10-QPeriod: Q1 FY2020

EVERSOURCE ENERGY Quarterly Report for Q1 Ended Mar 31, 2020

Filed May 8, 2020For Securities:ES

Summary

Eversource Energy's (ES) first-quarter 2020 10-Q filing provides insights into its market risk management and controls, particularly in light of the emerging COVID-19 pandemic. The company's regulated entities effectively transfer commodity price risks to customers, mitigating direct earnings exposure. Interest rate and credit risks are actively managed according to established policies. Management has affirmed the effectiveness of disclosure controls and procedures, with no material changes in internal controls over financial reporting. The most significant development highlighted is the potential impact of COVID-19 across various operational facets. These include increased cybersecurity threats, potential disruptions in capital market access, regulatory actions like moratoriums on disconnections, delays in strategic development projects (such as offshore wind), supply chain vulnerabilities, and potential impacts on employee availability. The company is actively implementing pandemic response plans to mitigate these risks, though the full extent of the impact remains uncertain. Pension plan funded status has seen a slight decrease, which could lead to increased benefit costs if not favorably impacted by market conditions.

Financial Highlights

46 data points
Beta

Revenue

$2.37B

Net Income

$336.63M

14.2% Net Margin

EPS (Diluted)

$1.01

Total Assets

$41.65B

Cash & Equivalents

$47.42M

Free Cash Flow

-$305.21M

Financial Statements
Beta
Revenue$2.37B
Operating Expenses$1.83B
Operating Income$539.12M
Interest Expense$134.72M
Net Income$336.63M
EPS (Basic)$1.01
EPS (Diluted)$1.01
Shares Outstanding (Basic)331.10M
Shares Outstanding (Diluted)332.94M

Key Highlights

  • 1Regulated companies effectively pass through commodity price impacts to customers, minimizing direct financial exposure.
  • 2Disclosure controls and procedures are deemed effective by management, with no material changes to internal controls over financial reporting.
  • 3COVID-19 is identified as a significant risk factor, potentially impacting cybersecurity, access to capital, regulatory actions, project timelines, supply chains, and workforce availability.
  • 4Eversource is implementing a company-wide pandemic plan to mitigate COVID-19 related risks.
  • 5Regulatory actions such as disconnection moratoriums and elimination of late fees are in place in response to COVID-19.
  • 6Delays in offshore wind project permitting due to COVID-19 are being addressed with mitigation plans.
  • 7The funded status of the company's pension plan has decreased, with potential implications for future benefit costs.

Frequently Asked Questions

Eversource's regulated companies manage commodity price risk by entering into energy contracts to serve customers. The economic impacts of these contracts are passed on to the customers, meaning the regulated companies themselves have no direct exposure to losses in future earnings or fair values from these market risk-sensitive instruments. The Energy Supply Risk Committee reviews and approves all large-scale energy-related transactions.

The COVID-19 pandemic presents several risks, including increased cybersecurity attacks and phishing attempts, potential challenges in accessing capital markets, regulatory actions like disconnection moratoriums, delays in strategic development projects (e.g., offshore wind), supply chain disruptions, potential workforce impacts, and a decrease in the funded status of pension plans.

Eversource has implemented a company-wide pandemic plan to address COVID-19. This includes taking extra precautions to protect employees and the public, updating cybersecurity measures, monitoring capital markets, working with regulators on customer assistance programs, developing mitigation plans for project delays, ensuring supply chain continuity, and enabling remote work arrangements while maintaining essential services.

Management has concluded that Eversource's disclosure controls and procedures are effective. There have been no changes in internal controls over financial reporting during the quarter that have materially affected them. Similarly, there have been no new material legal proceedings identified and no material changes to previously disclosed legal proceedings.