Emera Incorporated (EMA:CA) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A indicate a balanced outlook. While there are positive aspects such as capital investment plans, rate base growth, and regulatory approvals, there are also uncertainties like the unclear timeline for the New Mexico transaction and securitization discussions in Nova Scotia. The lack of immediate catalysts, combined with management's evasive responses on certain issues, suggests a neutral impact on the stock price in the short term.
Key Financial Performance
Capital Investment $3.6 billion in 2025, representing an approximately 8% rate base growth over 2024. This was the largest annual investment in Emera's history, driven by reliability and resiliency initiatives.
Annual Adjusted Net Income More than $1 billion in 2025, marking the first time in Emera's history to achieve this milestone. This was attributed to disciplined operational management and execution of the capital plan.
Annual Adjusted Earnings Per Share (EPS) $3.49 in 2025, an increase of $0.55 or 19% over 2024. This exceeded the upper end of the stated annual EPS growth target of 5% to 7%, driven by strong performance at Tampa Electric and favorable market conditions.
Operating Cash Flow Increased by 19% year-over-year in 2025, reflecting the strength of financial results and operational performance.
Tampa Electric Solar Generation Installed an additional 150 megawatts of solar generation in 2025, bringing the total to 1,505 megawatts. This reduced exposure to volatile fuel costs and delivered savings for customers.
Tampa Electric Grid Resilience Undergrounded 77 miles of overhead distribution circuits in 2025 as part of its Storm Hardening Program, improving reliability and protection from severe weather.
Nova Scotia Power Battery Storage Brought 250-megawatt 4-hour battery storage facilities into service in 2025, supporting the system during peak demand and improving reliability.
Peoples Gas Customer Growth Supported by steady residential and commercial growth in Florida, which led the nation in customer growth rates in 2025. This required continued reliability and distribution expansion investments.
Adjusted Earnings $1.45 billion in 2025, compared to $849 million in 2024, reflecting a 19% increase. This was driven by new rates, customer growth, and favorable market conditions.
Fourth Quarter Adjusted Earnings $167 million in Q4 2025, compared to $246 million in Q4 2024. The decrease was due to higher O&M costs, increased depreciation, and less favorable weather.
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Operating Highlights
AI tools at Nova Scotia Power: Modern technologies, including AI tools, are being deployed across customer-facing and operational functions to improve reliability, detect equipment issues earlier, reduce unplanned outages, and create a safer, more efficient system.
AI-enabled technology at Peoples Gas: AI-enabled technology is being used to improve crew dispatch efficiency, strengthen damage prevention and location practices, and reduce outage risk.
Drone and AI technology at Tampa Electric: Drone and AI technology are being deployed to support inspections at solar sites, reducing manual effort, enhancing safety, and optimizing asset performance.
Solar generation expansion at Tampa Electric: Installed an additional 150 megawatts of solar generation in 2025, bringing the total to 1,505 megawatts, reducing exposure to volatile fuel costs and delivering savings for customers.
Battery storage at Nova Scotia Power: Brought 250-megawatt 4-hour battery storage facilities into service, supporting the system during peak demand and improving reliability.
Residential and commercial growth in Florida: Peoples Gas experienced steady residential and commercial growth, requiring continued reliability and distribution expansion investment across the state.
Capital investment: Deployed $3.6 billion in capital in 2025, the largest annual investment in Emera's history, advancing reliability and resiliency initiatives.
Grid resilience at Tampa Electric: Undergrounded 77 miles of overhead distribution circuits as part of the Storm Hardening Program, improving reliability and protection from severe weather.
Private LTE network at Tampa Electric: Near completion of a private LTE network to strengthen system-wide communications and support critical grid and field operations.
New Mexico Gas sale: The sales process is proceeding, with a decision expected in the first half of 2026.
Extended EPS growth target: Extended the average adjusted EPS growth target of 5% to 7% through 2030, anchored to 2024 results.
Regulatory progress in Florida and Nova Scotia: Achieved favorable rate case outcomes in Florida and progressed the general rate application in Nova Scotia, balancing investment needs with customer affordability.
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Risk or Challenges
Regulatory Risks: The general rate application in Nova Scotia is still under review, and the final decision from the Nova Scotia Energy Board is pending. This creates uncertainty regarding the approval of critical reliability and infrastructure investments, which are essential for serving customers and balancing affordability pressures.
