10-Q: Eversource Energy Reports Third Quarter Loss Due to Offshore Wind Investment Sales

Eversource Energy reported a net loss for the third quarter of 2024, primarily due to losses from the sale of its offshore wind investments, while also updating its full-year earnings guidance.

Summary

• Eversource Energy reported a net loss of $118.1 million, or $0.33 per share, for the third quarter of 2024, a significant downturn compared to the $339.7 million profit, or $0.97 per share, in the same quarter of 2023.
• The company's nine-month results for 2024 show a net income of $739.1 million, or $2.08 per share, which is lower than the $846.2 million, or $2.42 per share, reported for the same period in 2023.
• The third quarter loss was primarily driven by a $524 million after-tax loss from the sale of offshore wind investments.
• Excluding the impact of the offshore wind investment sales, the company's non-GAAP earnings were $405.9 million, or $1.13 per share, for the third quarter of 2024 and $1.26 billion, or $3.56 per share, for the first nine months of 2024.
• Eversource has updated its full-year 2024 non-GAAP earnings guidance to a range of $4.52 to $4.60 per share, excluding the impact of the offshore wind investment sales and related transaction costs.
• The company reaffirmed its long-term EPS growth rate projection of 5 to 7 percent through 2028 and increased its capital investment forecast to $23.7 billion for the period 2024 to 2028.
• Operating cash flows for the first nine months of 2024 were $1.52 billion, compared to $1.17 billion in the same period of 2023.
• Investments in property, plant, and equipment totaled $3.29 billion in the first nine months of 2024, compared to $3.13 billion in the same period of 2023.
• The company completed the sale of its 50 percent ownership share of Sunrise Wind to rsted for adjusted proceeds of $152 million and its 50 percent ownership share in the South Fork Wind and Revolution Wind projects to GIP for adjusted gross proceeds of $745 million.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While the company has reaffirmed its long-term growth outlook and increased its capital investment forecast, the significant loss from the sale of offshore wind assets and the lower net income for the nine-month period are concerning. The sentiment is therefore slightly negative.

Positives

• Operating cash flows for the first nine months of 2024 were $1.52 billion, compared to $1.17 billion in the same period of 2023.
• Eversource reaffirmed its long-term EPS growth rate projection of 5 to 7 percent through 2028.
• The company increased its capital investment forecast to $23.7 billion for the period 2024 to 2028.

Negatives

• Eversource reported a net loss of $118.1 million, or $0.33 per share, for the third quarter of 2024.
• The company's nine-month results for 2024 show a net income of $739.1 million, or $2.08 per share, which is lower than the same period in 2023.
• A $524 million after-tax loss from the sale of offshore wind investments significantly impacted the third quarter results.

Risks

• The company's financial results are subject to 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.
• The company's financial results are subject to disruptions in the capital markets or other events that make access to necessary capital more difficult or costly.
• The company's financial results are subject to changes in economic conditions, including impact on interest rates, tax policies, and customer demand and payment ability.
• The company's financial results are subject to actions or inaction of local, state and federal regulatory, public policy and taxing bodies.
• The company's financial results are subject to fluctuations in weather patterns, including extreme weather due to climate change.

Future Outlook

Eversource updated its full-year 2024 non-GAAP earnings guidance to a range of $4.52 to $4.60 per share, excluding the impact of the offshore wind investment sales and related transaction costs. The company also reaffirmed its long-term EPS growth rate projection of 5 to 7 percent through 2028 and increased its capital investment forecast to $23.7 billion for the period 2024 to 2028.

Industry Context

The sale of offshore wind assets reflects a strategic shift in Eversource's focus, moving away from direct ownership of renewable energy projects and towards its core regulated utility business. This is occurring in a broader context of increased scrutiny and challenges in the offshore wind industry, including cost overruns and project delays.

Comparison to Industry Standards

• The reported loss due to the sale of offshore wind assets is a significant deviation from the typical performance of regulated utility companies, which generally exhibit more stable earnings.
• Companies like NextEra Energy and Duke Energy, which also have renewable energy portfolios, have not reported similar losses from asset sales, suggesting that Eversource's challenges are specific to its offshore wind investments.
• The updated earnings guidance of $4.52 to $4.60 per share is within the range of other large utilities, but the underlying performance is impacted by the one-time loss.
• The increased capital investment forecast of $23.7 billion is in line with the industry trend of investing in grid modernization and renewable energy infrastructure.

Stakeholder Impact

• Shareholders will be impacted by the reported loss and the updated earnings guidance.
• Employees may be affected by the strategic shift in the company's focus.
• Customers may see changes in rates due to the company's capital investments and regulatory filings.
• Suppliers and creditors may be impacted by the company's financial performance and strategic decisions.

Next Steps

• The company will continue to focus on its core regulated utility business.
• The company will continue to invest in grid modernization and renewable energy infrastructure.
• The company will monitor the post-closing purchase price adjustment payments related to the sale of its offshore wind investments.

Key Dates

Keywords

Eversource Energy, offshore wind, financial results, earnings, capital investment, energy delivery, regulated utilities, net loss, revenue, expenses