8-K: Eversource Energy Reports Strong Full-Year 2024 Results, Announces Sale of Aquarion Water Company

Eversource Energy reports full-year 2024 earnings of $811.7 million, or $2.27 per share, and announces the pending sale of Aquarion Water Company to strengthen its balance sheet.

Summary

• Eversource Energy reported full-year 2024 earnings of $811.7 million, or $2.27 per share, compared to a loss of $(442.2) million, or $(1.26) per share in 2023.
• Fourth quarter 2024 earnings were $72.5 million, or $0.20 per share, compared to a loss of $(1,288.5) million, or $(3.68) per share in the fourth quarter of 2023.
• Non-GAAP recurring earnings were $1,634.0 million, or $4.57 per share, for the full-year 2024, and $370.8 million, or $1.01 per share, in the fourth quarter of 2024.
• The company's 2024 updated non-GAAP recurring earnings guidance was between $4.52 per share and $4.60 per share.
• Results for the full-year 2024 include an aggregate net after-tax loss of $524.0 million, or $1.47 per share, related to the sales of its offshore wind investments.
• The company recorded an after-tax loss of $298.3 million related to the pending sale of the Aquarion Water Company in the fourth quarter of 2024.
• Eversource Energy's annual projection for 2025 earnings is between $4.67 per share and $4.82 per share.
• The company expects its cumulative long-term earnings per share growth rate to be in the range of 5 to 7 percent through 2029, using 2024 non-GAAP results of $4.57 per share as the base year.
• Eversource introduced its new five-year $24.2 billion investment plan for the years 2025 to 2029, excluding any capital investments related to Aquarion Water Company.
• Eversource expects to raise $1.2 billion of equity, excluding the annual equity issuances related to its dividend reinvestment and equity compensation programs, over its forecast period of 2025-2029.
• The majority of this equity is expected to be raised in the latter half of the forecast period.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook, highlighting improved financial performance and strategic initiatives. However, the inclusion of losses from offshore wind investments and the pending sale of the water business temper the overall sentiment.

Positives

• Eversource Energy achieved operational excellence and delivered solid financial results in 2024.
• The company is advancing its region's clean energy future and improving the reliability and resiliency of its delivery networks.
• The strategic decision to divest Aquarion will greatly strengthen the company's balance sheet.
• Eversource has extensive and attractive opportunities for system investments, as evidenced by a 10 percent increase in its five-year investment plan.
• The company maintained top decile performance for reliability.
• Eversource is aligned with providing reliable, resilient and affordable service for customers, while driving shareholder value.

Negatives

• Full-year 2024 results include an aggregate net after-tax loss of $524.0 million related to the sales of its offshore wind investments.
• The company recorded an after-tax loss of $298.3 million related to the pending sale of the Aquarion Water Company in the fourth quarter of 2024.
• The company sees some headwinds in 2025.
• Losses in both periods are primarily the result of higher interest expense, partially offset by a lower effective tax rate.

Risks

• The company faces risks and uncertainties that may cause actual results or outcomes to differ materially from those included in the forward-looking statements.
• These risks include cyberattacks, disruptions in the capital markets, changes in economic conditions, and actions or inaction of regulatory bodies.
• Fluctuations in weather patterns, changes in business conditions, and changes in laws and regulations also pose risks.
• The company's ability to qualify for investment tax credits and investment tax credit adders is a risk.
• Variability in the costs and final investment returns of the Revolution Wind and South Fork Wind offshore wind projects as it relates to the purchase price post-closing adjustment under the terms of the sale agreement for these projects is a risk.

Future Outlook

Eversource Energy projects 2025 earnings between $4.67 and $4.82 per share and expects a cumulative long-term earnings per share growth rate of 5 to 7 percent through 2029.

Management Comments

• In 2024, the diverse and talented people of Eversource once again distinguished themselves by achieving operational excellence and delivering solid financial results for our customers and shareholders, said Chairman, President, and Chief Executive Officer Joe Nolan.
• With the strategic decision to divest Aquarion, which is expected to close by late 2025, we will greatly strengthen our balance sheet and continue to focus on our regulated electric and natural gas utility businesses.
• We believe these opportunities will enable us to achieve our long-term growth rate of 5 to 7 percent, Nolan added.

Industry Context

Eversource's focus on regulated utility businesses and investments in transmission and distribution aligns with the industry trend towards grid modernization and clean energy transition. The sale of the water business reflects a strategic shift towards core energy operations.

Comparison to Industry Standards

• Eversource's long-term EPS growth target of 5-7% is comparable to other large regulated utilities like NextEra Energy (NEE) and Duke Energy (DUK).
• The company's investment plan of $24.2 billion over five years demonstrates a commitment to infrastructure upgrades and clean energy initiatives, similar to plans announced by other utilities such as Southern Company (SO).
• The sale of Aquarion Water Company for approximately $2.4 billion reflects a strategic decision to focus on core energy operations, a trend seen among some diversified utilities.

Stakeholder Impact

• Shareholders will benefit from improved financial performance and potential for long-term growth.
• Customers can expect continued investments in reliable and resilient energy infrastructure.
• Employees may experience changes related to the sale of the water business.

Next Steps

• Complete the sale of Aquarion Water Company by late 2025.
• Execute the $24.2 billion investment plan for 2025-2029.
• Raise $1.2 billion of equity over the forecast period of 2025-2029.
• Achieve long-term EPS growth of between 5% and 7% through 2029.

Key Dates