This summary is based on the fourth quarter fiscal 2007 earnings call conducted by FPL Group, Inc. (FPL: chart) on January 28, 2008.
Management:
CEO: Lewis Hay
CFO: Moray P. Dewhurst
IR: Jim Von Riesemann
COO: James L. Robo
President, FPL Energy: Mitch Davidson
President, Florida Power & Light Company: Armando J. Olivera
Key Investors Issues
- EPS were 56 cents per share compared to 67 cents per share last year.
- Net income fell to $224 million from $268 million in the year-ago quarter.
- Revenue totaled $3.7 billion, up from $3.6 billion a year ago.
Fourth Quarter Highlights
GAAP results were $224 million or 56 cents per share compared to $268 million or 67 cents per share during the 2006 fourth quarter.
Adjusted net income and EPS were $282 million and 71 cents per share respectively compared with $254 million or 63 cents per share in 2006. Adjusted earnings exclude the mark-to-market affect of non qualifying hedges.
In December the company received regulatory approval to implement extended power uprights at all four existing Florida nuclear units.
- The uprights will provide 400 MW of incremental base load capacity with zero greenhouse gas emissions and should be completed by the end of 2012. The estimated cost of approximately $1.8 billion will be recovered under the nuclear cost recovery rule adopted by the Florida Public Service Commission in early 2007. This recovery mechanism allows the cash recovery of all carrying costs during construction and subject to annual prudency reviews of the costs as they are incurred a base rate increase when the new capacity comes into service with a simplified administrative procedure.
- The company filed a petition for need determination for two new nuclear units to be constructed at Turkey Point site subject to numerous required regulatory approvals and satisfactory resolution of outstanding technical and economic uncertainties.
- If all goes well the new units will add approximately 2,200 to 3,000 MW of new generation in the 2018 to 2020 time frame.
Florida Power & Light Company continues to make progress in responding to Governor Crisp policy initiatives particularly in the area of climate change.
The company has accelerated plans for renewables development. The company expects to build a 10 MW solar thermal facility for proof of technology and economics and assuming this is successful it will then expand to 300 MW of capacity.
Florida Power & Light Company reported net income of $173 million compared with $170 million in last year’s fourth quarter.
The corresponding contributions to EPS were 43 cents per share in both just completed and comparable year ago quarter.
The company continues to believe that the medium to longer term prospects for growth in service territory remain good.
Retail kWh sales rose 3.1%. This was made up of the 1.5% customer growth, 2.6% due to favorable weather comparisons with last year’s fourth quarter and negative 1% from underlying usage mix and all other affects.
- Depreciation declined to $197 million from $199 million in the same period a year ago.
Operationally the fleet continued to perform well with a total portfolio forced outage rate under 3% despite some continued teething problems with some of the newer wind turbines.
In addition, the company was able to fund certain incremental G&A expenditures primarily for new wind development that will help continue to drive growth into the future. It was a good quarter for longer term outlook too. The company saw some strengthening in the gas curve which is good for the long term outlook for FPL Energy even while it produces book losses under generally accepted accounting principals for the non qualifying hedge category.
