10-QPeriod: Q3 FY2014

EVERSOURCE ENERGY Quarterly Report for Q3 Ended Sep 30, 2014

Filed November 7, 2014For Securities:ES

Summary

Eversource Energy (ES), formerly Northeast Utilities, reported net income attributable to controlling interest of $234.6 million, or $0.74 per share, for the third quarter of 2014, an increase from $209.5 million, or $0.66 per share, in the same period of 2013. For the first nine months of 2014, net income was $597.9 million, or $1.89 per share, down from $608.6 million, or $1.93 per share, in the first nine months of 2013. The company's performance was impacted by various factors, including cooler summer weather affecting electric sales, but offset by improved natural gas volumes and lower operational costs. Key financial activities during the period included the issuance of new long-term debt totaling $650 million to repay existing debt and short-term borrowings. The company also continued to manage its credit facilities and commercial paper programs. Management highlights the ongoing investment in property, plant, and equipment, totaling $1.1 billion for the first nine months of 2014, supporting infrastructure improvements and reliability projects across its service territories. Regulatory matters, particularly concerning the FERC's decisions on base return on equity (ROE) for transmission services, are noted as a significant factor, leading to the establishment of reserves and potential impacts on future earnings.

Financial Highlights

46 data points
Beta

Revenue

$1.89B

Net Income

$236.50M

12.5% Net Margin

EPS (Diluted)

$0.74

Total Assets

$27.98B

Cash & Equivalents

$41.71M

Free Cash Flow

$113.90M

Financial Statements
Beta
Revenue$1.89B
Operating Expenses$1.45B
Operating Income$440.90M
Interest Expense$89.74M
Net Income$236.50M
EPS (Basic)$0.74
EPS (Diluted)$0.74
Shares Outstanding (Basic)316.34M
Shares Outstanding (Diluted)317.55M

Key Highlights

  • 1Net income attributable to controlling interest for Q3 2014 was $234.6 million, up from $209.5 million in Q3 2013.
  • 2Year-to-date net income through September 30, 2014, was $597.9 million, down from $608.6 million in the prior year.
  • 3Total operating revenues for the first nine months of 2014 increased to $5.86 billion from $5.52 billion in the same period of 2013.
  • 4The company issued $650 million in new long-term debt in the first nine months of 2014, using proceeds to repay existing debt and short-term borrowings.
  • 5Capital expenditures for property, plant, and equipment totaled $1.1 billion for the first nine months of 2014, consistent with the prior year, reflecting ongoing investment in infrastructure.
  • 6The transmission segment saw increased operating income due to the absence of prior-year reserves related to FERC base ROE complaints and higher investments in infrastructure, although year-to-date results were impacted by new reserves related to FERC ROE orders.
  • 7The company's electric sales volumes decreased by 4.5% in the third quarter due to cooler weather and energy efficiency programs, while firm natural gas sales volumes increased by 1.4%.

Frequently Asked Questions

Eversource Energy reported a net income attributable to controlling interest of $234.6 million ($0.74 per share) for the third quarter of 2014, an increase from $209.5 million ($0.66 per share) in the third quarter of 2013. This improvement was attributed to lower operations and maintenance costs, and the absence of a prior-year reserve related to FERC base ROE complaints, partially offset by lower retail electric sales due to cooler weather and higher property taxes.

Operating revenues increased to $5.86 billion in the first nine months of 2014 from $5.52 billion in the same period of 2013. This increase was primarily driven by higher costs associated with procuring energy supply, particularly natural gas transportation costs impacting both electric and natural gas costs. Higher firm natural gas sales volumes due to colder weather and customer growth also contributed to the revenue increase.

Eversource Energy issued $650 million in new long-term debt in the first nine months of 2014 to repay existing long-term debt and short-term borrowings. The company also extended its $1.45 billion revolving credit facility and its $450 million commercial paper program, ensuring continued access to liquidity. These actions demonstrate a focus on maintaining a stable capital structure and managing debt obligations.

The company is significantly impacted by FERC's decisions regarding base return on equity (ROE) for transmission services. Recent FERC orders in June and October 2014 have set new tentative base ROEs and established a framework for calculating total ROE, including incentive adders. These decisions have led Eversource to record reserves for potential refunds to customers, affecting current and future earnings. The company is also managing ongoing proceedings related to transmission planning and cost allocation under FERC Order No. 1000.