ES.NYSEEversource Energy
10-Q: Eversource Energy Reports Second Quarter 2024 Results, Reaffirms Full-Year Guidance
Sentiment:
Quarterly Report
Eversource Energy announced its second quarter 2024 financial results, showing a significant increase in earnings compared to the same period last year and reaffirming its full-year earnings guidance.
Better than expectedThe company's earnings per share significantly increased in the second quarter and first half of 2024 compared to the same periods in 2023.The company reaffirmed its full-year earnings guidance and long-term EPS growth rate projection.Cash flows from operating activities improved substantially in the first half of 2024.
Summary
- Eversource Energy reported a net income attributable to common shareholders of $335.3 million, or $0.95 per share, for the second quarter of 2024, a substantial increase from $15.4 million, or $0.04 per share, in the second quarter of 2023.
- For the first half of 2024, net income attributable to common shareholders was $857.2 million, or $2.43 per share, compared to $506.6 million, or $1.45 per share, in the first half of 2023.
- The second quarter and first half of 2023 results included an after-tax impairment charge of $331 million, or $0.95 per share, related to offshore wind investments.
- Excluding the impairment and other charges, non-GAAP earnings for the second quarter of 2023 were $352.6 million, or $1.00 per share, and for the first half of 2023 were $844.3 million, or $2.41 per share.
- The company reaffirmed its 2024 non-GAAP earnings guidance range of $4.50 to $4.67 per share, excluding the impact of offshore wind project sales and related costs.
- Eversource also reaffirmed its long-term EPS growth rate projection of 5 to 7 percent through 2028.
- Cash flows from operating activities were $962 million in the first half of 2024, compared to $647.3 million in the first half of 2023.
- Investments in property, plant, and equipment totaled $2.22 billion in the first half of 2024, compared to $2.04 billion in the first half of 2023.
- As of June 30, 2024, cash totaled $33.4 million, and available borrowing capacity under commercial paper programs was $1.21 billion.
- In the first half of 2024, Eversource issued $3.85 billion of new long-term debt and repaid $900 million of existing long-term debt.
- On July 9, 2024, Eversource completed the sale of its 50 percent ownership share of Sunrise Wind to rsted for $118 million at closing, with an additional $34 million to be paid after onshore construction is completed.
Sentiment
Score: 8
Explanation: The document presents a positive outlook with strong earnings growth and reaffirmed guidance, indicating a stable and improving financial position. The strategic divestment of offshore wind assets also suggests a focused approach to core operations. However, the ongoing regulatory risks and the decrease in operating revenues temper the overall sentiment.
Positives
- Eversource's earnings per share significantly increased in the second quarter and first half of 2024 compared to the same periods in 2023.
- The company reaffirmed its full-year earnings guidance and long-term EPS growth rate projection.
- Cash flows from operating activities improved substantially in the first half of 2024.
- The sale of the Sunrise Wind project was completed, generating $118 million in cash at closing, with an additional $34 million to be paid after onshore construction is completed.
Negatives
- The second quarter and first half of 2023 results were negatively impacted by a significant impairment charge related to offshore wind investments.
- The company's operating revenues decreased by $95.8 million in the second quarter and $558.9 million in the first half of 2024 compared to the same periods in 2023.
Risks
- The company's ability to complete the sale of its offshore wind investments in the South Fork Wind and Revolution Wind projects on the expected timeline, terms, and pricing is subject to various conditions and potential adjustments.
- The company's financial performance is subject to risks related to changes in economic conditions, interest rates, tax policies, and customer demand.
- The company's operations are subject to risks related to cyberattacks, physical attacks, and disruptions to its electric, natural gas, and water distribution systems.
- The company's financial performance is subject to risks related to actions or inaction of local, state and federal regulatory, public policy and taxing bodies.
- The company's financial performance is subject to risks related to fluctuations in weather patterns, including extreme weather due to climate change.
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 percent through 2028.
Industry Context
The document reflects the ongoing challenges and opportunities in the utility sector, including the transition to renewable energy, the need for infrastructure upgrades, and the impact of regulatory changes. The sale of offshore wind assets indicates a strategic shift in the company's focus.
Comparison to Industry Standards
- Eversource's performance in the second quarter of 2024 shows a significant improvement in earnings compared to the same period last year, which was impacted by a large impairment charge. This suggests a recovery and stabilization of the company's financial position.
- The company's reaffirmed full-year guidance and long-term growth projections indicate confidence in its future performance, which is a positive sign for investors.
- The sale of the Sunrise Wind project and the planned sale of the South Fork Wind and Revolution Wind projects align with a broader trend in the utility sector of companies divesting non-core assets to focus on core operations.
- The company's capital expenditure plans reflect the ongoing need for infrastructure upgrades and investments in renewable energy, which are common themes in the utility industry.
- The company's financial results are subject to regulatory oversight, which is a common characteristic of the utility sector. The ongoing FERC ROE complaints and rate case filings highlight the importance of regulatory decisions on the company's financial performance.
- Compared to other large utilities, Eversource's focus on regulated operations and its strategic shift away from offshore wind development is a notable difference. Many other utilities are actively investing in renewable energy projects, while Eversource is divesting from them.
Stakeholder Impact
- Shareholders will benefit from the improved earnings and reaffirmed guidance.
- Customers may see changes in their rates due to regulatory decisions and cost tracking mechanisms.
- Employees will be impacted by the company's strategic decisions and operational changes.
- Suppliers and contractors will be affected by the company's capital expenditure plans and project timelines.
- Creditors will be impacted by the company's debt management and financial performance.
Next Steps
- Complete the sale of the South Fork Wind and Revolution Wind projects.
