Emera Completes New Mexico Sale, Faces Rising Interest Costs
Emera closed the New Mexico Gas sale in August, but Q2 adjusted EPS fell to $0.69 due to higher debt costs.
Key points
- Emera closed the New Mexico Gas sale in August, ending a two-year divestiture of non-core assets.
- Q2 adjusted EPS fell to $0.69 due to a $21 million rise in interest expense and currency losses.
- The company is on track for a $4 billion capital plan in 2026, with Florida utility profits up to $441 million.
Emera (NYSE: EMA) completed the sale of New Mexico Gas Company to Bernhard Capital Partners on August 12, finalizing a two-year divestiture process. This transaction concludes the company's recent restructuring efforts, which also included the May sale of Grand Bahama Power Company, leaving Emera with a portfolio focused exclusively on regulated utilities.
Despite the cleaner corporate structure, the second quarter results show financial pressure. Adjusted earnings per share declined to $0.69 from $0.79 in the same period last year, primarily driven by a $21 million increase in interest expense on long-term debt and currency losses on US dollar-denominated liabilities.
Capital spending fuels utility growth
The company is directing significant resources toward infrastructure expansion. Utilities invested over $1.7 billion in the first half of 2026, with management confirming they are on track to meet a $4 billion capital plan for the full year. Operating cash flow before working capital rose 8% year-over-year, indicating the business is generating sufficient cash to support this heavy investment cycle.
The Florida electric utility segment is a key driver of these results. It generated $441 million in adjusted profit during the first six months of 2026, up from $424 million in the prior year. This improvement was supported by newly established base rates and increased off-system sales volume.
Interest costs offset earnings gains
Corporate-level financial charges weighed heavily on the bottom line. Adjusted net income fell to $212 million from $236 million a year earlier. Beyond the interest drag, currency fluctuations on US dollar short-term debt added to the financial burden, while the New Mexico Gas unit itself contributed $12 million less in profit due to higher operating costs before its sale.
Reported earnings were further impacted by non-operating items. The company booked a $19 million loss on the Grand Bahama sale and faced mark-to-market losses, resulting in reported EPS of $0.34 compared to $0.45 in 2025. Additionally, corporate costs associated with the NYSE listing reduced first-half profits by $13 million.
Market valuation reflects steady growth
Investor positioning remains stable despite the earnings dip. According to Insider Monkey, 13 hedge funds held Emera shares in the latest count, a slight decrease from 15 in the previous quarter. As of September 18, the stock trades at 18.94 times forward earnings, a multiple that prices in consistent, rather than accelerated, growth.
