10-QPeriod: Q1 FY2004

EVERSOURCE ENERGY Quarterly Report for Q1 Ended Mar 31, 2004

Filed May 7, 2004For Securities:ES

Summary

Eversource Energy (ES), reporting as Northeast Utilities (NU) and Subsidiaries, posted solid first-quarter 2004 results, with net income increasing by 12% to $67.4 million ($0.53 per share) from $60.2 million ($0.47 per share) in the prior year's quarter. This growth was primarily driven by a significant improvement in the performance of its NU Enterprises segment, which saw its earnings surge to $18.8 million from $5.2 million, largely due to better margins and increased sales in its merchant energy business, particularly its retail operations. The Utility Group, while experiencing lower earnings ($54.8 million vs. $59.4 million), was bolstered by increased retail electric sales, although higher depreciation and pension expenses impacted profitability. The company maintained a strong liquidity position, with cash and cash equivalents and unrestricted cash from counterparties rising to $147 million. NU projects full-year 2004 consolidated earnings to be between $1.20 and $1.40 per share, with NU Enterprises expected to contribute significantly to the upper end of this range. Despite some challenges, including a negative outlook from Standard & Poor's on the Utility Group, the company appears to be navigating a complex market with positive year-over-year earnings growth.

Key Highlights

  • 1Net income increased by 12% to $67.4 million in Q1 2004 from $60.2 million in Q1 2003, with earnings per share rising to $0.53 from $0.47.
  • 2NU Enterprises significantly improved its performance, with earnings jumping to $18.8 million from $5.2 million, driven by its merchant energy segment's improved margins and retail sales growth.
  • 3The Utility Group's earnings declined year-over-year due to higher depreciation and pension expenses, although retail electric sales increased by 2.7%.
  • 4Consolidated revenues grew by 16% to $1.8 billion, largely attributable to higher revenues from NU Enterprises and the Utility Group.
  • 5Liquidity remains strong, with cash and cash equivalents and unrestricted cash from counterparties increasing to $147 million at the end of the quarter.
  • 6The company reiterated its full-year 2004 earnings guidance of $1.20 to $1.40 per share, expecting to be in the mid to upper end of this range.
  • 7Standard & Poor's lowered its outlook for NU to 'negative' from 'stable', citing increased competitive business exposure and low authorized returns on equity at CL&P.

Frequently Asked Questions

The primary driver of the increased net income was a significant improvement in the performance of NU Enterprises, specifically its merchant energy business, which benefited from better margins and growth in retail electric sales, offsetting a decline in the Utility Group's earnings.

The company's liquidity position strengthened. Cash and cash equivalents along with unrestricted cash from counterparties increased from $83.7 million at the end of 2003 to $147 million at March 31, 2004.

Northeast Utilities (NU) continues to project consolidated earnings between $1.20 per share and $1.40 per share for the full year 2004. Management expects NU Enterprises' earnings to be in the mid to upper end of the projected range.

Standard & Poor's lowered its outlook to 'negative' due to increased competitive business exposure, higher projected capital expenditures at CL&P, and the relatively low return on equity authorized for CL&P by the Connecticut Department of Public Utility Control.