Operational Costs: Higher O&M (Operating and Maintenance) costs were reported across several segments, including Nova Scotia Power and New Mexico Gas, which could impact profitability if not managed effectively.
Depreciation and Interest Expenses: Increased depreciation and interest expenses were noted, particularly at Tampa Electric and the gas utilities, which could pressure financial performance.
Foreign Exchange Risk: A weaker Canadian dollar in 2025 benefited earnings from U.S. utilities, but fluctuations in foreign exchange rates remain a risk, with potential impacts on adjusted earnings per share.
Customer Affordability Pressures: Efforts to balance system investments with affordability impacts for customers, particularly in Nova Scotia, could limit the pace of necessary infrastructure upgrades.
Pending Sale of New Mexico Gas: The sales process for New Mexico Gas is ongoing, with the hearing examiner's recommendation still pending. Any delays or unfavorable outcomes could impact financial projections.
Weather-Related Risks: Severe weather conditions, such as cold snaps in Nova Scotia and the need for storm hardening in Florida, highlight the ongoing risk of weather-related disruptions to operations and infrastructure.
Technology and Cybersecurity Risks: The deployment of AI and other modern technologies across various operations introduces potential cybersecurity risks and challenges in ensuring system reliability.
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Guidance & Outlook
Capital Investment: Emera plans to execute a record $4 billion of capital investments in 2026 as part of its 5-year, $20 billion capital plan. This plan focuses on strengthening resiliency and reliability while meeting evolving customer needs. Over half of the 5-year program is allocated to transmission, distribution, and gas infrastructure expansion.
Rate Base Growth: The company expects a 7% to 8% rate base growth through 2030, supported by its capital investment plan.
Earnings Growth Target: Emera has extended its average adjusted EPS growth target of 5% to 7% through 2030, anchored to 2024 results. This reflects confidence in long-term growth and aligns with projected rate base growth.
Nova Scotia Power Rate Application: The general rate application in Nova Scotia proposes limiting average rate increases to 2% per year across 2026-2027, balancing essential investments with customer affordability. A decision is expected within the next two months.
New Mexico Gas Sale: The sale process for New Mexico Gas is expected to close in the first half of 2026, pending a positive decision from the hearing examiner.
Data Center Growth: While no data center signings were announced, Emera remains optimistic about future opportunities and continues active discussions in this area.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What is the outlook for the dividend growth rate and payout ratio by the end of the decade?
A:The company likes the 1% to 2% dividend growth rate and aims to decrease the payout ratio. Historically, the target payout ratio was 70%-75%, and the company still believes in this range as it progresses towards that level.
Q:What are the early stakeholder engagements and power generation requisitions for future data center opportunities?
A:Tampa Electric is in advanced discussions with potential data center developers and operators. The company plans to invest in solar (150 MW in 2025 and 170 MW in 2026) and has two H-class machines from GE in the queue to support growing generation needs, including data center-driven load.
Q:Is the data center growth incremental to the 5%-7% EPS growth target?
A:No, data center growth is not baked into the 5%-7% EPS growth target. The company sees large load additions as beneficial for customer affordability and potentially contributing positively to earnings over time, but these are not included in the current rate base forecast or EPS guidance.
Q:How should we think about the EPS growth range in the context of Tampa Electric returns and rate filings?
A:Tampa Electric typically earns in the upper half of the range after securing new rates and in the lower half as it approaches the need for new rates. Weather also impacts the ROE profile, with favorable weather contributing positively and less favorable weather driving it lower.
Q:Could capital be reallocated from Nova Scotia to Florida if the regulatory or political situation worsens in Nova Scotia?
A:Yes, if there isn't regulatory support for the capital investment profile in Nova Scotia, capital could be reallocated to Florida, which is viewed as more favorable. The company remains confident in its regulatory process and the consensus agreement with customer representatives.
Q:What is the status of the securitization discussions in Nova Scotia?
A:The company continues to work with the province to demonstrate the benefits of the proposed $700 million securitization for retiring thermal assets. Two previous securitizations ($117 million and $500 million) have been completed for unrecovered fuel costs.
Q:What are the financing plans and assumptions for 2026?
