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PPL keeps top spot in Q1 as most profitable utility by recurring EBITDA margin

PPL Corp. remained the most profitable utility by recurring EBITDA margin in Canada and the U.S. during the quarter ending March 31. The company also ranked first in the first and fourth quarters of 2018.

PPL had a recurring EBITDA margin of 54.2% of recurring revenues, compared with 53.4% a year ago, according to S&P Global Market Intelligence data.

The Allentown, Pa.-headquartered utility saw its earnings from ongoing operations and operating revenues decline year over year. However, Chairman, President and CEO Bill Spence told analysts during the first-quarter 2019 earnings call that the company is still on track to deliver its earnings forecast of $2.30 per share to $2.50 per share in 2019.

NextEra Energy Inc. ranked second despite its recurring EBITDA margin falling 1.6 percentage points to 50.9% of recurring revenues from 52.4% in the same period of 2018.

The company reported higher first-quarter 2019 adjusted earnings of $2.20 per share, which beat analyst expectations for the quarter by 16 cents. "We grew adjusted earnings per share by approximately 12% year-over-year, reflecting excellent performance across our businesses," said NextEra Energy Chairman and CEO Jim Robo in the earnings release.

Robo also noted that integration of Gulf Power Co., which the company acquired from Southern Co. in the first quarter of 2019, is advancing well.

National Fuel Gas Co. placed third with a recurring EBITDA margin of 44.9%, down from 47.3% in the comparable 2018 period. The gas utility saw its fiscal second-quarter results drop due to drilling delays and lower pipeline revenue.

Despite lower results, the company continues to target earnings of $3.55 per share for 2019.

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Most utilities saw lower recurring EBITDA margin in the quarter.

Dominion Energy Inc. recorded the largest negative change of 6.9 percentage points. Dominion had a recurring EBITDA margin of 42.4%, compared with 49.3% a year ago.

The company reported operating earnings of $1.10 per share, missing the consensus for the first quarter by 2 cents. According to President and CEO Thomas Farrell II, the company's earnings were impacted by unusually mild weather in Virginia and South Carolina.

On the opposite end, NorthWestern Corp. booked the largest positive year-over-year change of 3.2 percentage points. The utility had a recurring EBITDA margin of 37.2% of recurring revenues in the 2019 first quarter, compared with 34% in the year-ago period.

The company's higher earnings of $1.23 per share topped the consensus estimate of $1.19 per share. NorthWestern attributed the increase in earnings to higher gross margin as a result of cold winter weather and customer growth, as well as a reduction in revenue in 2018 due to the impacts of tax reform through customer refunds.

Other companies that saw year-over-year improvements in their recurring EBITDA margin include Alliant Energy Corp., Atmos Energy Corp. and Emera Inc.