8-K: Eversource Energy Reports Strong Second Quarter Earnings, Reaffirms Full-Year Guidance

Eversource Energy announced a significant increase in GAAP earnings for the second quarter of 2024, driven by strong performance across its transmission and distribution segments and the absence of prior year offshore wind impairment charges.

Summary

• Eversource Energy reported GAAP earnings of $335.3 million, or $0.95 per share, for the second quarter of 2024, a substantial increase compared to $15.4 million, or $0.04 per share, in the same quarter of 2023.
• For the first half of 2024, GAAP earnings reached $857.2 million, or $2.43 per share, up from $506.6 million, or $1.45 per share, in the first half of 2023.
• The 2023 results included significant after-tax charges of $337.2 million in the second quarter and $337.7 million in the first half, primarily due to an impairment of the company's offshore wind investment.
• Excluding these charges, Eversource's adjusted earnings were $352.6 million, or $1.00 per share, in the second quarter of 2023 and $844.3 million, or $2.41 per share, in the first half of 2023.
• The company reaffirmed its 2024 non-GAAP earnings projection of between $4.50 and $4.67 per share and its long-term earnings per share growth rate within the range of 5 to 7 percent from a 2023 base of $4.34 per share.
• The electric transmission segment saw earnings of $189.0 million in the second quarter of 2024 and $365.7 million in the first half of 2024, compared to $161.0 million and $316.1 million in the same periods of 2023, respectively.
• The electric distribution segment earned $149.7 million in the second quarter of 2024 and $317.9 million in the first half of 2024, compared to $165.5 million and $331.0 million in the same periods of 2023, respectively.
• The natural gas distribution segment reported earnings of $27.1 million in the second quarter of 2024 and $217.6 million in the first half of 2024, compared to $11.7 million and $181.9 million in the same periods of 2023, respectively.
• The water distribution segment earned $8.0 million in the second quarter of 2024 and $13.4 million in the first half of 2024, compared to $9.3 million and $10.8 million in the same periods of 2023, respectively.
• Eversource parent and other companies had a loss of $38.5 million in the second quarter of 2024 and $57.4 million in the first half of 2024, compared to earnings of $5.1 million and $4.5 million in the same periods of 2023, respectively.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the significant increase in earnings, reaffirmation of guidance, and strategic moves to exit offshore wind. While there are some challenges in the distribution segments, the overall tone is optimistic and forward-looking.

Positives

• Eversource Energy's second-quarter earnings significantly improved year-over-year, driven by strong performance in the electric transmission and natural gas distribution segments.
• The company is successfully executing its strategy to exit the offshore wind business, which will allow it to focus on regulated growth opportunities.
• Eversource is making progress on key infrastructure projects, including the networked geothermal pilot and the Cape Cod Solution transmission project.
• The company reaffirmed its full-year earnings guidance and long-term growth targets, indicating confidence in its future performance.
• The electric transmission segment experienced a substantial increase in earnings due to higher investment and rate reconciliation.
• The natural gas distribution segment saw improved results due to higher revenues and lower operating expenses.

Negatives

• The electric distribution segment experienced lower earnings due to higher storm restoration costs and increased operating expenses.
• The water distribution segment saw lower earnings in the second quarter due to higher operating expenses and interest costs.
• Eversource parent and other companies reported a loss due to higher interest expenses.
• The company experienced higher non-tracked operations and maintenance expenses in the electric distribution segment.

Risks

• The company faces risks related to cyberattacks and breaches, which could compromise sensitive information.
• There are risks associated with the completion of the sale of offshore wind investments, including the ability to satisfy closing conditions and qualify for investment tax credits.
• The company is exposed to risks related to changes in economic conditions, including interest rates and customer demand.
• Eversource faces risks related to regulatory actions and changes in laws and policies.
• The company is subject to risks related to weather patterns, including extreme weather due to climate change.
• There are risks associated with the performance of third-party suppliers and service providers.

Future Outlook

Eversource reaffirms its 2024 non-GAAP earnings projection and long-term earnings per share growth rate. The company expects to close the sale of the Revolution and South Fork Wind Projects later this quarter and continues to focus on regulated growth opportunities.

Management Comments

• Joe Nolan, Eversource Energy Chairman, President and Chief Executive Officer, stated that the company delivered solid financial results for the second quarter and top-tier service reliability and storm response for customers.
• He also mentioned that the company is positioning itself well for the future of clean energy.

Industry Context

Eversource's focus on regulated growth and clean energy aligns with broader industry trends towards decarbonization and grid modernization. The company's exit from offshore wind is a strategic shift towards its core regulated utility business.

Comparison to Industry Standards

• Eversource's performance in the electric transmission segment, with a 17.4% increase in earnings in Q2 2024 compared to Q2 2023, is strong compared to peers such as NextEra Energy Transmission and American Electric Power, which have also been investing heavily in transmission infrastructure.
• The company's electric distribution segment saw a decrease in earnings due to higher storm costs, which is a common challenge for utilities in the Northeast. Companies like Consolidated Edison and National Grid have also faced similar challenges related to weather-related expenses.
• Eversource's natural gas distribution segment's significant increase in earnings is notable, as many utilities are facing pressure to transition away from natural gas. This performance is better than some peers who are experiencing flat or declining gas distribution earnings.
• The company's move to exit offshore wind is a strategic decision that contrasts with some other utilities that are continuing to invest in offshore wind projects. For example, Avangrid is still actively developing offshore wind projects.
• Eversource's reaffirmation of its long-term EPS growth rate of 5-7% is in line with the industry average for regulated utilities, which typically aim for stable and predictable growth.

Stakeholder Impact

• Shareholders will benefit from the increased earnings and reaffirmed growth targets.
• Customers will benefit from the company's focus on reliability and clean energy initiatives.
• Employees will be impacted by the company's strategic shift and focus on regulated growth.
• Suppliers and creditors will be impacted by the company's financial performance and strategic decisions.

Next Steps

• Eversource will webcast a conference call with financial analysts on August 1, 2024, to discuss the second-quarter results.
• The company expects to close the sale of the Revolution and South Fork Wind Projects later this quarter.
• Eversource will continue to advance its Electric Sector Modernization Plan in Massachusetts.
• The company will work with Connecticut and New Hampshire to enable and encourage a low-carbon future.

Key Dates

Keywords

Eversource Energy, Earnings, Financial Results, Electric Transmission, Electric Distribution, Natural Gas Distribution, Offshore Wind, Geothermal, Clean Energy, Infrastructure, Regulation