10-KPeriod: FY2018

EVERSOURCE ENERGY Annual Report, Year Ended Dec 31, 2018

Filed February 26, 2019For Securities:ES

Summary

Eversource Energy's (ES) 2018 10-K filing reveals a strong year characterized by increased revenues and net income, driven by growth in its electric transmission and natural gas distribution segments. The company reported a net income of $1.03 billion, or $3.25 per share, a notable increase from the previous year. This performance was bolstered by consistent investments in infrastructure, particularly in electric transmission, which saw earnings rise significantly. The company is strategically positioning itself for future growth in renewable energy, evidenced by its significant partnership in offshore wind projects. However, the filing also highlights certain risks, including the potential impact of regulatory changes, the ongoing FERC ROE complaints, and the challenges faced by the Northern Pass transmission project. Despite these headwinds, Eversource continues to prioritize capital expenditures on its core regulated businesses and has projected robust earnings for 2019, indicating a positive outlook for investors focused on stability and regulated utility growth.

Financial Highlights

49 data points
Beta

Revenue

$8.45B

Net Income

$1.04B

12.3% Net Margin

EPS (Diluted)

$3.25

Total Assets

$38.24B

Cash & Equivalents

$108.07M

Free Cash Flow

-$739.39M

Financial Statements
Beta
Revenue$8.45B
Operating Expenses$6.75B
Operating Income$1.70B
Interest Expense$498.81M
Net Income$1.04B
EPS (Basic)$3.25
EPS (Diluted)$3.25
Shares Outstanding (Basic)317.37M
Shares Outstanding (Diluted)317.99M

Key Highlights

  • 1Eversource Energy reported a net income of $1.03 billion, or $3.25 per share, for 2018, up from $988.0 million, or $3.11 per share, in 2017.
  • 2The electric transmission segment was a key growth driver, with earnings increasing by $35.3 million to $427.2 million, driven by higher transmission rate base from ongoing investments.
  • 3The company made significant strategic investments in offshore wind projects, entering a 50-50 partnership for Revolution Wind and South Fork Wind projects, indicating a commitment to renewable energy expansion.
  • 4Eversource's projected capital expenditures for 2019-2023 are $12.75 billion, focusing primarily on electric and natural gas distribution segments, as well as electric transmission.
  • 5The company continues to face regulatory scrutiny, particularly concerning FERC ROE complaints, which could potentially impact financial results if resolved unfavorably.
  • 6The Northern Pass transmission project faced setbacks, including the denial of its siting application in New Hampshire, but Eversource remains committed to pursuing approval.
  • 7Eversource Energy's Board of Trustees approved a common share dividend payment of $0.535 per share for March 2019, representing a 5.9% increase, signaling a commitment to returning value to shareholders.

Frequently Asked Questions

Eversource Energy's 2018 financial performance was primarily driven by growth in its electric transmission segment due to increased investments in infrastructure, and by the natural gas distribution segment benefiting from colder weather and a rate case settlement. The company also saw improved earnings from its water distribution segment following the acquisition of Aquarion.

Eversource Energy is focused on investing in its core regulated businesses, particularly electric and natural gas distribution and electric transmission infrastructure. Additionally, the company is making significant strategic investments in the offshore wind energy sector through partnerships, signaling a clear commitment to expanding its renewable energy portfolio.

Key risks highlighted in the filing include potential adverse outcomes from FERC ROE complaints that challenge allowed returns on equity for transmission projects, uncertainties surrounding the Northern Pass transmission project due to regulatory denials and appeals, and the general impact of climate change and severe weather on facilities and operations. Cybersecurity threats also remain a significant concern.

Eversource Energy plans to invest $12.75 billion in capital expenditures from 2019 through 2023, primarily directed towards its distribution and transmission segments. The company utilizes a mix of debt and equity markets for financing and maintains strong credit ratings, though S&P changed its outlook to negative on February 12, 2019. It expects future operating cash flows and market access to be sufficient to meet its financial obligations.