23.4.2004: Meldung: FPL Group, Inc.: First Quarter Results
Thursday April 22, 7:30 am ET
Affirms Full Year Earnings Guidance of $4.95 to $5.20 Per Share
JUNO BEACH, Fla.-- April 22, 2004--FPL Group, Inc. (NYSE:FPL - News) today reported 2004 first quarter net income on a GAAP basis of $138 million, or $0.77 per share, compared with $175 million, or $0.99 per share, in the first quarter of 2003. FPL Group"s net income for the first quarter of 2004 included a net unrealized loss of $1 million after-tax associated with the mark-to-market effect of non-qualifying hedges. The results for last year"s first quarter included a net unrealized gain of $3 million after-tax associated with the mark-to-market effect of non-qualifying hedges.
Excluding the mark-to-market effect of non-qualifying hedges, FPL Group"s earnings would have been $139 million or $0.78 per share for the first quarter of 2004, compared with $172 million, or $0.97 per share, in the first quarter of 2003. FPL Group"s management uses adjusted earnings internally for financial planning, reporting of results to the Board of Directors and for the company"s employee incentive compensation plan. FPL Group also uses earnings expressed in this fashion when communicating its earnings outlook to analysts and investors. FPL Group management believes that adjusted earnings provide a more meaningful representation of FPL Group"s fundamental earnings power.
Weather at Florida Power & Light was responsible for a $31 million or $0.17 per share reduction in FPL Group results. Last year saw exceptionally cold weather in January and warm weather in March, both of which drove higher than normal electricity demand. In contrast, in the first quarter of 2004, the weather in Florida was milder than normal.
"Despite the negative impact of milder than expected weather in Florida, FPL Group"s first quarter performance was consistent with our expectations and supports our continued confidence in our strategy and our team," said Lew Hay, chairman and chief executive officer of FPL Group. "Although we are disappointed in our sales at Florida Power & Light, the overall fundamentals of the company remain strong. Our customer growth is currently running at its highest rate in over a decade and system reliability is among the best in the industry. FPL Energy enjoyed another outstanding quarter with a strong performance from all segments of the business. Given our overall results in the first quarter, we remain comfortable with our full year earnings guidance for FPL Group of $4.95 to $5.20 per share, excluding the effect of adopting new accounting standards as well as the mark-to-market effect of non-qualifying hedges, neither of which can be determined at this time."
In affirming its guidance of $4.95 to $5.20 per share, the company said it expects Florida Power & Light to earn in the range of $4.20 to $4.35 per share, assuming normal weather for the remainder of the year, and FPL Energy to earn in the range of $1.05 to $1.20 per share. The company expects a negative impact from Corporate and Other of $0.30 to $0.35 per share.
FPL Group will include a March 31, 2004 balance sheet and statement of cash flows in its Quarterly Report on Form 10-Q. Recent interpretations of FIN 46R, an accounting standard that deals with the consolidation of variable interest entities, may require the deconsolidation of three FPL Energy subsidiaries and perhaps the consolidation of three qualifying facilities with which FPL has long-term contracts. FPL Group is seeking further clarification on these interpretations, and FPL is trying to obtain information from the QFs needed to perform the necessary calculations in the event the recent interpretations are applicable. FPL Group adopted FIN 46R effective March 31, 2004, and, therefore, the recent interpretations do not have any effect on FPL Group"s statement of income for the three months ended March 31, 2004, which are included herein.
Florida Power & Light
First quarter net income for Florida Power & Light, FPL Group"s principal subsidiary, was $105 million or $0.58 per share, compared to $135 million or $0.76 cents per share from the prior-year quarter. FPL"s customer growth rate is the highest in over a decade. In the last 12 months, FPL added 106,000 customer accounts, an increase of 2.6 percent since the 2003 first quarter. More than offsetting this growth, electricity usage per retail customer was down 7.7 percent in the quarter primarily due to weather differences year over year. The net effect was a decrease in retail sales of electricity of 5.3 percent.
Operations and maintenance expense was down slightly compared to the prior year quarter. The major drivers of O&M continue to be nuclear maintenance, rising employee benefit expenses and insurance costs, however, their impact in the quarter was more than offset by the absence of certain legal accruals that were incurred in last year"s first quarter and productivity improvements in other areas. The company said it expects O&M to be up slightly in 2004.
