Eversource Energy Annual Report, Year Ended Dec 31, 2015

Eversource Energy's 2015 10-K reports a year of steady growth in earnings and rate base, led by its regulated electric and gas utilities in Connecticut, Massachusetts and New Hampshire.

GAAP net income attributable to common shareholders was $878.5 million^a, or $2.76 per diluted share, up from $819.5 million, or $2.58, in 2014. Excluding integration costs, non-GAAP EPS was $2.81, up about 6%. Regulated companies contributed $884.8 million of non-GAAP earnings, with electric distribution ($1.59 per share) and electric transmission ($0.96) as the largest drivers.

Revenue rose 2.7% to $7.95 billion^b, and operating income rose 8.0% to $1.76 billion, supported by base rate increases at CL&P and higher transmission revenue requirements. The balance sheet and capital plan are central to the investment case. Eversource projects about $9.2 billion of capital expenditures from 2016 through 2019, of which about $3.9 billion is electric transmission, including the Northern Pass HVDC line, which has an estimated cost of $1.6 billion.

Management also highlights the Access Northeast gas pipeline (roughly $3 billion^c, with Eversource owning 40%). The company issued about $1.23 billion of long-term debt in 2015, and its credit ratings improved, with S&P upgrading the parent to A. Operating cash flow fell to $1.42 billion from $1.64 billion, mainly because of a roughly $302 million DOE spent-fuel payment and timing effects.

Management guided 2016 EPS to $2.90 to $3.05^d and raised the quarterly dividend 6.6% to $0.445. Key risks include FERC base ROE complaints, which could reduce transmission earnings; the pending New Hampshire generation divestiture, which requires NHPUC approval; regulatory outcomes for rate cases and tracked cost recovery; and about $3.5 billion of goodwill, which passed its 2015 impairment test. Goodwill, rate-regulated asset recovery, and the ROE outcome are the main items investors should monitor.