EMA — Emera Incorporated

Emera Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Annual Adjusted Earnings: Emera reported a record annual adjusted net income of CAD 1.45 billion, with adjusted earnings per share (EPS) of CAD 3.49, marking a 19% increase from CAD 2.94 in 2024.
• Fourth Quarter Results: Q4 adjusted earnings were CAD 167 million (CAD 0.55 per share), down from CAD 246 million (CAD 0.84 per share) in Q4 2024.
• Operating Cash Flow: Increased by 19% year-over-year, reflecting strong financial performance.
• Capital Investment: Emera deployed a record CAD 3.6 billion in capital investment in 2025, contributing to an 8% growth in rate base.

2. Strategic Updates and Business Highlights

• Operational Efficiency: Emera emphasized disciplined cost management and efficiency improvements, including the deployment of AI technologies across its utilities to enhance service reliability and operational performance.
• Tampa Electric Performance: Strong results driven by new rates and customer growth, with significant investments in solar generation and grid resilience initiatives.
• Nova Scotia Power: Introduced 250 MW of battery storage and executed a CAD 1.3 billion Reliability Plan, with a focus on balancing customer affordability with necessary infrastructure investments.
• Regulatory Progress: Achieved favorable outcomes in rate cases for Peoples Gas and Tampa Electric, providing clarity for future capital deployment.

3. Forward Guidance and Outlook

• 2026 Capital Plan: Emera plans to execute a record CAD 4 billion in capital investments, part of a five-year CAD 20 billion plan aimed at 7% to 8% rate base growth.
• EPS Growth Target: Extended adjusted EPS growth target of 5% to 7% through 2030, reflecting confidence in long-term growth despite not factoring in potential data center-driven growth.
• Regulatory Environment: Anticipates a positive decision from the Nova Scotia Energy Board regarding its general rate application, which aims to limit average rate increases to 2% per year.

4. Bad News, Challenges, or Points of Concern

• Q4 Earnings Decline: The fourth quarter saw a decrease in earnings compared to the previous year, primarily due to higher operating and maintenance costs and a tax recovery that benefited Q4 2024.
• Nova Scotia Power Performance: Earnings were negatively impacted by increased O&M costs and depreciation, alongside the sale of equity interest in the Labrador Island Link.
• Regulatory Risks: Potential challenges in Nova Scotia regarding regulatory support for capital investments could lead to a reallocation of funds away from the province if conditions worsen.

5. Notable Q&A Insights

• Dividend Growth: The management indicated a preference for maintaining a 1% to 2% dividend growth trajectory, with a focus on reducing the payout ratio towards 70%-75%.
• Data Center Opportunities: Emera is optimistic about future data center developments but has not included these in current growth forecasts, emphasizing the potential for reduced rate pressure on existing customers.
• New Mexico Gas Sale: The sale process is progressing, with expectations for a positive outcome in the first half of 2026.
• Coal Asset Phase-Out: Discussions on the phase-out of coal assets by 2030 are ongoing, with plans in place to ensure reliability during the transition to renewable sources.

Overall, Emera demonstrated strong financial performance in 2025, with strategic investments and regulatory successes positioning the company for continued growth, despite facing some operational challenges and regulatory uncertainties in Nova Scotia.