10-Q: Eversource Energy Reports First Quarter 2024 Results

Eversource Energy reports its financial results for the first quarter of 2024, highlighting earnings, strategic developments, and liquidity management.

Summary

• Eversource Energy reported net income attributable to common shareholders of $521.8 million, or $1.49 per share, for the first quarter of 2024, compared to $491.2 million, or $1.41 per share, for the same period in 2023.
• The company reaffirmed its 2024 non-GAAP earnings guidance range of $4.50 to $4.67 per share, excluding impacts from the expected sales of offshore wind projects.
• Eversource also reaffirmed its long-term EPS growth rate projection of 5% to 7% through 2028.
• Cash flows from operating activities were $291.3 million in Q1 2024, up from $69.2 million in Q1 2023.
• Investments in property, plant, and equipment totaled $1.15 billion in Q1 2024, compared to $977.1 million in Q1 2023.
• The company issued $1.35 billion in new long-term debt during the first quarter.
• Eversource is pursuing the sale of its 50% interests in the South Fork Wind and Revolution Wind projects to Global Infrastructure Partners (GIP), expecting $1.1 billion in cash proceeds.
• An agreement was signed with rsted for the sale of Eversource's 50% share of the Sunrise Wind project, contingent on certain approvals and contract negotiations.
• The company is exploring a potential sale of its water distribution business.

Sentiment

Score: 7

Explanation: The sentiment is positive due to increased earnings, improved cash flow, and strategic asset sales. However, a decrease in operating revenues and increased losses in parent and other companies temper the overall outlook.

Positives

• Net income attributable to common shareholders increased to $521.8 million in Q1 2024.
• Cash flows from operating activities significantly improved to $291.3 million in Q1 2024.
• The company is set to receive approximately $1.1 billion from the sale of its interests in South Fork Wind and Revolution Wind projects.
• The sale of Sunrise Wind to rsted is expected to be completed later this year.

Negatives

• Operating revenues decreased by $463.0 million compared to the first quarter of 2023.
• Eversource parent and other companies losses increased $17.8 million in the first quarter of 2024, as compared to the first quarter of 2023, due primarily to higher interest expense and the absence of a benefit in the first quarter of 2023 from the liquidation of Eversource parents equity method investment in a renewable energy fund, partially offset by the absence of a charitable contribution made with a portion of the proceeds from the liquidation in the first quarter of 2023.

Risks

• The offshore wind projects require receipt of federal, state and local approvals necessary to construct and operate the projects.
• Significant delays in the siting and permitting process resulting from the timeline for obtaining approval from BOEM and the state agencies could adversely impact the timing of Sunrise Winds in-service date.
• Factors that could result in Eversources total net proceeds from the transaction to be lower or higher include Revolution Winds eligibility for federal investment tax credits at other than the anticipated 40 percent level; the ultimate cost of construction and extent of cost overruns for Revolution Wind; delays in constructing Revolution Wind, which would impact the economics associated with the purchase price adjustment; and a benefit due to Eversource if there are lower operation costs or higher availability of the projects through the period that is four years following the commercial operation date of the Revolution Wind project.

Future Outlook

Eversource reaffirmed its 2024 non-GAAP earnings guidance range of $4.50 to $4.67 per share and its long-term EPS growth rate projection of 5% to 7% through 2028.

Industry Context

The announcement reflects a strategic shift for Eversource, focusing on its core regulated utility operations and divesting its offshore wind investments amid evolving market conditions and regulatory landscapes.

Comparison to Industry Standards

• Comparing Eversource's Q1 2024 EPS of $1.49 to peers like NextEra Energy (NEE) and Duke Energy (DUK) provides a benchmark for profitability in the utility sector.
• The reaffirmed EPS growth rate of 5-7% aligns with industry expectations for regulated utilities, balancing growth with stable, regulated returns.
• The strategic decision to sell offshore wind assets mirrors similar moves by other utilities, such as rsted, reflecting a broader industry trend of optimizing portfolios and focusing on core competencies.
• Capital expenditure of $1.15 billion is in line with peers such as American Electric Power (AEP) and Southern Company (SO), reflecting ongoing investments in grid modernization and infrastructure upgrades.

Stakeholder Impact

• Shareholders will benefit from increased earnings and the potential for future growth.
• Customers may see changes in rates due to regulatory adjustments and infrastructure investments.
• Employees may be affected by the strategic shift and asset sales.

Next Steps

• Complete the sale of the South Fork Wind and Revolution Wind projects to GIP.
• Finalize the sale of Sunrise Wind to rsted.
• Continue construction and commissioning of the Revolution Wind and Sunrise Wind projects.
• Address the PURA concerns regarding the Advanced Metering Infrastructure investment and implementation plan.
• Monitor and respond to the FERC ROE complaints and the Notice of Proposed Rulemaking on transmission incentives.

Key Dates

Keywords

Eversource Energy, financial results, first quarter 2024, offshore wind, earnings, liquidity, debt, capital expenditures