10-QPeriod: Q1 FY2014

EVERSOURCE ENERGY Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 2, 2014For Securities:ES

Summary

Eversource Energy (ES), formerly Northeast Utilities, reported solid financial results for the first quarter of 2014, with net income attributable to controlling interest rising to $236.0 million, or $0.74 per diluted share, compared to $228.1 million, or $0.72 per diluted share, in the same period of 2013. This growth was primarily driven by increased retail electric and firm natural gas sales, largely due to colder weather across its service territories. The company also saw improved operating cash flows. Significant regulatory developments included Connecticut PURA's approval for CL&P to recover $365 million in storm restoration costs over six years, starting December 1, 2014. While the company's transmission segment earnings saw a slight decrease due to the absence of a prior year tax audit benefit, the overall financial performance reflects stable operations and continued investment in infrastructure, with a focus on transmission projects like NEEWS and Northern Pass. The company also maintained strong liquidity and managed its debt effectively through new issuances and maturities.

Financial Highlights

45 data points
Beta

Revenue

$2.29B

Net Income

$237.80M

10.4% Net Margin

EPS (Diluted)

$0.74

Total Assets

$28.10B

Cash & Equivalents

$89.15M

Free Cash Flow

$145.10M

Financial Statements
Beta
Revenue$2.29B
Operating Expenses$1.82B
Operating Income$467.70M
Interest Expense$89.97M
Net Income$237.80M
EPS (Basic)$0.75
EPS (Diluted)$0.74
Shares Outstanding (Basic)315.53M
Shares Outstanding (Diluted)316.89M

Key Highlights

  • 1Net income attributable to controlling interest increased to $236.0 million ($0.74/share) in Q1 2014, up from $228.1 million ($0.72/share) in Q1 2013.
  • 2Operating revenues rose by 14.8% to $2.3 billion, driven by higher retail electric and firm natural gas sales due to colder weather.
  • 3CL&P received approval to recover $365 million in storm restoration costs over six years.
  • 4Investments in property, plant, and equipment totaled $348.7 million in Q1 2014.
  • 5The company issued $400 million in new long-term debt during Q1 2014.
  • 6Operating cash flows increased to $493.8 million in Q1 2014, up from $473.1 million in Q1 2013.
  • 7Credit ratings from Moody's, Fitch, and S&P were affirmed or upgraded, with outlooks revised to positive by S&P.

Frequently Asked Questions

The primary driver for the increase in operating revenues was higher retail electric and firm natural gas sales volumes, largely attributed to significantly colder weather experienced across its service territories during the first quarter of 2014 compared to the same period in 2013. Wholesale energy costs also played a role, impacting purchased power expenses.

A significant regulatory event was the PURA's final decision approving CL&P's recovery of $365 million in storm restoration costs over six years, starting December 1, 2014. This provides a clear path for cost recovery, although it will be amortized over a considerable period. Additionally, the NHPUC is investigating the fair market value of PSNH's generating assets, which could lead to future divestiture or restructuring, with potential implications for stranded costs. The FERC ROE complaint remains ongoing, with potential impacts on transmission revenue if the authorized rate is reduced.

Eversource Energy maintained strong liquidity, with cash and cash equivalents increasing to $89.2 million at the end of Q1 2014. The company managed its debt by issuing $400 million in new long-term debt (from Yankee Gas and NSTAR Electric) to repay maturing debt. It also utilized its revolving credit facilities and commercial paper programs to support short-term borrowing needs.

The NEEWS projects are progressing, with the GSRP project fully energized and others, like the Interstate Reliability Project, moving through permitting and construction phases, expected to be in service by late 2015. The Northern Pass transmission line project is undergoing federal and state permitting processes, with key milestones like the draft Environmental Impact Statement expected in late 2014 and a final EIS in mid-2015.