Emera Reports Q3 2016 Earnings

Emera (TSX: EMA) today reported results for the third quarter of
2016.

3Q 2016 Highlights:

Reported Net Income:

• Reported a Q3 2016 loss of $(95) million, compared with net income of
  $35 million in Q3 2015.
  • Reported net income included a $109 million after-tax
    mark-to-market adjustment primarily at Emera Energy.
• Reported loss per common share in Q3 2016 of $(0.52), compared with
  $0.24 per common share in Q3 2015.

Financial Highlights (in millions of $CAD,
except per share amounts)

			Three months ended September 30						Nine months ended September 30
			2016			2015			2016			2015
Net income attributable to common shareholders		$	(95)		$	35		$	157		$	205
Earnings per common share - basic		$	(0.52)		$	0.24		$	0.98		$	1.41
After-tax mark-to-market gain (loss)		$	(109)		$	12		$	(214)		$	(38)
Adjusted net income attributable to common shareholders(1)(2)		$	14		$	23		$	371		$	243
Adjusted earnings per common share - basic(1)(2)		$	0.08		$	0.16		$	2.31		$	1.67
TECO Energy acquisition costs		$	(0.65)		$	(0.14)		$	(1.12)		$	(0.14)
Adjusted earnings per common share(1) excluding TECO Energy acquisition costs		$	0.73		$	0.30		$	3.43		$	1.81
Weighted average shares of common stock outstanding - basic (millions of shares for the three months ended September 30)			182.8			146.0

⁽¹⁾See “Non-GAAP Measures” noted below.
⁽²⁾
Adjusted net income⁽¹⁾ and Adjusted earnings
per common share⁽¹⁾ exclude the effect of
mark-to-market adjustments.

“Our strong third quarter results, which include Emera Florida and New
Mexico for the first time, reflect summer earnings in Florida and
excellent cost control at New Mexico Gas Company. With the addition of
these companies, we have now exceeded our target mix of net income from
regulated operations and our dividend is more than covered by regulated
earnings,” said Chris Huskilson, President and CEO of Emera Inc. “While
the quarter was positive from a financial perspective, our thoughts
remain with the citizens of Grand Bahama, following Hurricane Matthew’s
direct strike on Grand Bahama Island and the damage to property,
livelihoods and the transmission and distribution system. Crews from the
Grand Bahama Utility and crews from virtually all of Emera’s utilities
continue to work diligently to safely restore power to our customers. We
are proud of the efforts of all of the Emera companies who are assisting
in this significant effort.”

Adjusted Net Income (excluding after-tax mark-to-market impacts):

• Adjusted net income⁽¹⁾ was $14 million, or $0.08 per common
  share, in Q3 2016, compared with income of $23 million or $0.16 per
  common share in Q3 2015.
• Further adjusted to exclude TECO Energy acquisition costs of $119
  million after tax ($0.65 per common share), adjusted net income⁽¹⁾
  was $133 million ($0.73 per common share) in Q3 2016, compared with
  $43 million or $0.30 per common share in Q3 2015. The acquisition
  costs included legal, banking and advisory fees, New Mexico Gas
  Company stipulation commitments, accelerated vesting of TECO Energy
  stock based compensation, acquisition related financing, non-cash
  accounting related costs associated with the conversion of the
  convertible debentures, and convertible debenture related interest.
• Included in Q3 2016 adjusted net income⁽¹⁾ was a net
  contribution to adjusted net income of $60 million or $0.33 per common
  share from the $109 million contribution from Emera Florida and New
  Mexico segment offset by $49 million in after-tax incremental interest
  expense associated with the permanent financing of the TECO Energy
  acquisition.

2016 Year-to-Date Highlights

Reported Net Income:

• Reported net income of $157 million, compared with $205 million in the
  2015 period.
  • Reported net income included a $214 million after-tax
    mark-to-market adjustment primarily at Emera Energy.
• Reported earnings per share of $0.98, compared with $1.41 in the 2015
  period

Adjusted Net Income

• Adjusted net income⁽¹⁾ was $371 million, or $2.31 per
  common share, compared with $243 million or $1.67 per common share, in
  the 2015 period. Our year-to-date adjusted net income included:
  • TECO Energy acquisition costs of $179 million, or $1.12 per
    common share, compared with $20 million, or $0.14 in the 2015
    period, which include the items discussed above and pre-closing
    financing costs.
  • Gain on sale of APUC common shares - Emera completed the
    sale of 50.1 million common shares of APUC, resulting in an
    after-tax gain of $146 million or $0.97 per common share.
  • Gain on APUC conversion - Emera exchanged 12.9 million APUC
    subscription receipts and dividend equivalents into 12.9 million
    APUC common shares in Q2, resulting in an after-tax gain of $53
    million or $0.35 per common share.
  • Gain on BLPC SIF regulatory liability - BLPC secured
    support from the Government of Barbados and the Trustees of the
    SIF to reduce the contingency funding in the SIF to $29 million.
    Using third party risk advisors, Emera reduced the SIF regulatory
    liability and recorded an after-tax gain of $43 million or $0.29
    per common share.
  • Emera Energy’s recognition of fuel taxes - Emera Energy
    recorded $12 million after-tax or $0.08 per common share liability
    for unpaid state tax on natural gas sales made from November 2013
    through March 2016.

