01—Abstract
Summary
Summary of the 10-K filed February 25, 2015. Cited figures are marked; the original filing is the authoritative source.
Eversource Energy (formerly Northeast Utilities) reported solid financial performance in its 2014 10-K filing.
The company experienced revenue growth driven by increased electric and natural gas sales volumes, partly due to colder weather in early 2014. Key drivers of revenue included residential customers (53%a of electric revenue) and commercial customers (40% of electric revenue). The company's strategic investments in transmission infrastructure contributed to a revenue increase in that segment.
Management highlighted effective cost management, with operations and maintenance expenses decreasing primarily due to lower labor and employee-related costs, including pension costs, and reduced storm restoration expenses. The company also noted significant progress in its integration activities post-merger with NSTAR, including rebranding to Eversource Energy in February 2015.
Capital expenditures were substantial, with projections of $8.4 billionb from 2015-2018 focused on electric and natural gas distribution and transmission segments. The company maintains strong credit ratings and healthy liquidity, with sufficient access to capital markets to fund its operations and capital expenditures.
02—Key points
Key Highlights
- Eversource Energy reported a net income of $819.5 million, or $2.58 per diluted share, for 2014, an increase from $786.0 million, or $2.49 per diluted share, in 2013.
- The company's electric distribution segment, including generation, earned $462.4 million ($1.45 per share) in 2014, while the transmission segment earned $295.4 million ($0.93 per share), and the natural gas distribution segment earned $72.3 million ($0.23 per share).
- Operating revenues increased by 6.0% to $7.74 billion in 2014, primarily driven by higher energy supply costs recovered through rate mechanisms and increased natural gas sales due to colder weather.
- Operations and maintenance expenses decreased by 5.8% to $1.43 billion in 2014, mainly due to lower labor and employee-related costs, including pension costs, and reduced storm restoration expenses.
- Capital expenditures for 2015-2018 are projected at $8.4 billion, with significant investments planned for electric and natural gas distribution ($4.2 billion) and electric transmission ($3.9 billion).
- The company maintained strong credit ratings from Moody's, S&P, and Fitch, with generally stable to positive outlooks across its entities.
- Eversource Energy successfully managed significant storm events, with restoration costs largely deferred and recoverable through regulatory mechanisms, mitigating the impact on operating results.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 25, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $7.74B$7.30B | +6.0% |
| Operating Expenses | $6.11B$5.77B | +5.8% |
| Operating Income | $1.63B$1.53B | +6.8% |
| Interest Expense | $362.11M$338.70M | +6.9% |
| Net Income | $827.07M$793.69M | +4.2% |
| EPS (Basic) | $2.59$2.49 | +4.0% |
| EPS (Diluted) | $2.58$2.49 | +3.6% |
| Shares Outstanding (Basic) | 316.14M315.31M | +0.3% |
| Shares Outstanding (Diluted) | 317.42M316.21M | +0.4% |
05—Questions
Frequently Asked Questions
What is the company's outlook for 2015?
Eversource Energy projected 2015 earnings per share to be between $2.75 and $2.90, excluding integration costs, indicating continued expected earnings growth.
How did the company manage its operations and maintenance expenses?
Operations and maintenance expenses decreased by 5.8% in 2014 compared to 2013, primarily due to lower labor and employee-related costs, including pension costs, and reduced storm restoration expenses. This effective cost management contributed to the company's profitability.
What are the company's major capital expenditure plans?
Eversource Energy projected substantial capital expenditures of approximately $8.4 billion from 2015 through 2018. The focus of these investments is on its electric and natural gas distribution segments ($4.2 billion) and its electric transmission segment ($3.9 billion), aiming to enhance infrastructure reliability and capacity.
How does the company address regulatory risks, such as the FERC Base ROE complaints?
The company has recorded reserves to recognize the potential financial impact of FERC orders related to base ROE complaints. In 2014, the net aggregate after-tax charge to earnings from these orders totaled $22.4 million. Management believes the current reserves are appropriate to reflect probable and reasonably estimable refunds, though the final outcome remains uncertain.
06—Continue