10-QPeriod: Q2 FY2013

EVERSOURCE ENERGY Quarterly Report for Q2 Ended Jun 30, 2013

Filed August 2, 2013For Securities:ES

Summary

Eversource Energy (formerly Northeast Utilities) reported a significant increase in net income for the six months ended June 30, 2013, reaching $399.1 million ($1.26 per diluted share), a substantial jump from $143.6 million ($0.60 per diluted share) in the prior year's period. This improvement is largely attributable to the inclusion of NSTAR's operations following the merger completion in April 2012, alongside stronger performance in its transmission and natural gas segments. The company also saw improvements in operating income across its key segments, driven by increased investments in transmission infrastructure and higher energy sales. Liquidity remains a focus, with cash and cash equivalents decreasing to $36.1 million from $45.7 million year-over-year. However, operating cash flows improved significantly to $686.9 million for the first half of 2013, up from $284 million in the same period last year. This was supported by the inclusion of NSTAR, reduced storm restoration costs, lower pension contributions, and the absence of merger-related expenses. The company also successfully issued $750 million in senior notes and $200 million in debentures, strengthening its liquidity position and refinancing existing debt.

Financial Highlights

44 data points
Beta

Revenue

$1.64B

Net Income

$173.10M

10.6% Net Margin

EPS (Diluted)

$0.54

Total Assets

$28.20B

Cash & Equivalents

$36.05M

Free Cash Flow

-$15.42M

Financial Statements
Beta
Revenue$1.64B
Operating Expenses$1.29B
Operating Income$350.60M
Interest Expense$86.85M
Net Income$173.10M
EPS (Basic)$0.54
EPS (Diluted)$0.54
Shares Outstanding (Basic)315.15M
Shares Outstanding (Diluted)315.96M

Key Highlights

  • 1Net income surged to $399.1 million ($1.26/share) for the first six months of 2013, up from $143.6 million ($0.60/share) in the prior year, boosted by the NSTAR merger.
  • 2Operating cash flow significantly improved to $686.9 million for the first six months of 2013, a substantial increase from $284 million in the prior year.
  • 3The transmission segment showed strong growth, with operating income increasing to $156.7 million for the first six months of 2013, driven by increased infrastructure investments.
  • 4The natural gas distribution segment also reported improved performance, with net income of $44.5 million for the first six months of 2013, compared to $12.6 million in the prior year.
  • 5The company successfully managed its debt by issuing $750 million in senior notes and $200 million in debentures, while also redeeming $109 million in Rate Reduction Bonds.
  • 6Total operating revenues increased by 33.1% to $3.63 billion for the first six months of 2013, primarily due to the inclusion of NSTAR's operations.
  • 7Despite a decrease in cash and cash equivalents to $36.1 million, the company's liquidity is supported by strong operating cash flows and access to capital markets.

Frequently Asked Questions

The significant increase in net income to $399.1 million for the first six months of 2013 was primarily driven by the inclusion of NSTAR's operations following the completion of the merger in April 2012. Additionally, improved performance in the transmission segment, increased energy sales, and lower operating and administrative expenses also contributed to the higher earnings.

The merger with NSTAR, completed in April 2012, has had a substantial positive impact on the company's financial performance. For the first six months of 2013, NSTAR contributed $138.1 million in operating cash flows and its inclusion led to a significant increase in operating revenues and net income compared to the prior year period.

As of June 30, 2013, cash and cash equivalents stood at $36.1 million. While this is a decrease from the previous year, the company's liquidity is supported by strong operating cash flows, which improved significantly to $686.9 million in the first half of 2013. The company also has access to capital markets, as evidenced by the recent issuance of senior notes and debentures, which are used to fund capital expenditures, meet debt obligations, and manage working capital.

Yes, there are ongoing regulatory matters, notably the FERC complaint regarding the base Rate of Return on Equity (ROE) for transmission services, which could impact future earnings if the authorized ROE is reduced. The company is also involved in various state-level regulatory proceedings, including those related to storm cost recovery and energy efficiency programs. The outcome of these matters could have a material impact on the company's financial position, results of operations, and cash flows.