Consolidated Financial Review:

Below is a table highlighting significant changes between adjusted net
income from 2015 to 2016 in the third quarter and year-to-date periods.

For the		Three months ended			Nine months ended
millions of Canadian dollars		September 30			September 30
Adjusted net income – 2015		$	23		$	243
Emera Florida and New Mexico			109			109
Acquisition and financing costs related to the acquisition of TECO Energy			(99)			(159)
TECO Energy post-acquisition financing costs			(49)			(49)
Gain on sale of APUC common shares			-			146
Gain on conversion of APUC subscription receipts and dividend equivalents to common shares of APUC			-			53
Gain on BLPC SIF regulatory liability			-			43
Emera Caribbean			11			22
NSPI			10			6
Emera Energy' (1)			(15)			(52)
2015 gain on the sale of NWP			-			(12)
Emera Energy's recognition of fuel taxes for 2013 through March 2016			-			(12)
Other			24			33
Adjusted net income – 2016		$	14		$	371

⁽¹⁾ excludes the effect of mark-to-market
adjustments.

Q3 2016

Segmented Results

Emera reports its results in six operating segments: Emera Florida and
New Mexico, Nova Scotia Power Inc., Emera Maine, Emera Caribbean, Emera
Energy, and Corporate & Other. The Pipelines segment is now included in
Corporate & Other.

Quarterly Segmented Results (in millions of
$CAD, except per share amounts)

										Adjusted Net Income(1)
			Q3 2016			Q3 2015					YTD 2016			YTD 2015
Emera Florida and New Mexico		$	109		$	--			$		109		$	--
Nova Scotia Power Inc.			15			5					96			90
Emera Maine			17			15					36			40
Emera Caribbean			24			13					92			27
Emera Energy(2)			-			15					19			95
Corporate & Other(2)			(151)			(25)					19			(9)
TOTAL		$	14		$	23			$		371		$	243
Adjusted EPS (basic)(1)		$	0.08		$	0.16			$		2.31		$	1.67

⁽¹⁾See “Non-GAAP Measures” noted below.
⁽²⁾Adjusted
net income⁽¹⁾ excludes after-tax mark-to-market loss
in Pipelines, Emera Energy, and Corporate and Other

Emera Florida and New Mexico’s net income was $109 million.
Results were driven by higher electricity sales resulting from strong
customer growth, warmer than normal weather in Florida, and a continued
focus on cost control in New Mexico Gas Company. The net contribution to
adjusted net income was $60 million or $0.33 per common share after the
$49 million in after-tax incremental interest expense associated with
the permanent financing of the TECO Energy acquisition.

Nova Scotia Power Inc.’s net income was $15 million in Q3 2016,
an increase of $10 million from the $5 million in Q3 2015. The increase
was primarily due to decreased OM&G and timing of regulatory deferrals
partially offset by Demand Side Management (DSM) program costs that are
no longer deferred. NSPI’s net income year-to-date was $96 million
compared to $90 million for the same period last year.

Emera Maine’s net income was $17 million Q3 2016, compared to Q3
2015 net income of $15 million. Emera Maine’s net income year-to-date
was $36 million compared to $40 million for the same period last year.

Emera Caribbean’s net income of $24 million in Q3 2016 represents
an increase of $11 million compared to Q3 2015 net income of $13
million. The increase was primarily due to a decrease in OM&G, and
higher energy sales at BLPC. Emera Caribbean’s net income year-to-date
was $92 million compared to $27 million for the same period last year.
In addition, the year-to-date increase was primarily the result of the
gain from the BLPC SIF as a result of the reduction in the regulatory
liability recorded in Q2 2016. Third quarter results do not reflect any
costs associated with Hurricane Matthew, which are expected to be fully
recovered from customers over time.

