10-QPeriod: Q1 FY2017

EVERSOURCE ENERGY Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 5, 2017For Securities:ES

Summary

Eversource Energy's (ES) May 5, 2017, 10-Q filing indicates that the company's regulated subsidiaries effectively have no exposure to commodity price risk, as the economic impacts of energy contracts are passed directly to customers. This is a key takeaway for investors, as it shields a significant portion of the company's operations from volatile energy market fluctuations. Management actively oversees these transactions through an Energy Supply Risk Committee. The company also outlined its approach to managing interest rate and credit risks. While maintaining a mix of fixed and variable rate debt, Eversource employs established policies for interest rate risk. For credit risk, the company works with a diverse customer and supplier base, employing risk management practices to mitigate potential losses from counterparty non-performance. Notably, as of March 31, 2017, no collateral was held by regulated companies for standard service contracts, but $24.3 million in cash was posted with ISO-NE for energy transactions.

Financial Highlights

46 data points
Beta

Revenue

$2.11B

Net Income

$261.30M

12.4% Net Margin

EPS (Diluted)

$0.82

Total Assets

$32.36B

Cash & Equivalents

$45.76M

Free Cash Flow

-$78.21M

Financial Statements
Beta
Revenue$2.11B
Operating Expenses$1.60B
Operating Income$501.00M
Interest Expense$103.43M
Net Income$261.30M
EPS (Basic)$0.82
EPS (Diluted)$0.82
Shares Outstanding (Basic)317.46M
Shares Outstanding (Diluted)318.12M

Key Highlights

  • 1Regulated companies have no exposure to commodity price risk due to cost-recovery mechanisms, insulating earnings from market volatility.
  • 2Energy supply risk for regulated entities is managed by a senior officer committee.
  • 3Interest rate risk is managed through a mix of fixed and variable rate long-term debt.
  • 4Credit risk is managed across a diverse customer and supplier base.
  • 5No collateral was held by regulated companies for standard service contracts as of March 31, 2017.
  • 6Eversource posted $24.3 million in cash with ISO-NE for energy transactions as of March 31, 2017.
  • 7Management confirmed the effectiveness of disclosure controls and procedures, with no material changes to internal controls over financial reporting during the quarter.

Frequently Asked Questions

Eversource's regulated companies enter into energy contracts to serve their customers, and the economic impacts of these contracts are passed on to customers. This cost-recovery mechanism means the regulated companies generally have no exposure to losses from market risk-sensitive instruments related to commodity prices.

Eversource manages its exposure to interest rate risk by maintaining a mix of fixed and variable rate long-term debt, in accordance with its written policies and procedures.

While Eversource manages credit risk across a diverse customer and supplier base, the filing notes that as of March 31, 2017, its regulated companies did not hold collateral (letters of credit) from counterparties for standard service contracts. However, the company had $24.3 million in cash posted with ISO-NE for energy transactions.

The filing states that there have been no additional material legal proceedings identified and no material changes with regard to the legal proceedings previously disclosed in the 2016 Form 10-K. Similarly, no new risk factors have been identified, and there have been no material changes to previously disclosed risk factors.