A:The company plans to utilize its ATM and DRIP programs for equity financing. It also has incremental capacity in the hybrid market and expects to refinance in June 2026. The pro forma Moody's metric is around 11.6%, with an additional 50 basis points expected from the New Mexico Gas closing.
Q:What is the timing and status of the New Mexico transaction?
A:The hearing is complete, and the company is awaiting the hearing examiner's recommendation, which could come any day. The transaction could close immediately after commission approval. There are no knock-on impacts or connections to the TXNM transaction with Blackstone.
Q:What is the remediation status of the cybersecurity incident at Nova Scotia Power?
A:The company expects insurance to largely cover the costs. Over 85% of meters are now communicating with the billing system, with 100% expected by the end of next month. No significant impact on 2026 is expected.
Q:What is the importance of coal assets for reliability in Nova Scotia, and what are the plans for their phaseout?
A:Coal assets continue to contribute to reliability, especially during cold snaps. The company plans to shut them down by 2030, supported by investments in batteries, a transmission line to New Brunswick, and new gas generation. An $18 million investment in the Lingan 2 asset will keep it operational until 2030.
Q:What is the company's appetite for deploying capital beyond current markets, particularly in Ontario?
A:The company is paying attention to opportunities in Ontario, including underwater high-voltage DC cable projects and potential LDC market changes. However, the focus remains on executing the $20 billion organic growth plan.
Q:What is the outlook for Tampa Electric's generation mix and renewables?
A:Natural gas remains the primary generation source, with over 70% of Tampa Electric's generation mix. The company continues to invest in solar (150 MW annually) and is considering retiring its remaining coal unit. The impact of the Inflation Reduction Act creates some uncertainty for long-term renewables.
Q:What is the company's approach to large-load tariffs for data centers in Tampa?
A:The company ensures that new large loads fully pay for incremental costs and contribute to the broader system to reduce rate pressure. Tampa Electric has the capacity to serve 300 MW in the near term, with modest growth potential.
Q:What is the outlook for Emera Energy's performance in 2026?
A:The company expects 2026 performance to be in line with 2025, which exceeded guidance. The general guidance remains at 15%-30%, with updates provided as conditions change.
Q:What flexibility does the company have in its $20 billion capital plan?
A:The company can reprofile projects to manage affordability pressures, maintaining 7%-8% rate base growth. This approach ensures durability and longevity of the growth program.
Q:What is the status of the New Brunswick intertie project?
A:The project is on track for a 2028 in-service date. Land preparation and forestry work are underway, with foundation pours expected in the spring.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer to the question about the timing of the New Mexico transaction, stating that the hearing examiner's decision could come 'any day now' without offering a specific timeline. Additionally, the response to the question about securitization discussions in Nova Scotia lacked detail on the timeline for resolution.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI technology
AI tool
BLPC Tampa
Balfour Emera
CFO capital
CFO value
Commission USD
Debt market
EVP Policy
Electric Emera
Electric OM
Electric customer
Electric deployment
Electric drone
Electric megawatt
Emera history
Energy record
OM depreciation
adjustment Tampa
bond
commitment
control
delivery energy
effectiveness
exchange dollar
facility
gas utility
grid modernization
hearing mid
history investment
income
inspection
interest expense
item utility
job
nation
practice
pressure
rate share
resiliency
system sale
term value
EMA Transcript
Emera Incorporated (EMA:CA) Q4 2025 Earnings Call Transcript
Unknown2-23
The earnings call summary and Q&A indicate a balanced outlook. While there are positive aspects such as capital investment plans, rate base growth, and regulatory approvals, there are also uncertainties like the unclear timeline for the New Mexico transaction and securitization discussions in Nova Scotia. The lack of immediate catalysts, combined with management's evasive responses on certain issues, suggests a neutral impact on the stock price in the short term.
Emera Incorporated (EMA:CA) Q3 2025 Earnings Call Transcript
Unknown11-7
The earnings call summary shows mixed signals. While there is strong capital investment and positive contributions from Tampa Electric, there are declines in Canadian utilities and gas utilities. The Q&A section reveals cautious management with uncertainties in guidance extension and data center opportunities. The acceleration of solar investments due to policy uncertainties also indicates caution. Overall, the sentiment is balanced between positive investments and cautious outlook, leading to a neutral prediction.
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