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 company serves approximately 4.6 million electric, natural gas and water customers in Connecticut, Massachusetts and New Hampshire.

Sentiment

Score: 7

Explanation: The document presents a positive outlook with improved financial results and a strategic focus on regulated utility businesses. However, losses from offshore wind investments and the pending sale of Aquarion Water Company temper the overall sentiment.

Positives

• Full-year 2024 earnings significantly improved compared to 2023, with a shift from a loss to a profit.
• Non-GAAP recurring earnings exceeded the company's updated guidance.
• The sale of Aquarion Water Company is expected to strengthen the balance sheet.
• The company has a new five-year investment plan focused on regulated utility businesses.
• Eversource is projecting a long-term EPS growth rate of 5 to 7 percent through 2029.
• Electric Transmission segment earned $724.6 million in 2024, compared with earnings of $643.4 million in 2023.
• Electric distribution segment earned $631.7 million in 2024, compared with earnings of $608.0 million in 2023.
• Natural gas distribution segment earned $291.0 million in 2024, compared with earnings of $224.8 million in 2023.
• Water distribution segment, excluding the loss on the pending sale, earned $44.6 million in 2024, compared with earnings of $33.1 million in 2023.

Negatives

• The sale of offshore wind investments resulted in a significant after-tax loss of $524.0 million for the full year 2024.
• The pending sale of Aquarion Water Company is expected to result in a loss of $298.3 million.
• Eversource expects to raise $1.2 billion of equity over the forecast period of 2025-2029, which could dilute existing shareholders.
• Eversource Parent and other companies earnings were $(57.9) million in 2024 and $8.4 million in 2023.

Risks

• The company faces risks related to cyberattacks, disruptions in capital markets, and changes in economic conditions.
• Variability in the costs and final investment returns of the Revolution Wind and South Fork Wind offshore wind projects could impact the purchase price post-closing adjustment.
• Actions or inaction of regulatory bodies could affect the company's performance.
• Fluctuations in weather patterns, including extreme weather due to climate change, pose a risk.
• Changes in laws, regulations, and accounting standards could impact the company.
• The company's ability to achieve its projected earnings growth rate is subject to various factors, including regulatory approvals and economic conditions.

Future Outlook

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

Management Comments

• Chairman, President, and Chief Executive Officer Joe Nolan stated that Eversource achieved operational excellence and delivered solid financial results.
• Joe Nolan mentioned that the strategic decision to divest Aquarion will greatly strengthen the balance sheet and allow the company to focus on regulated electric and natural gas utility businesses.
• Joe Nolan added that the company has extensive and attractive opportunities for system investments, as evidenced by a 10 percent increase in the five-year investment plan.

Industry Context

Eversource's focus on regulated utility businesses and investments in transmission and distribution infrastructure aligns with the industry trend of modernizing the grid and supporting the transition to clean energy.

Comparison to Industry Standards

• Eversource's electric reliability is in the top decile among industry comparators.
• The company's on-time emergency gas response rate of 98.1% exceeds mandated emergency response requirements.
• The sale of Aquarion Water Company at approximately 1.7x 2024 rate base or 35x 2025 earnings is within the range of recent water utility transactions.

Stakeholder Impact

• Shareholders will benefit from improved earnings and a focus on long-term growth.
• Customers will benefit from investments in reliable and resilient energy infrastructure.
• Employees will be involved in the execution of the company's strategic priorities.
• The sale of Aquarion Water Company may impact water customers in Connecticut, Massachusetts, and New Hampshire.

Next Steps

• Complete the sale of Aquarion Water Company by late 2025.
• Execute the five-year $24.2 billion investment plan for 2025-2029.
• Raise $1.2 billion of equity over the forecast period of 2025-2029.
• Continue to advance clean energy initiatives in Massachusetts.
• File for rate case requests for PSNH and Yankee Gas.
• Obtain final decision in 2025 for rates effective August 1, 2025 for New Hampshire.

Key Dates