Emera Energy’s net income, adjusted to exclude mark-to-market
changes, was nil in Q3 2016 compared to net income of $15 million in the
same quarter last year. The decrease was primarily due to higher fuel
for generation and purchased power due to the expiration of a favorable
gas contract at Bayside Power in 2016, lower marketing and trading
margin reflecting continued low natural gas prices and volatility across
the Northeast US and an increase in short-term fixed cost commitments
for transportation and storage. Emera Energy’s adjusted net income
year-to-date was $19 million compared to $95 million for the same period
last year.

Mark-to-Market Adjustments after-tax mark-to-market losses
increased $121 million to $109 million in Q3 2016 compared to $12
million gain in Q3 2015 and increased $176 million to $214 million
year-to-date in 2016 compared to $38 million loss for the same period in
2015. The increased mark-to market losses in the quarter are primarily
due to changes in existing positions on long-term contracts and the
amortization of 2015 gas transportation assets at Emera Energy.

Corporate & Other’s net loss, adjusted to exclude
mark-to-market changes, was $(151) million in Q3 2016 compared to a net
loss of $(25) million in Q3 2015. The increased loss was primarily due
to higher interest expense as a result of interest on the permanent
financing of the TECO acquisition, non-cash accounting related costs
associated with the conversion of the convertible debentures, and costs
related to the TECO acquisition. Corporate & Other’s adjusted net income
was $19 million year-to-date compared to a loss of $(9) million for the
same period last year. Year-to-date results include $179 million of
after-tax TECO acquisition costs, which were more than offset by the
$199 million of after-tax gains on the sale of the APUC shares and the
conversion of the APUC subscription receipts in the second quarter of
2016.

⁽¹⁾ Non-GAAP Measures

Emera uses financial measures that do not have standardized meaning
under USGAAP and may not be comparable to similar measures presented by
other entities. Emera calculates the non-GAAP measures by adjusting
certain GAAP and non-GAAP measures for specific items the Company
believes are significant, but not reflective of underlying operations in
the period. Refer to the Non-GAAP Financial Measures section of our
Management's Discussion and Analysis ("MD&A") for further discussion of
these items.

Forward Looking Information

This news release contains forward-looking information within the
meaning of applicable securities laws. By its nature, forward-looking
information requires Emera to make assumptions and is subject to
inherent risks and uncertainties. These statements reflect Emera
management’s current beliefs and are based on information currently
available to Emera management. There is a risk that predictions,
forecasts, conclusions and projections that constitute forward-looking
information will not prove to be accurate, that Emera’s assumptions may
not be correct and that actual results may differ materially from such
forward-looking information. Additional detailed information about these
assumptions, risks and uncertainties is included in Emera’s securities
regulatory filings, including under the heading “Business Risks and Risk
Management” in Emera’s annual Management’s Discussion and Analysis, and
under the heading “Principal Risks and Uncertainties” in the notes to
Emera’s annual and interim financial statements, which can be found on
SEDAR at www.sedar.com.

Teleconference Call

The company will be hosting a teleconference Tuesday, November 8, 2016
at 11:00am Atlantic time (10:00am Toronto/Montreal/New York; 9:00am
Winnipeg; 8:00am Calgary; 7:00am Vancouver) to discuss the Q3 2016
financial results.

Analysts and other interested parties in North America wanting to
participate in the call should dial 1 (888) 241-0394 at least 10 minutes
prior to the start of the call. International participants wanting to
participate should dial (647) 427-3413. No pass code is required. The
teleconference will be recorded. If you are unable to join the
teleconference live, you can dial for playback, toll-free at
1-855-859-2056. The Conference ID is 95080202 (available until midnight,
November 27, 2016).

The teleconference will also be web cast live at emera.com
and available for playback for one year.

About Emera

Emera Inc. is a geographically diverse energy and services company
headquartered in Halifax, Nova Scotia with approximately $28 billion in
assets and 2015 pro-forma revenues of $6.3 billion. The company invests
in electricity generation, transmission and distribution, gas
transmission and distribution, and utility energy services with a
strategic focus on transformation from high carbon to low carbon energy
sources. Emera has investments throughout North America, and in four
Caribbean countries. Emera continues to target having 75-85% of its
adjusted earnings come from rate-regulated businesses. Emera’s common
and preferred shares are listed on the Toronto Stock Exchange and trade
respectively under the symbol EMA, EMA.PR.A, EMA.PR.B, EMA.PR.C,
EMA.PR.E, and EMA.PR.F. Depositary receipts representing common shares
of Emera are listed on the Barbados Stock Exchange under the symbol
EMABDR. Additional Information can be accessed at http://www.emera.com
or at www.sedar.com

View source version on businesswire.com: http://www.businesswire.com/news/home/20161107006615/en/

Source: Business Wire
(November 7, 2016 - 5:25 PM EST)

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