10-QPeriod: Q2 FY2011

EVERSOURCE ENERGY Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 5, 2011For Securities:ES

Summary

Eversource Energy (ES), operating as Northeast Utilities and subsidiaries (NU), reported solid financial results for the second quarter and first half of 2011. The company saw an increase in earnings per share compared to the prior year, driven primarily by positive impacts from recent electric distribution rate case decisions and colder weather in the first quarter. The merger with NSTAR is progressing, with several regulatory approvals already secured and the remaining approvals anticipated in the fourth quarter of 2011. The company is also actively managing its capital expenditures, with significant investments in transmission infrastructure and ongoing updates on projects like NEEWS and Northern Pass. Financially, NU demonstrated improved operating income in its regulated segments, with distribution and transmission businesses contributing positively. The company maintained compliance with debt covenants and provided updated earnings guidance for the full year 2011, reflecting these positive operational trends and the anticipated benefits of the NSTAR merger. Investors can look forward to a potential dividend increase post-merger, indicating management's confidence in future financial performance.

Financial Highlights

45 data points
Beta

Revenue

$1.05B

Net Income

$78.70M

7.5% Net Margin

EPS (Diluted)

$0.44

Total Assets

$14.44B

Cash & Equivalents

$15.11M

Free Cash Flow

$82.09M

Financial Statements
Beta
Revenue$1.05B
Operating Expenses$869.35M
Operating Income$178.10M
Interest Expense$62.23M
Net Income$78.70M
EPS (Basic)$0.44
Shares Outstanding (Basic)177.35M
Shares Outstanding (Diluted)177.63M

Key Highlights

  • 1Eversource Energy (ES) reported increased earnings per share (EPS) for the second quarter and first half of 2011 compared to the same periods in 2010, with EPS of $0.44 and $1.08, respectively.
  • 2The company's regulated businesses, particularly the distribution segment, showed improved performance due to rate case decisions and colder weather, leading to higher operating income.
  • 3The proposed merger with NSTAR is on track, with several key regulatory approvals obtained, and the company anticipates closing in the fourth quarter of 2011.
  • 4Capital expenditures remain robust, with significant investments in transmission infrastructure, notably the NEEWS and Northern Pass projects, which are crucial for regional reliability.
  • 5The company reaffirmed its 2011 EPS guidance, projecting between $2.30 and $2.40 per share, excluding merger-related costs.
  • 6Cash flow from operations improved significantly in the first half of 2011, driven by rate case impacts and tax benefits.
  • 7Management anticipates an increase in the quarterly common dividend post-merger with NSTAR, reflecting confidence in future financial stability and performance.

Frequently Asked Questions

The primary drivers for the increased earnings were the positive impacts from recent electric distribution rate case decisions, which allowed for higher rates and improved revenue recovery. Additionally, colder weather in the first quarter of 2011 boosted natural gas sales and demand. The company also benefited from increased investment in transmission infrastructure and ongoing cost management efforts.

The merger with NSTAR is progressing as planned. Several regulatory approvals have been secured, including from the FCC, FERC, and the Maine Public Utilities Commission. The company anticipates receiving the remaining necessary approvals to close the merger in the fourth quarter of 2011. Shareholders of both companies have approved the transaction.

Eversource Energy continued to invest significantly in its infrastructure. Capital expenditures for the first half of 2011 totaled $468.5 million, an increase from the prior year, driven by investments in transmission projects such as NEEWS and the Northern Pass project. The company also reported capital spending in its distribution segment, including system upgrades and load growth projects.

The company paid common dividends of $97.2 million in the first half of 2011, reflecting a 7.3% increase in the dividend rate. Importantly, management indicated that following the completion of the NSTAR merger, the quarterly dividend per common share is expected to increase significantly, potentially by 18% to approximately $0.325 per share, or $1.30 annually, based on NSTAR's prior dividend.

Eversource Energy (NU) maintained compliance with its debt covenants. Cash and cash equivalents stood at $15.1 million as of June 30, 2011. The company also had available borrowing capacity under its revolving credit facilities, demonstrating adequate liquidity to meet its operational and capital needs. The issuance of new debt by subsidiaries like PSNH was managed to refinance existing obligations and fund capital programs.