10-QPeriod: Q3 FY2013

EVERSOURCE ENERGY Quarterly Report for Q3 Ended Sep 30, 2013

Filed November 4, 2013For Securities:ES

Summary

Eversource Energy (ES) reported solid financial results for the nine months ended September 30, 2013. The company saw a significant increase in net income attributable to controlling interest, reaching $608.6 million, a substantial rise from $351.2 million in the same period of 2012. This growth was largely driven by the inclusion of NSTAR's operations, acquired in April 2012, which contributed significantly to both revenue and earnings across the electric distribution, transmission, and natural gas segments. Operational highlights include improved earnings in the electric distribution and transmission segments, despite some weather-related impacts on electric sales. The company continues to invest heavily in infrastructure upgrades and reliability projects, with capital expenditures totaling $1.1 billion for the first nine months of 2013 across its utility operations. Liquidity remains stable, supported by strong operating cash flows and access to credit facilities, enabling the company to manage its debt obligations and fund ongoing capital investments.

Financial Statements
Beta
Revenue$1.89B
Operating Expenses$1.49B
Operating Income$399.30M
Interest Expense$87.48M
Net Income$211.40M
EPS (Basic)$0.66
EPS (Diluted)$0.66
Shares Outstanding (Basic)315.29M
Shares Outstanding (Diluted)316.22M

Key Highlights

  • 1Net income attributable to controlling interest for the first nine months of 2013 was $608.6 million, a significant increase from $351.2 million in the prior year, largely due to the NSTAR acquisition.
  • 2Operating revenues for the nine months ended September 30, 2013, increased to $5.52 billion, up from $4.59 billion in the same period of 2012, reflecting the full inclusion of NSTAR's operations.
  • 3The company invested approximately $1.1 billion in property, plant, and equipment during the first nine months of 2013, primarily in transmission and electric distribution infrastructure.
  • 4Eversource Energy's consolidated cash flows from operating activities were $1.1 billion for the first nine months of 2013, demonstrating robust operational cash generation.
  • 5A significant regulatory development was the FERC ALJ's initial decision on August 6, 2013, regarding base ROE for transmission owners, which led Eversource to record a $14.3 million after-tax reserve for potential financial impacts.
  • 6The company amended and extended its revolving credit facilities, increasing overall borrowing capacity to $1.45 billion, supporting its liquidity and capital expenditure plans.
  • 7Natural gas distribution segment revenues showed strong growth, with a 13.3% increase in sales for the first nine months of 2013, driven by colder weather and customer growth.

Frequently Asked Questions

The primary driver of Eversource Energy's increased earnings for the first nine months of 2013 was the full inclusion of NSTAR's operations, which were acquired in April 2012. NSTAR's contribution significantly boosted revenues and net income across the company's various segments.

Eversource Energy continued its significant investment in infrastructure, with capital expenditures totaling approximately $1.1 billion for property, plant, and equipment during the first nine months of 2013. These investments were primarily focused on transmission and electric distribution infrastructure upgrades and reliability projects.

A FERC ALJ issued an initial decision in August 2013 finding the current base ROE for transmission owners to be unreasonable. While the final decision from FERC is pending, Eversource recorded a $14.3 million after-tax reserve in the third quarter of 2013 to account for potential financial impacts, particularly for the refund period covering October 2011 through December 2012.

Eversource Energy's liquidity remains strong, supported by robust operating cash flows of $1.1 billion for the first nine months of 2013. The company also amended and extended its revolving credit facilities, increasing its total borrowing capacity to $1.45 billion, ensuring sufficient resources to manage its debt obligations and fund its substantial capital investment program.