Depreciation increased in the quarter reflecting investment in new power plants and delivery systems to help meet the continued growth in Florida. Since the beginning of the decade, FPL has invested more than $1.3 billion in over 2,600 megawatts of generation. Over the next four years, FPL expects to invest more than $1 billion in new generating facilities. In addition to adding generation, FPL has invested more than $3.3 billion in its power delivery infrastructure since 1998 and expects to spend approximately $3.4 billion through 2008.
"Florida Power & Light continues to enjoy some of the strongest customer growth in the industry," said Hay. "As we had indicated previously, we expected our first quarter earnings at FPL to be down on a comparative basis due to the extreme weather conditions experienced in the prior-year quarter when we set an all-time winter peak in January and experienced unusually warm weather late in the 2003 quarter. In contrast to last year, the weather during our first quarter 2004 was very mild."
FPL Energy, the wholesale generation subsidiary of FPL Group, reported first quarter net income on a GAAP basis of $53 million or $0.30 per share, compared to $44 million or $0.25 per share in the prior year quarter. FPL Energy"s net income for the first quarter 2004 included a net unrealized loss of $1 million after-tax associated with the mark-to-market effect of non-qualifying hedges. The results for last year"s first quarter included a net unrealized gain of $3 million after-tax associated with the mark-to-market effect of non-qualifying hedges.
Excluding the mark-to-market effect of non-qualifying hedges, net income for FPL Energy would have been $54 million or $0.31 per share compared to $41 million or $0.23 per share in 2003.
New wind projects added in 2003, strong operating performance across the portfolio, continued execution of its hedging program, better than expected market conditions in the Northeast and improved hydro conditions in Maine all contributed to FPL Energy"s strong quarter.
FPL Energy also completed two large transactions during the quarter. The company closed a complex contract restructuring initiative during the quarter that resulted in a gain of approximately $31 million after tax. In addition, as previously announced, the company reached an agreement to sell its interest in the 540-megawatt natural gas-fired Bastrop Energy Center in Texas resulting in a loss of approximately $30 million after tax for the quarter. The company said it expects the Bastrop sale to be accretive to earnings in 2005.
Interest expense increased in the quarter due to the expansion of FPL Energy"s asset base. FPL Energy added more than 3,900 megawatts to its portfolio since last year"s first quarter. The increase in interest expense was somewhat offset by lower general & administrative expenses.
"FPL Energy"s impressive results reflect the strength of its diversified portfolio and its world-leading position in wind," said Hay. "The diversity of our assets - in terms of fuel type, geography and contract coverage - helps to mitigate the risks inherent in our business and sets our portfolio apart from our competitors. FPL Energy also benefited from its conservative hedging strategy which protected it against downside risk while enabling it to benefit from market opportunities."
The company said it remains optimistic that the federal wind production tax credit will be renewed in 2004, however, the timing remains unclear. The company continues to hope it can add up to 400 megawatts of new wind projects to its portfolio in 2004.
Corporate and Other
Corporate and Other negatively impacted net income by $20 million or $0.11 per share. FPL FiberNet, an FPL Group subsidiary that provides fiber-optic networks and related services in Florida, had a net loss of $2 million compared to a gain of $5 million in the prior-year quarter; however, it remains cash flow positive. The company said it expects FPL FiberNet to be near break even in 2004.
FPL Group"s first quarter earnings conference call is scheduled for 9 a.m. ET on Thursday, April 22, 2004. The webcast is available on FPL Group"s website by accessing the following link, http://www.FPLGroup.com/investor/contents/investor_index.shtml
FPL Group, with annual revenues of more than $9 billion, is nationally known as a high-quality, efficient, and customer-driven organization focused on energy-related products and services. With a growing presence in 26 states, it is widely recognized as one of the country"s premier power companies. Its principal subsidiary, Florida Power & Light Company, serves more than 4.2 million customer accounts in Florida. FPL Energy, LLC, an FPL Group wholesale energy-generating subsidiary, is a leader in producing electricity from clean and renewable fuels. Additional information is available on the Internet at www.FPLGroup.com, www.FPL.com and www.FPLEnergy.com.
FPL Group, Inc., Miami
Corporate Communications Dept.:
Steve Stengel, 305/552-3888
Source: FPL Group, Inc.