10-QPeriod: Q2 FY2015

EVERSOURCE ENERGY Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 5, 2015For Securities:ES

Summary

Eversource Energy (ES) reported a significant increase in net income for the second quarter and first half of 2015 compared to the same periods in 2014. This improvement was driven by higher operating revenues across its segments, particularly electric distribution and transmission, bolstered by rate increases and favorable regulatory settlements. The company also saw a decrease in operations and maintenance expenses, contributing to improved profitability. Despite some headwinds like increased energy supply costs and the impact of integration initiatives, the company's strong performance was supported by strategic investments in infrastructure and effective cost management. Liquidity remained stable, with consistent operating cash flows and access to revolving credit facilities, allowing for continued capital investments and dividend payments.

Financial Highlights

46 data points
Beta

Revenue

$1.82B

Net Income

$209.40M

11.5% Net Margin

EPS (Diluted)

$0.65

Total Assets

$29.88B

Cash & Equivalents

$36.47M

Free Cash Flow

-$4.05M

Financial Statements
Beta
Revenue$1.82B
Operating Expenses$1.41B
Operating Income$412.00M
Interest Expense$92.26M
Net Income$209.40M
EPS (Basic)$0.65
EPS (Diluted)$0.65
Shares Outstanding (Basic)317.61M
Shares Outstanding (Diluted)318.56M

Key Highlights

  • 1Net income attributable to controlling interest increased significantly to $207.5 million ($0.65/share) in Q2 2015 and $460.8 million ($1.45/share) in H1 2015, up from $127.4 million ($0.40/share) and $363.3 million ($1.15/share) in the prior year periods, respectively.
  • 2Operating revenues rose across all segments, with notable increases in electric distribution and transmission driven by rate adjustments and favorable regulatory outcomes, including settlement agreements.
  • 3Operations and maintenance expenses decreased overall, primarily due to lower labor and employee benefit costs, contributing to improved operating income.
  • 4The company reaffirmed its commitment to capital expenditures, investing $740.4 million in property, plant, and equipment in H1 2015, primarily in transmission infrastructure upgrades and electric/gas distribution enhancements.
  • 5Liquidity was maintained, with cash flows from operations of $855.6 million in H1 2015, and the company had substantial borrowing capacity available under its credit facilities.
  • 6CL&P issued $300 million in bonds, and the company announced a $1.45 billion revolving credit facility expiring in 2019, ensuring financial flexibility.
  • 7Eversource is actively managing regulatory matters, including the resolution of FERC ROE complaints and various rate adjustment filings across its subsidiaries, with significant progress made on the PSNH generation divestiture agreement.

Frequently Asked Questions

The substantial increase in net income was driven by higher operating revenues across all segments, particularly in electric distribution and transmission, due to rate increases and favorable regulatory settlements. Additionally, a decrease in operations and maintenance expenses, largely attributable to lower labor and employee benefit costs, contributed significantly to improved profitability.

Eversource continues to invest strategically in its infrastructure, with $740.4 million invested in property, plant, and equipment in the first half of 2015. The company maintains financial flexibility through a $1.45 billion revolving credit facility maturing in 2019 and has access to commercial paper programs. These actions support ongoing capital projects and dividend payments.

Key regulatory developments include favorable settlements for CL&P related to rate base adjustments and energy efficiency programs, and the resolution of FERC ROE complaints which, while resulting in a charge, provided clarity. The company is also progressing with the PSNH generation divestiture agreement and has managed various rate adjustments across its subsidiaries, demonstrating proactive engagement with regulatory bodies.

Overall electric sales volumes remained relatively stable year-over-year, with slight decreases on a weather-normalized basis due to increased conservation efforts. Natural gas sales saw improvements in the first half due to colder weather and customer growth. For CL&P and WMECO, revenue decoupling mechanisms ensure that base distribution revenues are recovered regardless of sales volume fluctuations, mitigating the impact of sales variability on earnings.