- Continue to execute on capital expenditure plans to maintain and improve infrastructure.
- Monitor and respond to regulatory developments, including the FERC ROE complaints and rate case filings.
- Continue to manage and mitigate risks related to weather, cyber security, and economic conditions.
Key Dates
| Date | Description |
|---|---|
| 2011-10-01 | Date of the first FERC ROE complaint. |
| 2012-12-27 | Date of the second FERC ROE complaint. |
| 2014-07-31 | Date of the third FERC ROE complaint. |
| 2014-10-16 | FERC issued Opinion No. 531-A setting the base ROE at 10.57 percent and the incentive cap at 11.74 percent for the first complaint period. |
| 2016-04-29 | Date of the fourth FERC ROE complaint. |
| 2018-05-31 | Date of issuance of securitized RRBs by PSNH Funding. |
| 2018-10-16 | FERC issued an order on all four complaints describing how it intends to address the issues that were remanded by the Court. |
| 2019-11-21 | FERC issued Opinion No. 569 affecting the two pending transmission ROE complaints against the Midcontinent ISO (MISO) transmission owners. |
| 2019-12-23 | The NETOs filed supplementary materials in the NETOs' four pending cases to respond to the new methodology in FERC Opinion No. 569. |
| 2020-03-20 | FERC issued a Notice of Proposed Rulemaking (NOPR) on transmission incentives. |
| 2020-05-21 | The FERC issued its order in Opinion No. 569-A on the rehearing of the MISO transmission owners' cases. |
| 2020-11-19 | The FERC issued Opinion No. 569-B denying rehearing of Opinion No. 569-A. |
| 2021-03-25 | Each of the Yankee Companies filed a fifth set of lawsuits against the DOE in the Court of Federal Claims. |
| 2022-05-11 | Eversource entered into an equity distribution agreement. |
| 2022-06-08 | The Yankee Companies submitted a supplemental filing to include costs of $33.1 million in the DOE Phase V complaint. |
| 2022-08-09 | The Court issued its decision vacating MISO ROE FERC Opinion Nos. 569, 569-A and 569-B and remanded to FERC to reopen the proceedings. |
| 2023-01-01 | CL&P reduced the average NBFMCC rate to a credit of $0.01524 per kWh. |
| 2023-03-21 | Eversource's equity method investment in a renewable energy investment fund was liquidated. |
| 2023-05-01 | PSNH's pole purchase agreement. |
| 2023-05-25 | Eversource announced that it would pursue the sale of its offshore wind investments. |
| 2023-07-01 | The average NBFMCC rate changed to $0.00000 per kWh. |
| 2023-09-01 | The average NBFMCC rate changed to $0.00293 per kWh. |
| 2023-09-07 | Eversource completed the sale of its 50 percent interest in an uncommitted lease area to rsted. |
| 2023-10-30 | The DPU approved a $25.4 million increase to NSTAR Gas base distribution rates. |
| 2023-11-01 | NSTAR Gas base distribution rate increase became effective. |
| 2024-01-01 | NSTAR Electric base distribution rate increase became effective. |
| 2024-01-24 | rsted signed an agreement with Eversource to acquire Eversources 50 percent share of Sunrise Wind. |
| 2024-02-08 | The NHPUC approved PSNHs request for authorization to issue up to $300 million in long-term debt. |
| 2024-02-13 | Eversource executed an agreement to sell its existing 50 percent interests in the South Fork Wind and Revolution Wind projects to Global Infrastructure Partners (GIP). |
| 2024-02-29 | Sunrise Wind was selected for contract negotiation in the offshore wind solicitation by NYSERDA. |
| 2024-03-25 | The State of Connecticut Superior Court issued a decision on the AWC-CT rate case appeal. |
| 2024-04-18 | Eversource and rsted executed the equity and asset purchase agreement to sell Eversources 50 percent interest in Sunrise Wind to rsted. |
| 2024-04-17 | PURA issued an interim decision in CL&Ps Rate Adjustment Mechanisms (RAM) filing. |
| 2024-05-01 | The DPU approved NSTAR Electrics request for authorization to issue up to $2.4 billion in long-term debt. |
| 2024-05-16 | Record date for Eversource's common share dividend payment. |
| 2024-05-31 | Sunrise Wind was awarded a contract, which was finalized and completed. |
| 2024-06-04 | The DPU approved four of the remaining five CIPs that were originally submitted by NSTAR Electric. |
| 2024-06-11 | PSNH filed an application with the NHPUC for approval of a temporary annual base distribution rate increase. |
| 2024-06-18 | Moodys revised the outlook from stable to negative for CL&P. |
| 2024-06-28 | Eversource's common share dividend payment was paid. |
| 2024-07-09 | Eversource completed the sale of its 50 percent ownership share of Sunrise Wind to rsted. |
| 2024-07-24 | PURA approved CL&Ps request for authorization to issue up to $1.0 billion in long-term debt. |
| 2024-07-31 | The NHPUC approved a settlement agreement to implement a temporary annual base distribution rate increase of $61.2 million for PSNH. |
| 2024-07-31 | PURA issued a final decision in the AWC-CT remand docket. |
| 2024-08-01 | PSNH's temporary annual base distribution rate increase took effect. |
| 2024-08-14 | A final PURA decision in CL&Ps RAM filing is expected. |
| 2024-08-02 | Date of this report. |
| 2024-10-28 | Date of the DOE Phase V trial. |
Keywords
Eversource Energy, financial results, earnings, offshore wind, renewable energy, electric distribution, electric transmission, natural gas distribution, water distribution, capital expenditures, debt, regulatory, transmission, distribution, net income, EPS, guidance
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