10-Q: Eversource Energy Reports Q3 2024 Results; Updates Earnings Guidance

Sentiment:

Quarterly Report 6 November 2024 2:28 PM

Eversource Energy reports a net loss for Q3 2024, impacted by losses on offshore wind investments, while updating its non-GAAP earnings guidance for the year.

Worse than expectedThe company reported a net loss for Q3 2024, a significant downturn compared to the net income reported for the same period in 2023.The loss was primarily attributed to the after-tax loss on the sale of offshore wind investments.

Summary

Eversource Energy reported a net loss of $118.1 million, or $0.33 per share, for the third quarter of 2024, compared to a net income of $339.7 million, or $0.97 per share, for the same period in 2023.
For the first nine months of 2024, the company reported a net income of $739.1 million, or $2.08 per share, compared to $846.2 million, or $2.42 per share, for the same period in 2023.
The 2024 results were significantly impacted by an after-tax loss of $524.0 million, or $1.48 per share, from the sale of offshore wind investments.
Excluding these losses, the non-GAAP earnings for Q3 2024 were $405.9 million, or $1.13 per share, and for the first nine months of 2024 were $1.26 billion, or $3.56 per share.
The company has updated its 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 costs.
Eversource reaffirmed its long-term EPS growth rate projection of 5 to 7 percent through 2028 and increased its capital investment forecast for 2024-2028 to $23.7 billion.
The company completed the sale of its 50 percent ownership share of Sunrise Wind to rsted for adjusted proceeds of $152 million in July 2024.
Eversource completed the sale of its 50 percent ownership share in the South Fork Wind and Revolution Wind projects to Global Infrastructure Partners (GIP) for adjusted gross proceeds of $745 million in September 2024.
The company recorded a liability of $365 million reflecting its best estimate of the future obligations under the GIP sale terms.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the company reported a net loss, it also reaffirmed its long-term EPS growth rate and increased its capital investment forecast, indicating a mixed outlook.

Positives

Eversource reaffirmed its long-term EPS growth rate projection of 5 to 7 percent through 2028.
Capital investment forecast for 2024-2028 increased to $23.7 billion.
The company completed the sale of its 50 percent ownership share of Sunrise Wind to rsted for adjusted proceeds of $152 million.
Eversource completed the sale of its 50 percent ownership share in the South Fork Wind and Revolution Wind projects to GIP for adjusted gross proceeds of $745 million.

Negatives

Eversource Energy reported a net loss of $118.1 million, or $0.33 per share, in Q3 2024.
The company recorded a liability of $365 million reflecting its best estimate of the future obligations under the GIP sale terms.
The 2024 results were significantly impacted by an after-tax loss of $524.0 million, or $1.48 per share, from the sale of offshore wind investments.

Risks

The ultimate cost of construction and extent of cost overruns for Revolution Wind could increase post-closing adjustment payments owed to GIP.
Delays in constructing Revolution Wind could impact the economics associated with the purchase price adjustment.
Revolution Winds eligibility for federal investment tax credits at less than the value included in the purchase price could increase post-closing adjustment payments owed to GIP.

Future Outlook

Eversource projects 2024 non-GAAP earnings within a range of $4.52 to $4.60 per share and reaffirms a long-term EPS growth rate of 5 to 7 percent through 2028.

Industry Context

The announcement reflects a strategic shift for Eversource away from offshore wind development and towards its core regulated utility businesses.

Comparison to Industry Standards

The sale of offshore wind assets aligns with a broader trend among some utilities seeking to de-risk and focus on core operations.
Comparatively, other major players in the renewable energy sector, such as rsted and Iberdrola, continue to invest heavily in offshore wind projects, indicating differing strategic priorities.
The increased capital investment forecast reflects the growing emphasis on grid modernization and renewable energy integration, similar to trends observed in other utility companies like NextEra Energy and Southern Company.

Stakeholder Impact

Shareholders will be impacted by the net loss reported for Q3 2024.
Customers may benefit from the increased capital investment forecast, which includes grid modernization and renewable energy integration.
Employees involved in the offshore wind business may be affected by the sale of those assets.

Next Steps

Eversource will continue to manage Sunrise Winds and Revolution Winds onshore construction through completion as a service provider.
Eversource is supporting due diligence with potential buyers for its Aquarion water distribution business.

Key Dates

Date	Description
2018-05	PSNH Funding issued $635.7 million of securitized RRBs.
2023-03-21	Eversources equity method investment in a renewable energy investment fund was liquidated.
2023-05-25	Eversource announced it would pursue the sale of its offshore wind investments.
2023-09-07	Eversource completed the sale of its 50 percent interest in an uncommitted lease area to rsted for $625 million.
2023-09	Eversource made a contribution of $528 million to invest in a tax equity interest for South Fork Wind.
2024-01-24	Eversource signed an agreement with rsted to sell Eversources 50 percent share of Sunrise Wind.
2024-02-13	Eversource executed an agreement to sell its 50 percent interests in the South Fork Wind and Revolution Wind projects to Global Infrastructure Partners (GIP) for an initial gross purchase price of approximately $1.1 billion.
2024-04-18	Eversource and rsted executed an equity and asset purchase agreement for a gross purchase price of $230 million for Sunrise Wind.
2024-07-09	Eversource completed the sale of its 50 percent ownership share of Sunrise Wind to rsted for adjusted proceeds of $152 million.
2024-08-29	The DPU approved NSTAR Electrics ESMP for a five-year period commencing July 1, 2025.
2024-09-30	Eversource completed the sale of its 50 percent ownership share in the South Fork Wind and Revolution Wind projects to GIP for adjusted gross proceeds of $745 million.
2024-10-11	Eversource parent, CL&P, PSNH, NSTAR Gas, Yankee Gas, EGMA and Aquarion Water Company of Connecticut are parties to a five-year $2.00 billion revolving credit facility, which terminates on October 11, 2029.
2024-10-11	NSTAR Electric is also a party to a five-year $650 million revolving credit facility, which terminates on October 11, 2029.
2025-01-01	Effective date (subject to union negotiations) of Cash Balance Pension Plan replacing employer K-Vantage contributions.

Keywords

Eversource Energy, Financial Results, Offshore Wind, Earnings, Guidance, Capital Investment, Revolution Wind, Sunrise Wind, South Fork Wind, GIP, Orsted, Sale

Disclaimer:The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.