519       Total Assets $ 28,328,661 $ 28,302,824    

The data contained in this report is preliminary and is unaudited. This report is being submitted for the sole purpose of providing information to present shareholders about Northeast Utilities and Subsidiaries and is not a representation, prospectus, or intended for use in connection with any purchase or sale of securities.

 

NORTHEAST UTILITIES AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

     

March 31,

December 31,

(Thousands of Dollars)

   

2013

     

2012

   

LIABILITIES AND CAPITALIZATION

 

Current Liabilities:

Notes Payable $ 1,287,000 $ 1,120,196 Long-Term Debt - Current Portion 947,328 763,338 Accounts Payable 633,458 764,350 Regulatory Liabilities 191,707 134,115 Derivative Liabilities 108,964 117,194 Other Current Liabilities   671,180     744,497   Total Current Liabilities   3,839,637     3,643,690     Rate Reduction Bonds   19,610     82,139     Deferred Credits and Other Liabilities: Accumulated Deferred Income Taxes 3,614,278 3,463,347 Regulatory Liabilities 531,546 540,162 Derivative Liabilities 840,043 882,654 Accrued Pension, SERP and PBOP 2,097,550 2,130,497 Other Long-Term Liabilities   873,637     967,561   Total Deferred Credits and Other Liabilities   7,957,054     7,984,221     Capitalization: Long-Term Debt   7,011,561     7,200,156     Noncontrolling Interest - Preferred Stock of Subsidiaries   155,568     155,568     Equity: Common Shareholders' Equity: Common Shares 1,664,760 1,662,547 Capital Surplus, Paid In 6,173,801 6,183,267 Retained Earnings 1,914,371 1,802,714 Accumulated Other Comprehensive Loss (70,898 ) (72,854 ) Treasury Stock   (336,803 )   (338,624 ) Common Shareholders' Equity   9,345,231     9,237,050   Total Capitalization   16,512,360     16,592,774     Total Liabilities and Capitalization $ 28,328,661   $ 28,302,824      

The data contained in this report is preliminary and is unaudited. This report is being submitted for the sole purpose of providing information to present shareholders about Northeast Utilities and Subsidiaries and is not a representation, prospectus, or intended for use in connection with any purchase or sale of securities.

  NORTHEAST UTILITIES AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)       For the Three Months Ended March 31, (Thousands of Dollars, Except Share Information)   2013     2012   Operating Revenues $ 1,995,023   $ 1,099,623   Operating Expenses: Purchased Power, Fuel and Transmission 747,809 395,344 Operations and Maintenance 346,092 261,963 Depreciation 154,977 80,839 Amortization of Regulatory Assets, Net 54,049 5,426 Amortization of Rate Reduction Bonds 34,499 18,347 Energy Efficiency Programs 105,771 37,273 Taxes Other Than Income Taxes   132,881     86,038 Total Operating Expenses   1,576,078     885,230 Operating Income 418,945 214,393   Interest Expense: Interest on Long-Term Debt 85,295 59,968 Interest on Rate Reduction Bonds 611 1,431 Other Interest   (9,651 )   5,048 Interest Expense 76,255 66,447 Other Income, Net   7,765     8,773 Income Before Income Tax Expense 350,455 156,719 Income Tax Expense   120,487     55,964 Net Income 229,968 100,755 Net Income Attributable to Noncontrolling Interests   1,879     1,493 Net Income Attributable to Controlling Interest $ 228,089   $ 99,262   Basic and Diluted Earnings Per Common Share $ 0.72   $ 0.56   Dividends Declared Per Common Share $ 0.37   $ 0.29   Weighted Average Common Shares Outstanding: Basic   315,129,782     178,055,716 Diluted   316,002,538     178,437,453    

The data contained in this report is preliminary and is unaudited. This report is being submitted for the sole purpose of providing information to present shareholders about Northeast Utilities and Subsidiaries and is not a representation, prospectus, or intended for use in connection with any purchase or sale of securities.

  NORTHEAST UTILITIES AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)       For the Three Months Ended March 31, (Thousands of Dollars)   2013     2012     Operating Activities: Net Income $ 229,968 $ 100,755

Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:

Depreciation 154,977 80,839 Deferred Income Taxes 168,938 52,474 Pension, SERP and PBOP Expense 53,102 42,268 Pension and PBOP Contributions (47,048 ) (98,910 ) Regulatory Over/(Under) Recoveries, Net 39,218 (27,569 ) Amortization of Regulatory Assets, Net 54,049 5,426 Amortization of Rate Reduction Bonds 34,499 18,347 Proceeds from DOE Damages Claim 77,936 - Other (51,106 ) (5,484 ) Changes in Current Assets and Liabilities: Receivables and Unbilled Revenues, Net (129,431 ) 29,276 Fuel, Materials and Supplies 28,487 30,108 Taxes Receivable/Accrued, Net (21,295 ) 11,758 Accounts Payable (86,916 ) (190,232 ) Other Current Assets and Liabilities, Net   (32,235 )   (40,240 ) Net Cash Flows Provided by Operating Activities   473,143     8,816     Investing Activities: Investments in Property, Plant and Equipment (388,950 ) (304,294 ) Proceeds from Sales of Marketable Securities 141,500 40,947 Purchases of Marketable Securities (233,429 ) (41,570 ) Other Investing Activities   33,966     2,448   Net Cash Flows Used in Investing Activities   (446,913 )   (302,469 )   Financing Activities: Cash Dividends on Common Shares (116,431 ) (52,104 ) Cash Dividends on Preferred Stock (1,879 ) (1,390 ) Increase/(Decrease) in Short-Term Debt (228,000 ) 343,000 Issuance of Long-Term Debt 400,000 300,000 Retirements of Rate Reduction Bonds (62,529 ) (17,903 ) Other Financing Activities   (2,322 )   (1,130 ) Net Cash Flows (Used in)/Provided by Financing Activities   (11,161 )   570,473   Net Increase in Cash and Cash Equivalents 15,069 276,820 Cash and Cash Equivalents - Beginning of Period   45,748     6,559   Cash and Cash Equivalents - End of Period $ 60,817   $ 283,379      

The data contained in this report is preliminary and is unaudited. This report is being submitted for the sole purpose of providing information to present shareholders about Northeast Utilities and Subsidiaries and is not a representation, prospectus, or intended for use in connection with any purchase or sale of securities.